The Golden Age (of outsourcing)

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March 25, 2012 by Nash Riggins

Last week in his address to the Institute of Civil Engineering, the Prime Minister posed a particularly provocative assertion: “if we wait for the state to fund the infrastructure challenge, we’ll be waiting forever.” Given the recent and aggressive inquiries into the potential privatisation of virtually every government sector, this indeed appears to be the Coalition Government’s new take on how to curb public spending.

In fact, in what some are calling “a golden age of outsourcing,” around £80 billion will be paid by local council authorities to foreign conglomerates this year in order to help tackle jobs that the government used to take upon themselves. Predictably, this number is on track to increase to £140 billion by around 2015. Who do we have to thank for this capital exodus? The most direct culprit is without a doubt David Cameron’s Localism Act.

The concept itself is quite simple: devolve the majority of infrastructure decisions down to local council authorities, so that citizens have more say over how their tax dollars are spent locally; yet in practice, localism has become a far messier beast than many could have predicted. Not only have councils inherited new powers, but they’ve also inherited new debts that they clearly do not know how to handle. The immediate result of this bubble in 2011 meant councils closing down libraries and attempting to tax children in order to use their playground equipment – yet these brilliant ideas unsurprisingly rendered little-to-no financial result, and councils have now been forced to make bigger decisions in 2012.

This year, councils are selling off any and every job possible to the highest bidder – that is to say, effectively laying off employees and then outsourcing the job to whoever will cost them fewer coppers. To top it off, apart from over-paid council executives, it seems evident that virtually no job is safe from privatisation: councils are selling IT and telecommunications contracts to Germany, cleaning positions have all been privatised and property management firms are taking over the maintenance of government-owned facilities. As a result, it’s fair to say that not all council executives understand the best interests of their constituencies.

Let’s explore the long-term, shall we? In an attempt to pinch a few pennies, local councils have laid off hundreds of employees – drastic times call for drastic measures, and someone has to be the bad guy. Yet the frustratingly predictable result is that many of these unemployed citizens will then struggle past their severance agreements looking for work in debt-afflicted areas, before being forced to go on welfare in order to feed their families. In short, these money-saving techniques will effectively cost local authorities even more money than if they would have just kept those workers’ jobs in-house in the first place – outsourcing and privatisation cannot be guaranteed to save governments anything if they fail to account for the way in which they will be displacing their own hard-working citizens.

Furthermore, privatisation is too-often accompanied by corporate mishandling and less-than reputable business practices. For example, it came to light last year that Mitie, the private company that maintains British treasures such as the Tower of London, has been charging admission even from workers visiting sights for government business – worse yet, the company was within their rights, given the preceding private service agreement.

Debt scares people into doing very foolish things, and the local council authorities that you vote into office are, unfortunately, no different. While police forces across the country are attempting to pass their paperwork and patrol duties on to private security firms and the NHS is being forced to create space in their facilities for the VIP patients who can afford to pay for superior healthcare, it’s a fair assessment that governments – both local and national – are not taking into account the casualties of their budget solutions.

In David Cameron’s speech last week, he stated that the upcoming privatisation boom in British infrastructure was important in order to enable “factories, offices, warehouses and workshops to function, to trade and to grow,” yet it’s hard for a factory to grow without workers. Mr Cameron wants to compete with the rest of the world by showing off his privately funded and well-manicured roads – yet by allowing local councils to privatise and outsource anything and everything just in order to stay afloat, the Prime Minister’s idea of a ‘Big Society’ has completely failed. As a result, Mr Cameron should now ask himself a vital question: “Would I rather that British roads be the envy of Europe, or would I rather that Britain’s unemployment rate become an international laughing stock?” The decision should be a simple one – yet as with all things political, nothing can ever be truly simple.


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