The great Civil Service sell-off: Dozens of services and 75,000 staff set to be transferred to private sector

Unions denounce sale as ‘privatisation by stealth’

Ministers are preparing to spin off “dozens” of state-owned services into independent companies in what could be one of the largest privatisation programmes since the 1980s.

Under plans being rolled out by the Cabinet Office, millions of pounds’ worth of state-owned services will be spun off into independent companies – jointly owned by private-sector investors and their employees – within the next two years. Eventually as many as one in six civil servants – or 75,000 staff – could be transferred into the private sector with the Government maintaining a minority stake and offering long-term contracts to the new companies to encourage investment.

Today the Cabinet Office minister Francis Maude will announce that the Government’s Behavioural Insights Team – known as the “nudge unit” – will become the most high-profile area of Government to be “mutualised”.

It will be turned into a profit-making joint venture with private companies being invited to bid for a stake of up to 50 per cent in the new business. Under the plan, the Government would guarantee contracts for a number of years – with the business free to sell its services outside Whitehall.

But the move will herald a much wider sell-off of government functions and assets over the coming months.

Among the areas under active consideration are Whitehall’s IT, personnel and legal functions. Cabinet Office sources said they hoped to support “dozens of such spin-offs” in a programme which is expected to raise millions of pounds for the Treasury. It will leave a dramatically slimmed-down Civil Service providing only core functions of policy advice and implementation.

Eventually other government bodies such as the Land Registry and the Office for National Statistics could also become candidates for mutualisation, although government sources stressed that these were not under consideration at present.

The move has been condemned by public sector unions which fear it will lead to job cuts and erosion of services as the private outsourcing companies that are expected to take stakes in the new ventures look to cut costs.

Dave Prentis, the general secretary of the public sector union Unison, said the plan amounted to “privatisation by stealth”.

He said: “The involvement of big private companies makes mutuals just another Tory party ploy to sell off public services. The Government is stretching the definition of mutuals to the limit – genuine co-ops and mutuals will be up in arms.

“Staff will be plunged into confusion and could face being taken out of public sector pension schemes and having their pay and conditions seriously harmed.”

The Government has long championed the idea of John Lewis-style mutuals, but until this month only one part of central government – the Civil Service pension provider MyCSP – had been sold off.

The next two years are expected to see a significant rolling out of the scheme in a drive to boost public sector productivity – and capitalise on expertise that can be marketed to the private sector. Sources close to Mr Maude said the model of mutualisation that the Government was adopting would “finesse some of the problems of naked privatisation” while keeping alive the “Thatcherite principle” of a small state.

They stressed that all the spun-off businesses would have at least 25 per cent employee ownership – allowing workers a true say in the direction of the business as well as a stake in profits. They added that workers would be fully consulted before being transferred to the new entities.

A source close to Mr Maude said: “This accelerates our drive to make public assets pay their way. We hope to support dozens more new spin-outs over the next few years. This is a whole new growth area and Britain is leading the way.”

Mr Maude has previously pointed to figures showing that more than half of every pound of the UK’s wealth is spent by the state and he has spoken about “the perils of state monopolies over service provision”, saying: “The state is an inherently monopolistic entity and a state monopoly can be the enemy of enterprise.

“Within the public sector there is a legion of entrepreneurs, fired with the public service ethos but deeply frustrated with the constraints imposed by the monolith within which they are imprisoned. Liberating them as leaders of a new cohort of public-service mutuals will create a whole new enterprise sector in our economy.”

But Mark Serwotka, head of the Public and Commercial Services Union said there was “nothing mutual or co-operative” about the proposals and that its first attempt to privatise Civil Service pensions had been imposed on staff against their wishes. “The route to improving public services is investment, not gimmicks and back-door privatisation,” Mr Serwotka said.

Q&A: Mutualisation explained

What is mutualisation?

It’s a form of privatisation – but where employees have a stake in the spun-off company. Under government proposals the “shares” in the company would be split between a private sector investor, the employees and the Government.

Why does the Government think it is a good idea?

Tory ministers point to figures from the ONS which, they claim, show that public sector productivity failed to rise under the previous Labour government. Mutuals, they believe will improve this by harnessing private sector efficiencies while giving workers a stake.

What do the critics say?

Public sector unions in particular believe that this is privatisation by the back door. They fear that over the long term, terms and conditions will deteriorate for workers while big private sector outsourcing companies like Capita will effectively run the businesses.

News
John Travolta is a qualified airline captain and employed the pilot with his company, Alto
people'That was the lowest I’d ever felt'
Life and Style
healthIt isn’t greasy. It doesn’t smell. And moreover, it costs nothing
News
i100

Other places that have held independence referendums
Arts and Entertainment
Jack Huston is the new Ben-Hur
film

It scooped up an unprecedented 11 Academy Awards when it was first remade in 1959

PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
News
ebooksAn unforgettable anthology of contemporary reportage
Arts and Entertainment
Pharrell dismissed the controversy surrounding
musicThe singer said 'the last thing I want to do is degrade'
News
news

Arts and Entertainment
Blossoming love: Colin Firth as Stanley and Emma Stone as Sophie, in 'Magic in the Moonlight'
film

Actors star in Woody Allen's 'Magic in the Moonlight'

News
A male driver reverses his Vauxhall Astra from a tow truck
newsThe 'extremely dangerous' attempt to avoid being impounded has been heavily criticised
News
peopleThe Times of India said actress should treat it as a 'compliment'
Arts and Entertainment
Maxine Peake plays Hamlet at Manchester's Royal Exchange
theatreReview: Maxine Peake brings emotional ferocity to Shakespeare's starring part
News
news

Watch this commuter wage a one-man war against the Circle Line
Property
Home body: Badger stays safe indoors
lifeShould we feel guilty about keeping cats inside?
Life and Style
fashion

Olympic diver has made his modelling debut for Adidas

Travel
travel

...and the perfect time to visit them

Sport
Jonas Gutierrez (r) competes with Yaya Toure (l)
football

Newcastle winger reveals he has testicular cancer - and is losing his trademark long hair as a result

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

Maths Teacher

Negotiable: Randstad Education Reading: Maths Teacher required for a College i...

Year 1 Teacher required in Haverhill

£21000 - £35000 per annum: Randstad Education Cambridge: Teacher required for ...

Lecturer - Construction

Negotiable: Randstad Education Reading: Construction Lecturer needed for a Col...

SEN Teaching Assistant Runcorn

£50 per day: Randstad Education Cheshire: SEN Teaching Assistant EBD , Septemb...

Day In a Page

Mystery of the Ground Zero wedding photo

A shot in the dark

Mystery of the wedding photo from Ground Zero
His life, the universe and everything

His life, the universe and everything

New biography sheds light on comic genius of Douglas Adams
Save us from small screen superheroes

Save us from small screen superheroes

Shows like Agents of S.H.I.E.L.D are little more than marketing tools
Reach for the skies

Reach for the skies

From pools to football pitches, rooftop living is looking up
These are the 12 best hotel spas in the UK

12 best hotel spas in the UK

Some hotels go all out on facilities; others stand out for the sheer quality of treatments
These Iranian-controlled Shia militias used to specialise in killing American soldiers. Now they are fighting Isis, backed up by US airstrikes

Widespread fear of Isis is producing strange bedfellows

Iranian-controlled Shia militias that used to kill American soldiers are now fighting Isis, helped by US airstrikes
Topshop goes part Athena poster, part last spring Prada

Topshop goes part Athena poster, part last spring Prada

Shoppers don't come to Topshop for the unique
How to make a Lego masterpiece

How to make a Lego masterpiece

Toy breaks out of the nursery and heads for the gallery
Meet the ‘Endies’ – city dwellers who are too poor to have fun

Meet the ‘Endies’ – city dwellers who are too poor to have fun

Urbanites are cursed with an acronym pointing to Employed but No Disposable Income or Savings
Paisley’s decision to make peace with IRA enemies might remind the Arabs of Sadat

Ian Paisley’s decision to make peace with his IRA enemies

His Save Ulster from Sodomy campaign would surely have been supported by many a Sunni imam
'She was a singer, a superstar, an addict, but to me, her mother, she is simply Amy'

'She was a singer, a superstar, an addict, but to me, her mother, she is simply Amy'

Exclusive extract from Janis Winehouse's poignant new memoir
Is this the role to win Cumberbatch an Oscar?

Is this the role to win Cumberbatch an Oscar?

The Imitation Game, film review
England and Roy Hodgson take a joint step towards redemption in Basel

England and Hodgson take a joint step towards redemption

Welbeck double puts England on the road to Euro 2016
Relatives fight over Vivian Maier’s rare photos

Relatives fight over Vivian Maier’s rare photos

Pictures removed from public view as courts decide ownership
‘Fashion has to be fun. It’s a big business, not a cure for cancer’

‘Fashion has to be fun. It’s a big business, not a cure for cancer’

Donatella Versace at New York Fashion Week