Carillion and Public Sector Outsourcing

Justin Madders Excerpts

Wednesday 24th January 2018 Commons Chamber

[Justin Madders (Ellesmere Port and Neston) (Lab)]

For decades now, this country has been beguiled by the outsourcing and privatisation industry. The magic formula of better services for less money has permeated through every part of the public sector. But the Carillion debacle has shown us that that magic formula is an illusion—a con trick of epic proportions.

I want to focus on one element of outsourcing: the impact on employees. When a function transfers, it is usually the case that the staff who are employed in that function transfer along with it. While TUPE does offer a level of protection, it is far from perfect and often misunderstood. Contrary to what many people think, it does not offer unlimited protection against changes to terms and conditions. If someone works for an employer who has taken them on as part of an outsourcing or privatisation project, they are far more likely to have their terms and conditions attacked, because very often the whole purpose of the outsourcing project is to save money. As employee costs are often a significant part of the contract, they are usually first in line when savings are sought.

We then see an industrial scale of cowardice as blame is passed between the old employer and the new. The new employer says, “The company we are contracting with is asking us to make savings on the contract, and the only way we can do it is by cutting your pay,” but the old employer says, “Don’t look at us—we’re just a customer now. We were told that you would be protected when you left us.” A merry dance is led, and the employees facing a wage cut, or worse, are left high and dry.

The blunt truth is that this is just an elaborate dance—a façade—because the evidence tells us that the minute the decision was taken to outsource, this was always where things would end up. People might kid themselves that their former employees will be protected and think that nothing will change, but the history of outsourcing tells us that sooner or later it is the workers who pay. How do people think that these miraculous savings will emerge? I am sure there are fields of expertise where the private sector can offer something, but really, what does a construction company know about cleaning hospitals?

Scrutiny, transparency and accountability are all jettisoned by outsourcing, as the private sector companies have none of the obligations that the public sector is obliged to adhere to, such as freedom of information. The only thing they are judged on is the contract itself. Social value, long-term investment and building capacity for the future, which ought to be by-products of a healthy public sector, are completely forgotten.

The Prime Minister said that the Government are just a customer of Carillion. That is of course true, but Labour Members expect much more than a passive role from the Government. The Government should be more than a customer: they should be the defender of public services and a vehicle for driving change in society. Outsourcing functions should not mean an outsourcing of that responsibility. We need to end the toxic cocktail of beguiling management consultants, weak employment rights and greedy bosses that leads to a race to the bottom that is accelerated by privatisation and outsourcing. It is time that Government put a stop to this instead of being a willing participant.