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12 February 2018updated 24 Jun 2021 12:26pm

Privatisation overseas is a waste of government aid money

It’s time to crack down on the Tories’ ideological obsession with outsourcing abroad as well as at home.

By Kate Osamor

Capita teeters on the brink. Carillion has collapsed. In the UK, tens of thousands of businesses and hundreds of thousands of workers are at risk. The bubble has burst: it is the beginning of the end of the outsourcing party for profiteers in the UK.

So now it’s time to crack down on the ideological obsession with privatisation overseas.

The direction under this Conservative government is clear. Ever greater proportions of the taxpayers’ aid budget are now spent and delivered through private contractors: up from 12 per cent of the Department for International Development’s bilateral spend in 2010/11 to 22 per cent in 2015/2016.

Despite the Tories’ tough talk last year of a crackdown on fat cats profiteering from the aid industry, it’s not clear if new rules will bring effective oversight without an increase in staffing or application across other government departments that now spend 26 per cent of the aid budget.

And in December, disgraced contractor Adam Smith International and the Foreign and Commonwealth Office became embroiled in further investigations by BBC Panorama and the Times on the running of an outsourced security project in Syria. 

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Even more alarming is the government’s promotion overseas of Private Finance Initiatives (PFI) – or Public Private Partnerships (PPPs) as they are known outside the UK. The Financial Times reported in September that despite condemning PFI schemes in the UK (with Boris Johnson even comparing them to “looting”), various Tory ministers continued to promote the model overseas to the world’s poorest countries.

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This government has focused on private sector models like never before. In Uganda, there has been a challenge to sub-standard, unlicensed and unsanitary learning conditions of so-called “low-cost” PPP private school chains, such as the Dfid-backed Bridge International Academies, which have also come under fire in Kenya.

In Lesotho, one World Bank-supported PPP for a single hospital and its filter clinics cost more than half the country’s health budget.

Little surprise then that in October last year, 152 trade unions and civil society organisations from 45 countries submitted a global manifesto sounding the alarm on this model, calling on the World Bank and International Monetary Fund to stop pushing PPPs to some of the poorest countries in the world.

Even United Nations Assistant Secretary General Jomo Kwame Sundaram recently pointed out negative experiences with PPPs across the globe, with few being cost-effective or delivering results in the public interest.

Labour has been clear that we will end the Tories’ “outsource-first” approach, which has degraded our public services and ripped off taxpayers to the tune of billions. Jeremy Corbyn has recently announced new rule changes to tighten the oversight of contractors and end this privatisation racket.

For two decades, we have been fed the unchallenged myth that the private sector is inherently better placed to provide our public services. The Carillion collapse shows this couldn’t be further from the truth. If we are serious about tackling poverty and inequality overseas, we need to end the hypocrisy and help people take back control of their public services. Not just here at home, but across the world.