Carillion sees surge in outsourcing as cuts bite

Grant Prior 13 years ago
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Carillion boss John McDonough is looking forward to a boom in support services as public bodies look to outsource more work when post-election spending cuts bite.

The Carillion chief executive believes local authorities will bundle-up larger contracts for support services specialists as they strive for efficiency savings.

New deals will see a single contractor appointed to run a whole range of local authority services like street lighting, highways maintenance and waste management.

McDonough said in an interview with the Telegraph that an early example could be the Ministry of Justice.

He said the organisation, which operates across courts, immigration centres and prisons in England and Wales, is considering a bundling up of its services worth £250m a year.

McDonough said he believes greater private sector involvement will allow the state and local authorities to refocus on what is important – strategy and budget.

He said: “You don’t have to have the council person saying good morning as people walk into a building.

“I think the council leaders that are switched on are looking for local authorities to go to more of a commissioning role and outsource the doing.”

Carillion currently generates £2.5bn a year from UK support services and facilities management of services including catering, security, cleaning and mechanical and electrical maintenance.

Speaking about life after the election McDonough said: “I think the spending reviews will take a year-ish to really get into shape what the oursourcing should be.

“I think you will get some big headlines in the first 100 days of this cut, that cut, but they will be big programmes. I think the support services cuts, and outsourcing, will start second half of 2011, into 12 and 13.”

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