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10 December 2011

The battle against privatisation

Outsourcing of public services continues apace as austerity bites.

By Kate Belgrave

Last week, a group of public sector workers, supporters and others who’ve had enough of the neoliberal mantra that “public services improve if they’re run by the private sector” protested outside a Capita conference called “New Models of Service Delivery – Opening Up Local Government Services to New Providers”.

That was Capita – one of the country’s biggest outsourcing firms, playing host (at more than £300 per head, behind closed doors) to senior council people who are in the process of deciding which private companies should win contracts to provide council services.

“There’s no transparency – these big outsourcing plans are being discussed behind the backs of the residents and staff who are most affected,” said Barnet Alliance For Public Services protestor Vicki Morris. “It’s wrong for the companies who will profit from outsourcing to have privileged access to those making outsourcing decisions.” Morris’s group is fighting a Barnet council plan (called One Barnet) to mass-outsource council services. Capita is bidding for a £750m contract to provide services like finance and revenues and benefits as part of One Barnet.

There’s every reason to suppose that Capita will get that contract. If there’s a manual on snorkelling cash out of the public sector, Capita wrote it – every page. Last year, Capita’s profits increased by 12 per cent to £364.2m, with dividends up by 19 per cent (you can read the rest here if you can stand it).

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No matter that the questionable achievements of some of the outsourcing giants have frightened a few councils off. More ought to be terrified. Sefton council recently decided to terminate a £65m contract with Capita Symonds (a division of the Capita Group), because it failed (spectacularly) to deliver expected savings. Mouchel, another of the UK’s biggest outsourcing companies, is in a tight spot. In October, chief executive Richard Cuthbert resigned when a £4.3m hole was found in the company’s accounts. Mouchel reportedly has a net debt of £879m. The European Services Strategy Unit has an excellent document cataloguing some of Capita, Mouchel and BT’s larger contracts and failures, as does almost every edition of Private Eye.

Still, the goldrush goes on. The public services industry is not just big business – it is and has been colossal business. Figures vary, but Unison reports estimated a worth of £79bn in 2008 with growth expected to put that figure near £100bn round about now. Wherever the total settles in so-called austerity, you can rest assured that the likes of Capita will fling themselves at it.

None of which is good news for those at the rough end of the trade. Public sector workers and service users know only too well what happens when services are outsourced. Staff salaries and leave allowances are slashed (often drastically in already-low-paid sectors like care), working hours extended (often to the detriment of a service) and unions sidelined as private companies look to destroy workers’ terms and squeeze every pound out of contracts to pass to shareholders and senior managers.

Barnet Unison branch secretary John Burgess describes privatising in the austerity era as “outsourcing cuts” – councils offloading public services to companies which slash services and staff numbers, and diffuse political heat. Burgess would know. He and his members have already taken strike action in protest at Barnet council’s radical, and unstable, mass-outsourcing plan (hard questions have been asked this year about the council’s ability to manage big contracts with private sector companies).

Southampton council workers are gearing for a similar fight. That council wants to turn itself into a commissioning council – which means it would exist mostly to engage private companies to deliver services, rather than provide services directly itself.

Other councils are taking an incremental, rather than whole-hog, approach to outsourcing. Bristol council is chipping away at care homes and services. Nottinghamshire is doing the same. And, as Vicki Morris says, far too much of it is happening out of the public eye. Contracts fail and money is tight, but ideology prevails.