Under new proposals announced by Shadow Chancellor John McDonnell, a future Labour government will legislate to ensure that the default option is for the public sector to deliver its own services in a move to end the “scandal” of the taxpayer being “ripped off” by private companies.
Although councils will be allowed to employ private contractors under tightly controlled conditions, the presumption will be that they take responsibility for their own services when existing contracts expire. These services will include rubbish collection, cleaning and school dinner provision back in-house and will reverse four decades of outsourcing.
An example of local outsourcing by the Eden District Council is the contact with Amey who are contracted to provide grounds maintenance, street cleansing and domestic refuse collection services. Amey has a turnover of £2.2 billion, employs 20,000 people internationally with a focus on the UK, and is owned by Ferrovial, one of the world’s leading infrastructure management and investment companies. Ferrovial has more than 96,000 employees and a presence in over 15 countries. Amey is part of the Services division. Naturally, the huge profits made by these international companies is whisked out of the County never to be seen, invested or spent locally. This is our Cumbrian resources providing profits that instantly go elsewhere.
Nationally, local Councils currently spend a staggering £80 billion on outsourced contracts with companies who are obligated to generate profit levels that keep their shareholders happy.
Outsourcing the delivery of local services began in the early eighties eventually expanding to include construction and maintenance, refuse collections, cleaning, school and welfare catering, ground maintenance, and the provision of sports and leisure services.
Where services remain with outside contractors, companies bidding would have to prove they pay fair wages, recognise trade unions and support local labour and supply chains.
Shadow Communities and Local Government Secretary, Andrew Gwynne commented, “Our plan will be the largest set of reforms of local government in generations, rebuilding local government capacity and giving power back to communities – because public services belong to local people, and people are more important than profit.”
The original justification for outsourcing and privatisation, that the private sector is more efficient and that public ownership is bad, has long since been severely discredited. There was the chaos after the collapse of Carillion and, only last month the Probation Service had to be renationalised because of failure of this strategy. Look at the problems caused by the private sector: the G4S security fiasco at the 2012 Olympics when the army and police had to step in at the last moment to rectify a massive private sector blunder; the publicly operated East Coast Mainline rail franchise that was outperforming all the private franchises so dramatically that the Tories quickly bundled it back into private ownership to avoid the embarrassment; the out-of-control utilities companies using every tactic they can to make us pay more for gas and electricity than we should be paying and the housing and homelessness crisis following the sale of social housing. This privatisation and outsourcing must come to an abrupt end before education, health services and everything else is gobbled up by profiteering monsters.
In launching this policy, McDonnell will say: “After year upon year of failures the public has rightly lost confidence in the privatisation of our public services and the carve-up of the public realm for private profit. The government’s ideological pursuit of privatisation and outsourcing has seen the public pay the price as fat cat bosses count their profits.
“It’s time to end the outsourcing scandal which has seen private companies rip off the taxpayer, degrade our public services and put people at risk whilst remaining wholly unaccountable to the people who rely on and fund these services.”
In January this year the Penrith & The Border Labour Party proposed the reversal of local Council outsourcing and privatisation. We have also had numerous discussions on the enormous success of the Preston Model and the benefits that it has brought to their local economy. It would seem that positive change is on the way.