A report, Government outsourcing: what has worked and what needs reform? was released on Sunday night by an independent think tank, the Institute for Government (IFG).
Lamiat Sabin reports its finding that the cost savings outsourcing is supposed to deliver have been heavily exaggerated and that public support for renationalising services will increase as a result of “repeated failures”.
In the words of General union GMB national secretary Rehana Azam: “All too often the apparent ‘savings’ from outsourcing take the form of cutting wages, terms and conditions and pensions . . . We need to rebuild our public services and return them to public and democratic ownership, serving citizens and their communities not the shareholders of big business”.
But under the headline: Labour plan to reverse outsourcing criticised by think-tank, Valentina Romei (below right) puts a very different emphasis on the report’s findings, quoting the words of Tom Sasse, senior researcher, Institute for Government:
Noting that the government spends about £292bn, more than a third of all public spending, on goods and services from external suppliers and that a series of failures has brought the system under intense scrutiny, Valentina points out that these often stem from recurring issues and failures, including:
- an excessive focus on the lowest prices . . .
- the finding that some of the people most in need in society — jobseekers, benefits claimants, ex-offenders — have been let down by government outsourcing services. . .
- the outsourcing of probation services which have failed on every measure, harming ex-offenders trying to rebuild their lives . . .
- setting the cost ceiling to provide services in Cornwall in 2011 too low for many GP services providers and
- the repeated failure of the company finally selected to meet both its performance and quality targets.
Valentina concluded that: “Opening up prisons to competition has led to innovations that have improved the lives of prisoners . . . Contracting out waste collection, cleaning, catering and maintenance in the 1980s and 1990s led to significant savings”.
John McDonnell, Labour’s shadow chancellor, also scrutinised this “40-year failed experiment”. He focussed on several points made in the report, including:
- the fact that politicians regularly cite headline savings of up to 30% but recent evidence shows any savings are more typically around 5 to 10%.
- 28% higher rates of MRSA infection were found in hospitals which had outsourced cleaning to companies that often employ fewer staff.
- Private prisons also tend to pay prison officers and support staff considerably less than in public prisons (by 15 and 22% respectively) while paying managers and directors more.
- The fact that NHS will have spent £80bn by the time all the PFI contracts for buildings such as schools and hospitals are paid off, in return for just £13bn of initial investment (IPPR think tank).
The website of public ownership campaign group We Own It, set up in 2013, is well worth visiting. Its founder and director Cat Hobbs (right) said:
“It doesn’t make sense to hand over crucial services to companies that are motivated to make a profit rather than serve the communities.”
(Ed) A statistician could objectively assess the findings of this report which may be downloaded here. Until that is done the public will continue to regard privatisation as an abysmal failure and a gross misuse of tax income by government.
In an earlier post Political Concern reported that 2.6 million women born in the 1950s will ‘lose out’ because of changes to pension law: “while corporations and the richest individuals receive tax breaks.“
“Governments are balancing budgets on the backs of the poor”- (lawyer/novelist John Grisham)
One, the Chorley Supporters Group, is denouncing the government who arbitrarily told them to work for several extra years before they can claim their state pensions, causing them to lose income and peace of mind and obliging many to continue to work at a time of life when caring duties increase and energy levels start to fall. Read more in the Lancashire Evening Post.
Writing to the Financial Times they say: “It is about time the spotlight was turned on this government, which has effectively stolen the security net of millions of women by raising the state pension age far quicker than planned, with no personal notification”.
On the BBC’s World at One programme one of many testimonies was given:
Stella Taylor: “I was born in 1955, I had worked all of my life and, when I became unwell at just about the age of 58 I then discovered, quite accidentally, that my State Pension, which I was expecting to receive at 60, had been moved six whole years to sixty-six. And, like so many women in this movement, we were just aghast. We thought there must be a mistake. Had I received my pension at sixty, when I had expected to, I wouldn’t have been wealthy by anybody’s standards, but I wouldn’t have been in the depths of poverty that I now am. At the moment, because I am still unable to work due to ill health, I receive seventy three pounds and ten pence per week in Employment Support Allowance. Living, and paying all your household bills, out of that £73 a week is impossible. There are times when I have needed to use my local food bank because I haven’t been able to afford groceries.” More testimonies here.
On February 10ththe BBC reported the warning of Amber Rudd, the pensions secretary, which should be extended to her own department:
”If you chronically mismanage a pension scheme . . . we’re coming for you.”
After pointing out that a freedom of information request has revealed recent research findings that the government reneged on their contributions to the national insurance fund over many years and redirected that money towards paying off the national debt, the Chorley Supporters Group asks:
“How government can expect other public or private institutions in this country to play fair with pension funds when it is not doing so itself”.
On February 11th, the government published a research briefing on the legislation increasing the State Pension age for women born in the 1950s. up
This unexpected rise in the state pension age will now “save” the Treasury an estimated £8bn by impoverishing 1950s women.
MP Grahame Morris pointed out that the Labour Party, Liberal Democrats, SNP, Plaid Cymru, the DUP and 50 Conservative MPs support the Waspi campaign.
He added that Landman Economics’ report gives the figure of £8bn savings to government and suggests that this sum should be seen in the wider context of current or planned government finance. Some examples follow: (Ed: links added):
- The refurbishing of the palace of Westminster, which will cost the taxpayer some £7bn.
- HS2 – total cost, including rolling stock, £55.7 billion in 2015 prices – 2018 parliamentary research briefing.
- Britain’s six-hour bombing airstrikes in Syria, which each cost £508,000 or a year’s average salary for 18 junior doctors.
- An estimated £8.7bn of the health service budget which went to non-NHS providers of care in 2017-18.
- Billions of pounds which were lost to government following its progressive cuts to the bank levy.
FT Adviser reports that SNP MP Mhairi Black earlier pointed out that the National Insurance Fund is projected to have a substantial surplus at the end of 2017 to 2018 and the HMRC’s report confirms that the National Insurance Fund balance at 31 March 2018 was £24.2 billion and is expected to increase in the following year.
Morris ends: “In this context, finding the money for Waspi women seems a sensible price to pay to give these women justice . . . We know and we can see that it isn’t equal, it isn’t fair and it isn’t justifiable – it’s driving down the incomes and the quality of life of countless women”.
Next June the government faces a judicial review in the High Court to determine whether these recent increases to women’s state pension age are lawful and the Chorley Supporters Group, Chrissie Fuller, Jane Morwood, Betty Ann Tucker, Riley Ann Rochester, Beverley Cordwell, Lea Butler and Lesley Kirkham end by warning that they will not rest until justice is done.
Carillion paid only £94m towards the pension deficit but sent £162m in dividends to shareholders over 2015 and 2016.
Media reports agree with Debbie Abrahams, shadow secretary of state for Work and Pensions that Carillion have failed in their duty to ensure that their pension provision was adequately managed and resourced.
She is on record as pointing out that they could well have done so, in a letter to the regulator, asking whether they were aware of dividends payments to shareholders far higher than the payments to employees’ pensions.
The FT, BBC, Telegraph, Guardian, Reuters and Citywire online reports cover news of the deficit but fail to mention what appears to be preferential treatment for directors
Carillion’s last accounts, to December 2016, show there was a combined deficit on half a dozen defined benefits schemes linked to employees’ salaries of £811m but a surplus on a directors’ scheme of £6m.
Private Eye reporting this asked: “How could most of the company’s pension commitments, covering tens of thousands of employees, be so woefully underfunded when those for a small number were fully financed?”
It notes that the PR firm acting for the trustees (possibly Teneo Blue Rubicon taking over from Bell Pottinger) refused to provide a breakdown of the schemes’ positions, which in the secretive pensions world remain confidential.
Several former directors – who had received large salary, pensions and bonuses -were questioned by the Work & Pensions and BEIS select committees on 6th February, including former chief executive Richard Howson, former finance director, Richard Adam and current chairman Philip Green (above) in an informative article in The Construction Index.
A final PE comment: with ordinary workers facing serious cuts to their retirement incomes, MPs led by pensions select committee chair Frank Field are unlikely to take “no comment” for an answer.
In an earlier post it was noted that “Governments are balancing budgets on the backs of the poor” (John Grisham) 2.6 million women born in the 1950s will ‘lose out’ because of changes to pension law: “while corporations and the richest individuals receive tax breaks”.
Grahame Morris, MP for Easington, wrote earlier this month:
“Across Britain some 3.8 million women are affected by the increase to the state pension age. Though there is a good deal of sympathy for the aim of equalising the retirement age, what has taken place in practice has been appallingly unjust. Women Against State Pension Inequality (WASPI) agrees with equalisation, but does not agree with the unfair way the changes were implemented – with little or no personal notice (1995/2011 Pension Acts), faster than promised (2011 Pension Act), and no time to make alternative plans”.
Guy Opperman, work and pensions minister with responsibility for financial exclusion, failed to reassure women in their 60s, hit by changes to their pension, by advising them to get a job or take up “extended apprenticeship opportunities”.
“Raising the pension age for women, often with little notice and sometimes failing to notify people of the changes at all, is a recipe for disaster.
“Many Waspi women affected by state pension inequality have been working full time and paying national insurance since the age of 15 or 16. In my constituency of Easington, the government’s changes to the state pension age will harm some 4,542 women.
“The OECD has recently ranked Britain’s pensions system as the worst in the developed world – yet the Tories are attempting to deny Waspi women even a basic state pension” . . .
“Excluded from the winter fuel allowance, from the free bus pass and now from the state pension, this generation of women are now in numerous cases having to sell their homes, take on precarious poverty-wage jobs or rely on foodbanks . . .
“The government’s given reason for failing these 3.8 million women is that to give them their pensions would cost as much as £30bn – for six years of pensions.
“Yet research from Landman Economics suggests the cost of helping Waspi women would likely be a more modest £8bn”. Morris lists the wider context:
- Refurbishing Westminster will cost the taxpayer some £7bn,
- Britain’s airstrikes in Syria are estimated to reach a cost of around £10bn.
- Increased privatisation of the national health service is estimated to cost at least an extra £4.5-£10bn each year.
- There have been billions of pounds of needless tax cuts to the bank levy.
“In this context finding the money for Waspi women seems a sensible price to pay to give these women justice and stop poverty from rising to ever more tragic levels. We know and we can see that it isn’t equal, it isn’t fair and it isn’t justifiable – it’s driving down the incomes and the quality of life of countless women.
Morris: “The prime minister is herself a Waspi woman but I doubt she ever has or ever will be faced with a choice between heating or eating. Yet this doesn’t mean it is too late for the government to do the right thing”.
“The parliamentary ombudsman is currently investigating the Department for Work and Pensions for maladministration, by failing to notify women of the changes to their state pension age. If the ombudsman finds in favour of the Waspi women the government could have to pay compensation to the tune of billions of pounds”
The Labour Party, Liberal Democrats, SNP, Plaid Cymru, the DUP and 50 Tory MPs support the Waspi campaign.