Britain's Private Army Takes a Fearsome Kicking

Getting private companies to run public services was a big Margaret Thatcher idea back in the 1980s, a mission embraced by her eventual successor as U.K. Prime Minister Tony Blair. It led to the rise of British outsourcing titans such as Capita Plc, Serco Group Plc and G4S Plc, which manage facilities ranging from prisons and Royal Air Force bases to leisure centers and car parks.

You wouldn't call them giants now. After sector scandals a few years back that included billing taxpayers for keeping track of dead offenders, we've moved on to agonizing about the companies' finances as Britain's austerity drive squeezes how much they can make from contracts. Carillion Plc's collapse and this week's monster profit warning from Capita show the danger.