CBI report 'fundamentally flawed' warns UNISON

UNISON, the UK’s largest union, said today that a Confederation of British Industry (CBI) report, claiming that billions could be saved by privatising public services, is ‘fundamentally flawed’.

The report is based on an assumption that savings of 11% can be made through outsourcing or privatisation – a figure that has been ‘plucked out of the air’ by the CBI. This assumption is then extrapolated and applied to more than £200bn of public spending.

The 11% savings calculation does not take into account the often huge knock-on costs associated with privatisation including procurement, tendering and contract management. It also omits to mention the huge cost to the taxpayer and local people when the private sector fails, or that some public bodies have brought public services back in-house after contracts have failed.

The report also flies in the face of public attitudes to privatisation. Recent polling by ComRes for UNISON* reveals a lack of public trust in private companies providing public services. The polling reveals a widespread awareness amongst the public that private companies fail to deliver on their contractual obligations and that privatisation leads to lower quality services.

Dave Prentis, UNISON General Secretary, said:

“This report is fundamentally flawed. Where is the proof that 11% savings can be achieved by privatising public services? The CBI has plucked this figure from the air. All the evidence shows that privatisation is a costly failure that the taxpayer can ill afford. Only last week MPs felt it necessary to call for a blacklist of firms that have failed to deliver on their contracts.

“Privatisation failures carry heavy human costs – just ask an elderly resident of an ex-Southern Cross home. And, as the G4S Olympic fiasco clearly shows, when the private sector fails, the public sector has to pick up the pieces – including the cost.

“Turkey’s don’t vote for Christmas, and the CBI is hardly going to call for less businesses involvement in public services. But recent polling has revealed that privatisation is deeply unpopular with the public. If the government pushes through with the CBI’s vision it would face the wrath of voters at the ballot box.”

UNISON is calling for an urgent inquiry into privatisation and outsourcing, including the companies that provide public services, their employment practices, the quality of services they provide, as well as the profits they make at taxpayers’ expense.

*Recent ComRes polling for UNISON* shows that

62% do not trust private companies to run public services.

Only one in five (20%) believe that privatisation has led to better quality services to the public, nearly three times as many (55%) believe that public services are of worse quality under privatisation.

81% believe that private companies either frequently or sometimes fail to meet their contractual obligations.

Privatisation failures

The CBI report features case studies including the company May Gurney that provides recycling services in North Somerset, which it holds up as a success story. However, after more than 7000 public complaints about the service, the company was recently fined more than £61,000. The company is also reportedly facing severe financial difficulties, with a recent 41% drop in its share price – leaving these vital public services in jeopardy.

Only last week it was reported that Serco, a private company running out of hours GP services in Cornwall, had given false data to the NHS on 252 occasions. This followed an inquiry, after fears were raised that the service was so understaffed, it was unsafe – concerns about the service and the effect on the public remain.

Six patients at Lister Hospital suffered irreversible sight loss after they received poor aftercare when they were treated by a private company owned by construction firm Carillion.

Despite failing to deliver on its Olympics contract, G4S boss Nick Buckles has admitted that he expects to be paid its £57 million management fee in full, despite the public sector – the army – stepping in to keep the Olympics safe.

Care home company Southern Cross collapsed in June 2011, leaving the company’s 31,000 vulnerable residents facing huge uncertainty. The company had been operated by a private equity firm that made money from a complicated sale and leaseback arrangement with its buildings.

In August this year, some workers at private care home Winterbourne View received a prison sentenced after they were caught on camera abusing vulnerable patients. The home has since been closed down.