Standards fall as care operators get 'too big to fail'

 

Standards in social care are being undermined because the handful of private companies which dominate public sector contracts are now "too big to fail", a new report warns.

Outsourcing was supposed to drive up standards and cut costs, but the dominance of multinationals such as Serco and G4S risks harming vulnerable people, it claims.

Britain faces "another banking crisis" in the care sector unless charities and social enterprises are given a greater slice of the market, according to the report's authors.

Peter Holbrook, the chief executive of Social Enterprise UK, who commissioned the investigation, told The Independent: "Britain's most vulnerable people are suffering as competition and the delivery of efficient care is replaced by short-sighted bidding wars and low-quality service."

The outsourced market for public services has an annual turnover of £82bn, which is predicted to rise to £140bn by 2014. The report identifies the emergence of a "shadow state", with a small number of companies taking "large and complex stakes in public service markets, and a great deal of control over how they work".

G4S, which made headlines this summer for failing to provide sufficient security at the Olympics, has contracts with 10 government departments and agencies and 14 police forces.

Serco has dozens of private contracts, running everything from prisons to hospital facilities to council waste collection. "Its failure would cause extreme turbulence in public services. No business should be too big to be allowed to fail," the report warns.

About £1bn is spent every year looking after children and young people in residential care, with Sovereign and 3i the major private players. But the report found that it is "hard to pinpoint who owns what; their waters seem to be in perpetual motion, as they buy from one another and take one another over, and offload assets."

Other private operators whose substantial public contracts are highlighted in the report include Atos, which has the contract to perform disability assessments, and Capita, which was recently named as the preferred bidder for a £1.7bn, 20-year contract to run educational services in Staffordshire.

"If we are going to go down this route of further marketisation, then it is imperative that these markets are open, transparent and well-functioning," Mr Holbrook said. "There is a very small number of companies dominating these markets, and they surround themselves by complex legal structures so that it is hard to understand the level of profit they are taking from some of these contracts".

The report, which is the result of interviews with policy-makers and front-line workers, accuses profit-seeking companies of bidding for public-sector contracts on short-term price alone, with devastating long-term effects, including a "race to the bottom" on pay.

One unnamed home-care worker for a "sizeable private provider" is quoted as saying: "Most of the carers don't have English as a first language. It's always the minimum wage."

Charities and social enterprises can no longer compete, the report claims.

A G4S spokesman said yesterday: "There is absolutely no way we are comprising on service, for the very reason that every government contract we provide has to meet strict criteria and if we fail we incur financial penalties, which is not something echoed in the public sector."

A spokesperson for Serco said: “We are passionately committed to delivering high quality services to all our customers and to members of the public who make use of them. And it is only by delivering continually high quality services that we are able to be successful as an organisation.”

Public sector market: Outsourcing giants

G4S Had its contract for Wold prison revoked last month after a shambolic performance in providing security at the London Olympics, pictured. The Government remains its biggest client, with 14 police forces within the firm's remit.

SERCO Major shareholders include HBOS and Lloyds. Government contracts include maintaining the Docklands Light Railway, missile defence systems and military bases, and security services for the young offenders institutions.

ATOS The French multinational turned over €8m (£6.5m) last year. It made headlines after losing a memory stick with the passwords and names of a government computer system were found in a pub car park. Clients include the UK Border Agency.

CAPITA Contracts span administration of public-sector pensions and public grant programmes. Recently named preferred bidder for a 20-year contract to run educational services in Staffordshire. Specialises in "Business process Outsourcing".

Start your day with The Independent, sign up for daily news emails
Have you tried new the Independent Digital Edition apps?
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Recruitment Genius: Sales Executive - OTE £30,000+

£16000 - £30000 per annum: Recruitment Genius: They are looking for individual...

Recruitment Genius: IT Project Coordinator / Manager

£25000 - £40000 per annum: Recruitment Genius: A Project Coordinator is requir...

Recruitment Genius: Mortgage Advisor - OTE £95,000

£40000 - £95000 per annum: Recruitment Genius: This is an exciting opportunity...

Recruitment Genius: Trainee Vehicle Inspectors / Purchasers

£20000 - £40000 per annum: Recruitment Genius: Trainee Vehicle Inspectors / Pu...

Day In a Page

Greece debt crisis: EU 'family' needs to forgive rather than punish an impoverished state

EU 'family' needs to forgive rather than punish an impoverished state

An outbreak of malaria in Greece four years ago helps us understand the crisis, says Robert Fisk
Gaza, a year on from Operation Protective Edge: The traumatised kibbutz on Israel's front line, still recovering from last summer's war with Hamas

Gaza, a year on from Operation Protective Edge

The traumatised kibbutz on Israel's front line, still recovering from last summer's war with Hamas
How to survive electrical storms: What are the chances of being hit by lightning?

Heavy weather

What are the chances of being hit by lightning?
World Bodypainting Festival 2015: Bizarre and brilliant photos celebrate 'the body as art'

World Bodypainting Festival 2015

Bizarre and brilliant photos celebrate 'the body as art'
alt-j: A private jet, a Mercury Prize and Latitude headliners

Don't call us nerds

Craig Mclean meets alt-j - the math-folk act who are flying high
How to find gold: The Californian badlands, digging out crevasses and sifting sludge

How to find gold

Steve Boggan finds himself in the Californian badlands, digging out crevasses and sifting sludge
Singing accents: From Herman's Hermits and David Bowie to Alesha Dixon

Not born in the USA

Lay off Alesha Dixon: songs sound better in US accents, even our national anthem
10 best balsamic vinegars

10 best balsamic vinegars

Drizzle it over salad, enjoy it with ciabatta, marinate vegetables, or use it to add depth to a sauce - this versatile staple is a cook's best friend
Wimbledon 2015: Brief glimpses of the old Venus but Williams sisters' epic wars belong to history

Brief glimpses of the old Venus but Williams sisters' epic wars belong to history

Serena dispatched her elder sister 6-4, 6-3 in eight minutes more than an hour
Greece says 'No': A night of huge celebrations in Athens as voters decisively back Tsipras and his anti-austerity stance in historic referendum

Greece referendum

Greeks say 'No' to austerity and plunge Europe into crisis
Ten years after the 7/7 terror attacks, is Britain an altered state?

7/7 bombings anniversary

Ten years after the terror attacks, is Britain an altered state?
Beautiful evening dresses are some of the loveliest Donatella has created

Versace haute couture review

Beautiful evening dresses are some of the loveliest Donatella has ever created
No hope and no jobs, so Gaza's young risk their lives, climb the fence and run for it

No hope and no jobs in Gaza

So the young risk their lives and run for it
Fashion apps: Retailers roll together shopping and social networking for mobile customers

Fashion apps

Retailers roll together shopping and social networking for mobile customers
The Greek referendum exposes a gaping hole at the heart of the European Union – its distinct lack of any genuine popular legitimacy

Gaping hole at the heart of the European Union

Treatment of Greece has shown up a lack of genuine legitimacy