Multinationals making money from the public purse – in prisons, detention centres, hopsitals and the like – are the perfect example of the modern age; firms that talk about rights and care but are all about only one thing. Serco is one of those companies, getting huge profits in the process. Governments love them; much less accountability.
Incapacity benefit claimants began to be “invited” in for tough new work-capability assessments on Monday – an invitation they can’t refuse. In two pilot schemes 70% of claimants were judged fit for work, with a third put straight on to jobseeker’s allowance – leaving just 30% too frail to be chivvied further.
Last week the government announced who had won contracts for the work programme: there was shock when, out of 40 contracts worth between £3bn and £5bn, only two went to not-for-profit groups. Not so much “big society” as big Serco. The biggest winner – and a surprise – was Ingeus Deloitte, which won seven huge contracts amid acid observation that its CEO was a former director at the Department for Work and Pensions. Concern was expressed that Ingeus had underbid more experienced providers: price was a clinching factor in the official scoring system, whereas bizarrely previous performance was not scored at all.
The greatly disappointed voluntary sector will be relegated to sub-contracting. The big companies will hand down their difficult cases, such as addicts, ex-prisoners or the mentally ill – creaming 20%-30% off the top in “management fees”. The Glasgow-based Wise Group, whose board I was on until recently, is a leading not-for-profit organisation, and was shocked to win no contract and see Scotland go to Ingeus Deloitte despite a lower success rate. Wise is the sixth most successful in the UK for the flexible new deal and top for finding people work in the new deal for the disabled. It’s about as big society as they come. Why didn’t it win? Possibly because it wouldn’t and couldn’t discount too steeply: the voluntary sector can’t gamble and borrow as large companies can.
Among the winners is A4E (Action for Employment) – hardly surprising as its founder, Emma Harrison CBE, was named by David Cameron as his workless families tsar. As the Observer revealed, she and her husband have a joint income of some £1.4m from their welfare-to-work empire. While any public sector chief executive earning over the prime minister’s £140,000 is ritually slaughtered by Eric Pickles, not a word is said about private sector chiefs making a killing out of public contracts. Serco’s CEO had an 18% rise to £1.86m.
Cameron has announced his intention to outsource not just the NHS but virtually the entire public sector to “any willing provider” – with little concern about profits made from the public purse.