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.