Outsourcing: Government Departments

Andy McDonald Excerpts

Wednesday 29th January 2025 Westminster Hall

[Andy McDonald (Middlesbrough and Thornaby East) (Lab)]

I beg to move,

That this House has considered outsourcing by Government departments.

It is a pleasure to see you in the Chair, Sir Jeremy. I am pleased to have secured this debate on outsourcing in Government Departments, in which I also intend to discuss the outsourcing of public services more widely, some of the negative consequences of outsourcing and the opportunities of a new wave of insourcing, and to acknowledge that the Government are putting together their national procurement policy, which the Chancellor said last week will be published shortly; I am sure the Minister will have a lot more to say on that.

I wish to draw attention to my entry in the Register of Members’ Financial Interests and the support I have received from a number of trade unions that have their own published policies on outsourcing of public services, some of which provided briefings for today’s debate.

First, I wish to set out the background to the outsourcing of public services and its growth in recent decades, before setting out some of the steps I hope the Government will take in the coming days and weeks to begin a new wave of insourcing. I believe there is a prevailing view on the Government Benches that essential public services should be run for the public, not to make a profit for shareholders. An emphasis on competition and markets has undermined the public service ethos associated with public services and has too often worked against the public interest.

[Imran Hussain (Bradford East) (Ind)]

I thank my hon. Friend for his years of work in this area; he has been instrumental in shaping the Government’s policy. All too often, particularly in the public sector, outsourcing is disguised in many shapes and forms, but the reality remains that it is back-door privatisation that leads to lower standards and higher costs. Most importantly, workers are treated as second-class citizens, and it has a disproportionate impact on black, Asian and minority ethnic communities. Does he agree that the central question is the one that was in the new deal: is it in the public interest? The answer is that it never is.

[Andy McDonald]

I thank my hon. Friend for his kind words and wholeheartedly agree with his comments. The whole premise of outsourcing has been to reduce costs, and that is visited on the workforce in terms of pay and other terms and conditions, with the disproportionate impact that he describes, which I will come on to shortly.

All too often, wider social, environmental and economic implications have been eclipsed by the pursuit of narrow short-term cost savings, with an insufficient assessment of the overall costs and longer-term impacts. Since 1979, under the Conservatives, starting with compulsory competitive tendering, there has been a huge growth of private business involvement in public service delivery and its scale. That has resulted in more fragmented, poorer-quality services run by companies seeking to renegotiate contract terms, with staff—often women and minority ethnic employees, as my hon. Friend described—the subject of squeezed terms and salaries.

The last Labour Government invested in public services but did not slow the growth of outsourcing. That allowed the coalition to expand it further, with austerity encouraging public bodies to turn to outsourcing as a means of reducing costs, while ideologically driving it through a White Paper, “Open Public Services”, which argued that few services should be exempt from outsourcing. That is where we were in the run-up to the recent general election, before which Labour set out a clear message on outsourcing.

In February 2021, at the height of the covid pandemic, the now Chancellor set out her concerns about outsourcing. Spend on outsourcing was worth £249 billion in 2014-15, and by 2019-20 had reached £296 billion—a significant sum that dwarfs the NHS budget. She said:

“Outsourced services are not integrated into the fabric of our communities. Unlike our public services and providers, like charities, many of which offer vital frontline services, outsourced companies have not built up trust over time and lack the vital local knowledge and flexibility required.”

Furthermore, she added:

“A shadow state has emerged and it is unaccountable to the people. Even before the pandemic, the government spent an extraordinary £292bn on outsourcing over a third of all public spending and that level is rising year on year. The public pays for these contracts yet so often it cannot adequately scrutinise many of them. This secrecy must stop.”

To set out the case for insourcing, I want to highlight the experience of outsourced workers represented by a number of unions. In the civil service, the Public and Commercial Services Union states that the two-tier gap between directly employed and outsourced workers is widening as pay and terms and conditions for the latter erode, with civil servants reliant on universal credit and workplace food banks. Departments’ budgets are stretched as they deal with the inefficiency of picking up the cost of tendering and awarding contacts, which have to deliver a profit for the contractors.

[Kim Johnson (Liverpool Riverside) (Lab)]

I thank my hon. Friend for securing this important debate. PCS workers in my constituency who work for the Disclosure and Barring Service are currently in dispute because of inadequate contracts, which put additional burden and stress on them. PCS has continually called for the insourcing of those contracts. Does my hon. Friend agree that the Government need to commit to their policy of insourcing? It is not only workers who are suffering, but children and other adults, because of the outsourcing of local authority services. That needs to change immediately.

[Andy McDonald]

My hon. Friend is entirely right. That is yet another example of the tension and conflict between delivering high-quality public services and driving down costs, which leaves the people who deliver the services in poverty. That has to be addressed.

Similarly, in the railways, the RMT says that outsourced workers struggle to make ends meet, and it directly attributes that to outsourcing firms profiting from low pay. Many outsourced workers’ wages are anchored to the minimum wage, and they do not have the right to occupational sick pay and decent pay schemes. The RMT argues that insourcing would not only lift living standards by putting money into people’s pockets, but raise workers’ productivity, tackle structural inequality and even achieve greater efficiency in public spending. It is time to start a wave of insourcing now.

In the civil service, the Government have come into office with numerous disputes having recently taken place, or currently taking place, between outsourced service contractors and their employees, including various instances of industrial action. That is disruptive and costly to the civil service, and it is a result of those service providers holding down the pay of their staff, particularly in facilities maintenance areas such as cleaning, catering and security.

PCS, the union representing those workers, wrote to the Prime Minister in mid-July to discuss matters faced by workers across the UK civil service, including those working in contracted out and devolved areas. I know that the Chancellor of the Duchy of Lancaster met with the FDA, Prospect and PCS in June, at the earliest opportunity after taking office, but the number of civil service disputes in contracts inherited from the Government’s predecessors requires action. There are multiple disputes involving PCS members employed as cleaners, post room staff, porters, catering and reception staff in several Government Departments, and they are not limited to one outsourced employer, but concern G4S, ISS and OCS.

[Imran Hussain]

My hon. Friend is making a powerful case. In Bradford, there was an attempt at outsourced back-door privatisation, which was successfully fought off by me alongside trade unions. Does he agree that trade unions play a crucial role and that it is shameful that, in the disputes he talks of, many of the organisations that hold public contracts have refused even to recognise trade unions?

[Andy McDonald]

We are giving a lot of attention to the recognition of trade unions. As the Employment Rights Bill progresses, we will want to ensure that that gets proper attention. The people we are talking about are the ones who kept the country going through the covid pandemic. We have come out of that but they are still in dire straits.

I want to mention the dispute involving G4S, as it has resulted in Department for Work and Pensions buildings, including jobcentres, closing for several days. The DWP has been asked to intervene in the dispute and to set out the sanctions it has issued to G4S for failing to deliver its contractual responsibilities. Not many months ago, I was on a picket line outside our jobcentre in Middlesbrough with G4S security guards who were expected to put food on the table at £11.40 per hour—their employer was not the DWP but G4S. We have to ask whether that is a legitimate and moral way to organise our public services.

There are other disputes between the PCS and G4S, ISS and OCS in the Department for Business and Trade, the Department for Education, the Department for Energy Security and Net Zero, the Foreign, Commonwealth and Development Office, the Department for Science, Innovation and Technology and the Cabinet Office. The Government should intervene and ensure that the Government Property Agency meets PCS to help reach a conclusion with the outsourced firms.

We need a hard stop to new outsourcing, because not only have the Government inherited poorly performing outsourced contracts, but there is concern that they might be about to re-let to private providers that have already failed in His Majesty’s Prison and Probation Service. In the halcyon days when I was a member of Select Committees, we made trips to other jurisdictions and we were met with horror by other parliamentarians who found it anathema that prisons were in private hands. They thought that it was contradictory and unacceptable for anybody other than the state to be involved in incarceration. There is a fundamental question we need to ask ourselves.

The Government have the opportunity to put this right by insourcing facilities and estates management, rather than increasing the profits of private companies. If prisoners are living in squalor, those union members are working in squalor. Just as unions have argued that it is not too late to invite in-house tenders, it is now time to invest in existing prisons—not just new prisons—by ensuring that the Prison Service runs its own maintenance and facilities management.

Prison maintenance in England and Wales was fully privatised in 2015, with Amey winning the contract for the north and Carillion the one for the south, later replaced by Gov Facilities Services Ltd—GFSL—which took over its contracts. A race to the bottom continued, and 10 years later there is widespread prison squalor and an estimated maintenance backlog of almost £2 billion.

Amey and GFSL’s contracts were extended in 2020 and are up for renewal over the coming months. The prison unions are calling for maintenance to be brought back in-house—not with GFSL, but with a return to full works departments in every establishment. However, the Government have previously stated that the public sector will not be invited to bid for the new contracts, after a 2023 assessment apparently determined that a privatised solution was the preferred option for meeting prison maintenance service needs.

It was welcome that the Prisons Minister, Lord Timpson, recently promised:

“As future prison maintenance contracts approach expiry, we will conduct detailed assessments to inform decisions about whether to continue to outsource services”.—[Official Report, House of Lords, 23 January 2025; Vol. 842, c. 1804.]

I was pleased to hear the Prisons Minister tell the House yesterday that the Government still have an open mind on maintenance contracts. The private sector has completely failed to deliver on its promises around prison maintenance, with staff, inmates and the taxpayer all paying the price. Will the Minister explain why the Government seem to be following the last Government’s privatisation plans, despite the obvious failure of running key prison services for profit?

The Minister set out to the House last autumn how the new national procurement policy framework would be a legal framework to deliver greater value for money and improve social value, which the previous policy statement did not do. Will the Minister give some indication as to whether the framework might be founded upon such a review?

The task before the Government is twofold. First, in the civil service, the Government must intervene in industrial disputes and ensure that public services are not disrupted by contractors prioritising profit over public service and at the expense of public servants’ livelihoods. Secondly, I encourage the Government not to enter into any further outsourced contract arrangements in the civil service or elsewhere before a review into the costs and impact of the outsourcing is complete, and before a new strategy setting out the case for a new wave of insourcing has been published. I agree with the PCS proposal to

“seek an agreement on a programme of civil service insourcing and rights for contractor staff. Whilst services remain outsourced”

the PCS

“seek an agreement on union recognition for all facilities management workers and selected outsourced staff. A key element of that agreement would be parity for private sector workers with civil servants in respect of pay and terms and conditions of employment.”

Similarly, Unison has set out its concern:

“Any decisions by public bodies to outsource any services should have to pass a key public interest test.”

That test should consider: the quality of the service that would be delivered; value for money; the effects on workers’ job conditions, such as pay and holiday entitlements; the implications for other public services and their budgets; the impact on the local economy and its job market; and the ability of the contractor to meet climate targets and equality considerations. Unison has also said that

“the test should be applied to contracts coming up for renewal whilst providing services in-house should become the default position.”

I wholeheartedly agree with that notion.

In her speech in 2021, the Chancellor said that

“under Keir Starmer’s Labour government we will see the biggest wave of insourcing of public services for a generation.”

It is now time to deliver just that.

[Several hon. Members rose—]

Speaker’s Statement

Andy McDonald Excerpts

Monday 25th November 2024 Commons Chamber

[David Davis (Goole and Pocklington) (Con)]

Further to that point of order, Mr Speaker. When I first arrived in the House, it was common in the Conservative party—the Thatcherite Conservative party, I say to my right hon. Friend the Member for Gainsborough (Sir Edward Leigh)—to view John Prescott as public enemy No. 1. It was an act that he loved playing into, in public at least. That being said, outside the studio or the Chamber, he was friendly and helpful, certainly to me. Indeed, he was almost the best possible constituency neighbour one could want.

John Prescott was quintessentially a working-class hero—an identity that I suspect the current Deputy Prime Minister also adopts. Of course, he was a brilliant constituency ally and a forceful defender of the interests of the people of Hull, with the emphasis on force. However, he was also a necessary champion of the new Labour party. The Prime Minister referred implicitly to the fact that John Prescott delivered one man, one vote. We should remember that it was an act of huge courage for him to take on his own union allies, I think at about one hour’s notice, and persuade them to support the neophyte Tony Blair.

Frankly, despite the snobbery of the London establishment about John Prescott’s education, it was a very unwise person who underestimated his intellect. He was a formidable and brilliant innovator on—I am looking at the Environment Secretary—the environment, on Europe, on devolution and on a whole range of things. He was what we would all hope to be: not a creature of history, but a changer of history. For that, we should always admire him.

To put to one side all those grand things, he was also greatly, greatly loved by his family. On that basis, I offer my condolences to Pauline and the rest of the family.

[Andy McDonald (Middlesbrough and Thornaby East) (Lab)]

Further to that point of order, Mr Speaker. I want to add my own few words to the tributes that have been made, and especially to welcome the comments from my hon. Friend the Member for Kingston upon Hull East (Karl Turner), which were so warm and personal.

John Prescott’s great many achievements—his commitment to climate change and other matters—have already been spoken of. He was a truly authentic working-class hero, and somebody who always attracted a crowd wherever he went. He persevered with his famous battle bus through good times and poorer ones. What may sometimes be missed is his commitment to devolution, and the great efforts he made in the north-east of England, where he committed to the campaign for a north-eastern assembly. We were not successful on that occasion—the referendum was not won—but, ultimately, John’s legacy prevails in the devolved institutions and authorities that we have seen ever since.

On a personal note, I want to put on record my thanks to John for his personal support to me. I found myself propelled on to the shadow Front Bench a little bit prematurely and unexpectedly, but he was of great support to me in discharging the transport brief. He retained such immense knowledge, and on every single occasion he offered encouragement, for which I will be eternally grateful. He was a true giant of the Labour movement. We will miss him enormously, but his legacy remains. I, too, pass on my sincere condolences to Pauline and to all his family.

[Pete Wishart (Perth and Kinross-shire) (SNP)]

Further to that point of order, Mr Speaker. On behalf of the Scottish National party, I pass on our sincerest condolences to Pauline, to John’s family and to his many friends, colleagues and comrades right across the Labour movement. You have lost a colossus of a man, and an inspiration to working-class people right across the United Kingdom who were encouraged by his example to go into politics.

I remember coming down here as a new MP in 2001 and observing the Labour Front Bench—titans, all of them, and all known to the UK public, but dominant among them was John Prescott, and it was John Prescott the public wanted to hear from. When he appeared on the TV screens, the public paid attention and listened to what he had to say. He resonated with the British public, who held him in a curious affection. If what he had could have been bottled, I am sure we would all take a little sup of it today.



I will never forget where I was, as a candidate in 2001, when that famous incident came in that the hon. Member for Newport East (Jessica Morden) referred to—who could? I think we all know where we were. I was with a bunch of sixth-formers at a hustings at Brechin high school, and one of the senior pupils said to me, “If it’s like that every day in your political life, I want a bit of that.” There’s inspiration for you, Mr Speaker.

John was a huge music fan and a great supporter of our music act, MP4. We could never quite master the jazz that he seemed to favour—although maybe as a tribute to him we will get round to doing one of those numbers—but it was something he completely loved.

Everyone has talked about John’s commitment to climate change, but there was also his commitment to devolution, which a few colleagues have mentioned. John Prescott was the engine who drove that path towards a Scottish Parliament and the regional assemblies which will be happening as a matter of course with this new Labour Government.

John was part of a generation that we are sadly beginning to lose, but he will stand out as one of the true great parliamentarians in this House of the past few decades and we will all miss him dearly.

Anniversary of 7 October Attacks: Middle East

Andy McDonald Excerpts

Monday 7th October 2024 Commons Chamber

[The Prime Minister]

We of course have to be careful to ensure that any agency absolutely complies with international law and, where there are any allegations, we must ensure that they are properly investigated and any wrongdoing is rooted out. We do have to provide, or help to provide, aid across the region, but that is caveated by the first part of my statement in relation to the point that the right hon. Gentleman rightly raises.

[Andy McDonald (Middlesbrough and Thornaby East) (Lab)]

I wish to put on the record my sorrow at the appallingly violent events of 7 October one year ago in southern Israel, and at all the days of violence we have witnessed since. Since the House last met, the forced displacement of almost 2 million residents of Gaza by Israel’s military action has been compounded by a further half a million people forcibly displaced in Lebanon, again by Israeli military action. Does the Prime Minister share the concerns of the United Nations High Commissioner for Refugees, Filippo Grandi, that in destroying civilian infrastructure, killing civilians and impacting humanitarian operations, the Israeli invasion is a breach of international law? What further steps will the Prime Minister take to enforce a ceasefire?

[The Prime Minister]

I am not going to accept invitations to agree with other people’s assessments. I will make my own. I have been absolutely clear that Israel has the right to defend herself in accordance with international law. The displacement is a very serious issue across the region. Very many people have been displaced and many of them simply want to go home. That includes Israelis who have been displaced from their homes as well. That is why we need to de-escalate: to ensure that those displaced can return back and live safely in their own communities.