Private public service providers: making a killing

Submitted by Matthew on 29 July, 2010 - 4:32 Author: Darren Bedford

This government, made up of parties with an historical, ideological commitment to the rule of markets has come to power against the backdrop of an economic crisis. They will make cuts and it is inevitable that they will try to expand public sector privatisation and outsourcing under the cover of this crisis.

Contracting out provision of public services — waste management, housing or education, for example — is an easy way to cut without seeming to cut and to absolve central or local government of responsibility for the quality of service or the working conditions of those who provide those services.

Several giant multinationals already operate in Britain as significant providers of outsourced public services. We profile some of them here to help working-class activists get to know a group of enemies that are only going to get bigger.

Capita Group

This is the big daddy in the field. Capita does everything. Its field is “business process outsourcing”, which basically means “need something doing? Pay us to do it for you.” Except it’s not talking about your dishes or hoovering the carpet. It’s talking about multi-million pound contracts to run various parts of the public sector.

The Education Maintenance Allowance (the derisory £30 a week “grant” for 16-19 year olds in full time education) is not administered by the government, but by Capita Group. The contract it won from the now defunct Learning & Skills Council is just one of several such contracts. And it’s only set to get bigger. Quoted in the Guardian, Capita boss Richard Marchant said: “A major problem for the public sector is, we feel, a significant opportunity for us. Opportunities are at their highest level in two to three years. This year we have probably seen a 100% increase in opportunities [compared with 2009] and I suspect we will see another 50% increase in the following year.”

So there you have it, folks. Big public sector present huge opportunities for companies like Capita. The Guardian estimates a £60m boost for Capita’s revenues as a result of increased outsourcing. We take cuts, they make money. And they make money even when they prove incompetent: when they took over running CRB checks in 2002, thousands of teachers were kept out of work for weeks as Capita’s systems failed to keep up with the workload.


Serco Group PLC is a service-provision behemoth, employing 70,000 people directly and operating with a revenue of over £3 billion in 2009. The Guardian referred to it as “the biggest company you’ve never heard of”. The pies in which Serco has a big fat profiteering finger are innumerable. Ever taken a DLR train in London? A Merseyrail train in Liverpool? Been clocked by a speed camera? Attended school in Bradford, Walsall or Stoke? All money in Serco’s pocket. It manages several Local Education Authorities, a range of transport services, leisure centres and the IT facilities of a London borough as well as having a substantial defence portfolio. Like many companies of its type it has also expanded into the detention “sector”, running four prisons and two “Immigration Removal Centres”, including the infamous Yarl’s Wood centre.

The nature of Serco’s relationship to the local government bodies for whom it provides services gives an insight into how, even when you think a public service is still public, it might actually be privatised. Its 10-year, £360 million contract with Bradford Council allowed it to provide “education support services” to the council; their joint “division of responsibilities” document shows that Serco has sole or lead responsibility for vital services in the schools sector, including libraries, ICT, inclusion, testing, and headteacher employment. Three years into Serco’s stewardship of schools in Bradford, 5% of them were in special measures. Fortunately, Serco’s contract will not be renewed when it expires in 2011.


France-based multinational Sodexho is one of the world’s biggest food and facilities management companies, with an operating income of nearly 750 million euros in 2009.

Sodexho’s main line of business is providing food services in a range of public sector institutions including schools, colleges and hospitals. But its poor quality of service and atrocious workers’ rights record have seen it become the target of several industrial disputes and boycott campaigns that have, in some cases, threatened its contracts.

According to Sodexho’s own propaganda, 75 of the FTSE 100 “rely” on them to provide “cost-effective solutions to their employee or hospitality catering, or to deliver support services including cleaning, reception, switchboard and help desks, mailroom, reprographics and grounds maintenance.”

In spring 2010, there was a mini-strike wave among Sodexho employees in America in response to low pay, poor healthcare options and management bullying. Like retail giant Wal-Mart, it has been exposed issuing its managers with direct training and materials on how to “deal with” (ie, smash up) workers’ organisation. It is currently the UK’s leading contractor for catering services for local authorities and NHS trusts.


If your local authority doesn’t fancy running its water supply and waste management, it’s probably paying Veolia to do it for them.
It’s paying them pretty well, too; its 2009 profits were over €580 million. The Veolia Water division is the largest private water company in the world; boss Henri Proglio is also the head-honcho of the French public energy company EDF. He caused controversy by continuing to draw two salaries for a period during his joint tenure. The fact that he is able to operate both posts is a pretty clear indication of the erosion of barriers and distinctions between the public and private sectors in many capitalist states.
Veolia also has a transport division that runs bus, coach and train services across the UK.

In late 2008, two workers at a Veolia facility in Ohio, USA were seriously injured in an explosion. And in 2009, Veolia was fined £100,000 after a worker at one of their Birmingham facilities suffered a near-fatal fall. But a lack of concern for basic health and safety is characteristic for companies like Veolia.

United Learning Trust

ULT is the single-biggest sponsor of academy schools in the UK, currently running 17.

It was formed in 2002 as a subsidiary of the United Church Schools Trust. Many of the academies it runs retain a strong religious ethos. ULT stands to gain substantially from the ConDem coalition’s Academy plans.

ULT management of existing academies has led to drops in both standards and workplace rights. The aggressively target-driven business models ULT use to run their schools have led to a culture of bullying developing in many academies, with a bullying headteacher at one ULT academy in Walthamstow being forced to resign following a staff campaign protesting their behaviour.
ULT is also famous for its eagerness to bring big business into the classroom, working closely with a number of high-profile corporate sponsors to develop workplace-focused learning for children, more-or-less explicitly designed to teach working-class kids to be efficient and obedient proletarians.


“Social landlord” Peabody is a sector-specific provider, taking over the running of housing authorities. They now manage nearly 20,000 homes across London.’’

Since taking over the Pembury estate in Hackney residents have complained about Peabody’s lack of accountability and the lack of any proper channels for residents to communicate effectively with the company. They have also failed to improve the estate’s ailing facilities. As one resident put it in 2005, “If any other estate is being asked to transfer, tell them to vote ‘No’. It’s a con.”

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