January 22, 2007 11:12 ET

The real meaning of public sector reform is privatisation and waste says Amicus

LONDON, UNITED KINGDOM--(CCNMatthews - Jan. 22, 2007) - Amicus says that the complicated language of public sector reform is thinly disguising the gradual privatisation of public services.

The union has published a glossary of reform terms (attached) which it says amounts to widespread private involvement in public services. Amicus says that there is no evidence that the reforms are improving services or providing an efficient use of public money. It also says that as well as costing many millions of pounds the involvement of the private sector in public services is compromising public accountability.

Amicus, the largest private sector union, is campaigning against the rush to privatisation of public services, the lack of involvement and engagement with public sector employees and the failure to properly evaluate the impact of reforms without before rolling them out.

Amicus' General Secretary, Derek Simpson, said: "There is a fundamental conflict of interest between profit and providing the best service to people but the problem is not simply a matter of cost and evidence. These policies take for granted a set of values that idealise competition and see public services as consumer goods.

"There is no evidence that profit-driven privatisation provides better services or improved value for money. In fact privatisation is often more expensive detrimental to service delivery and creates significant inequalities.

"Our public services have wider benefits than simply economic and individual gain. They contribute to an enriched, participative and socially engaged society and help build solidarity and compassion. In other words, public services are a good thing and worth paying for."

Amicus say that from the crisis in private pension schemes and the problem of water shortages, to the closure of rural post offices and train lines, private company's involvement in the public sector has not provided the intended results.

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Note to editors

Amicus has launched a Valuing Public Services document which is available on Amicus' website. The campaign's principles are spelt out in its name:

Valuing public service users and staff

Long-term commitment
Universal access
End to market madness

Amicus' privatisation glossary of terms


Choice is the buzz word of the public service reform agenda. Sold as the panacea for all public services it implies that all services need to be more receptive to the needs of users. Part of the choice agenda is about diversifying the way a service is provided so that the service is more accessible and convenient for users. Service users have different needs and therefore for the service to be equally accessible it needs to reflect those needs. So far so good, but in practice this term is used to cover more than one policy.

It is clear that a major element of what is happening is a policy of choice through markets and privatisation. Markets are set up to allow public service "consumers" to choose between various service providers. This competition is meant to drive up service quality and efficiency. Some key examples of these policies are choice of hospital and "payments by results" in the NHS, city academies, foundation and faith schools and variable tuition fees in Higher Education.

Privatisation is sold as necessary to provide value for money and choice for the public but these can undermine universality and increase long-term private sector involvement in the provision of public services. All too often the choice is made for people by the 'market' or service providers themselves and the idea of choice for public service users is illusionary.


Private consultancy firms have been used right across the civil service and the NHS.
We are told that they are being brought in to save tax payer money and create cheaper and more efficient services.

In practice this consultancy has been used to move service costs off budget and has led to billions of tax payers money being given to private consultants - some earning up to GBP2,000 a day!

The National Audit Office estimates that total public sector spending on consultants in 2005-06 was GBP2.8 billion - an increase of a third in two years. Similarly a recent memorandum from the DoH to the Commons Select Committee estimated that the DoH spent GBP133 million on management consultants in 2005, more than the GBP94 million projected net deficit for the NHS in 2007. The NAO report concluded that: "there is some way to go before central government overall is achieving good value for money from its use of consultants" and recommends that "public bodies should start with the presumption that their own staff are best fitted for their requirements."


Sold as a system of driving best value in public service delivery, contestability is in practice a system of competitive bidding for outsourced public service contracts. Voluntary and private sector organisations bid against each other for pots of money to deliver public services.

These contracts are supposedly about commissioning the best service and bringing in third sector expertise. The experience of Amicus members in the community and not for profit sector is that contestability is leading to a race to the bottom in terms and conditions as organisations out bid each other to be the cheapest. This gives the private sector an advantage as cash strapped charities rarely have the resources to win bids.

On top of this the process is often bureaucratic, costly and time consuming for organisations short on resources. Concentrating on short term funding bids means a reduction in third sector organisations ability to plan for long-term projects on which many of society's most vulnerable people depend or to invest in training for their employees. It has also led to a reduction of partnership and collaboration within the sector as organisations are forced to compete against each other for funding.


Public Private Partnerships (PPP or P3) is the general term used to cover all systems in which a government service or private business venture is funded and operated through a partnership of government and one or more private sector companies.

Partnership sounds all well and good but in practice most partnership systems involve transfer of formerly state owned assets and tax payer's money to company share holders. Some of the methods used include Local Improvement Financial Trusts (LIFT) companies running care facilities in the NHS, Private Finance Initiatives (PFI) in school building, hospitals, fire stations, university buildings, defence infrastructure and council housing, and Design-Build-Finance-Operate (DBFO) in road building contracts.

The argument is that these partnership contracts provide new efficient infrastructure quickly and without increasing taxes or public debt. However it is clear that this argument is based on almost no evidence.

In fact the evidence shows the complete opposite! These arrangements have led to massive extra cost to the tax payer due to the higher price for private sector borrowing and the fact that they lock us into expensive contractual arrangements that last up to 30 years. The costs and risks of building the infrastructure is usually paid for in the first few years of the contract so for the rest of the time tax payers are simply paying for company profits. Worst of all many deals have led to massive windfall profits for companies that have been able to refinance their loans with no similar benefit for the tax payer. This was described by the Public Accounts Committee as the "unacceptable face of capitalism".

Amicus has seen again and again that these policies are leading to the fragmentation of public services - reducing the ability for the public sector to look at problems holistically and collaboratively. Partnership deals have led communication between different parts of the same service to become complicated by contractual arrangements. They have also negatively impacted on lines of responsibility within public services with the introduction of new layers of bureaucracy, governance, quangos and markets created to regulate contracts and markets and coordinate cooperation.


The government claims that many public sector organisations need to modernise to meet the needs of society. This is often a condition of funding.

This has been used as an excuse for cuts to services and staff, out sourcing of services to non-publicly owned organisations and restructuring public services along business lines. It is also the banner under which the permanent revolution in public sector reform initiatives takes place leaving staff feeling confused, disempowered and stressed.

For policies to be effective they need time to take effect. Amicus is not against efficiency savings and reform but when seen in the light of the waste caused by consultancy and partnership deals this policy leaves a bitter after taste.

Deregulation and independence

The idea is to give local organisations more control over their own management. Systems have been created where by public services are given a level of independence from direct government control. These include Arms Length Management Organisations (ALMOs) for housing, City Academies, Trust Schools, and Foundation Hospital trusts.

Amicus members have found that these policies have been used as the first step towards privatisation as organisations are restructured, denationalise accountability and governance while also allowing them to seek money from private sources. They are also often the precursor to opening the service up to competition from other sectors as in housing and the postal service.


Despite promises to the contrary the Labour government has continued with whole sale privatisation policies of the Tories.

This has largely been in the civil service and Ministry of Defence infrastructure. For example the conclusions of the Defence Industrial Strategy (DIS) recommend the privatisation of much of the current MOD. Infrastructure like Defence Aviation Repair Agency (DARA), the British government's defence research service - Qinetiq and other MOD agencies are being transferred or outsourced to private companies with significant job losses. Other examples include half of the Air traffic control system, re-privatisation of Network Rail, and the use of Independent Treatment centres.

Contact Information

  • Amicus
    Catherine Bithell
    020 7420 8909 or 07958 473 224