22 Aug 2012

Who really runs the public sector?

In the second part of a special series into the outsourcing of public sector work to private firms, we profile the big names which win the contracts as well as some of the controversies.

Who runs your world graphic (Ciaran Hughes)

Such is the fragmented nature of the outsourcing industry, it is extremely difficult to establish which firms have which percentage of available public sector contracts on their books.

This picture is further complicated by the fact that not all of the companies which carry out work on behalf of the sector operate under the name of their parent company. For example, the under-fire courts translation company Applied Language Solutions is now owned by the arguably better-known Capita.

Channel 4 News profiles three of the better-known companies and hears from outsourcing expert Peter Smith how effective outsourcing has been in local government, the NHS and in prisons.

Capita Logo

Capita 46,500 employees, 2011 revenues of £2,930m and pre-tax profits of £302.9m (Source: Capita website) Capita was established in 1984 as part of the Chartered Institute of Public Finance and Accountancy (CIPFA)


Local government Collects business rates on behalf of 18 local authorities and pays out council tax and housing benefits on behalf of 139 local authorities.

Recruitment Early in 2012, Capita won a contract to run recruitment services for the British Army. The army says the move will “release over 1,000 military recruiters back to the front line, and will deliver hundreds of millions of pounds in benefits”.

Capita has also run the BBC’s HR operations since 2006 which the corporation estimates is saving it £50m

Communications Provides radios for Britain’s emergency services such as London Fire Brigade, for whom it has just signed a contract to provide control room services

In announcing the contract, the company said: “In the longer term it will make technological innovation easier to implement and help change the communications behaviour of the general public, reducing, for example, the number of non-urgent calls”

Health Offers occupational health services and operates a government contract to assess people for disability benefits under the personal independence payment programme (which is replacing disability living allowance) across central England and Wales

TV Licensing Since 2002 has operated the contract to administer and collect the television licence fee. Capita says it has reduced TV licence evasion to 5.2 per cent

Read the first report in our special series on public sector outsourcing: Who runs your world


Applied Language Solutions (ALS): Capita took over ALS in December 2011. In the previous July, ALS had won a Ministry of Justice (MoJ) contract to provide court interpreters. Since the beginning of the contract on 1 February 2012, there have been complaints from the judiciary and solicitors about the service including allegations that some cases had to resort to using Google translate. The way in which ALS was awarded the contract as well as its subsequent performance are to be investigated by MPs.

Capita told Channel 4 News: “Statistics released by the MoJ concerning the contract show an improvement month on month in fulfilling requests for interpretation services (nearly 3,000 bookings a week) rising from 65 per cent in the first month of the contract to more than 90 per cent in April. We are determined to get the service running at full efficiency, providing transparency of opportunity for linguists and fully supporting the MoJ, police and court service.”

Serco logo

Serco: 100,000+ employees, 2011 revenues of £4.646bn and pre-tax profits of £238.3m (Source: Serco website) Serco began life in 1929 when Radio Corporation of America formed a UK subsidiary, RCA Services Limited, to support the country’s growing cinema industry.


Health Manages NHS premises on behalf of the government, and supplies community matrons to help people manage long-term conditions such as diabetes. Also offers out-of-hours GP services.

Transport Co-operator of Merseyrail and the UK’s largest train franchise Northern Rail, which runs train services in the north of England. Serco runs the Boris Bikes scheme in London on behalf of Transport for London as well as the capital’s Docklands Light Railway, for which it is the preferred bidder for a further seven year contract

Custodial services Serco manages two immigration removal centres at Colnbrook and Yarl’s Wood. It has a contract to transport prisoners for the east of England and London regions. It has a contract to transport prisoners for the east of England and London regions

Nuclear weapons Serco is part of a partnership which is responsible for managing the UK’s Atomic Weapons Establishment

Welfare to work The company says its two work programme contracts will support 45,000 long-term unemployed people into work by the end of the contract, which will be paid by results


Serco was recently reviewed by the Care Quality Commission (CQC) over its provision of out of hours GP cover for Cornwall and the Isles of Scilly. The report found that the private firm was not meeting four of the essential standards of quality and safety. Among other criticisms, the CQC report found that there were “not enough qualified, skilled and experienced staff to meet people’s needs.” It also found that a quarter of staff had not completed mandatory training.

Serco told Channel 4 News “We are committed to providing high quality, accessible services that put our patients at the heart of everything we do. I am confident we have already implemented the majority of improvements identified in the CQC report and will have the remainder in place by mid-August.”

G4S logo

G4S: 657,000 employees, 2011 revenues of £7.522bn and pre-tax profits of £279m (Source: G4S website) G4S was formed in 2004 after a merger between two security companies – the Danish Group 4 and the British firm Securicor.


In written evidence to the home affairs select committee, G4S told MPs the company has contracts with government worth £600m per year. It has largely stuck to its origins as a provider of security services.

Security The company is perhaps best-known for providing security staff for large events. Its contract to secure the London 2012 Olympics was intended to be a showpiece contract for its security portfolio.

Tourism In 2012, the firm’s assessment services arm won a licence to rate the quality of over 400 hotels, guest-houses and hostels as well as 40 restaurants, cafes and coffee shops on the Isle of Man. The firm has provided similar services since 2005.

Police G4S won a contract with Lincolnshire police to build and staff a new police station. Among others, the private firm will provide HR, firearms licensing and custody services. It has just advertised for staff to become civilian investigators in the Warwickshire constabulary area to carry out policing tasks such as conducting interviews and reviewing CCTV footage as well as to “undertake sensitive high profile cases enquiries with limited supervision”. G4S also provides electronic tagging services and estimates it is currently monitoring 12,000 offenders.


G4S admitted its failure to provide security for the London 2012 Olympics was a “humiliating shambles” The government was forced to draft in the police and British Army to cover a shortfall of several thousands of staff. The firm was forced to apologise to MPs. As a goodwill gesture, G4S donated £2.5m to the army