Outsourcing public services is damaging for staff and service users, says TUC

3 March 2015

The outsourcing of public services provision to private providers has a detrimental impact on the workforce and a knock-on effect on the quality of care, says a new TUC report published today (Tuesday).

The research, conducted by the New Economics Foundation on behalf of the TUC, looked at the scale and scope of outsourcing in five key sectors – social care, health care, offender management, local government and employment services. The report also examined the effects of outsourcing on staff working in a variety of public service jobs, such as care workers, nurses, prison officers and security guards.

The TUC findings show that compared with public service employees, workers in privatised services are more likely to work longer hours, receive less pay and be on insecure or temporary contracts. Some key figures broken down by job-type are:

• Security guards are more than twelve times more likely to regularly work longer hours (more than 48 hours per week) if they are employed by a private company rather than the public sector.
• The hourly wage for a private prison officer is more than £4 less than an equivalent public sector employee.
• Residential care workers employed by the public sector typically stay in post more than three times longer than private sector workers.

Low pay and poor working conditions in the private sector can affect the commitment and the motivation of employees and have repercussions on the quality of service provided. Given the absence of monitoring data on standards of services, a useful proxy is to measure aspects of the treatment and quality of the workforce which is correlated with the calibre of service delivery. This is particularly relevant in ‘relational’ services, such as health and social care, which depend on high levels of interaction between staff and service users. Some examples of outsourcing reducing the quality of services include:

• Evidence of a higher incidence of hospital infections following the contracting out of cleaning services to private companies.
• Private prisons are more likely to be overcrowded than publicly owned prisons and have held a higher percentage of their prisoners in overcrowded accommodation than public sector prisons every year for the past 15 years.
• The Care Quality Commission’s (CQC) annual report in 2010–11, the last time in which the independent regulator analysed quality delivered by providers distinguished by sector, reported that quality standards were superior in public and voluntary sector providers. In April 2010, services run directly by councils and those run by voluntary organisations had the same proportion of good and excellent services (91 per cent), while privately run services had a significantly smaller proportion (81 per cent).

TUC General Secretary Frances O’Grady says: “This research clearly exposes the damaging effect of outsourcing on the morale and working conditions of staff.

“But it is not just the workers who are suffering, it is also service users and family members who are getting a raw deal from the break up and outsourcing of our public services.

“Who would you rather have treating your sick relative? A low-paid, exhausted private sector worker whose temporary contract makes them unable to see the same person more than once, or a public sector employee who is paid a decent salary and is given a proper contract that allows for a long-term care commitment?”

The TUC has identified a number of common themes from the analysis of different public service areas:

• There is a tendency towards market concentration, with services taken over by a narrow range of large providers dominating the market, whether this is on a national or local level. Within this concentrated market it is private providers that dominate both in terms of delivering services but also in capturing prime contractor position with subsequent control over supply chains.
• Accountability is compromised by a lack of transparency regarding ownership and corporate governance among private providers.
• Quality outcomes are difficult to specify, measure and price, particularly in ‘relational’ services based on high-quality human relationships.
• Private providers have tried to increase profit margins by reducing the workforce and cutting back on pay and conditions.

Based on the research, the TUC has identified a set of policy recommendations to address issues related to the outsourcing of public services. These recommendations include: greater protection of employment standards and collective bargaining in the commissioning and procurement process; clearly defined standards of transparency and accountability for all providers of public services; greater consultation with stakeholders and the need for a public-interest case to be made for any outsourcing; and the public should have the ‘right to recall’ contracted out services due to poor quality or performance.

NOTES TO EDITORS:

Source: TUC analysis of LFS 2014 (Q1-Q3)

Source: TUC analysis of LFS 2014 (Q1-Q3)

Source: TUC analysis of LFS 2014 (Q1-Q3)

- The full report Outsourcing Public Services is available at https://www.tuc.org.uk/sites/default/files/TUC%20and%20NEF%20Outsourcing%20Public%20Services.pdf

- All TUC press releases can be found at www.tuc.org.uk
- Follow the TUC on Twitter: @tucnews

Contacts:

Media enquiries:

Clare Santry  T: 020 7467 1372  M: 07717 531150  E: csantry@tuc.org.uk

Alex Rossiter  T: 020 7467 1285  M: 07887 572130  E: arossiter@tuc.org.uk
Tim Nichols  T: 020 7467 1337  M: 07876 452902  E: tnichols@tuc.org.uk