Privatisation: corruption and poor services at heart of system


Natalie Silverstein examines the corruption that privatisation always involves

Two recent examples uncovered by Private Eye magazine have highlighted the phenomenon of senior public sector figures transferring to lucrative careers in the companies benefitting from the outsourcing schemes they have pushed forward while in public office.

Revolving door 

Adam Sharples CB, previously Director General in the Department of Work & Pensions (DWP) has recently been appointed as Chairman of Ixiom, a limited “not for profit company” whose “employability support” programmes include the delivery of welfare to work problems for the DWP. While at the DWP, Sharples led the creation of the government’s new Work Programme and spearheaded its “payments by results” model.

Another recent departure from the DWP was Alan Cave, who had been responsible for overseeing the “Work Programme” in Yorkshire and the West Midlands. His new role is for Serco, who are one of the main private sector contractors of the programme Cave was overseeing in that area, and is apparently outside the welfare to work division, although little more detail has been revealed.

While such an appointment might be expected to go before the government’s Advisory Committee on Business Appointments, which exists to vet civil servants’ moves into the public sector for conflicts of interest, a spokesman said that Cave was not senior enough for such scrutiny to be required.

Serco, sometimes referred to as “the biggest company you’ve never heard of”, is a leading private sector provider of public services, including the government’s “Workfare” programme providing businesses with cut price labour. Photo:

Yet during his period in office, the number of benefit claimants who had their benefits cut due to sanctions rose massively, from 39,000 in 2009 to 508,000 in 2011. Many of these sanctions followed recommendations by companies, including Serco, who deliver welfare to work schemes. In fact, these companies were even keener than the government to sanction claimants, with 28% of cases referred to the government by private companies being decided in favour of the benefit claimant. Little wonder that with these benefit suspensions, the numbers of people claiming emergency food from Britain’s growing number of “Food Banks” has mushroomed with over 100,000 people accessing these centres between April and September this year.

A major beneficiary of the sell-off of public services, Serco runs a huge array of outsourced industries, from transport and defence through to prisons and electronic tagging services. Since the privatisation of parts of the NHS, they have also been contracted to run the out of ours GP service in Cornwall.

Poor services 

Following an investigation by the Guardian newspaper, Serco admitted having presented false data to the NHS on 252 occasions regarding the performance of its service. While the justifications for privatising public services usually centre on the supposed increased efficiency that results, a study by the Care Quality Commission found that Serco was failing in the delivery of its four key requirements, including the provision of sufficient staff. In turn, these failures led to a strain on local Accident & Emergency Departments. Quality service provision was hit by these private profiteers.

These failures may be depicted as unique to Serco, but in reality they reflect the real impact of privatisation – increased profits and opportunities for the elite, at the expense of decent services and jobs. This has nothing to do with creating greater “efficiency” – its purpose is to free up money for profits.

Serco’s chief executive was paid £3.1m in 2010 – more than 250 times the salary of his lowest-paid UK staff, who earn less than the living wage.


Campaigns against privatisation can seem abstract and difficult to campaign against – they involve principle issues and require a higher level of political consciousness about the importance of public services.

But stories and statistics like this are important in bringing home the real impact of the government’s reform programme. This is not a drive to “greater efficiency”, but a form of legalised corruption that has seen the dramatic transfer of funds to the private sector from the public purse.

It’s time to step up grassroots campaigning to confront it head on.



One Comment

  1. Angus
    February 6, 2013 at 11:07 am · Reply

    You have chosen to depict the introduction of the profit-model in the public sector as corruption. It is cronyism where politicians are helping their rich friends to massive pay cheques by toying with desperately valuable and important public services. It is immoral and scary.

    Is this an accurate portrayal of what is happening?

    Let’s re-depict the relationship between the department of health, the NHS and Serco, Virgin Care etc. The DOH desperately needs to save money for various reasons. It needs to meet its budget targets, but also for the NHS to be a sustainable institution it needs to only spend the amount of money that is judged to be safely and realistically available. So it decides to figure out how to spend less money. Groups of people with tons of expertise in running services at low-cost are brought in (serco) and that seems like a brilliant idea to solve the problem. It will mean less money is spent more efficiently within the NHS to actually improve the services!


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