The government’s drive to outsource social care and other public services risks damaging service quality, weakening accountability and harming working conditions, a report has said.
The warning came in a study for the union Unite by Howard Reed, formerly the chief economist at centre-left think-tank the Institute for Public Policy Research.
“The report, The Shrinking State, is a searing indictment which shows that the only winners when it comes to reducing the role of the state are the forces of big business – the corporations that wrongly believe that the principles behind running a profitable supermarket or budget airline can be successfully transferred to the public sector,” said Unite’s general secretary, Len McCluskey.
It comes ahead of the government’s public services reform White Paper – due in early May – which is expected to set out plans to open most public services to competition from private and voluntary sector providers, and give public sector staff the opportunity to run their services by setting up social enterprises to take them over.
Though a large proportion of adult care provision is already outsourced, the government is keen to reduce in-house provision even further.
Contrary to claims that outsourcing increased the efficiency of public services, Reed said it often increased costs as commissioners had to set up arrangements to monitor the quality of services and a proportion of fees paid to private providers had to go on profits as opposed to service provision.
He cited evidence from social care that private provision was of worse quality on average than public or voluntary sector services, while he also pointed to evidence of higher staff turnover and longer hours in privately run services than in those in the public or voluntary sectors.
This comes with the government planning to weaken the pension rights of public sector staff transferring to the private or voluntary sectors and having removed requirements for new staff in outsourced services to work on the same terms and conditions as former public sector employees in the same firm.
The report also said accountability would be weakened as services run outside the public sector were not subject to the Freedom of Information Act 2000 and duties to promote equality for groups such as disabled people, women and black and minority ethnic communities.
Outsourcing would also favour large private sector firms over specialist and smaller voluntary providers as the former possessed much greater experience in bidding for contracts and were able to borrow money at lower costs, while charities were struggling in the face of funding cuts from the state.
The government’s idea of public sector staff taking on their own services as social enterprises or mutuals was “exciting on paper” but ran the risk that resulting companies would be unviable in the long-term, and would be taken over by the private sector.
By contrast, the report found “promising evidence” of the effects of councils taking back services in-house, in terms of improved performance and service user satisfaction and cost-efficiency savings.
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