G4S is just the latest in a long line of outsourcing disasters

When will we learn?

The left has long understood many of the many problems of outsourcing: the fact that it typically replaces at least semi-decently paid, full-time staff, with career paths and a commitment to the service ethic, with a casualised, often minimum wage, rapidly-changing group of workers who are struggling to survive – often working two or three jobs. (Even in “professional” areas such as GP surgeries and IT, relatively low pay and casualisation is the norm.) The cash not going to the work force is redirected into shareholders' pockets, all too often through off-shore, tax haven companies that fail to contribute tax to the society in which they're based, from which they’re extracting profits.

But most of all, we’ve understood that it doesn’t work. We’ve seen it fail again and again. The outsourcing of hospital cleaners contributed to a rise in hospital-acquired infections and super-bugs. Multiple government IT projects have gone seriously and expensively off the rails. Then there’s the still unfolding scandal of the ruinously expensive PFI scheme for hospitals (and other public institutions such as schools) which has just claimed its first victim, with the South London Healthcare NHS Trust going into administration. And railways and the Tube, and call centres…. the list goes on and on.

And now we’re finding, with G4S unable to guarantee that it will provide the contracted staff for the Olympics, that we’re calling on the army to help. So visitors to London will see a militarised Olympics, with expensively trained soldiers doing work that they have no training, and possibly no inclination, for. It’s difficult to know which is worse soldiers doing jobs they aren’t suited for or for that work to be done by some of the many £2.60/hour security “apprentices” that we learnt about during the Jubilee security outsourcing scandal. These arrangements for Olympics security may not be a recipe for public safety or confidence.

The writing is on the wall, but a lot more still has to be done to highlight the basic flaw of outsourcing, the reason why it does not, cannot work: the supplier of outsourced services and the purchaser have different objectives. It's as though your service is balanced on a rubber band held by two people running in different directions. Sooner or later it is going to snap, or one side be dragged back.

One small example from my working life, details anonymised for contractual reasons. At one time a widget producer had staff security people, who understood their job to be assisting in the smooth production of widgets. They knew the company, they knew the staff, they understood at least a bit about making widgets, and they used their common sense, their knowledge and some flexibility in applying the security rules to assist in the making of widgets. Then they were outsourced. New staff came in, employed by the security firm, for the purposes of security. They applied the rules as laid down by their company rigidly and inflexibly (indeed they were at risk of losing their job if they didn’t).

They didn’t know or care about the production of widgets, or that they were actively hampering their production. One told me – while I was trying to get a freelance widget worker through the system: “We’re subject to penetration tests you know.” (And no this wasn’t MI5 or Scotland Yard.) Cue rampant frustration, many wasted hours of staff time and a considerably less pleasant working environment. And fewer widgets produced.

As with so many aspects of our neo-liberal, hypercapitalist economy, outsourcing doesn’t work even in its own terms. It is a disaster, on financial, service and social grounds. We've got a government now that's ideologically wedded to it, as part of the "market knows best" religion, despite the obvious collapse of the case for that creed in the past few years, and the main opposition party that finds itself too close to its past failures to publicly recant – even if it wanted to, which given the return of Tony Blair you’d have to conclude it doesn’t. On top of that, we've got a whole generation of people in senior public service and private sector management with crisp, expensive and intellectually mediocre-to-worthless MBAs in this outsourcing "religion", who lack the knowledge of any other approach or the ability to adapt to the obvious facts under their nose.

There's a long road ahead to reverse direction from this outsourcing dead end. But we can start by saying, loudly, clearly and often, that outsourcing is a disaster. It does not, cannot, work as well as forms of organisation based on shared goals, whether they be co-operatives or public ownership at local or national level, or at least a company in which permanent, decently paid staff are working together towards the same aim.

Natalie Bennett is chair of Green Party Women and the former editor of the Guardian Weekly


Soldiers have been drafted in to help with security at the 2012 Olympics after G4S failed to recruit enough staff. Photograph: Getty

Natalie Bennett is the leader of the Green Party of England and Wales and a former editor of Guardian Weekly.

Photo: Getty Images
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Autumn Statement 2015: George Osborne abandons his target

How will George Osborne close the deficit after his U-Turns? Answer: he won't, of course. 

“Good governments U-Turn, and U-Turn frequently.” That’s Andrew Adonis’ maxim, and George Osborne borrowed heavily from him today, delivering two big U-Turns, on tax credits and on police funding. There will be no cuts to tax credits or to the police.

The Office for Budget Responsibility estimates that, in total, the government gave away £6.2 billion next year, more than half of which is the reverse to tax credits.

Osborne claims that he will still deliver his planned £12bn reduction in welfare. But, as I’ve written before, without cutting tax credits, it’s difficult to see how you can get £12bn out of the welfare bill. Here’s the OBR’s chart of welfare spending:

The government has already promised to protect child benefit and pension spending – in fact, it actually increased pensioner spending today. So all that’s left is tax credits. If the government is not going to cut them, where’s the £12bn come from?

A bit of clever accounting today got Osborne out of his hole. The Universal Credit, once it comes in in full, will replace tax credits anyway, allowing him to describe his U-Turn as a delay, not a full retreat. But the reality – as the Treasury has admitted privately for some time – is that the Universal Credit will never be wholly implemented. The pilot schemes – one of which, in Hammersmith, I have visited myself – are little more than Potemkin set-ups. Iain Duncan Smith’s Universal Credit will never be rolled out in full. The savings from switching from tax credits to Universal Credit will never materialise.

The £12bn is smaller, too, than it was this time last week. Instead of cutting £12bn from the welfare budget by 2017-8, the government will instead cut £12bn by the end of the parliament – a much smaller task.

That’s not to say that the cuts to departmental spending and welfare will be painless – far from it. Employment Support Allowance – what used to be called incapacity benefit and severe disablement benefit – will be cut down to the level of Jobseekers’ Allowance, while the government will erect further hurdles to claimants. Cuts to departmental spending will mean a further reduction in the numbers of public sector workers.  But it will be some way short of the reductions in welfare spending required to hit Osborne’s deficit reduction timetable.

So, where’s the money coming from? The answer is nowhere. What we'll instead get is five more years of the same: increasing household debt, austerity largely concentrated on the poorest, and yet more borrowing. As the last five years proved, the Conservatives don’t need to close the deficit to be re-elected. In fact, it may be that having the need to “finish the job” as a stick to beat Labour with actually helped the Tories in May. They have neither an economic imperative nor a political one to close the deficit. 

Stephen Bush is editor of the Staggers, the New Statesman’s political blog.