Cancel all sell-offs call

Tory efforts to privatise Whitehall back office functions to save £500m a year have instead cost taxpayers an extra £4m – and are riddled with problems that will be expensive to fix, the National Audit Office (NAO) has found.

The spending watch dog’s damning conclusion came as new analysis from the New Economics Foundation showed how government plans to privatise and outsource even more public services will damage finances in the future.

The cabinet office’s decision to transfer Whitehall’s human resources, accounts and payroll duties to private companies in 2013 was supposed to “radically improve efficiency across departments.”

However the NAO found that rather than saving at least £128m a year, the scheme, which cost £94m to set up, had saved £90m – leaving taxpayers £4m out of pocket.

NAO auditors said confidence in the project “is now low” and that delays and contingency plans had driven up costs and left some elements of the system out of date.

The NAO blamed the cabinet office for not acting “in a timely and effective manner” to resolve the issues because it “did not see this as its role.”

Multitude of privatisation

The NAO report came during the closing days of a consultation on privatising the land registry. Plans to sell off the land registry are just one of a multitude of privatisation initiatives the Conservatives are intent on enacting.

These include privatising the remaining public stake in national air traffic services, looking at options for introducing the private sector into ordnance survey and the partial privatisation of Channel 4.

Privatisation will also hit the ministry of defence’s (MoD) civilian workforce, with 18,000 jobs to go by 2020.

“A lot of our members who are drivers, stores people, electricians, plumbers etc, they’re the ones who will be outsourced or made redundant and that’s a worry for them,” explained Unite national officer for MoD and government departments, Mike McCartney.

“Although the 1 per cent pay freeze doesn’t apply in the private sector, private companies are definitely after eroding terms and conditions.

“A lot of people are very comfortable at the MoD, but they shouldn’t get too comfortable because I can just see attacks after attacks.”

The taxpayer is also under mounting threats from privatisation, a study from the New Economics Foundation (NEF) for the We Own It campaign, released this week, found.

The report concluded that long term losses from selling off public assets outweigh the money accrued from one off sales.

We Own It director Cat Hobbs said, “If the Great British sell off goes ahead, we’ll have lost our public assets forever – and all the millions of profit they bring in every year.

“The land registry is a profitable, successful, innovative organisation doing a great job – why privatise it? We need to think about the wealth of the next generation not just a quick fix on the deficit.”

If the land registry is sold off, the public will lose out financially from the sale in 25 years, the report found. For the recently privatised Royal Mail any profits will slide into loss within 10 years, the NEF said, while a decision to sell off the government’s stake in national air traffic services will shrink the public purse in just seven years’ time.

NEF researcher Duncan McCann said, “Politicians often work on a short timeframe. This report shows just how short.

“These valuable assets can bring in long term sustainable income. They are working well, have successfully modernised and our economy can benefit most from them staying in public hands.”

Unite assistant general secretary Gail Cartmail, pointing to Britain’s dysfunctional rail franchise system as an example of what happens when public assets are sold off to make a quick buck, called on the government to halt its plans.

She said, “Unite warned against the planned escalation of sell offs and outsourcing. Our predictions have come to pass. This is cold comfort to the service providers faced with insecurity and the taxpayer who sees good money thrown after bad in a desperate rush to ‘shrink the state’.

“Sell-offs serve the austerity addiction that is the hallmark of the Conservative government. The facts are proof positive and all sell offs in the pipeline must now be cancelled.”