15 Aug 2012

Do you know who runs your world?

Desperate to cut costs, the NHS, police and councils are outsourcing more work to private firms. In the first of a special series, Channel 4 News asks if saving money means losing transparency?

As little as three decades ago, local council workers emptied bins, the state locked criminals up in government-run jails, and when you rang the police you spoke to staff from the police service. Now, only around 50 per cent of councils employ binmen directly according to the Local Government Association, private companies run 10 per cent of our jails (with more due to be outsourced very soon), and call centre staff from anonymous service companies direct your 999 call.

And the push for huge budget savings means more and more services which used to be provided by public sector workers will instead be delivered by “business operations” companies under so-called GOCO – government-owned, contractor-operated deals.

The Financial Times quotes a report from the investment bank Jefferies International, estimating that the UK government is negotiating £4bn of public sector contracts in this year alone. Huge companies such as G4S, Serco and Capita, are competing with less familiar names to operate police stations, provide health services or even guard Britain’s nuclear weapons.

The contracts will commonly come under the umbrella of the contract commissioner – for example the NHS or the prison service – but staff may well wear the uniforms of their employer, the private firm.

And this hints at the single biggest issue with the industry – its transparency.


When public contracts move into the private domain, the ability of members of the public to scrutinise them vanishes. Former senior civil servant Peter Smith edits the procurement website Spend Matters and advises companies on outsourcing.

He told Channel 4 News he finds this lack of public oversight worrying: “We can get a lot of information from public bodies through freedom of information.

“Once the Department for Work and Pensions or Ministry of Defence have outsourced some large piece of work – and they’re often outsourcing work that includes an element of procurement as well, so the outsourcer is then buying services down the supply chain – we can’t ask the same questions.

“I can find out a lot from the MoD or DWP. I can’t get that from Serco or Carillion or G4S.”

On that point, Martyn Hart, chairman of industry body the National Outsourcing Association, told Channel 4 News such clarity ultimately could be more problematic than helpful.

“Transparency of public sector contracts is something to be applauded and encouraged – although if exact price breakdowns were available for individual services it might cause more problems than it solved.

“For example, could, price-fixing become an issue? If suppliers could see a detailed market rate for each service, wouldn’t they gravitate towards the most expensive?”


This issue of commercial confidentiality, added to the fact that there is no central government database of outsourced contracts, means it is extremely difficult to establish the scale of outsourced public sector services.

Promotional literature produced by the companies themselves is often vague and riddled with business jargon, meaning it is usually unclear what are the services and products being offered.

Channel 4 News has examined a wide range of publicly available sources and pieced together a snapshot of who really runs the services the majority of us use during our everyday lives.

Recent headline-making contracts such as that won by healthcare company Circle to run the NHS Hinchingbrooke Hospital in Cambridge, or the deal with G4S to build and operate a police station in Lincolnshire, are only a tiny part of an industry which the TUC estimates takes almost a quarter of the public sector budget of £334bn (pre spending review 2009/2010 figures).


Companies which have diversified and developed well beyond their original purpose include Virgin, whose brand-new healthcare offshoot runs dermatology, health-visiting and sexual health services, and NSL (formerly part of National Car Parks), which provides paramedic support as well as traffic wardens, plus park and ride schemes in Oxford and Durham.

National Savings and Investments, which provides the popular premium bonds investments, is run by the French outsourcing corporation Atos, which also carries out controversial welfare-to-work health assessments for the UK government, while the processing and issuing of UK passports rests in the hands of Steria. Even Ofsted school inspections are carried out by staff working for private firms.

In parts two and three of this series of special reports, we profile some of the companies benefiting from increased government contracts and examine the links between them and government.

What seems certain is that in future it will be increasingly difficult to establish who runs your world.