UK/Europe: What kinds of companies are delivering our public services?
(October 2011) The outsourcing of public services has become big business and is increasing as governments around Europe resort to it in the hope of making short-term cost savings. While public sector unions have often argued against privatization on the grounds of the impact on the quality of employment and the quality of services, they have focused much less on the social responsibility of the companies that are winning the contracts.
A recent report by Ethical Consumer magazine in the UK has put 20 of the biggest of contractors under the spotlight and exposed some of their shortcomings under a range of social, ethical and environmental criteria.
The magazine’s main conclusion is that “the biggest companies that are playing an increasingly important role in running our public services have the bottom rating for many of our ethical and environmental criteria, including environmental reporting, supply chain management, human and workers’ rights and political activity.” Although the report looks at the main contractors in the UK, several of them are European multinationals and so operate in several other countries.
The companies investigated in the Ethical Consumer report are:
Construction and facilities management: Balfour Beatty, Ferrovial, ISS, Serco
Custodial services: G4S, Serco, Sodexo
Health care commissioning: KPMG, McKinsey, United Health
Information and communications technology services: Atos, Capita, HP, IBM, Serco, Vodafone
Local education authority outsourcing: Capita, Ferrovial, Serco
Management Consultancy: IBM, KPMG, McKinsey
Secondary healthcare: Alliance Medical, BUPA, Circle
Tertiary education: A4E, BPP (Apollo), Capita
Waste management: Veolia
The list of companies was compiled from The rise of the public service industry published by Unison, and a list of the top 19 government contractors published by the Cabinet Office.
The report found that the companies “ scored badly with regard to human rights, with 13 out of the 20 companies picking up the bottom rating in this category.”
The magazine refers in particular to G4S, Serco and Sodexo that run the UK government’s immigration removal centres. The report reveals that Serco “has been criticised for conditions at the Colnbrook immigration removal centre. Government inspectors recently made 191 recommendations to change current practices at Colnbrook after reports of poor conditions. There were also reports of abuse at Serco’s Yarl’s Wood detention centre which resulted in a number of detainees going on hunger strike.”
Serious questions have also been raised about political influence. The report says that health company Alliance Medical were awarded a contract to supply scanning equipment to the National Health Service after a company which part-owns it, Bridgepoint Capital, hired Alan Milburn, a former Labour government health minister, as an adviser (See report in Daily Telegraph newspaper).
Similarly, the G4S was the focus of news stories when it was awarded a four-year contract just months after taking on former Labour government defence minister John Reid as an advisor (See report in Daily Mail newspaper).
Ethical Consumer expresses concern that most of these companies are also taking advantage of tax havens to reduce their tax bills. It identifies the following companies with subsidiaries in tax havens include KPMG, Capita, Sodexo, Serco, ISS, G4S, Ferrovial, Veolia, Balfour Beatty, Hewlett Packard, United Health Care, McKinsey, BUPA and BPP.
The full details of the research behind the Ethical Consumer report are available on its website but the article provides some examples:
“Atos is at the centre of a fierce campaign run by disability activists. The French company is responsible for carrying out the government’s drive to assess everyone claiming incapacity benefit and deciding if they are fit enough to work. There are 8,000 tribunals hearing ‘fitness to work’ appeals every month across the UK and 40 per cent of decisions are being reversed.” BBC news report
“As well as being one of the UK’s biggest companies Capita also has a well documented record of poor service provision. The company was sacked by Lambeth local authority after tens of thousands of unprocessed housing claims left many families in danger of eviction. It has had similar problems in Manchester and Blackburn.” Guardian news report
“In 2010 the Brook House immigration removal centre run by G4S was described as ‘fundamentally unsafe’ by Dame Anne Owers who at the time was Chief Inspector of Prisons. Dame Anne found there had been 105 assaults, mostly against staff and 35 incidents of self-harm by detainees over a six month period. There were said to have been serious problems with bullying, violence and drugs.” BBC news report
The full article is available at Ethical Consumer