Union hits out as public sector outsourcing value rises to £95bn

15 January 2019

The government has been accused of failing to learn its lesson on outsourcing public contracts following the downfall of Carillion last year.

The GMB, Britain’s general union, has revealed that public sector outsourcing rocketed to £95bn last year.

Despite the collapse of government contractor Carillion a year ago, the lifetime value of outsourcing public services rose by 53% in 2017-18, up from £62bn the previous year.

The GMB criticised the government’s continuation of outsourcing public services, claiming it is “hell bent” on privatisation, regardless of the consequences.

Rehana Azam, GMB national secretary, said: “What other explanation can there be for this huge increase on outsourced contracts in the year Carillion went bust and when other outsourcing giants look like they’re on life support?”

The union was critical of the decision to award public sector contracts to Capita and Interserve, despite both firms issuing profit warnings in the last year.

Capita received contracts worth almost £1.4bn in the last year despite issuing a profit warning in the same year, said the GMB. Interserve meanwhile issued two profit warnings in two months at the end of 2018, received public services contracts worth £450m.

In December, John Manzoni, permanent secretary at the Cabinet Office, defended awarding contracts to Interserve, claiming the situation was “very different” to Carillion’s collapse.

In response to the increase in outsourcing, the GMB has launched its Go Public campaign, calling for an end to outsourcing and privatisation in UK public services.

As one of the government’s largest contractors, Carillion held contracts across Whitehall in areas including health, education, defence and the prison service. The firm collapsed in January last year, owing around £2bn to suppliers, subcontractors and short-term creditors.

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