Saturday, 30 August 2014

Down the drain

With all that's going on, who is taking any notice of outsourcing?  Even the galloping privatisation of the NHS receives no attention from the mainstream media.  It's down to the "left-wing" papers to bring the occasional bit of news to our attention, but unless you read Polly Toynbee's excellent article in the Guardian back in May you would have little idea that anything significant was happening.
We don't know the situation with A4e, but the chances are that its finances haven't improved much, if at all, since March 2013, the date of the last published accounts.  And they're not the only ones in trouble.  Both Serco and G4S have gone into the red, and the publicity is all negative.  Quite right too; think of those electronic tagging contracts which both companies used to rake in money they weren't entitled to.  They've had to pay it back, but there have been no prosecutions.  Why?  For two reasons, I think.  One, that a court case would have exposed the fact that it was government processes which allowed them to overcharge by millions.  And two, that they have become indispensable to government.
Let's go back a bit, to the heyday of the last government when outsourcing became all the rage.  Some companies, like A4e, chose to concentrate on particular areas of business, in their case where the commodity was people.  Others, like Capita, specialised in "back-office" functions, focussing on IT systems and processes.  Serco and G4S both started life as security firms, and cashed in on the bonanza that was outsourcing in that field.  But they soon branched out into anything that was going.  They learned that there are a number of rules to the game:

  1. Bid for everything.  That means employing a large number of bid-writers who know exactly how to write the tender.
  2. Bid low.  Offer to do the job for so little that not only can you not make a profit but you can't fulfil the contract either.  It doesn't matter.  Just get the contract.
  3. Renegotiate.  Having embarked on the job, announce that you need more money to complete it.
So Serco in particular have scooped up contracts for everything from prisons to council call-centres, trains to welfare-to-work, electronic tagging to forensic science laboratories.  How can they possibly know enough about any of these specialist areas?  Simple.  They take over a service that's already being run by someone else and employ their staff (not all of them, of course, got to keep the costs down).
But now they are coming unstuck.  Serco announced a little while ago that it was pulling out of the healthcare market altogether.  This comes after it made a mess of the GP out-of-hours contract in Cornwall and had to hand it back; and now we learn, from the Independent, that it has been overcharging the NHS by millions for pathology services through a firm it set up in partnership with two London hospitals.
But healthcare is just one area.  There are plenty of companies ready to step into that market.  Meanwhile Serco, along with G4S, Capita and the others move on to the next contract.  Sometimes they don't even have to go through the tedious bidding process; contracts are just handed to them.  Often now the whole outsourcing procedure is tailored to the demands of these few companies, making the idea of competitive tendering a nonsense.
If some companies go under, others will step in.  The competition comes now not from UK firms but from overseas companies like Atos, who've discovered just how easy it is here if you know the rules.  And we, who pay for it all, can do nothing about it; we can't even know what's happening because of "commercial confidentiality".  All we know is that it's money down the drain.


  1. When contracts are so badly formed, when the amounts involved beggar belief, when the service provided is so mediocre then all the warning lights for fraud are switched to "on". When corrupt people get to the top they tend to employ other corrupt/incompetent people who in turn employ ..... The Civil Service may simply have gone the way of the Westminster gravy train. Only the very stupid get prosecuted and when they see millionaire ministers brazenly flipping their homes (and then talking about the "something for nothing" culture of the poor!) they maybe think "what's the point with honesty?" We reap what we sow and the cleanings waters of a flood are needed in the halls of Westminster to remove the filth of greed that splatters its walls.

    John McArthur

  2. After talking to a former WP Provider employee,not an adviser but a data processing clerk,she has a rather different view of the WP (same sign on day) she is bitter about losing her position and income,but relieved at the same time.

    I have been following this blog for a few years and read all the theories about the failings or predictions of failings concerning the W2W industry as a whole,one by one they have come true,while those that they have been imposed upon continue to be ignored by the powers that be,I find this distressing,but also it steels my belief that eventually the general public will wake up and realise that they have been duped in one of the biggest frauds ever pulled on the citizens of this country.

  3. Well theres something i noticed in ingeus.. i have been on their books for a while but they dont contact me.. I was jsut told by the adviser, that i should appeal against being on WRAG and go to the support group.. because they can help you more.. i am wondering since they have been inundated with people (and my home town has an a4e) i am wondering if ingeus isnt also feeling the pinch not only with the flow from a4e but whether they know something coming.. Interesting if it is true..just a feeling from comments made by others

    1. Sick of the Work Programme31 August 2014 at 04:08

      Perhaps something IS coming... Out of interest I was looking at jobs on the Indus Delta site and was surprised to see that G4S is advertising two jobs for Work Programme staff on a 6 to 9 month fixed-term contract. I am particularly wondering about the Supply Chain Manager's job (advertised at a salary of £45 000 to £55 000 per year), as a job with that kind of responsibility and pay is more likely to be one that someone would relocate for? Why would G4S think that someone would relocate for an insecure job, unless G4S knows something is around the corner and realises it cannot make the job permanent?! Here's a link to that jobs page in case anyone wants to see for themselves:

  4. My local physio care (Chorley and South Ribble) has been sub-contracted out to three private firms. They get paid by the NHS for any treatment. It is free but the quality of care I received for a sports injury was terrible and I have had to go private.

    Maybe this is the Tories NHS strategy - reduce the quality of treatment, thereby forcing people to take out private medical insurance.


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