KEN LEE, our Town Hall reporter, on how a corporate crisis at construction company Carillion could provide the chance to end a long-loathed outsourcing deal
Croydon Council is readying itself to take back the running of the borough’s public libraries, as a crisis deepened in the boardroom of Carillion, the construction company which has held the outsourced library contract since 2013.
Last month, Hounslow council abruptly terminated its contract with Carillion, taking back control of its libraries on August 1. Carillion’s cost-cutting management of the Croydon library service was linked to their operation in Hounslow.
Croydon’s libraries were controversially outsourced under the previous Tory-led council administration, who handed the contract to John Laing Integrated Services.
JLIS had no library-management experience, but they were an arm of the building company which worked closely with the Conservatives in Croydon on what ended up being the financially disastrous CCURV joint venture responsible for the council’s £150million head offices, Fisher’s Folly.
JLIS swiftly sold on their libraries contract to Carillion.
Following the outsourcing, there were numerous redundancies among experienced library staff in Croydon, and a spate of complaints about the declining standards of service in the libraries.
But no library has been closed in the past four years.
There has been no such stability in the management of Carillion, however, with the financial press reporting that the company has seen 80 per cent of its value wiped from its stocks this year, and with chief executive Richard Howson forced to step down.
An interim financial report has been delayed until the end of September, with the company on the brink of collapse because of debt.
The company has in the meantime been losing local authority clients, apparently concerned that Carillion will be unable to fulfill its duties. As well as Hounslow kicking Carillion out of their libraries, Oxfordshire County Council is planning to exit a significant proportion of its contracts for various outsourced services.
Croydon could be next.
Timothy Godfrey, the Labour-run council’s cabinet member for libraries since 2014, was a vocal critic of the Tories’ outsourcing arrangements when in opposition. He has repeatedly highlighted that, while Carillion maintains that its outsourcing arm is “non-profit”, that “doesn’t mean it doesn’t extract its margin via contracts, directors etc. It is for profit”. With the profit being made out of public funds.
Carillion’s corporate crisis may offer Godfrey the opportunity to dispense with their services, at no extra cost to the council.
“We continue to monitor this construction company very carefully following Hounslow Council ending their contract with them early and the wider issues that this company has,” Godfrey told Inside Croydon today.
“Following the contract termination on July 31 by Hounslow, Carillion have to make alterations to how they manage the Croydon contract and we continue to press for improvements to the service.
“Residents should be reassured that whatever happens to this construction company, Croydon Council will ensure that our libraries remain open as a key public service.”
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