How private firms take unfair advantage over the public sector to get government contracts

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Open and transparent: Grahame Morris, who called for a ‘level playing field’ for both private companies and public organisations when bidding for government contracts.

Did you know that £1 in every £3 spent by the government goes to an independent or private-sector service provider?

If you also recall government ministers bemoaning the fact that £1 in every £4 spent by the government was borrowed, as they said very often during the first year or so of the Coalition, and you bear in mind the fact that all private companies must make a profit, you’ll come to a fairly damning conclusion.

Did you know, also, that private companies – while free to hide behind commercial confidentiality regarding the conditions under which billions of pounds of taxpayers’ money are awarded to them in government contracts – may use Freedom of Information requests to gain detailed information about public sector organisations and then use that knowledge to undercut or outbid those bodies when government contracts are tendered or put up for renewal?

FoI regulations give private providers an unfair competitive advantage when bidding for contracts, due to unequal disclosure requirements.

Both of these were made clear in Grahame Morris’s short speech in support of his 10-minute rule motion to bring in a Bill amending the Freedom of Information Act 2000 to apply to private healthcare companies, and for connected purposes.

He even pointed out that we are living in a society where freedom of information is routinely censored – stating that he attended a demonstration against NHS privatisation in Manchester at the start of the Conservative Party conference there, “but which was barely reported by our public sector broadcaster”.

He said the government should be chastened by recent events. “For example, the tagging scandal — involving Serco and G4S and uncovered by the Serious Fraud Office — showed that these companies had defrauded the taxpayer of more than £50 million.

“Perhaps we need a hard-hitting advertising campaign, with advertising hoardings on vans driven around the City of London, warning off corporate fraudsters from bidding for public contracts?

“The danger for our NHS is that we are inviting convicted fraudsters into our health system.”

He said HCA, the world’s biggest private healthcare company, recently won the contract to provide cancer treatment for NHS brain tumour patients, “stopping patients receiving world-class treatment at London’s University College Hospital”.

Mr Morris continued: “The Competition Commission has already caught HCA overcharging private patients in the United Kingdom. In the United States, HCA has had to pay fines and costs in excess of $2 billion for systematically defrauding federal healthcare programmes.

“The public are right to be concerned about these providers coming into the NHS. If that is to happen, it is essential that their operations and their contracts with the NHS should be open, transparent and subject to public scrutiny.”

Introducing his Freedom of Information (Private Healthcare Companies) Bill, he said its purpose was to strengthen FoI legislation and introduce vital safeguards, so members of the public can see how their money is being spent.

It seems he may even have read Vox Political‘s earlier article on his motion, as he said: “I hope that Members on both sides of the House will support fair competition, a level playing field and the duty of equal disclosure throughout the bidding process for NHS services.

“The public have a right to know the record of public and private providers before contracts are awarded. Those safeguards can work only if the Information Commissioner has the same rights to seek information and carry out investigations, and to make all providers of public services comply with freedom of information legislation.

“I understand that the Information Commissioner expressed concern to the Justice Select Committee that accountability would be undermined if FOI did not apply to private providers of public services.”

He said: “Freedom of information is one of the Labour Government’s greatest achievements, ensuring transparency and accountability in modern government and allowing the public access to information on what is being done in their name and how their money is being spent.

“In recent years, we have witnessed an acceleration in the number of public services being outsourced, and today roughly £1 in every £3 that the Government spend goes to independent or private sector providers.

“Owing to the Government’s policy of opening up public services to the private and voluntary sectors, billions of pounds of NHS contracts are now being made available to the private sector, following the implementation of the Health and Social Care Act 2012.

“Unfortunately, while more and more taxpayer money is being handed to the private sector, especially in the NHS, FOI responsibilities are not following the public pound.

“There is a big issue here about transparency, because the public should know what is happening in their name, as was brought home to me recently in a demonstration against NHS privatisation in Manchester that I attended, along with more than 50,000 other people, but which was barely reported on by our public sector broadcaster.

“Private health care companies should not be permitted to hide behind a cloak of commercial confidentiality. Billions of pounds of taxpayers’ money is being awarded to private sector companies under barely transparent contracts.

“Meanwhile, private companies are free to benefit by gaining detailed knowledge of public sector bodies through their use and submission of FOI requests. The same information is then used by the private sector to undercut or outbid the very same public sector bodies when contracts are tendered or put up for renewal.”

Although no objection was raised to the Bill going forward, it seems the Coalition has performed an about-face on the issue. Mr Morris said: “I understand that in opposition the Prime Minister was convinced about this matter, having previously promised to increase the range of publicly funded bodies subject to scrutiny using section 5 of the Freedom of Information Act.

“The coalition agreement also promised to extend the scope of the Act to provide greater transparency, but unfortunately it would appear that nothing is being done to address the democratic deficit caused by the outsourcing of public services.”

Sadly, it seems likely that this Bill won’t get very far, for reasons this blog has already mentioned – the Government usually opposes Private Member’s Bills in the later stages and, given their low priority in the schedule, there is often insufficient time for the debate to be completed.

But this may not matter, as the information already provided by Mr Morris makes fascinating reading that is damning for the government.

Does anybody believe this Conservative claptrap dressed up as information?

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Tory Parliamentary candidate Chris Davies: In his letter he accuses local Labour members of “acting as disciples of their London hierarchy” – and then regurgitates as much of the drivel handed down to him by his own Westminster masters as he can manage.

Once upon a time, if you found an error in an article, a document or (in my case – I’m going back to when I was very young) a teacher’s work, you were congratulated for finding the “deliberate mistake”. The culprit would say something like: “Well done! I put that in there as a deliberate mistake to see if you were alert enough to find it. You’ve passed the test! As a reward, clean the blackboard.”

I wonder if the same can be said of a letter in the local paper by a Councillor Chris Davies who, we’re told, is the Conservative Parliamentary Candidate for Brecon and Radnorshire. If so, it seems likely that even the doziest student should find at least one, because his screed is riddled with errors.

Last night I spent several hours writing up a response to his nonsense, and I propose to share it with you now. This means the article will be quite long, but never mind. As those of you who keep up to date with current affairs know, it’ll give Facebook something really juicy to censor.

Here’s the letter from Cllr Davies. Spelling mistakes and misuses of apostrophes are all his own work:

“For years people have had difficulty in distinguishing between the policies of political parties, accusing politicians of all being the same and hogging the middle ground.

“I am grateful to the local Labour Party acting as disciples of their London hierarchy for putting clear water between our parties.

“As reported [on April 11], the local Labour councillors are up in arms over the Coalition Government’s Welfare Reforms.

“Yet rather than offering to help people back into work or helping them move into more suitably sized accommodation, all these Labour councillors offer is, ‘Check your exemption status.’

“This is the sad reality of a Labour Party that despises individual responsibility and aspiration, preferring instead to encourage and promote state dependency.

“During the last Labour government, welfare spending rose by 60 per cent.

“Such reckless spending and disregard for taxpayer’s money not surprisingly brought record levels of borrowing and debt which left the UK on the brink of bankruptcy.

“For these Labour councillors to now clearly advocate working the welfare system instead of striving to escape it proves that they still have not learnt their lesson.

“These Labour councillors are also completely out of touch with the public, the majority of whom support the coalition’s welfare reform policies.

“The Welfare State is there as a last resort, a safety net, for those who need it – Not as an alternative to work as it became under Labour.

“Labour has always shown little regard for the hardworking taxpayers’ who pay for the welfare state; those paying for others to stay at home and paying for tenants to live in larger houses than they need. The fact that so many of these hard working taxpayer’s cannot afford a property of any size themselves appears of no concern to Labour.

“Whether you are running your own business, working on the checkout in the local supermarket or working as a farm labourer, the majority of the tax you pay now goes to fund the welfare state.

“No one minds paying for those who truly need support, but as these welfare reforms have already shown, there were many people claiming support that they did not need or were not entitled to.

“Tougher medical tests recently introduced to assess the health of the 2.6 million people claiming incapacity benefit found 800,000 of them were perfectly fit and able to work.

“Another 900,000 dropped their claim to these benefits rather than take the test.

“How can Labour honestly say it is unfair that we are capping benefits at £26,000 a year when that is far more than most workers in Brecon & Radnorshire earn?

“How can Labour continue to support a benefit system that gives workless households a higher income than the majority of working individuals who are paying for the system?

“The system should never have allowed unemployment to become more financially rewarding than working. It is this disincentive to work that has largely caused the welfare problem we are now dealing with.

“All Labour can do is pour scorn on anything the Coalition Government does. What are they offering as an alternative? We are seeing No policies, No ideas, No alternatives.

“To quote Tony Blair recently – “Ed Milliband is in danger of being seen as reducing the Labour party to nothing but a party of protests” – It seems to me that whether in London or locally the Labour Party is already there.”

If I know my readership, you are all shaking your heads in blank astonishment that someone who professes to be a reasonable human being – and has managed to become a county councillor, here in Powys, should come out with such an unremitting stream of dribble.

In response, I wrote the following. Be warned – it doesn’t address every single piece of nonsense in Cllr Davies’ letter. There is a word-limit on letters submitted to the newspaper.

So here’s a game for you: Spot the ‘deliberate’ mistakes in his letter that I haven’t singled out, tell us what they are and why they’re wrong.

Here’s my response:

I read with interest the letter from Cllr Chris Davies, who is keen to put “clear water” between our parties. His letter certainly achieves this, ably clarifying that Conservatives have little or no understanding of the effect their so-called reforms are having on those they claim they are trying to help. I’d like to set the record straight. Although I am a Labour member, I think it is appropriate to quote the late Baroness Thatcher: “Where there is error, may we bring truth.”

If taken to its obvious conclusions, the under-occupation charge – more correctly known as the Bedroom Tax – will cost the taxpayer far more than the former situation. The stated aim is to get people who are living in social housing with spare bedrooms to move into smaller accommodation or lose housing benefit. This means a disabled person in a house with thousands of pounds worth of adaptations for their disability, that has two extra bedrooms (one used as a carer’s respite room while the other would be more accurately defined as a cupboard), would lose so much money that they would be forced to move out. If they then went to a private, one-bedroom flat, the taxpayer would not only have to pay full housing benefit (around £100 extra per month) but also the cost of removing the disability adaptations from one dwelling and installing them in the other (thousands of pounds).

You see, the Conservative-led government got its sums wrong. It would be better for all involved (not least the taxpayer!) if ways could be found to prevent this extravagance with the public purse. What the Labour councillors were suggesting was a way of saving taxpayers’ money – not spending it.

Cllr Davies’ claim that welfare spending rose by 60 per cent under the last Labour government is scaremongering and cynical manipulation of the figures. Total expenditure on welfare when Labour took over in 1997 was 11.6 per cent of Gross Domestic Product. Under Labour, it averaged 10.7 per cent – that’s right, it went down – right up to the crash. Afterwards, benefits for children and working-age adults rose from an average 4.9 per cent of GDP to six per cent, which is what one might expect during a recession.

For clarity, the majority of welfare spending goes into pensions – around 55 per cent. Benefits for the unemployed total just three per cent. Fraudulent claims total a miniscule 0.7 per cent.

Moving on to Cllr Davies’ ridiculous claim that many people were claiming support who did not need or were not entitled to it, he claims that 900,000 people (in fact it was 878,300) dropped their claim for Employment and Support Allowance rather than take the Work Capability Assessment. In fact, DWP figures show that the number of cases closed before assessment has remained consistent since before the new assessment came into use. It is known as ‘churn’ – a turnover of claims withdrawn for perfectly normal reasons like people getting better or finding a job they can do, even if they’re ill. That is a result of people using the benefit system properly. Every month, around 130,000 people come off ESA – it isn’t a lifetime benefit; it’s something you claim for as long as you must. Because of the huge number of cases on the system and the amount of time it takes for them to be assessed and decided, some people who no longer need to claim haven’t even had their assessment.

DWP figures show the number of people receiving the benefit has in fact risen since the current government increased its scrutiny of disabled people.

Cllr Davies’ claim that the Work Capability Assessment is a “medical” test is also inaccurate. It is based on a system devised by an American insurance company called Unum, in order to avoid paying out to customers whose policies had matured. The aim is to convince very sick people that their illnesses are imagined. As a policy, you might consider that to be sick in itself. The result is horrifying but I’ll try to put it in context: According to the BBC, by October 30, 2012, the total number of British soldiers who had died in Afghanistan since military operations began there in 2002 was 437. That’s equivalent to the number of sick or disabled people who die while going through the work capability assessment system (or as a result of going through it) – every six weeks; an average of 73 per week (according to figures released after a Freedom of Information request).

The benefit cap is another waste of taxpayers’ money. It will reduce households’ ability to pay the rent, leading to an expected increase in homelessness of 40,000 families. How much will local authorities have to pay, housing families in temporary accommodation? Child poverty will skyrocket by 100,000. Many families may break up in response to the pressures. Parents who live separately and divide their children’s residency between them can claim up to £1,000 a week in benefits, while a couple living together may only claim £500. Of course, this would completely wipe out any saving the government would have made on that family, costing £26,000 more every year.

Cllr Davies rightly says £26,000 a year is more than most workers in Brecon and Radnorshire earn. That’s not a good thing – it means people here don’t get the pay they deserve. But even that figure is inaccurate as it omits benefits, so the average income of a working family is in fact £31,500, or £605 per week. The trouble with that is, if applied to benefit recipients, so few people would lose benefits that it would make the cap pointless. You see, it’s all about cutting the benefit bill; it isn’t about fairness at all. But, as I say, the Conservatives are so hopeless they can’t even get their sums right.

Cllr Davies is wrong to say that Labour opposes a benefit cap, however. There is cross-party support for limiting benefits as an incentive to seek work. The difference is that the Labour version would have been fair.

Cllr Davies says Labour supports a benefit system that gives workless households a higher income than the majority of working individuals who are paying for the system – and again he is manipulating the figures, comparing households with individuals. The simple fact is that unemployment benefits stood at around one-sixth of average earnings until April, when the one per cent uprating came into effect and pushed unemployed people closer to poverty. When benefit is so much less, in real terms, than earnings, a higher percentage increase does not mean you receive more money than a working person – something the Conservatives find hard to grasp, it seems.

So which do you believe – the comfortable lies that Cllr Davies has foisted on you, unencumbered by any factual evidence – or the unpalatable truth that the government’s imbecilic handling of the situation will cost us all many millions more in damage control when it all goes wrong?