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A Millionaire Who Funded Brexit Made a Killing as Carillion Crashed

A wealthy hedge fund manager helped create the environment for outsourcing, and profited when it failed.
Photo: Louisa Svensson / Alamy Stock Photo

VICE can reveal that a wealthy hedge fund manager who donated large sums of money to pro-privatisation politicians made millions as Carillion crashed.

Sir Paul Marshall – who has funded Michael Gove and helped move the Lib Dems to a more right wing, pro-privatisation position – is the Chairman and Founding Partner of Marshall Wace, one of the UK’s bigger hedge funds. Like other funds, it invests money in fast, complicated deals, including "short selling" company shares, i.e. betting that a company share will lose value.


Last July, when Carillion's share price crashed, Marshall Wace made an estimated £11.3 million. And while the firm's decline and ultimate collapse this year is a disaster for their public sector contracts, their suppliers and their staff, as one of the UK hedge funds with the largest "short position" against Carillion (Marshall Wace had a bet against the company equivalent to 3.7 percent of the its entire shareholding) it has made huge sums off its demise.

Paul Marshall also puts a lot of his money into UK politics. In July of 2016, he gave Michael Gove £3,250 towards his short lived Tory leadership campaign. Before that, Marshall spent hundreds of thousands of pounds – £200,000 between 2002 and 2014 – on the Liberal Democrats' pro-privatisation wing, known as the "Orange Book" brigade, after the book of the same name. Pro-privatisation Lib Dems like David Laws MP led the party into coalition with the Tories, forming a government that stuck to the pro-privatisation policies under which Carillion grew.

With David Laws, Marshall co-edited The Orange Book, a collection of proposed liberal solutions to societal issues, authored by Nick Clegg, Vince Cable and Chris Huhne, among others. The Orange Book set out to pull the Lib Dems away from what they called "soggy socialism and corporatism" towards a more pro-market approach, and was enthusiastic about private companies providing NHS and other public services.


In a chapter titled "UK health services: a liberal agenda for reform", David Laws said the NHS was a "second-rate, centralised, state monopoly service", and suggested that "private sector providers are more efficient than the NHS". As well as arguing for "more competition within the NHS" and more private sector provision in the Health Service, authors also called for more private prisons, local government services and the privatisation of the Royal Mail. Vince Cable said there were some problems with "outsourcing, PFI/PPP contracts", but that there should still be more private provision in the NHS, even if it was "strenuously resisted".

With the help of Paul Marshall’s donations and backing, the "Orange Book" Lib Dems became the dominant wing of the party. The Lib Dems' decision to go into coalition with the Tories – rather than Labour – from 2010 to 2015 was in part a result of the victory of that more pro-market, pro-privatisation wing.


Paul Marshall also funded a Lib Dem-oriented think-tank called Centre Forum, which promoted pro-market economic liberalism. Danny Alexander, a Lib Dem minister in the Tory-Lib Dem coalition, announced that the Coalition government would continue a modified PFI programme called "PF2" at a Centre Forum event in 2013. In 2015, Carillion won a £187 million "PF2" contract to build and run schools in the Midlands. This is one of the many contracts thrown into crisis by the collapse of Carillion.

Paul Marshall fell out with the Lib Dems when he became a major Brexit backer, putting £100,000 into Vote Leave (Ian Wace, his fellow founding partner at Marshall Wace, put £100,000 into the Remain campaign). Since then, Marshall has funded Michael Gove's short-lived Tory leadership bid, as well as the cow-themed political website "Unherd".

Marshall’s donations to the Lib Dems, and his backing of the Orange Book and Centre Forum, all helped maintain the pro-privatisation political environment in which Carillion thrived. The firm became bigger from privatisation, and while Marshall clearly had nothing to do with the collapse of Carillion, this did eventually create a bigger opportunity to profit from their failure.

A spokesman for Paul Marshall said: "There is no connection between the collapse of Carillion and the Orange Book published 14 years ago."