‘Deep flaws’ in many outsourcing deals brings call for new approach

THE GOVERNMENT is being urged to end its “love-in” with outsourcing work to private firms amid claims of “deep flaws” in many deals.

A report said outsourcing contracts were poor value for money, carried huge social costs and often benefited overseas shareholders of multinational companies. The Smith Institute said that in the wake of the collapse of construction giant Carillion, public delivery of services should be the “norm”.

The think-tank said there should be a comprehensive examination and audit of all outsources and Private Finance Initiative (PFI) deals.

Public-sector outsourcing contracts are currently valued at £100bn a year, with a further £95bn of liabilities, said the report. There should be a new regulator to scrutinise the contracting business, to include directors’ pay, working conditions, union recognition and tax avoidance, it was suggested.

Despite the rapid growth of outsourcing and PFI, the report said there was a lack of reliable data and a failure by the Government to properly scrutinise deals.

Paul Hackett, director of the Smith Institute, said: “As the Carillion debacle shows, outsourcing and PFI contracts have become part of the DNA of government.

“This reliance on, and bias towards, private firms for public services has gone on for too long. We need a new approach.”

Jon Trickett, Shadow Cabinet Secretary and Hemsworth MP, said: “Outsourcing and PFI are failed dogmatic experiments. Marketisation of public services was sold to us as efficient, with competition ensuring a good deal for the taxpayer and service users. It is clear that this is not the case.”