TUC: Private outsourcing firms get £3,500 per household for services
18 Jan 2019 11:56 AM
New analysis published today (Friday) by the TUC finds that private service firms are getting thousands of pounds a year from every UK household to deliver public services.
- New TUC report calls for outsourcing reforms to increase transparency and accountability
- Public must not be kept in the dark on where their money goes and how it is spent, says TUC
The analysis estimates that UK households pay an annual average of £3,530 through their taxes to private outsourcing firms that deliver public service contracts.
Based on information from the National Audit Office (NAO), the total amount spent by UK government on outsourced services (excluding goods and equipment) is estimated at £97.4bn.
However, the TUC warns that, despite making the estimate with the best available data, the quality of publicly available information on spending on outsourcing is currently too poor to give taxpayers the clarity they need.
The analysis is published alongside a new TUC report: A Domesday Book for public service contracts – better data, better value for money, and in the anniversary week of Carillion going into liquidation (15 January 2018).
The TUC believes that publicly owned and accountable services are the best way to meet public interests. But where public services are put out to tender, high standards of transparency, accountability and value for taxpayers must be met.
To improve standards, the report proposes a set of actions for government and public service bodies:
- Improve data collection on outsourced contracts – the Cabinet Office and Treasury have begun making improvements, but progress must be faster. The Cabinet Office should be given a greater role in collecting data from Whitehall, local authorities, police and crime commissioners, and the NHS.
- A ‘Domesday Book’ for all contracts – a new public body should be set up that operates at arm’s length from central government. It would have statutory powers to require both commissioners and contractors from across the public sector to supply it with data. And it should maintain a ‘Domesday Book’ of all contracts including their performance on the outsourcing of services.
- Major reforms to improve value for taxpayers from outsourcing – the National Audit Office should become audit supervisor for the whole public sector. And a new Office for Equity, Efficiency and Effectiveness should be established to maximise social and public value.
TUC General Secretary Frances O’Grady said:
“The collapse of Carillion left taxpayers out of pocket and cleaning up the mess. It cost people their jobs and disrupted vital public services. We cannot let it happen again.
“Our preferred model is public ownership and delivery. But if outsourcing is used, working people must not be left in the dark. It’s their taxes that pay for it.
“We need new independent bodies to protect the interests of taxpayers. They should shine a light on every penny that private service firms take from the public purse. And they should make sure the public always gets a good deal, with high quality services and good pay and conditions for staff.”
It was written for the TUC by David Walker (a former director at the Audit Commission), and John Tizard (strategic adviser and formerly a senior executive at Capita and Labour leader Bedfordshire County Council).
- TUC estimate for spending on outsourcing:
- The TUC estimates use data from the National Audit Office (NAO), which estimates that in 2016/17 government spent £194.8bn on ‘goods and services’ – see page 5:www.nao.org.uk/wp-content/uploads/2018/12/Departmental-Overview-Commercial-and-Contracting-2017-18.pdf
- The NAO estimates that half of spending on ‘goods and services’ is for ‘outsourcing and privately-run services’ This does not include spending on goods used by government in the delivery of services (e.g. NHS pharmaceuticals, paper, and energy); and it does not include capitalised expenditure (£50 billion total) or the finance cost element of PFI contracts – see page 4: www.nao.org.uk/wp-content/uploads/2016/05/Government-Commercial-and-Contracting-overview-NAOs-work.pdf
- The TUC used this information to estimate that total spending on ‘outsourcing and privately-run services’ in 2016/17 was half of £194.8bn; or £97.4bn.
- To estimate the amount per household, the TUC divided £97.4bn by the number of households given by the Office for National Statistics (ONS) in 2017 (27.595m) to arrive at a figure of £3,530. The ONS data on number of UK households is here (column G on tab 401):www.ons.gov.uk/peoplepopulationandcommunity/populationandmigration/populationprojections/datasets/householdprojectionsforengland
- About the TUC: The Trades Union Congress (TUC) exists to make the working world a better place for everyone. We bring together more than 5.5 million working people who make up our 49 member unions. We support unions to grow and thrive, and we stand up for everyone who works for a living.