Hospital cleaning
The NHS market testing programme led to a series of contract failures and reduction in cleaning standards in the 1983-2000 period (Public Service Action, 1983-1997). By 2002 some 52% of domestic services contracts were outsourced with an estimated value of £94m according to an unpublished NHS outsourcing study. However, standards had declined to such an extent that the NHS Plan launched in 2000 included a additional £31m to improve the quality of cleaning combined with a Patient Environment Action Team (PEAT) to visit every hospital to inspect standards (Department of Health 2000). In autumn 2000 only 20% of NHS Trusts had a achieved a good standard of cleanliness, rising to nearly 80% by summer 2004. Additional investment specifically to improve cleaning had risen to £68m by 2004 and the DoH issued a revised specification, recommended minimum cleaning frequencies, a revised Healthcare Facilities Cleaning Manual and best practice guidance on evaluating and awarding contracts as part of a renewed campaign to control infection, particularly MRSA (Department of Health, 2004).
Connex South East Trains
On 26 June 2003 Connex were informed by the Strategic Rail Authority that after seven years of poor performance their rail franchise was being terminated. Connex were given a choice of immediate termination or 6 months notice and chose the latter although they later agreed an early transfer with South Eastern Trains taking over on 9 November 2003 (SRA, 2003). South Eastern Trains is a newly formed subsidiary of the SRA. Between 1996/97 and 2002/03 Connex received £779m in public subsidies (www.csenews.net).
Network Rail takes over outsourced rail maintenance
Network Rail originally split the rail network into 20 maintenance contract areas which were awarded to seven firms Amey, Carillion Rail, First Engineering, Balfour Beatty, Amec, Jarvis and Serco. In October 2003 Network Rail made a strategic decision to terminate all contracts and to return all maintenance work in-house following the earlier agreement to takeover Amey's Reading contract in January 2003 (Network Rail, 2003). By July 2004 some 16,000 maintenance staff, over 5,000 road vehicles, 600 depots and a network of 11 training centres had been transferred to create a single rail maintenance operation. Jarvis withdrew from its three contracts in October 2003 and were followed a systematic transfer in the remaining contract areas. Network Rail achieved significant improvements in performance with the new in-house operation, for example reducing delays in Thames Valley, Wessex and East Midlands by 21%, 20% and 22% respectively (Network Rail, 2004).
London Borough of Southwark – WS Atkins
The £100m education contract to operate the Local Education Authority (LEA) was terminated after two years of the five year contract. Atkins failed to meet several key targets and claimed the contract was unprofitable. The contract termination cost Southwark Council £1.5m.
PFI no longer to be used for ICT
Following a series of major failures the government announced that PFI will no longer to be used for ICT projects. This included ICT projects in the criminal justice system such as the LIBRA, the case management project in the Lord Chancellor's Department and CRAMS, although not a PFI project, failed to provide a common high quality information technology infrastructure linking probation services in England and Wales.
PFI contractors go into administration and sell off PFI units
Ballast collapsed in 2003 resulting in delays to the refurbishment of 6 secondary schools in Scotland. Jarvis PLC has 14 PFI projects but with an estimated £240m debts, delayed projects and mounting complaints, plans to withdraw from all its PFI activities by early 2005 (Financial Times, 2004). It has agreed terms to sell its PFI bidding operation to Hochtief, a international German-based construction company with an expanding range of PPP projects. Jarvis plans to sell its stake in Tubelines, the London Underground PFI consortia, and is negotiating to sell four PFI projects in late 2004. Norfolk County Council had selected Jarvis as preferred bidder for a 37 school PFI project but decided to re-advertise delaying the project by two years.
Individual Learning Accounts failed marketisation of training
In July 2000 Capita Group PLC won a contract to operate the Individual Learning Account (ILA) scheme under which everyone aged 19 or over had a right to an ILA entitling them up to chose how they spent up £200 on training. Between its September 2000 launch and its closure on 21 November 2001 there were 2.5m accounts logged on to Capita's computer system. The scheme was closed because there were suspicions that abuse of the scheme had become so endemic that could not be eradicated without killing the scheme itself (House of Commons, 2002). The scheme cost £268.8m with an overspend of £69.9m. Capita received nearly 8,500 complaints by the end of October. It's security was later described as pitiful and the vetting procedures for learning providers as ‘shocking’ in evidence to the Select Committee (ibid). The level of abuse and fraud was estimated to run into millions and by August 2002 560 learning providers were under investigation by the Department's compliance unit and 99 had been transferred to the police (National Audit Office, 2002).
Railtrack PLC replaced by Network Rail
Railtrack PLC, the privatised rail infrastructure company was placed in administration on 7 October 2001. Railtrack was sold for £1,904m in 1996 preceded by a £869m net debt write-off. The shares were priced at 390p, almost doubled in price within a year and by 1999 were over 1,600p valuing the company at £8bn, four times its original sale price (Whitfield, 2001). Network Rail is a non-profit company limited by guarantee. It operates commercially but any surplus is reinvested in the railways it owns and maintains the tracks, signals, bridges and 2,500 stations.
British Energy
The privatised nuclear power generator, supplying 20% of Britain's electricity, had to be bailed out by the government to the tune of £410m in 2002 to meet the company's debts. A restructuring deal was agreed in which the company's creditors agreed a debt-for-equity swap in which they take control of 97.5% of the shares leaving the existing shareholders with just 2.5%. The restructuring deal has been extended to March 2005. British Energy was delisted from the London Stock Exchange as part of the agreement from where it was first privatised as part of the Tories electricity privatisation.