Whether it’s public of private sector, for decades now management consultants have been paid a fortune to give advice on how to cut costs. But more often than not the biggest savings are made by the outsourcing or privatisation of particular parts of an organisation. In the public sector as we have seen it can be building, cleaning or maintaining schools or hospitals, upgrading rail infrastructure, managing facilities in prisons, supplying food to schools and even facility management of Army barracks. These are just some of the examples of the type of work outsourced under the Carillion model, which has been called into question after its dramatic collapse.
When these functions transfer, employees also transfer over to the new company. Despite assurances being given about TUPE protection (under the Transfer of Undertakings (Protection of Employment) Regulations 2006) at the time, the reality is that the lion’s share of savings made from outsourcing come directly from the pockets of these transferring employees. TUPE does offer a level of protection but it is far from perfect, is often misunderstood and has enough loopholes in it that any determined employer can sidestep the protections. That is particularly the case when, as so often with outsourcing projects, the whole purpose of the transaction is to save money; because employee costs are often a significant part of the contract they are usually first in line when savings need to be found.
We then see industrial scale cowardice as blame is passed between the old employer and the new. The new employer says “the company we are contracting with is asking us to make savings on the contract and the only way we can do it is by cutting your pay.” The old employer says “don’t look at us, we’re just a customer now.” A merry dance is led and those employees facing a wage cut, or worse, are left high and dry. The blunt truth though is that the minute the original company decided to outsource, this was always where it would end up eventually. They might kid themselves that their former employees will be protected, they might think nothing will change, but the history of outsourcing tells us that sooner or later, it’s the workers who pay.
The public sector’s role in outsourcing has accelerated in recent years, with the loss of skilled and experienced staff through austerity putting ever more pressure on those who remain. Time and again we are told that only the private sector has the skills to do a particular job, conveniently forgetting that sometimes it’s only because the public sector outsourced that particular department in the first place that those skills are no longer available. Scrutiny, transparency and accountability are all jettisoned by outsourcing as we have private sector companies delivering public services, but with none of the obligations their public sector counterparts are obliged to adhere to, such as responding to Freedom of Information requests.
The only thing that contractors and consultants are judged on is the contract; so social value, long term investment and building capacity for future generations, which ought to be by products of a healthy public sector, are forgotten. The Prime Minister rather gave the game away when she said the Government are a customer of Carillion which is of course true but rather misses the point. The Government is so much more than a customer, it is the custodian of public services and the outsourcing of functions should not mean an outsourcing of responsibility.
The last decade or so has seen most people’s real terms income flat-line or fall. Whilst there are many possible reasons for this, the trend for outsourcing and the subsequent impact that has on wages must play a part. A typical example is happening right now locally to me where Unite members who are tanker drivers for Sutton Tankers have gone on strike over a proposed pay cut of up to 40%. The Employer says they have to do something to stay competitive with the customer. However, it just happens to be the case that the customer is in fact the company that the drivers used to work for until three years ago when their jobs were outsourced.
What we end up with is a toxic cocktail of beguiling management consultants, weak employment rights and greedy bosses that leads to a race to the bottom. It’s time Government put a stop to this instead of being a willing participant.