Outsourcing: Government Departments

Jess Brown-Fuller Excerpts

Wednesday 29th January 2025 Westminster Hall

[Jess Brown-Fuller (Chichester) (LD)]

It is a pleasure to serve under your chairmanship, Sir Jeremy. I thank the hon. Member for Middlesbrough and Thornaby East (Andy McDonald) for securing today’s important debate. I think we can agree across the House that this debate is really about the workers, and the disproportionate effect that outsourcing has on some—especially those in the BAME community, as the hon. Member for Bradford East (Imran Hussain) and the right hon. Member for Hayes and Harlington (John McDonnell) mentioned.

Time and again, we have seen examples of Government Departments outsourcing their obligations to others who have failed to fulfil their duties, representing poor value for money for the public. Examples of such systemic failures include procurement issues in the NHS, poor accommodation standards in the military, and failing, poorly designed programmes for tutoring in English schools.

In 2022-23, the public sector spent around £326 billion—29% of its total spending—buying goods and services from the private sector. As my hon. Friend the Member for Carshalton and Wallington (Bobby Dean) reflected, that creates monopolies in the private sector, so support in the public sector is totally eroded and it is unable to provide those services any more. As the hon. Member for Normanton and Hemsworth (Jon Trickett) said, this means that a third of taxpayer money is now being spent on outsourcing. In the light of those figures, we must ensure that public procurement processes do not undermine confidence in our institutions, especially following years of a Conservative Government that caused significant damage to public trust in politics and public institutions.

Let me give an example of the lack of accountability that the hon. Member for Normanton and Hemsworth talked about. With local authorities reneging on their responsibilities to manage new roads, land management companies such as FirstPort come in and charge excessive fees to homeowners. Politicians of all parties—the Conservatives, Labour and the Liberal Democrats—have hauled that company in to say, “You are treating your householders poorly,” but how do we actually hold them to account if they are a private company providing a private service? Nothing will change unless we bring the service back in house.

During the covid pandemic, there were clear failures in procurement processes, particularly through the use of VIP lanes for Government contracts. That led to £9 billion being wasted on personal protective equipment that had to be written off, and £2.6 billion being spent on items deemed not suitable for the NHS, which accounted for one in 10 items purchased overall. It is imperative that robust rules are in place to guarantee that vital public spending is conducted effectively, efficiently and transparently, and that scandals like the misuse of VIP lanes will be avoided.

There are huge opportunities in the NHS to get this right. The Government should investigate the merits of national commissioning and procurement of National Institute for Health and Care Excellence-approved digital technology, devices and diagnostics, much like is currently done for medicines. There are fantastic examples of integrated care boards using commissioned services that have improved patient experience and created a more joined-up health pathway, but we do not see those best-practice models rolled out across the whole of our healthcare service, because of the fragmented approach to procurement, with individual ICBs doing their own commissioning.

Far from restricting choice for local NHS trusts, cutting the cost of new tech and digital services could make them available for the first time in areas where they currently are not available. Care boards often have to commission such innovations and services from companies separately, causing a far greater overall cost. As many Members have said today, we have no evidence that commissioning services out actually saves the public sector any money at all. The NHS has huge buying power and the Government should make the most of it to improve patient treatment. Commissioning based on NICE guidelines could also help clinicians to better determine which devices or digital innovations work best for their patients.

Something that is often missed when we talk about outsourcing is that frontline services in healthcare are already all outsourced. Nobody working in the frontline of our healthcare professions is employed directly by the NHS. Our general practitioners, pharmacists, dentists and audiologists are all outsourced; they are all part of private companies. I recently saw the real effect of that, when a GP federation that provided doctors across my constituency and the wider area fell apart. Suddenly, lots of doctors who, as far as they were concerned, worked for the NHS were out of work with no recompense. We know that we have a crisis and that we need doctors on the frontline providing general practice services, but when that private company collapsed, there was nothing available for those doctors, even though they had always felt that they were part of the NHS.

The Liberal Democrats also really want to improve the standard of Ministry of Defence housing by reviewing outsourced housing and maintenance contracts, which have represented poor value for money, leading to inadequate accommodation for our service personnel. The facilities are often outsourced, too, as the hon. Member for Moray West, Nairn and Strathspey (Graham Leadbitter) said.

The Thorney Island barracks in my constituency have long called for improvements to accommodation and infrastructure facilities, so I was glad to hear about plans for new accommodation to be constructed there later this year. However, too many of our service personnel across the country have to put up with homes leaking sewage, inadequate rooms for their families and a lack of basic information about when improvements will be forthcoming.

The MOD has historically failed to get good value for money from its management of contracts for service family accommodation, which it leases from Annington Property Ltd. In the 1990s, the Conservative Government sold off MOD accommodation to Annington, which made £550 million in profit in 2021, but the MOD is still responsible for the upkeep of the properties, with five maintenance contracts worth £640 million being established in 2022.

We welcome the Government’s commitment to reviewing outsourced services through public interest tests to prevent a recurrence of scandals such as the PPE debacle and the challenges faced in MOD housing provision, but it is essential that outsourcing occurs with full transparency from Government Departments, to ensure that deals struck represent good value for money for the public and are not handouts to “VIPs” without a proper process in place. The Liberal Democrats would also ensure that Ministers received annual training to prevent further scandals about standards, and we would enshrine the ministerial code in legislation. We will continue to call for measures that strengthen tests to prevent misuse of public funds, in order to rebuild trust in our institutions.