UK Government Outsourcing Doubles Despite G4S, Serco and Atos Scandals

Outsourcing in the public sector has rocketed under the coalition government as it tries to drive down state spending under its austerity programme to balance the UK's finances.

But outsourcing has been the source of increasing controversy as scandals surround some of the biggest firms, from the fit-for-work assessments by Atos to the electronic tagging of offenders by G4S and Serco.

Research firm ISG said that since 2010, when the coalition of Conservatives and Liberal Democrats came to power, the value of outsourcing contracts issued by the public sector hit £87.7bn. That is up from £45.1bn in the four years before under the Labour government.

"The recession and the subsequent focus by the public sector on cost reduction and value for money has driven a renewed interest in outsourcing and its role in helping deliver efficient, cost effective services," said Luke Mansell, a partner at ISG.

Cat Hobbs of the We Own It campaign against outsourcing to the private sector claimed that ideology has fuelled the increase.

"The current government believes in putting public services in private hands, ignoring the dubious record of outsourcing companies like G4S, Serco, Atos and Capita," Hobbs said.

"Our research shows these companies are distrusted by 64% of the British public. Despite the ideology of central government, many councils have brought services in-house to improve value for money, quality and flexibility."

A report by parliament's Public Accounts Committee (PAC) said the government had to "get its house in order" over outsourcing.

The PAC said a handful of large firms run most of the public contracts because small businesses were being crowded out of the bidding process by its unnecessary complexity, bureaucracy and high cost.

This view is supported by the IGS data, which showed that there had be a drop in the portion of small contracts from 46% of the market in 2010-2011 to 40% in the period since 2012.

And a number of scandals have gripped some of the UK's largest outsourcing firms.

Atos has come under heavy criticism over its contract with the Department for Work and Pensions (DWP) to assess the whether or not the recipients of Employment and Support Allowance (ESA), formerly called Incapacity Benefit, are fit to work.

Between 2010 and 2013, the government, which has the final say on the assessments, reversed 158,300 fit-for-work approvals by Atos.

In one case, a dying man with a brain tumour and serious heart condition was deemed fit to work by Atos.

In another, a vulnerable man with Asperger's Syndrome, a phobia for food and several other health issues was stripped of his ESA after being judged fit to work by Atos. He later died of malnourishment.

A separate scandal embroiled G4S and Serco when it emerged they had been charging taxpayers for the electronic tagging of criminals who were dead or in prison.

Both firms are under investigation by the Serious Fraud Office (SFO) and have paid back millions of pounds to the Department of Justice on their electronic tagging contracts, which they were also stripped of.