More outsourcing means more fraud, warns union

12 September 2011

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12 September 2011 | Angeline Albert

Procurement fraud in the public sector could get worse as a result of government plans to outsource more services, a trade union has warned.

Unison, the public sector workers’ union, claims outsourcing currently contributes to £1.3 billion of the £2.4 billion annual cost of procurement fraud to the public sector and fears this amount could rise if proposals to tender more services to the private sector under the government's Open Public Services white paper are implemented.

The union believes the risks will be greater because there will be more tendering, which could “create more opportunities for price-fixing, false invoicing and other forms of fraud associated with public sector outsourcing”, it says. The current £1.3 billion estimate is made up of £825 million from central government and £470 million from local government.

Unison also warned contracting with the private sector leads to under-performance and poor value for money, as well as “costly and disruptive restructuring and procurement processes”.

“Billions of taxpayers’ cash is wasted during the outsourcing of public services,” said Dave Prentis, general secretary of Unison. “Many employers have to bring services back in-house after money, quality and efficiency have gone down the drain. The taxpayer needs to know the risks employers are willing to take to sell off services. The government’s open public services white paper can only lead to the public paying a higher price for fraud. We will continue to campaign against it.”

The Cabinet Office told SM it plans to respond once Unison has submitted a formal response to the white paper, which it plans to do later this year.

The £2.4 billion cost of purchasing fraud was highlighted in a Cabinet Office report in June, which showed £1.5 billion lost in central government and £855 million to local government. The analysis was conducted as part of the government’s Public Services Industry Review in 2008. This looked at the whole procurement cycle and covered fraud such as cartel activity and fraudulent invoicing.

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