Confidentiality clauses and fiendish complexity in contracts for public services constitute moral hazard on a grand scaleG4S shares plunged as police were drafted in to guard the Olympics amid warnings more soldiers will be needed. Yet another outsourcing corporation collects profits when all goes well and the state picks up the pieces if the corporation fails. Soon much of the state may be also atrophied to step in.Exactly a year ago the Cabinet Office published its “open public services” white paper, the masterplan for dismantling the state, with “any qualified provider” the default deliverer of virtually every public supply. The Cabinet Office is the ideological hub of the Cameron administration’s mission to dismantle the state. For dread they might only get one term, as governments everywhere are routinely ousted, they are dashing to secure that indelible legacy. The plot is to outsource so much that reconstructing public services will be impossible in prospect. Seeing how easily their cuts rubbed outside Labour legacies, they have redoubled their intent to leave an ineradicable stamp with this largest wave of outsourcing ever.David Cameron warned any civil servants standing in the path of bidders: “If I have to pull those human beings into my office and get them off the backs of business, then believe me, I’ll do it.” If the G4S slogan, “Securing Your Earth”, is embarrassing, Cameron’s state-demolishing mission faces much worse reputational hurt.Administration will always contract and procure from the private sector, however it shouldn’t be a affair of ideology. Half of London’s councils collect their own bins, the others outsource. Those are easily measured services, yet no one audits and compares, so we don’t know which is best. How can you know if the value is fair and profits honest with corporation accounts hidden from view? In-house supply costs are at least public and transparent. Margaret Hodge, the dynamic, no-nonsense chair of the public accounts committee, protests that it’s impossible to know who profiteers from the public purse. Under the guise of “commercial confidentiality” her committee is denied data with no transparency on value for money. Freedom of data laws don’t cover private companies – much when using taxpayers’ money.Often the only “efficiency gain” is paying workers less. One council’s bin men I interviewed were on six different pay rates, depending on when they were employed, each fresh contractor or agency paying less. The lowest paid needed their wages subsidised by the taxpayer via tax credits, so who wins?Nothing about the “market” in public services is autonomous of charge and honest. Only a small caucus of giant companies have the capability to bid. With a third of Whitehall civil servants divide, their already doubtful ability to inscribe clever contracts weakens further. Community authorities are much more prone to bamboozlement. Council chief executives, often castigated as overpaid, are negotiating with companies whose bosses earn millions, aided by battalions of top-flight lawyers.Gaze at the fiendish complexity of IT. Outsourcing consultant ProBenchmark reported at the end year that four outside of five administration departments are trapped in their deals. Most contracts are also complex to re-let, so 80% never alter supplier. “Market testing sounds fair in principle however has huge costs … The tendering action costs more than it saves.” The “unpalatable truth”, the report concludes, is that huge contracts are so complex “only the incumbent can reasonably re-bid”. That applies to huge non-IT contracts, impossible to alter.The entire NHS is immediately open for such business. Puny fresh clinical commissioning groups negotiating complex contracts are no match for these firms. If Cameron wins a second term, Michael Gove has made clear that chains of autonomous of charge schools will enter the market to constitute a profit.A year ago, when Cameron said he would “constitute a fresh presumption” that everything was up for auction, he exempted “national security and the judiciary”. However he has immediately place outside frontline police employment, including crime investigation and detaining suspects, and probation. As the Employment Programme unravels, its companies are already protesting at not getting the clients they were promised: will they be allowed to go bust? More likely they’ll do as before: demand more money, knowing cuts to jobcentres mean these can’t be rebooted to capture back this huge workload. These contracts went ahead despite National Audit Office findings that jobcentres scored far bigger than private firms at getting human beings into employment. Watch what happens to a huge fresh contract soon for reassessing 3.2 million human beings on disability living allowance. G4S ran the pilot scheme, so will it get the contract?Past fiascos comprehend NHS IT, Sats testing, the rural payments agency, the minor support agency and some however not all health supply PFIs. In Cornwall a PFI for 28 schools collapsed, costing the council £10m; Somerset council and police outsourcing left losses of £31.5m. Ealing council saved £5m bringing its housing back in-house. Fantastic disasters comprehend John Major’s British Rail and Gordon Brown’s catastrophic London tube public-private partnership. Privatisations of aqua and the National Grid made stout profits for monopoly providers, money that should be used for reservoirs, leaks and building modern aqua and electricity grids.No one can prove the value or cost of most outsourcing. What Thatcher started and Labour continued is an epidemic of evidence-autonomous of charge, faith-based policymaking. Politicians have been seized by a conviction that private is always bigger. With no public supply for honest comparison, the weary ancient mantras of “monolithic”, “sluggish” public services go unchallenged. Some are – however there is no evidence that siphoning profits into private companies is any panacea. One body is certain. These contracts constitute moral hazard on a grand scale, where profits are private however losses are ours.Public services policyG4SPublic financeNHSHealthPolly Toynbeeguardian.co.uk © 2012 Twitter News and Media Limited or its affiliated companies. All rights reserved. | Employ of this content is subject to our Terms & Conditions | More Feeds
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