Outsourcing was mis-sold

After two decades of the continual expansion of outsourcing in the public and private sectors, the opposite has been roundly proven. Outsourcing for the North East has been a story of brain drain, as institutional knowledge is hollowed out, decreasing wages, and the migration of public money into private pockets. All while accountability and transparency has collapsed.

Procurement for outsourced services in 2023-24 accounted for approximately a third of spending, roughly £341 billion. This isn’t a question of alternative administrative models; it is a political question which we all must ask. As we saw during Covid, much of this outsourcing money is funnelled through untransparent shortlisting. During those years, we saw a vast number of contracts going more or less directly to large organisations, reducing market competition, costing us all more, and weakening the incentives in the public sector to invest in in-house services.

Outsourcing reduces job quality. When services are subcontracted, pay, training, and pensions suffer. It’s the creation of two-tier workforces, and a roadmap to substandard terms and conditions. A structure that hits women and black workers the hardest. A structure that suggests the work of these key workers matters less.  

This is clearest in our NHS, where the GMB union’s research showed that a shocking £1.8 billion is being shelled out by NHS Trusts each year through outsourcing. Everything from ambulances to cleaning, is being pushing out of the accountable public sector into precarious private contracts. This is public money intended for the delivery of key public services, instead being funnelled away into private hands. GMB members and those in other health unions have fought back, rightly demanding to be brought back in house.

The TUC’s Our Work Matters campaign aims to fight for justice for outsourced facilities workers. In line with the national campaign, we are establishing a North East, Yorkshire and Humber committee to ensure the voices of outsourced workers in the region are heard. Our goal is simple: to campaign for fair pay and conditions equivalent to those of their directly employed colleagues.

Sensible partnership between private and public and across companies, if done in a targeted and measurable fashion and with clear benefits to service users, can work. Not all companies are expert at all things. But we need a fundamental shift in our region and across the UK to responsible and necessary decision-making, not race-to-the-bottom outsourcing. Policy makers in our region’s NHS Trusts, in city and regional government, and in national government must invest in our public services’ in-house capabilities, must look to use and champion their own first. The same can be said for our region’s businesses that are just as likely to be subcontracting work. 

If we want resilience in public services and good jobs, outsourcing must become the exception not the rule. We cannot afford the wearing away of capacity, accountability, and fairness that we have seen over the last 20 years. The evidence is clear; bringing services in-house works.

First published in the Journal (Newcastle-upon-Tyne), 29 September 2025