Following the Government statement on Interserve entering administration, Mark Pritchard asks about the Government’s process for so-called stress testing of its private sector suppliers to ensure situations such as happened with Carillion - and the apparent near-miss with Interserve - do not happen again.
Although I do not believe in nationalisation—save for, perhaps, the Brexit process—and although this is not the same as Carillion, I say gently to the Minister that this is a near miss for jobs, investment and the whole credibility of outsourcing. Is this not potentially another case of greedy capitalism—I speak as a Conservative MP—giving capitalism a bad name, rather than considerate capitalism? Will the Minister enlighten the House as to what has happened since Carillion’s collapse and the so-called stress testing, with the unit in the Treasury and the unit in the Cabinet Office, to ensure that this does not happen again? Following on from what the hon. Member for Edinburgh East (Tommy Sheppard) quite rightly said, what else are the Government doing to try to prevent this from happening again?
Let me restate this point. My hon. Friend raised the issue of whether this situation was a near miss, as compared with Carillion. The situation with Carillion was very different: it had problems across all its contract base and issues with its management, which are currently being explored. In this case, there is a specific issue in relation to some of the energy-for-waste contracts, which are being dealt with. The company sought to refinance to strengthen its balance sheet. It failed to do that because of the position taken, some might say, by some greedy capitalists, in respect of some of the hedge funds that owned shares in the company and refused to consent to its restructuring. None the less, it has gone through a pre-pack, and as a result its position has strengthened considerably. It has £100 million more on the balance sheet and it has reduced its debts considerably.
My hon. Friend is right to challenge the Government on what wider lessons we have learned. It is precisely why we engaged in a tremendous exercise of consultation, engagement and reform. For example, we spent more than 1,400 hours gathering evidence and, as a result of that, we have announced extensive changes through the new playbook.