Perhaps not you know:
Construction union UCATT said councils should stop outsourcing essential services. Alan Ritchie, general secretary, said: \”Outsourcing is expensive and leads to poorer services. With private contractors, unlike council services, there is always a danger they could go out of business.\”
That \”expensive\” bit might not be true:
Despite a debt-for-equity swap being considered, it is understood that the lenders believed many of Connaught\’s contracts were just not viable.
Untangling that \”not viable\” we can say that, certainly in the opinion of the lenders, Connaught was in fact too cheap. It had bid so low for the work that it simply couldn\’t do it and still make a profit.
Those who hired the company therefore got the work cheaper than they otherwise could have done.
The proof in this pudding will come as the half completed contracts are passed on to someone else or are renegotiated with someone else.
If the prices paid go up then we\’ll see that indeed, Connaught was bidding too low and thus there was, in the end, a transfer of economic resources from the company\’s shareholders to the company\’s customers.
Exactly the opposite of what Mr. Ritchie says in fact: Connaught were not expensive, they were cheap, which is why they went bust.