Serco is a company in trouble. Under investigation by the Serious Fraud Office over the electronic tagging scandal, its chief executive jumped ship last month, and last night it jettisoned its UK boss. Today, it was ditched as a contender to run three prisons in Yorkshire.
As far as I am concerned these corporate headaches could not have happened to a more deserving case.
But I am not complacent. While there are welcome signs the tide is slowly turning against the likes of Serco – government auditors are probing the role of private companies in running an increasing number of our public services, and their bosses faced MPs this week – the government is still committed to outsourcing, writing contracts in indelible ink.
Despite G4S’s Olympics security fiasco and the revelations about overcharging for tagging offenders, Francis Maude, the cabinet office minister, is clear that he wants the companies “to emerge renewed and stronger”. How many more chances can such companies be given before we say: do you know what, you have failed even on your own terms; the party is over?
But this is one of the central problems of privatisation. There is no real risk. The bosses claim the risks they take are reputational and financial, citing share prices and the chances of winning future contracts. This is nonsense. In its final analysis of the Olympics saga, G4S described the way it was bailed out by the public sector as “successful”. Now it has been handed a contract for the 2014 Commonwealth Games in Glasgow.
Time and time again, privatisation – which now comes in many guises – is shown to be less efficient and more costly, and without a genuine transfer of risk. The east coast mainline rail franchise, the upgrade ofLondon’s underground and even translation services in courts, were all examples of private sector failure bailed out by taxpayers.
And it has happened without any public debate. We were never asked if we wanted hundreds of billions of pounds worth of our public services handed to private companies so they could make vast profits from them.
Not only are these profits obscene, so is executive pay. A few years ago, some of our members who work for Capita, campaigning for a wage they could live on, were handing out leaflets outside the company’s headquarters when the chief executive, Paul Pindar, strolled in. After reading a leaflet, he took umbrage at a claim about his eye-watering pay and perks package and went into the building to fetch his payslip, which he then brandished in front of these low-paid workers to prove he earned “only” £14,700 a week – what they were paid for a full year.
The government has committed to paying the living wage to its own staff, but there is no requirement on its contractors to do the same, and many still refuse to do so. This is what we expect from multinationals, but it is an abdication of responsibility by ministers, particularly given the drive to privatise more and more.
So I welcome the fact a spotlight is now being trained on Serco, G4S, Capita and others. The National Audit Office is concerned that some may be “too big to fail”. I agree, but I would go further and say let them fail, and let us bring these services back into the public sector where they can be properly run, with the books fully scrutinised, without hiding behind bogus “commercial confidentiality”, and fully accountable to the people whose taxes pay for them.
For once, I half-agreed with Maude when he wrote this week that “public services are too important to too many people” – but I only half-agreed because he went on to say, “to be allowed to be the monopoly of the public sector”. Now by “people”, he presumably means shareholders, because there is no public interest in propping up the troubled Serco and the oligopoly of which it is a part.
- UK boss Jeremy Stafford quits Serco after overcharging row (theguardian.com)
- Euro chief of scandal-smacked Serco leaves as cop probe continues (go.theregister.com)