No contracts to firms that just want profit, says Labour policy chief

Companies with profit as their main aim should not win public sector outsourcing contracts, says Labour policy chief

Companies like BT, Atos, Vodafone, Capita and Hewlett Packard should not win public sector outsourcing contracts because their main aim is profit, according to the man helping the Labour Party write its manifesto.

According to The Telegraph, Labour’s policy chief Jon Cruddas has written his thoughts on what Labour should change in a new book.

In a chapter of Blue Labour: Forging a new politics, he outlined three big changes – one of which was no more outsourcing of government services for corporate profit.

"No more outsourcing of relational services to those parts of the private sector that are driven purely by corporate profit rather than a social purpose," wrote Cruddas. "It is quite staggering that some £10bn of public contracts – of taxpayers’ money – are allocated to some 20 private companies.

"We need to forge cooperative ties with ethical enterprise – such as co-operatives, mutuals and social businesses.”

But National Outsourcing Association CEO Kerry Hallard said the plans entirely miss the core premise of outsourcing. 

“Specialise in what is core to your business, and then outsource the non-core to industry specialists who do them better and cheaper," she said.

Hallard added that austerity will not go away under Labour and the government will still need to deliver services cost-effectively. 

"The UK public sector has an enormous amount of services to provide and all within ever-decreasing budgets," she said. "Engaging in outsourcing contracts with the private sector allows for these services to be delivered on time, within decreasing budgets and often to a higher quality.” 

A reduction in government outsourcing would also have a negative impact on the UK workforce, warned Hallard.

“Cruddas would do well to remember that outsourcing is the second largest employment industry in the UK today and contributes more than £30bn to the Treasury, before he tries to destroy it,” she said.

About 340,000 UK workers in the IT services sector generated £48.4bn in UK turnover in 2013, with IT services to UK government generating £2bn of this, according to a study carried out by Oxford Economics for the Business Services Association.

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