Beware the new language of privatisation: state activity farmed out to profit making firms

As national and local authorities across the UK turn to “outsourcing” to cope with the waves of funding cuts, how much privatisation is too much privatisation? Are some activities inappropriate to privatise?

Stuart Weir
21 June 2012

As the government and business combine to expand the modern-day enclosure of the public sphere and state services by the private sector, the official talk is now of “outsourcing”, and of “partnerships” or “mutuals”, as private incursions into the police provoke political criticism and fears that private companies would be taking over frontline policing duties. Beware the new language of privatisation.

Beware, too, the huge expansion of privatisation. According to the Financial Times, Britain is poised “for the biggest wave of outsourcing [that word again] since the 1980s”. More than £4 billion in tenders are being negotiated this year, according to studies of contracts published in the Official Journal of the European Union and analysis of companies’ bid pipelines. According to analysts, the FT reports, contracts involving the prison service – which is going to be almost wholly taken over – police forces, defence and health are “coming to market this year”.

Three government departments – the Ministry of Justice, Ministry of Defence and Department for Work and Pensions – are the big drivers, but the expansion in privatisation includes local government, transport and education.  Local authorities are losing 27 per cent of their grant over four years and government is under increasing pressure to use the private sector in order to maintain frontline services in the face of the cuts. “This is as exciting as outsourcing gets,” Kean Marden, equities analyst at investment bank Jefferies, told the FT. “We haven’t seen a wave this big since the 1980s when they introduced competitive tendering for public services.”  Another financial analyst, Alex Magni, at HSBC, said in a report, “Contract activity has ramped. The UK’s austerity programme is entering a more fruitful phase for outsourcing companies.”

The Ministry of Justice has plans to hand over nine prisons to the private sector within weeks and will “outsource” eight more in the next three years. April’s deal between Lincolnshire police and the private company G4S is likely to be replicated shortly by ten more police authorities. The Home Office is on the point of paying a private company to collect unpaid fines; a key element of the Welfare Reform Bill is the introduction of more rigid testing to support benefit claims – much of it done by private contractors. G4S recently estimated that annual revenue from welfare assessment services could reach as much as £300 million as the government imposes severe cuts on benefits and public welfare services.

In short, many of the state’s most sensitive areas of activity are being farmed out to private suppliers for profit. We have already seen how insensitive, inefficient and downright brutal some of these companies have been. OurKingdom's ongoing investigation into the manifold activities of G4S – picked up by the Financial Times (17th June) – gives substance to the worrying and silent extent of this reach. 

This government equates efficiency with reduced spending and glosses over the human costs of privatisation, the retreat from public services and the evisceration of welfare.  It is not just on the scale of privatisation that this government surpasses Mrs Thatcher. It does so even more on inhumanity, humbug and hopefully hubris.

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