External Private Contractors: Government Use and Employment

Kim Johnson Excerpts

Wednesday 21st October 2020 Westminster Hall

[Kim Johnson (Liverpool, Riverside) (Lab)]

It is a pleasure to serve under your chairmanship, Mr Pritchard. I congratulate the hon. Member for Liverpool, Wavertree (Paula Barker) on securing this important debate. Civil service numbers have gone down in key Departments—the Department for Work and Pensions, the Home Office, the Ministry of Housing, Communities and Local Government and the Department of Health and Social Care—by between 30% and 50%, most drastically in the last couple of years.

They are the services that are most needed by the public. Yet the outsourced market has an annual turnover of £82 billion. Research by Unison shows that £9 billion has been paid in total cost overruns on 105 outsourced IT contracts in central and local government, the NHS and other public bodies. No one can ignore the latest disastrous privatisation of the test, track and trace system, where some consultants are paid £7,000 a day. That is just under half of what civil servants on the lowest AO grade outside London earn in a year.

Despite its failure, Serco is set to generate between £160 million and £165 million in profits this year, thanks to its covid-19 contracts. Last year, the CEO, Rupert Soames, pocketed an estimated £4.5 million. It is not about the money, and nor is it about effectiveness. Serco’s test, track and trace contract is running at 67% effectiveness, compared with the 97% effectiveness of local public health teams. This is the same Serco that was fined £2.6 million for shortcomings in relation to a contract for asylum seekers’ accommodation in January 2020 and that paid £22.9 million to the Serious Fraud Office under its tagging contract, where it claimed for returned, released or even dead clients.

As long as someone is a friend of this Government, their ability to deliver is irrelevant. Now it appears that Serco may be awarded a contract to run interviews with vulnerable asylum seekers for the Home Office. The PCS union has serious concerns that the Home Office is cynically using the covid situation to bring in privatisation through the back door, and I agree with those concerns. Outsourcing is most certainly not about improving terms and conditions—look at the ISS cleaners, in dispute with Her Majesty’s Revenue and Customs for several months, including in my Liverpool constituency, over the failure of companies to pay a living wage or afford them the sick pay and holiday entitlement of their directly employed counterparts. Now the same company is bidding to take on HMRC’s security contract, which will lead to more job losses.

The rationale behind the massive outsourcing of public sector work to the private sector is driven by ideology and nothing else. It leads to job losses, insecure contracts, lower wages and worse terms and conditions, but bigger profits for the Tory donors. I am fully behind our public sector unions—PCS, Unison and Unite—in fighting back for a living wage, secure jobs and decent terms and conditions and to save the public purse money, because it is becoming increasingly clear that privatisation is not about saving public funds.