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.
Edited extracts from an article by MP Dawn Butler, responding to a claim by Minister Liz Truss
Her message to Theresa May: you delivered a caring speech on the steps of 10 Downing Street, but it is clear that it was nothing more than rhetoric and spin. The few it governs for are certainly not the working class . . .
Rents have sky-rocketed to ridiculous levels, with my constituents, in the worst cases, spending 70% of their wages on rent alone, whilst drivers on modest incomes – who need their car to get to and from work – continue to face misery at the petrol pump. In Brent, we have two very busy foodbanks and several soup and bread kitchens. This 19th century scenario is the sad reality for the working class in 21st century Britain.
Wages for the majority of people have continued to fall in real terms, whilst those at the top have seen their salaries soar
Living conditions in the UK are now at their lowest levels for 60 years, with hundreds of thousands of families relying on food parcels just to get by. Our hospitals are in crisis, hate crime has rocketed and homelessness has doubled.
And to compound the struggle, this government has been cutting services, such as money for pupils, access to justice and policing
This means that when you are being discriminated against at work, you will be less likely to be able to take your employer to court. Tribunal cases have plummeted by 70%. To the government this number represents success, but to me, these are hard-working people who have had the rug pulled from underneath them when it comes to getting proper recompense for their grievances. These are the signs of a government destroying the working conditions and protections of those who need it most.
Nearly one million people are on zero hours contracts which means, from month to month, they are in a panic to know if they can pay their rent on time or at all.
This government is openly deceiving the general public by claiming to be something they’re so clearly not. Whether you call it “alt-facts” or “fake news”, if such untruths are peddled often enough, people soon start to believe it may be true.
Conservatives have tried to force the trade union bill through parliament to silence and, ultimately, destroy trade unions. Why would they want to do this unless they wanted also to destroy the voice of the working class and important workers’ rights? How about the workers’ rights bill? The Tories wouldn’t allow a discussion in parliament of a bill which sought to protect the rights of the working class after Brexit. Features like working 48 hour weeks, holiday pay and maternity and paternity rights are all at risk due to us leaving the EU. The government appear to be running roughshod over them.
Throughout our history in power we have championed the working man and woman in establishing great working class systems, from the NHS to the minimum wage, and all equality legislation, tenets that have now become the fibre that gives our country its unity, fairness and strength. We defended SME businesses, created through a movement of working class men women and trade unions, all with a common goal of helping the many and not just the few.
Dawn Butler is MP for Brent Central
In the FT on January 1st, MP Michael Meacher pointed out that the record of capitalism has been poor over the current decade: some 90% of the income gains have been appropriated by the top 1% at a time when average wages were stagnant or falling.
He added that growing inequality has been championed by some on the basis that if the rich gain, the benefits will percolate down through society, but that the trickle-down theory has been discredited – it doesn’t work, wealth actually steadily trickles up.
Meacher cites a book by Richard Wilkinson and Kate Pickett, The Spirit Level (2009), which demonstrates that the more unequal a society is, the greater the social pathology on more than a dozen counts.
He asserts that such inequality is not inexorable; his recommendation:
“The metric of reward is not universal across the income distribution. Different criteria apply:
- collective bargaining for wage-earners,
- private contracts for white-collar workers,
- and often self-appointed remuneration committees at the top, with excessively generous incentive schemes that bear little or no connection with reality.
“What is needed is the development of a single system of remuneration for calibrating rewards at all levels, plus much greater transparency in the process”.