The Great ‘Outsourcing’ Con Trick

The recent collapse of Carillion has served to finally expose the ‘Great Con Trick’ that is Public Service Out-Sourcing. This procedure is promoted by those of a right-wing persuasion as a way of ‘saving’ money, ‘improving’ services and increasing ‘efficiency’ to benefit the public…. Only it patently does nothing of the sort. The practice began with the infamous Maggie Thatcher, continued under the Red Tory Neo-Liberal that was Tony Bliar, further enhanced by the Tory/LibDem Doomsday coalition of 2010-2015 before the baton was picked up by the current right-wing coalition of Tory/DUP.

The collapse into oblivion of that doyen of the ‘Privatisation’ ethos that was Carillion shows how far the tentacles of that ethos reach. Carillion was born from an infrastructure company and, with a combination of political positioning through cash donations to that very Tory party and sheer unadulterated greed for (Tory awarded) Public Service contracts, it became a behemoth of a company that considered itself too big to fail, until it did indeed collapse in on itself like the public cash black hole it was.

Read through this excerpt from the BBC News website concerning one small company that sub-contracted from the Carillion cartel…… read it carefully and inwardly digest the meaning.

“Shaun Weeks runs the cleaning firm Paragon Services. He told BBC 5 live Breakfast they had withdrawn the cleaner they had working full-time in a local prison.

“We’d been chasing them for money, we hadn’t been paid since July and when we heard the rumours about a week-and-a-half ago that Carillion were in a lot of trouble, we really pressed.

“Fortunately for ourselves, we did actually get paid the money that was owed to us for the work that she’d done between August and November.”

Having read that… consider this.

Carillion held the contract to supply a cleaner for that prison, they sub-contracted that service out to the company run by Mr Weeks, who then in turn engaged the lady who actually did the work. It all sounds organised, very efficient doesn’t it? Not really.

In the days before the contract was awarded to Carillion it can be assumed that the prison employed a cleaner to carry out the necessary work. That cleaner had a secure job, an acceptable salary and, beside the usual employment costs related to PAYE contributions, would only have required a minimal additional cost to the prison staff Personnel Department. The cleaner would have held a sense of attachment to the prison staff ‘family’, a sense of belonging that usually invokes pride in her job. Then it was decided to end that relationship.

The Government decided for whatever reason, and it is normally declared as being ‘in the public interest’ or ‘to be more efficient and save public money’, decided to privatise that particular cleaning service and outsource the contract….. they put the ‘con’ into contract. Carillion, presumably for the reasons mentioned at the start of this article, were awarded the contract. They tendered for the work for a price that was agreed, a price we can only guess at as it will be ‘confidential information’ between a Government Department and a Private Company. Carillion had no intention of actually employing that cleaner to carry out the contracted work so they sub-contracted the work out to the company run by Mr Weeks…. who then employed the cleaner.

Look at the situation before and after the decision to privatise the cleaning of that prison.

In the ‘old’ days the prison needed a cleaner, the prison employed a cleaner and the prison was cleaned. The cleaner was a full staff member of the prison staff with a secure job, a decent level of wages and the employment costs of that individual would be combined with all the other prison staff and be relatively modest in nature. It all sounds like an efficient use of public money to run and maintain a necessary establishment…….. BUT then the decision was made to ‘Outsource’ that service.

The contract was awarded to Carillion. Carillion decided to sub-contract that cleaning service as they did not want to employ the cleaner directly. The sub-contract was awarded to Mr Weeks who then employed the cleaner.

Now look at the associated costs involved in this convoluted state of affairs. Carillion would need to employ people to examine the work involved, compile a tender for that work including a portion of available ‘profit’ for Carillion. This is a costly business as the people involved in that tender process are specialists and do not work for peanuts. That work is then further ‘outsourced’ to Mr Weeks who would have had to compile a smaller version of the original Carillion tender for the work. The tender price submitted by Mr Weeks would necessarily have been for a lower amount than the Carillion tender for the contract as Carillion would need to hold back the costs of their initial contract tender. Mr Weeks would then seek out and employ the cleaner to carry out the work.

How many people are involved in the employment of the cleaner now?

The Prison Service have staff employed to look after the award of cleaning contracts…… Carillion have a heavy staff involvement to secure the initial contract and monitor the performance of the sub-contractor, Mr Weeks……. Mr Weeks himself now has employment costs for the cleaner and a profit margin to consider as he is, after all, in business to make a profit, as are Carillion. With all these built-in profit margins to consider just how does the ‘outsourcing’ become more efficient and cheaper than the original employment of a cleaner for the prison? In my opinion it does not, nor can it ever be so, but that is what we are told.

This case is a simplistic look at how outsourcing works and it appears to be a con trick, a way of ‘rewarding’ loyal corporate donors to one party or the other at Westminster. It is a con-trick that is being repeated all over by those of a right-wing political persuasion, a declared alliance to that ethos or not. Our local Council is making noises concerning the disposal of our refuse, and in one case has already ‘outsourced’ the work which led to a number of people losing decent steady jobs. The only way ‘outsourcing’ can be less expensive than the current provision is for the actual workers to be employed on far less beneficial terms and conditions. The ‘private’ companies will have a profit margin built into any tender price and that profit margin has to be provided, someone somewhere will need to lose out. It can only be with an increased cost to the public purse (you and me) in the price paid to the private company or by slashing the terms and conditions of employment for those who actually carry out the contracted work.

There are EU Employment laws to consider in this scenario that guarantee a certain level of working conditions, salaries, time off, holiday entitlements and the like. These employment guarantees severely limit the ability for right-wing Governments and Councils to ‘privatise’ public services or, in other words, reward their Corporate Donors with handsome contracts whilst still claiming ‘efficiency’ savings.

It all starts to provide an explanation for the headlong charge towards Brexit at any cost by Westminster. With these EU Employment Laws consigned to the political dustbin they can charge on and effectively asset-strip the whole Public Sector to the point where they’ll even try to privatise the privatisation process itself. There’s money to be made for the ‘Elite’ and their wealthy political donors. We need to stop this and stop it now. We need out of this Union and fast before it’s too late.