Public money is being thrown away on government-contracted scroungers

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A4E, accountancy, accountant, allowance, avoid, backbencher, bedroom tax, benefit, Big Four, business, cap, Coalition, company, Conservative, contract, council tax, Deloitte, Department, DWP, employment, Ernst & Young, ESA, EU, european union, feckless, firm, food bank, foreign, G4S, government, idle, immigrant, immigration, in-work, incentive, Ingeus, KPMG, lazy, lie, Maximus, Mike Sivier, mikesivier, minister, mislead, parasite, payout, Pensions, people, politics, PricewaterhouseCoopers, private, provider, reassessment, sanction, scrounger, skiver, social security, support, tax, taxpayer, Tories, Tory, Treasury, unemployment, unum, uprating cap, Vox Political, welfare, welfare to work, work, Work Programme, work-related activity, Workfare, Working Links, zero hours contract

It turns out that some people really do get to lie around all day, doing nothing apart from watching the money rolling in.

Bloody scroungers.

I’m sorry to swear – and you know I’m not usually rude – but these Work Programme provider companies really get my goat.

The revelation that companies such as Ingeus, A4e and Working Links were getting undeserved ‘incentive’ money (see also the BBC’s article), rather than being paid by results as has been claimed loudly and repeatedly by Tory ministers and backbenchers, is nothing new to Vox Political – we first pointed out the problem in November 2012, more than 18 months ago.

You see, not only has this been going on ever since the Coalition government established welfare-to-work in its current form –

Not only have government ministers and backbenchers been lying to you about the payouts given to the profit-driven privately-owned provider companies –

Not only have these companies been sucking down on your hard-earned taxpayer cash as though they had done something to earn it –

But the people they were supposed to be helping – people who have been forced into ever-greater poverty by the benefit uprating cap, arbitrary and unfair benefit sanctions, the bedroom tax, the £26,000 cap on benefits for families, the imposition of council tax on even the poorest households (in England at least), the stress of continual reassessment (if they are ESA claimants in the work-related activity group), the humiliation of having to visit food banks and who knows what else…

The people who are desperate to get any kind of paying job, despite the fact that zero-hours contracts could make them worse-off than unemployment, due to the effect on in-work benefits, despite the fact that those in-work benefits are also being squeezed hard, and despite the fact that there are at least five jobseekers for every job that becomes available…

These are the people that government ministers, backbenchers and the right-wing press keep victimising with their endless attacks on “skivers”, “scroungers”, the “feckless”, the “idle” and the “lazy”!

If I was unemployed and my MP had been caught slagging me off while praising these good-for-nothing so-called work programme ‘providers’, I would make it my business to bring them before the public, lock them into some medieval stocks and pelt them with rotten vegetables. Public humiliation is the least they should get for this continual insult to common decency.

But wait! There’s more.

It turns out that, not only are these work programme providers a bunch of lazy good-for-nothing parasites, but many of them are also a bunch of foreigners who’ve come to the UK to take our jobs!

Ingeus is Australian. G4S is part-Danish. Maximus is American.

It seems that all the politically-fuelled and media-driven anger against immigration into the UK from the rest of the European Union and beyond may be designed to distract us all from the fact that foreign firms are immigrating here to take government jobs that should be yours, and to steal your tax money.

Nobody can say they’ve earned it, after all.

But let us not be unfair. It would be wrong to concentrate on welfare-to-work providers when all of government is riddled with foreign interlopers.

Look at the Treasury, where the ‘Big Four’ accountancy firms have been re-writing tax law to suit their tax-avoiding corporate clients for the last few years. They are Deloitte (American), PriceWaterhouseCoopers (part-American), Ernst & Young (part-American) and KPMG (Dutch).

And then there is the huge, criminal, foreign firm that has been advising the Department for Work and Pensions on ways to privatise the welfare state since the mid-1990s – a firm so controversial that there is currently a moratorium on the mention of its name in the national mainstream media. It is an American insurance giant called Unum.

The best that can be said of these five corporations is that – at least to the best of our knowledge – they do work for a living.

… In their own interest – not yours.

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Private company given contract to harass the long-term sick

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A4E, advice, allowance, assessment, BBC, bullied, bully, Coalition, Conservative, costs, Democrat, Department, DWP, economic, economy, employer, employment, England, ESA, GP, harass, health, illness, Lib Dem, Liberal, long term, loss, Mike Sivier, mikesivier, money, non compulsory, output, Pensions, people, plan, politics, profit, Scotland, service, sick, support, Tories, Tory, Trades Union Congress, treatment, TUC, Universal Jobmatch, Vox Political, Wales, WCA, welfare to work, work, work capability assessment

The pretext: These are the figures showing the estimated amount of long-term illness in the UK per year. Remember that these figures have halved in the last decade.

The Department for Work and Pensions is setting up a new “service” offering “advice” to people who are off work with an illness for more than four weeks.

No reference is made to improving people’s health.

It should also be noted that sickness absence in the UK is among the lowest in Europe, and has halved over the past decade.

The announcement was made on the BBC News website shortly after midnight. Nothing has appeared on the Government’s own website so it seems the Corporation has gone back to being Westminster’s poodle again – breaking news for the government in order to give spin doctors time to assess the reaction and then write a press release that is more acceptable to the public.

The Health and Work Service will be a privately-run operation covering England, Wales and Scotland, offering “non-compulsory” medical assessments and “treatment plans”. This is reminiscent of the way Universal Jobmatch was introduced to jobseekers as a “non-compulsory” service – which many thousands of people have been bullied and harassed into joining.

The scheme will allow employers or GPs to refer employees for a “work-focused occupational health assessment”, according to the BBC report. So this means the employee has no say in whether to go on the scheme – it is down to bosses and doctors. You are invited to consider whether this represents another great step forward in the Conservative Party’s claims to be crusading for patient choice.

The story says workers will be allowed to refuse assessment or to follow any course of action that is recommended but, again, we have the example of Universal Jobmatch.

The “assessment” is meant to identify the issues preventing an employee from returning to work and draw up a plan for them, their GP and their employer, showing how that person can be “helped” back more quickly.

One is forced to question the efficacy of such a system, if faced with illnesses or diseases that must receive medical treatment.

You don’t talk someone better – the huge number of people who have died while going through the DWP’s Employment and Support Allowance sickness denial machine has proved that.

The government has made its aim in setting up the new scheme perfectly clear, saying employers will “save money” by having fewer staff off sick – possibly saving companies up to £70 million a year in reduced sickness pay and related costs.

The DWP says people will return to work earlier. This seems like a pie-in-the-sky aspiration, as illness does not go away in accordance with a timetable. This means the Department’s other claims – that there will be a reduction in lost working days and increased economic output – are also pipe dreams.

It is far more likely that sick people will be forced back to work before they are better – leading to an increased chance that illnesses will spread among workforces, there will be more lost working days and lowered economic output.

The Trades Union Congress, while supporting schemes that could help people back into work, agreed (with me) that this one creates a danger that people will be forced back to work before they are well.

Finally, any company involved in the scheme should be aware that it is unlikely to make a profit from it. Look at the effect on other firms of involvement with DWP schemes: Welfare-to-work provider A4e has reported a pre-tax loss of £11.5 million in the year to March 31, 2013 – up from a £2.1 million loss the year before. Turnover dropped from £194 million to £167 million.

So now we can say very clearly to all private companies:

Working for the Coalition government doesn’t pay.

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DWP calls in Rentadoc to harass the sick off-benefit

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abuse, accountancy, accountant, allowance, amputate, Atos, avoidance, belief, benefit, Big Four, Black Country, bloodbath, breakdown, claimant, condition, corporate, cut, death, Deloitte, Department, depress, Derbyshire, disability, disable, doctor, employment, ESA, esther mcvey, government, grow back, harass, health, healthcare, Iain Duncan Smith, Ingeus UK, Jobseeker's Allowance, JSA, law, Leicestershire, limb, Lincolnshire, mental, Mike Sivier, mikesivier, minister, Multiple Sclerosis, nervous exhaustion, Northamptonshire, Nottinghamshire, Parkinson's, Pensions, people, physical, politics, premature, professional, provider, rentadoc, required, Rutland, Shropshire, sick, social security, spending, Staffordshire, suicide, support, tax, threaten, unemployment, Vox Political, welfare, welfare to work, work, Work Programme, work-related activity, worse, WRA

Ingeus out of favour: This image was found on a site protesting against Workfare and demonstrates the high regard in which it is held by previous users of the Ingeus service.

Perhaps we’re jumping the gun with the headline but alarm bells tend to go off when you read that “people on sickness benefits will be required to have regular meetings with healthcare professionals to help them with their barriers to work”.

Everyone working on Employment and Support Allowance should already know what everyone receiving it knows – it’s more a bloodbath than a benefit.

This is down to the attitude of the healthcare professionals already working on it – the people who (and God forbid you should ever ask to see their qualifications) automatically sign 70 per cent of claimants as ‘fit for work’, whether they are or not, and tell most of the rest they need to be work-ready within a year.

The result? Mental breakdowns, depression and suicides; physical breakdowns, worsening of existing conditions, and premature deaths. By the thousand.

These are the people who ask claimants when amputated limbs are going to grow back, and who tell people with Parkinson’s disease and multiple sclerosis that they’ll be fit for work within six months.

If you did (God forbid) ask them where they got their qualifications, it was probably the Teaching Hospital of Noddyland.

“People on sickness benefits will be required to have regular meetings with healthcare professionals to help them address their barriers to work – or face losing their benefits [italics mine] – in a two-year pilot scheme in central England which begins in November,” the DWP press release states.

Isn’t this what happened with people on Jobseekers’ Allowance? Suddenly they had to start fulfilling lots of pointless extra requirements or their benefits would be withdrawn? Part of that is a regular meeting in which – as far as we can ascertain – innocent people are harassed, threatened and abused by DWP employees who are themselves, it seems, millimetres away from nervous exhaustion brought on by the pressures of the job.

Claiming benefits, it seems, is now an endurance test: Who cracks (up) first?

Now, for 3,000 people in the work-related activity group for ESA in the Black Country, Derbyshire, Leicestershire, Northamptonshire, Lincolnshire, Nottinghamshire, Rutland, Staffordshire and Shropshire, there’s no relief even if they have a nervous breakdown and have to claim ESA on mental health grounds.

“People involved in the pilot – who have all been assessed as being able to work at some point in the future – will have regular appointments with healthcare professionals as a condition of receiving their benefit, to focus on helping them move closer to being able to get a job.”

There you go – all judged as able to work in the future. Presumably Iain Duncan Smith has taken a look at their files, glanced into his crystal ball, and declared that he has a “belief” in their fitness to work. If any of these people are reading, please contact this blog if you have a progressive health condition that won’t ever improve.

Because the meeting is a condition of receiving benefit, anyone attending can expect to be treated abominably. This is not about helping you back to work, or even back to health; it’s about kicking you off-benefit and nothing further. The aim, as with JSA, is to cut claimant numbers and thereby cut spending.

“It’s really important we give people who are disabled or have a health condition the support they need to get into work if they are able,” said employment minister Esther McVey who knows nothing about this at all (despite having been minister for the disabled).

“Traditionally, this help has tended to be work-related, but this pilot will look at whether a more holistic approach is more successful in helping people to manage their conditions and so break down their barriers to work.”

The biggest barrier to a person with a disability getting work is the fact that the Conservative-led Coalition government has been closing down employment opportunities for them and removing incentives for employers to take them on.

The healthcare professionals will be provided by Ingeus UK – a welfare-to-work provider that has been involved in the Work Programme – you know, the time-wasting scheme in which jobseekers are taken off the unemployment statistics while they learn simple skills that, in fact, most of them already have.

The company’s website is very slick but contains no information about the number of doctors in its employ.

Oh, and guess what? The company is half-owned by Deloitte, one of the ‘Big Four’ accountancy firms that currently writes British tax law to make avoidance easy for the big corporates. How much tax has Ingeus paid lately?

“Everything we do is results driven”, the site declares.

One wonders what Ingeus will do when the casualties start piling up.

The work programme – a £527 million failure

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allowance, benefit, benefits, Coalition, Conservative, Department for Work and Pensions, DWP, employment zones, government, Iain Duncan Smith, Jobseeker's Allowance, Jobseekers, Mike Sivier, mikesivier, new deal, Parliament, pathways to work, people, politics, Serco, Tories, Tory, unemployed, unemployment, Vox Political, welfare, welfare to work, Work Programme

The government’s flagship work programme stood revealed as an abject failure today, when the Department for Work and Pensions admitted only around three per cent of jobseekers have found “sustainable” work.

Of the 878,000 people who joined the programme, only 31,000 found a job for six months or more.

The figures mean as many unemployed people are finding sustainable jobs on their own – and are staying in employment six months after joining the work programme – than if the scheme had never existed.

There was “no direct evidence of movement into sustained employment”.

Ministers have, of course, refused to accept that the scheme is a failure – despite it reaching only three-fifths of its 5.5 per cent target (3.53 per cent) – and are claiming it is taking longer than expected to succeed. The next set of figures will be better, they claim. They said it was “early days”.

We should bear in mind that three top officials on the work programme resigned recently, before the results were released. Oh, and the figures aren’t for a year but for 14 months, from June 2011 to July 2012. Cooking the books?

Under the scheme – replacing the New Deal, Employment Zones and Pathways to Work – approved providers in England, Scotland and Wales – mostly private companies – try to find work for claimants on a payment-by-results basis. In practice they get paid per referral, with more cash coming to them for providing ‘work-related activities’.

According to Vox readers, the contract is outsourced to our good friend SERCO, which is then supposed to pass money on to six different agencies. There is a question mark hanging over whether that has actually happened.

Providers can earn between £3,700 and £13,700 per person helped into work, depending how hard it is to give support to an individual, with an initial payment of between £400 and £600.

Again, Vox readers have helped with the details: “The few hours spent on ‘work related activities’ cost the taxpayer another £200 per person.

“What did we do on this ‘course’? We drew graphs with our barriers to employment. No one was allowed to mention lack of jobs and no training. We also played silly games: the one in which everyone had to say three things about themselves and everyone had to guess the lie. We all drew a pig. If it’s facing forward you are a straightforward person. The ‘ teacher ‘ told us that this all came from some American psychologist. It looked more like one of those quizzes in Cosmopolitan.”

So we can see that, with hundreds of thousands of people being put on the work programme but only 31,000 actually finding sustainable work, the big winners are, as this site suggested previously, the private companies contracted to provide the service at up to £600 per referral plus £200 for the ‘activities’ themselves. And if the rumours are correct, even these firms are losing out because SERCO hasn’t released the cash.

It may interest you to know that 878,000 (the number of people referred to the scheme) multiplied by £600 (the minimum amount we can say was given to private companies for them) is a whopping £526,800,000!

This site reported previously that the number of people being referred to the work programme has dropped dramatically, with total monthly referrals in July fewer than 49,000 – less than half of the 100,000 who were put on the controversial scheme in July 2011.

The number of long-term Jobseekers’ Allowance claimants had risen by 188,000 during the same period.

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Work programme is on the rocks – but the battle’s not over yet

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2011, A4E, Action for Employment, back-hander, backhander, benefit, benefits, borough, Channel 4, charities, charity, Chris Grayling, Coalition, community service, Conservative, Department for Work and Pensions, DWP, economic, economy, GDP, government, growth, Iain Duncan Smith, Job Centre, Jobseeker's Allowance, London, Mike Sivier, mikesivier, Parliament, people, Plus, politics, slavery, summer riot, The Guardian, Tories, Tory, unemployment, voluntary group, Vox Political, welfare to work, Work Programme, Workfare

Slave auction: One of the posters created to protest against the work programme when A4e was still involved.

The number of people being referred to the government’s flagship work programme has dropped dramatically, according to official figures – but I wouldn’t start celebrating yet, if I were you.

Figures for the year to the end of July 2012 show 878,000 referrals, but total monthly referrals in July were fewer than 49,000 – less than half of the 100,000 who were put on the controversial scheme in July 2011.

The number of long-term Jobseekers’ Allowance claimants has risen by 188,000 during the same period.

Since January, 15 charities or voluntary groups have quit the work programme, possibly due to the bad publicity the surrounds it. But 20 more signed up.

According to The Guardian, “The programme is supposed to link job centres to the companies that help unemployed people find work. The firms are paid for every jobless person who is found work.

“Under the contract, companies, and the charities that work for them, can collect £13,550 for finding such claimants long-term work; double the money paid for getting an unemployed person a job.”

This certainly agrees with the information sent in by Vox Political commenters, like this one: “The WTW [Welfare-to-Work] provider gets a £600 attachment fee. They also get paid fees for ‘providing support’ i.e. bullying her into doing what they want. Later they get an ‘outcome fee’ for making her stay in the minimum wage job of their choice. If she finds something with no help from them, they still pocket the dosh. If she finds training other than their useless ‘courses’ she gets rewarded with a sanction (benefits withheld indefinitely) to ensure compliance.”

That comment was made by a person who was placed with A4e [Action for Employment], a training company whose government contracts have been terminated after allegations of fraud were made against it. A Channel 4 investigation revealed in September that A4e had only found 4,020 jobs that lasted more than three months, in the 10 months up to May 2012, for its 115,000 compulsory attendees, at a cost to the taxpayer of £45 million.

Only a few days ago I wrote about one such “training” company – it might have been A4e – that took £400 per claimant, then passed each person on to Job Centre Plus, to go on a £300 work scheme. The cash taken by the company – for doing nothing – was excused as an “administration” cost.

These are all incidental to the main criticism of the work programme, which is that it keeps unemployment high by offering private companies people who must work for no pay – in other words, state-sponsored slavery. When the work placement ends, the private company throws away that person and brings in another. My belief is that it is not the taxpayers’ responsibility to pay the wages of people employed by a private company; if a firm wants people to stack its shelves, it should hire them at a living wage, rather than ask the government to provide workers and pay them only in state benefits.

I do not think it is a coincidence that the work programme has slumped, apparently because Job Centre Plus staff are moving claimants straight into jobs. And look at some of the other figures! Unemployment – down. GDP growth – up.

I have always believed that the work programme was an attempt to funnel taxpayers’ money into the hands of ministers’ friends, and these figures suggest I am right. The nation is better off without the work programme.

But that means these friends of the ministers would go without, and we can’t have that, can we? So what will the government do?

Let’s all remember that one of Chris Grayling’s last decisions at the Department for Work and Pensions was to roll out the work programme in 16 London boroughs – all notable sites of the summer riots in 2011 – starting in September. So youngsters who probably weren’t involved in those riots will end up doing 390 hours’ community service, while Grayling’s fat-cat business buddies continue to get their government backhander.

Grayling’s work placement gravy train rolls on – YOU get nothing

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"slave labour", care home, charity, Chris Grayling, economy, employment, Evening Standard, Facebook, job market, jobseeker, Jobseeker's Allowance, judicial review, Mike Sivier, mikesivier, minister, placement, provider, summer riots, taxpayer, voluntary, welfare to work, Winterbourne View, work experience, Work Placement

What do you do with a policy that has caused misery for thousands, has harmed the job market, removed jobseekers from work experience that would have led to a decent job and forced them to stack supermarket shelves instead, and actually had a judicial review held against it?

If you’re Chris Grayling, you roll it out in 16 London boroughs – all notable for being sites of the summer riots in 2011.

According to the Evening Standard, Mr Grayling plans to force young unemployed Londoners aged 18-24 to work in charities or care homes for 30 hours a week, while spending another 10 hours a week searching for a proper job, for a 13-week period. The policy will be applied to everybody who has spent less than six months in employment since leaving education; if they don’t agree to it, they’ll lose their £56-per-week Jobseekers’ Allowance.

He denied it was “slave labour” – the common nickname for the Work Placement scheme – instead claiming it would help young Londoners improve their career prospects.

I wonder what it will do for the prospects of people living in care homes who’ll have these inexperienced youngsters put in charge of them. It’ll probably make Winterbourne View care home look civilised – and through no fault of the youngsters being forced to do the work.

Mr Grayling also said it was reasonable for youngsters to be asked to give something to the community before the community gives anything back.

This might be a valid argument, but let’s ask one vital question: Who really gains from these work placement schemes?

The youngsters don’t – all they get is £56 per week and the loss of time that could be spent in voluntary work that will lead to a proper job.

The economy won’t – the jobs these young people will be doing should have proper wages, contracts and conditions of employment attached. This would pump money into the national economy and might actually help get Britain working properly again, but instead we’re seeing a silly publicity stunt from the government.

And the taxpayer won’t benefit either – because the government is using our tax money to fund the scheme. We’re paying for these youngsters to work for organisations that should be offering proper employment to people instead. And if you think all we’re paying is £56 per week, per jobseeker, think again!

If this system is anything like Welfare to Work (and I think it is), then each jobseeker will be sent to a placement by a provider – a private company employed by the government to shoehorn them into a placement. These are the people who will benefit from this scheme. It’s another backhander for Grayling’s fat-cat business buddies.

According to a commenter on my Facebook page (the ‘like’ button is at the top left of this page) “The WTW provider gets a £600 attachment fee. They also get paid fees for “providing support” i.e. bulllying her into doing what THEY want. Later they get an “outcome fee” for making her stay in the minimum wage job of their choice. If she finds something with no help from them, they still pocket the dosh. If she finds training other than their useless ‘courses’ she gets rewarded with a sanction (benefits withheld indefinitely) to ensure compliance.”

Is the reasoning behind this starting to make sense now?

The comment continues: “The job centre sent me to work (unpaid, natch) as a learning support asst with pre-ESOL classes. Six months later the college offered to fund my teacher training. Jobcentre promptly ordered me onto Work Programme. I now belong to Maximus [this will be the WTW provider] for two years. They told me to dump teaching plans and do contract cleaning. I dumped Maximus instead. Now I’ve been sanctioned. The Prime Minister goes on about literacy (which I also intend to teach) but is willing to keep throwing money into the WP to use the unemployed as a commodity. Maximus get to keep the attachment fee, by the way.

“The reason given [for the sanction] was ‘you had opportunities’ meaning the useless, unaccredited courses at À4E. I found a part-time job to help while training and the college want to pay my fares. The jobcentre seems to be under pressure to send people on WP. The Govt line is that the WP is for the ‘feckless workshy’ and the press seems to be colluding in this.”

That last comment is particularly telling, as there’s no mention of any of this in the Standard’s article.

Public sector – good/private sector – bad

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A4E, agency, Any Questions, bank, banks, BBC, benefits, British Rail, Conservative, consultancy, consultants, David Cameron, G4S, Geoff Atkinson, government, health, housing, John Bird, John Fortune, judiciary, Labour, local authority, London Underground, National Rail Trends, Olympic, Olympics, Owen Jones, PFI, police, Powys, Powys County Council, prisons, private, Private Finance Initiative, privatisation, public, Radio 4, rail, repairs, revolution, Rory Bremner, rosco, section, sector, security, services, stock, survey, tax, taxpayers, The Future of Transport White Paper, water, welfare to work, Westminster, You Are Here

Many of you may be aware that I live in a large county called Powys, that has a small population. This means that the amount of money the local authority receives from central government and local taxation is always stretched very thin, in order to provide the services required across – what is it? – 6,000 square miles.
Given that context, it should come as no surprise at all that some of the information I have been receiving about the way that money is being spent has raised concern.
It seems the county council has employed a consultancy to carry out a survey of housing stock – to pinpoint where repairs are required and carry them out. This consultancy has taken £1.5 million from the council’s budget and not one repair has yet been carried out.
In addition, it seems most of the council’s own employees at its benefits section have quit, to be replaced by staff from an agency. This organisation charges £20 per hour for each worker’s services, I’m told.
Is this value for money? I don’t think so.
I think it is a local symptom of a national malaise: the disastrous affair public authorities have been having with the private sector. It is an affair that has already led to the humiliation of the government in the G4S Olympic security debacle; an affair that has its roots in the Private Finance Initiative that was launched by the Conservatives in the 1990s and continued into the current century (to my shame) by my own political party, Labour.
I have recently become quite a fan of ‘lefty’ columnist Owen Jones. This may come as a surprise to some readers as not only has he enjoyed greater success than me at the same career (journalism), but he is 16 years my junior. Talented, young and successful – I should be green with envy rather than cheering him on, right?
In fact I’m simply glad that someone is around to say what I would have said, in his position.
You may have heard this gentleman speaking on the BBC’s Any Questions (Radio 4, last Friday and Saturday), on the very subject of private involvement in public services. If you did not, allow me to enlighten you.
“What’s happened with G4S has exposed the dogma of the last 30 years, that the private sector is good and efficient, and the public sector is wasteful. What happened when G4S failed? The state had to go in and fill the vacuum – and it’s not just there we’ve seen it. We’ve seen it with A4E, this welfare to work programe, this company that basically took taxpayers’ money to line the pockets of those who were running it; we saw it with PFI – started by the Tory government, continued under New Labour, that’s like paying for public services on a credit card, getting these private companies to do what the state should have done, apparently it costs up to £25 billion more, of our money. It’s the same with the London Underground; it’s the same with rail privatisation – we’re now paying up to four times more on subsidies for private rail companies than we did in the time of British Rail. And we’ve seen it recently with water. We just recently had a drought when rain was absolutely hammering the southeast. That’s because a water company sold off 25 reservoirs in the last 20 years.
“Public services should be run by the public sector, accountable to us, democratically-run, instead of taxpayers’ money lining the pockets of private companies who do not have our interests at heart; they just want to make profit out of our services.”
In support of that, let’s have a few facts and figures. Those I have at hand come from a book entitled ‘You Are Here’ by satirical luminaries Rory Bremner, John Bird and John Fortune, with Geoff Atkinson. It was published in 2005 so the information – accurate at the time – may be out of date by now and I would be happy to read any updates on what follows.
In 2005, this was the situation:
When the railways were privatised (by the Conservatives) it was decided that one company would own and run the tracks, one group of companies would operate the trains and another group of companies would own them. There are three rolling stock leasing companies – roscos – that lease their trains to the operating companies. These trains cost just over £2 million to build and are leased out for £500,000 per year. Their lifetime is anything up to 40 years – which is a huge profit margin.
But don’t worry – they don’t receive a penny of taxpayers’ money. No – the subsidy for the South Central franchise was set to increase by £342 million between 2005-2010. Of this, 80 per cent went to the roscos for new rolling stock – around £273,600,000. But it wasn’t taxpayers’ money by then. It was taxpayers’ money when it was part of the operating company’s subsidy, but when it was passed between that company and the rosco it was a simple business transaction.
That’s how they get away with it. You and I both know that the cash came out of our pockets, but because it went through a middle-man, these companies can call it their own.
You might be interested to know that the three leasing companies are (or were, in 2005) all owned by banks.
According to ‘You Are Here’, “The Future of Transport White Paper says: ‘The privatisation of the rail industry in the early 1990s assumed that private sector discipline and innovation would drive down the railway’s subsidy requirement and drive up the quality of service. In part this has been borne out.
“Rail users might well ask: In which part? The same document shows 80 per cent of trains arriving on time in 2004, compared to 90 per cent in 1998. The latest National Rail Trends shows total government support to the rail industry in 1995-96 of £431 million. For 2002-03 it was £2,588 million.”
Private Finance Initiatives were intended to bring private sector cash in to fund public services – which may seem like a good idea on the face of it. As ‘You Are Here’ states: The deal is simple. Money for the new service is raised privately in the money markets and thus kept off the country’s balance sheet… but like any free offer, it does come with small print.
“The long-term value of PFI contracts may go down as well as up. Your public services are at risk if you do not keep up the repayments. The return for consortiums running PFI projects” – on the other hand – “may go up and up and up. Standard terms include: cost-cutting, short-term employment contracts, high management costs, huge legal costs. Every element must be a profit centre. After expiry of contract (typically 35 years) the consortium is under no obligation to renew the terms of the lease and can renegotiate at more favourable rates or move out of the public service sector and turn the property into a hotel or office block.
“PFI often means that an organisation which previously worked to a single goal is now in competition with itself, as different parts of the same system strive to outbid each other, the primary goal being to enhance profitability rather than deliver a service.”
To enhance profitability rather than deliver a service.
In February last year (2011), David Cameron promised to deliver a ‘revolution’ in public services, in which he envisaged everything but the security services and the judiciary being privatised. You can read about it here. Private prisons; private police; private health services – we’ve seen these rear their ugly heads already, and I’m sure more is to come.
Considering the disastrous profit-driven performance of the private sector in public services, as detailed above, I cannot think of anything worse than letting private companies continue with what they’ve got, let alone adding anything new to their portfolio of travesties!
With this in mind, I have to ask why Powys County Council thinks employing a private firm to survey its housing stock, or workers for a private agency to administer its benefits, is an economical use of my taxpayer money.
It’s time the madness stopped, and if Westminster is too sick to do it, then perhaps local government should lead the way back to sanity.