Outsourcing giant Interserve has gone into administration but will continue trading following the rejection of a controversial rescue package by its shareholders today (March 15).
Coming a year after Carillion’s collapse, the administration of Interserve – which holds contracts for cleaning schools and hospitals, provides probation services and builds roads and infrastructure – is yet more evidence of the damaging impact outsourcing has on public services.
Unite is demanding an urgent meeting with the administrators, Ernst & Young, over the future of Interserve staff, who have been told to continue to work normally unless instructed otherwise.
The union, which has 1,700 members at the firm, said it expects to be fully consulted on any potential transfers of staff to new companies.
Despite thousands of government contracts for public services and an extensive construction sector, serious mismanagement by its leadership resulted in Interserve accruing a £681m debt mountain.
By rejecting a plan by banks and hedge funds to cancel £485m of the debt in return for a 95 per cent ownership of the business that would have wiped out the value of their investments, shareholders today forced the company into administration.
As a result, Interserve’s 45,000 UK employees are now facing an uncertain future.
Unite national officer Colenzo Jarrett-Thorpe said Interserve’s workers are “innocent victims” and blamed a culture of greed and incompetence amongst the company’s senior management for the scandal.
“Interserve’s management has portrayed this as business as normal but this is anything but normal. Workers are being asked to deliver vital public services without knowing who their employer will be and whether they will continue to have a job in the future,” Jarrett-Thorpe.
“The government must step in and ensure that services continue and that workers are treated with dignity and respect. Once again we have seen the government’s outsourced model fail.
“It is essential that the administrators meet with Unite at the earliest possible opportunity and clarify what is in prospect for the workforce, a failure to do so would be crass, insensitive and deeply disrespectful to the workforce.”
Following the collapse of Carillion last year, Unite has been warning that similar corporate collapses were inevitable without government action.
However the government has largely rejected any proposals for reform and continued as though it was business as usual.
Unite has produced a report – Ending Bandit Capitalism: Learning the lessons following Carillion’s collapse – that contains 22 recommendations on how to reform the economy.
Jarrett-Thorpe said, “Interserve is the latest example of bandit capitalism and this demonstrates that the government’s outsourcing business model is smashed beyond repair.
“The government has been asleep at the wheel since Carillion’s collapse last year and if no action is taken we face further corporate collapses.”