John Medhurst
Johnme@pcs.org.uk
“Britain is in the biggest wave
of Government outsourcing
since the 1980s”
Alan White, New Statesman, September 2012
 Biggest public spending cuts since 1930s
 July 2011 - White Paper on Open Public
Services signals massive outsourcing of public
services
 Services to be delivered by “any willing
provider”
 Process disguised but traditional privatisation
continues
 Since 2010 £5bn of cuts and 230,000 jobs lost
 Spending now falling on adult social care,
children’s services, planning, culture & leisure
 By 2015 local councils will have lost a third of
their budgets
 If cuts not reversed, by 2020 budgets could be
cut by 80%
“The future cuts fill me with horror.
We’ve
been through hell already in Newcastle. The
impact of another three years of cuts will
bring local government to its knees”
Nick Forbes, Leader, Newcastle City Council.
 Birmingham Council will cut £600m by 2016/17 - half
the Council’s budget
 March 2013 - Leader of Birmingham Council announces
that city was preparing to “start a dialogue about
decommissioning services”
“The end of local government as we know it”
Sir Albert Bore, Leader, Birmingham City Council.
 G4S – Olympics security
 A4E – DWP Work Programme
 ATOS - Disabled unemployed
 Thames Water - Leaks and tax
avoidance
 2009: National Express abandoned East Coast rail
franchise mid-contract because “insufficient profits”
 East Coast rail renationalised as a Directly Operated
Railway (DOR)
 East Coast DOR has been big success – increased
punctuality, customer satisfaction, and £600m to
Treasury in 3 years
 East Coast to be re-privatised in 2014
 G4S Security Services - largest security solutions




company in UK with turnover of £1.2 billion and 40,000
employees
£759m per year from taxpayer
Contracts with 10 central govt departments and
agencies, and 14 Police Forces
G4S Immigration Removal Centres – one death;
treatment of 10 year old asylum seeker led to attempted
suicide; handcuffs and racist language
GH4S NHS non-emergency drivers – paid below
Minimum wage.
 Home Secretary, Secretary of Defence, Health Secretary
 2008: became “Consultant” to G4S whilst still an MP -
£45,000 - £50,000
 Three months later G4S win contract for private security
at 200 MoD sites in UK
 2009 : £10,000 for 2 days attendance and address at
'Public-Private Partnership in Healthcare‘ Conference in
Portugal sponsored by Portuguese Association of Private
Hospitals
 2010: Becomes Director of G4S
 National Benefit Fraud hotline – Vertex.
 Crisis Loans & Community Care Grants – abolish April 2013.
Local authorities to provide alternatives. Likely outsourced.
 Transforming Labour Market Services – Monster Worldwide
Ltd. Web based service replace the work of 250 staff on
Employer Direct and Jobseeker Direct telephony service.
 JSA Online (telephony) service – outsourced to Capita in
September 2012.
 DWP staff in JSA Online start at £16,080. Capita pay £13,893
for same service.
 Budget of EHRC cut in half
 Regional offices closed - new HQ opened in
London “to be close to our key stakeholders”
 EHRC Helpline outsourced to Sitel
 Experienced EHRC Helpline staff made
redundant
 Sitel does not recognise trade unions
 Treasury Review of PFI concedes that “some of
the commonly identified concerns ” about PFI
are valid
 Review driven by drying up of bank credit and
long-term PFI debt
 Aim of review “to help bring forward proposals
for a new approach to using the private sector in
the delivery of public assets and services”
“The changes will allow the government to
forge ahead with our ambitious plans for
public sector reforms, since the new pension
arrangements will be substantially more
affordable to alternative providers in the
private and voluntary sector bidding for
public sector contracts”
Danny Alexander, December 2011
 Hinchinbrook Hospital - massive PFI debts
 Now run by Circle Healthcare - a “mutual” with 49%
employee share ownership, so not labelled privatisation
 Circle = a joint venture between Circle Partnerships and
hedge fund Circle Holdings registered in British Virgins
Islands and Jersey
 No previous experience in running an entire hospital
with emergency and A&E facilities
“We will not dictate the precise form of these
mutuals; rather, this should be driven by what
is best for the users of services and by
employees as co-owners of the business.
Options include wholly employee-led, multistakeholder and mutual joint ventures”
Open Public Services White Paper, 2011
 A Mutual Joint Venture (MJV)
 Decision imposed by Maude- “dictated
by Govt”
 Staff given no choice
 Staff lost civil service status and access
to PCSPS
“As a market develops, the newly
established mutual joint ventures
will have to bid for contracts along
with other potential contractors”
Francis Maude, 2011
 MyCSP Ltd has contract for Civil Service
pensions for next 7 years
 40% owned by the Equiniti Group
 Equiniti Chair – Kevin Beeston, ex Serco
 Equiniti CEO – Wayne Story, ex Capita
 Lord Hutton (John Hutton) - ex Labour Defence and




Business Secretary
Now on Board of US nuclear power company
Hyperion Power
Hutton Report recommended “reform” of public
sector pensions
His MyCSP salary - £1,000 a day
“Employee owners” given no say in appointment
“Thatcherism disguised
as mutualism”
Michael Stephenson, General Secretary
Co-operative Party, 2012
 Five ISSCs
 ISSC1 (DfT + DCLG, DID, ONS) outsourced to Arvato
June 2013
 Cabinet Office confirmed that ISSC2 (DWP + DEFRA, DfE,
BIS, DECC) was to be a “Public Sector Mutual” in public
sector.
 PSM option dropped after Minister imposed a Joint
Venture model (over 50% private ownership). Now no
“Mutual” element at all!
“Government
Owned
Contractor Operated”
 Forensic Science Service - from Executive Agency to
GOCO (2005)
 GOGO not successful commercial entity
 2012 - FSS GOCO wound up, work to be contracted
out. No consultation with legal experts, DPP or
police.
 Atomic Weapons Establishment (AWE) – GOCO set
up but not open to public scrutiny
 Proposal to turn DE&S into a GOCO
 No other country runs defence procurement in this way
 Would require primary legislation
 Raises questions about sharing of technologies with a
commercial body – conflicts of interest etc
 USA GOCO example – Lead Systems Integrated. Failed,
brought back to Dept of Defence
“At present we cannot easily see how the
DE&S as a GOCO would even work in practice,
let alone why it would be less expensive and a
better alternative to what is in place today”
Royal United Services Institutes - Acquisition Focus Group
“A GOCO would not be restricted by civil
service and military terms and
conditions of employment”
Colin Cram, Managing Director Marc 1 Ltd
Public Service.co.uk
 Govt will legislate for “owner-employee” contracts of




employment
Employees given shares in exchange for waiving
employment rights – protection unfair dismissal,
statutory redundancy pay, right to flexible working
“Employee Owners” have to give 16 weeks notice of
return from Maternity Leave.
First £2,000 of shares exempt from NI and Income Tax
Would cost Treasury £200m over 5 years.
 Fosters divisions amongst workers – armies of little
Thatcherites competing with each other for shares in
place of trade union and employment rights
 Not even supported by business:
“What would the population at large think of
businesses that want to trade employment rights
for money?”
Justin King, CEO, Sainsbury’s
 JL does not recognise trade unions
 Usual management hierarchies. Relationship to sub-
contractors same as other businesses
 Many JL staff on near Minimum Wage. Bonus not a
luxury but a necessity
 Some JL worker-partners concerned that 3,000 more
would dilute value of bonuses for existing 70,000
staff
“PCS fully supports the John Lewis workers' demand for the living wage.
Employers who sub-contract poverty pay, like the government and John Lewis,
need to be both exposed and taken on" Chris Baugh, PCS General Secretary
 2012 – Strikes by IWW organised cleaners at JL
Oxford Street forced contractor ICM to back off
redundancies and wage cut
 Key demand of the London Living Wage - not
conceded, but cleaners won 10% pay increase
backdated to start of contract in March 2012
 Hours of work re-organised to reduce excessive
shifts (had to be available for work during unpaid
breaks)
 1971 - Occupation of Upper Clyde
Shipbuilders inspired hundreds of worker
occupations in next decade
 Focal point 1974-75 while Tony Benn Sec of
State for Industry
 Benn and others looked for alternative
models to orthodox nationalisation
 Lucas Aerospace sought to cut jobs.
 LA shop stewards - mix of aerospace designers, shop
floor engineers and “unskilled” labour
 Alternative Corporate Plan drawn up by a combine of all
LA workers
 Ideas for alternative production based on social
usefulness – new kidney machines, portable life support
systems, improved wheelchairs, battery driven cars,
solar panels, wind generators, etc
 LA refused to negotiate the plan
 Suggestions of public ownership of LA - only govt
supporter Industry Secretary Tony Benn
 Wilson removed Benn from post after pressure from CBI
and media because of support for LA workers and public
ownership.
 LA Alternative Corporate Plan not acted on, but an
inspiration for today’s Green New Deal
 UK’s only not-for-profit energy supplier
 A social enterprise without shareholders
 Re-invests surplus profit
 Not raised prices
 Assistance to customers
in debit
 Uses renewable energy
 Federation of Worker Co-ops based in Basque Region,






Spain
Spain’s 7th largest company
Co-operative university, bank, social security mutuals
Co-ops owned by worker-members
Run by 1 person, 1 vote
80,000 worker-owners in 256 companies
Highest paid managers salaries capped at 6 times that of
lowest paid workers (in U.S CEOs makes 380 times more)
 USW America’s largest industrial union – 1.2 m members
 USW in partnership with Mondragon and Ohio
Employee Ownership Centre create a template for
introducing “Union Co-ops” into mid-west Rust Belt
 Union co-ops model differ from traditional workerowned Co-ops
 Unions appoint management team and collective
bargaining model
“A union co-op is a unionized workerowned co-operative in which workerowners all own an equal share of the
business and have an equal vote in
overseeing the business”
Ohio Employee Ownership Centre
 2002/3 – bosses lockout in attempted coup,
hundreds of factories shut
 Workers took over factories to keep them
running.
 2005 - Chavez legislated to keep these running
under workers control or “Co-management”.
 Many workers co-operatives created and funded
 Ineval – valve manufacturing company under
workers’ control since 2005
 Legally a co-operative – 51% owned by state, 49% by
workers
 Decisions taken by Workers Assembly, which elects
recallable “co-ordinators of production” for one year
 All employees paid equally
“We want it in public ownership, but for
workers to control all production and
administration. This is the new productive
model. We don’t want to create new
capitalists here”
Francisco Pinero, Ineval Treasurer
“These examples are not the result of accidental
errors of judgement. They result from a political and
economic logic which says that in every sphere of
our lives, the market and the profit motive will
perform better than any other system. It is this
dogma that all who want democratically
accountable and publicly owned services must
challenge”
Mark Serwotka, PCS General Secretary
 2000: Bolivia’s water supply privatised 



Cochabamba Water run for profit by Bechtel
“Law 2029” gave Bechtel control of all water
resources in Cochabamba.
Bechtel raised prices by 35%, charged for installation
of meters, and for licenses to collect rainwater.
“If people don’t pay their water bills, their water will
be turned off” – G. Thorpe, Bechtel Executive
Massive campaign of resistance led by Union of
Coca Farmers (UCF)
 UCF leader Evo Morales led 600km march
from Cochabamba to La Paz.
 Occupation of central la Paz.
 Eventually privatisation reversed and water
re-nationalised.
 Morales and others create “Movement
Toward Socialism” party
 2005 – Morales elected President of Bolivia