Be-Serco! A shadowy tale of outsourcing

The outsourcing giant Serco – which holds a number of lucrative contracts providing services in sectors as varied as education, defence – and even maintaining Greenwich Mean Time as well as the “Boris Bike” scheme, has agreed to repay the government for overcharging on its contract to provide electronic tagging systems by around £50 million.

The scandal, which saw Serco billing the government for offenders who were dead, already back in prison, or abroad, is set to become a political football, with senior Labour Party sources telling the Independent they would seriously consider stripping the company of its contracts – currently worth £61billion.

Serco’s meteoric rise over the last 25 years has seen it amass a quasi-monopoly in the public sector. Within the UK alone it operates six prisons and two immigration detention centres, it manages intelligence for the UK Border Agency and our ballistic missile defence system, as well as providing various NHS services in Suffolk and Cornwall. Serco’s also got its mitts in education and transport, running inspections for Ofsted and operating Northern Rail and Merseyrail train networks. In addition many local authorities choose to outsource to Serco; it could oversee refuse disposal, road maintenance, and even traffic light operation in a council near you. They also happen to be the largest air traffic controllers in the world, with over 50 towers in the US and the monopoly on Baghdad’s air traffic. And the list goes on and on.

The company’s trajectory is indicative of the ubiquity of outsourcing in Britain, and even further, the pervasiveness of privatisation. The management of public services by the private sector took off with Thatcher, but expanded exponentially during New Labour’s tenure. Blair’s 1997 statement “what matters is what works” seemingly sealed the deal. Scandal aside, how such a model (predicated on the cutting of costs but also fatally flawed though its obligation to make profits for its shareholders) was taken up by a supposedly “left wing” party points to a worrying diminution of ethical standards in British politics over the last 20 years.

Theoretically part of “the roll back of the bureaucratic state” and intended to inject some entrepreneurial and competitive spirit into the public sector, in reality outsourcing poses a serious threat to the quality of services. Serco managed to cut costs by 20 per cent in one of its prisons by putting beds in the toilets, and a child in Cornwall where it manages the NHS’s out of hours service, died of a burst appendix after a Serco phone operator told his mother to put him to bed instead of seeing a GP.

A whistle-blowing doctor said he believed he was the only doctor on duty in the whole county. Despite this, Serco’s contract in Cornwall was renewed in 2012 for another five years.

The current scandal has seen its CEO and UK boss resign and it has warned its shareholders that profits look set to fall over the next two years; however some critics have compared outsourcing companies to the banks, claiming they are “too big to fail.” The Daily Telegraph even claimed, “Without Serco, we’d struggle to go to war.”

Compared to its main rivals – G4S (which failed to deliver security guards for the Olympics) Atos and Capita, Serco’s company structure is even more sinister. Each contract operates as a separate business thereby making it very difficult to ascertain what is actually going on. With fraud and managerial bungles arguably endemic, it begs the question, why is the government so intent on ramping up its outsourcing contracts? Austerity measures and its continuing commitment to the private sector play their part.

However Labour’s pronouncements should also be taken with a pinch of salt, in reality Britain is so enmeshed in Serco et al’s web that it will take a near reversal of current policy (indeed a fairly lengthy deep-rooted one) and some serious political clout to get us out of the thicket, the kind which, in my opinion, Labour is yet to display.