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Interserve workforce and supply chain must not be ignored, as company stands on cliff edge
The wellbeing of Interserve's 45,000 UK workforce and its supply chain are being ignored, as the company totters on the brink of administration, warned the UK and Ireland's largest union, Unite, yesterday.
Interserve has thousands of Government contracts and an extensive construction sector. The heavily indebted company has produced a controversial rescue plan, however many of Interserve's existing shareholders are opposing the plan and have forced a vote on the deal which will take place tomorrow.
Experts predict that if the rescue plan is rejected then Interserve could be forced into administration within days. Unite, which represents more than 1,700 workers, believes that whatever the outcome of tomorrow's vote, the workforce will suffer.
If the company is forced into administration then workers on outsourced public sector contracts may be transferred to new companies which is likely to lead to substantial workplace changes. The future for other sections of the business could be far bleaker.
Even if the rescue plan is approved, Interserve will be controlled by its lenders, who will be looking for a quick return on their investment. This is likely to lead to a squeeze on pay and conditions, with redundancies and staff not being replaced, as the banks seek a swift return on their investment.
Since the collapse of Carillion in January 2018, Unite has warned that the model of outsourcing companies undercutting each other to secure public sector contracts was broken and that the Government must not continue as though it was 'business as usual'.
Unite assistant general secretary Gail Cartmail said: "Interserve workers and those in its supply chain are facing an uncertain and difficult future.
"Whatever the outcome of Friday's vote, the Government as Interserve's largest client must step in to ensure that the workforce and the supply chain are fully protected and do not become the innocent victims of the company's epic mismanagement.
"The predicament of the workforce has been made far worse by the Government failing to learn the lessons of Carillion and bringing in new rules to better protect the workforce when companies collapse.
"What is unequivocally clear is that the current flawed outsourcing model is broken."
Following Carillion's collapse Unite published a report titled, 'Ending Bandit Capitalism: Learning the lessons following Carillion's collapse', which included 22 recommendations.
The recommendations included:
* Director's duties need to be reformed to require directors to concentrate on the long-term welfare of the company, rather than short term profits
* The creation of additional rules to ensure that a company's auditors have a duty of care to employees
* The culture of public sector outsourcing must end
* The unsustainable culture of the lowest bidder being awarded public sector contracts must end
* Companies bidding for government contracts most demonstrate they are financially robust or be barred from bidding
Prem Sikka, professor of accounting and finance at the University of Sheffield, said:
"Interserve's predicament has been brought about by the relentless focus on appeasing shareholders, paying unwarranted dividends and debt.
"Once again the Government is guilty of being asleep at the wheel in failing to learn the lessons from Carillion's collapse and introducing measures to ensure that future large-scale corporate failures can be prevented."
14th March 2019