So it turns out the much publicised manpower shortage in the British Army is down to outsourcing company Capita’s failure to do its job. It’s not often I applaud The Sun on it’s journalism, but their revelation this week that the army is being crippled a man power shortage, despite a record number of of would-be recruits attempting to join, is a favour to all of us who believe in public services need to be brought back in-house.
Our 82,000 army is 4,000 short of the recruits it needs to function viably. Yet according to The Sun reports of 100,000 who attempted to join last year, only 7,500 survived the 300 day joining process - most dropping out because of frustration with Capita’s lengthy and impersonal procedures. The Sun damning Tory outsourcing is to watch the governments own media bulldog break from its chains and turn to savage them.
Neither Capita, nor the Tories outsourcing programme, is any longer for for purpose. The Sun’s exposé puts the nails in the privatisation coffin. Labour’s 2017 General Election manifesto pledges of a new economic settlement to end the outsourcing of public services and to replace costly PFI with direct public investment was derided by the Tories as unviable last June. Seven months on, those pledges look prophetic. Wriggle as they might, the Tories can no longer escape the public’s wrath for the terrible value for taxpayers money which Private Finance Initiative (PFI) projects provide.
Day after day, the Tories are failing in their first duty of government - to protect it’s people. Outsourcing is the flip side of the austerity coin. It’s the side that delivers privatised profits to the corporates, the speculative and the downright greedy elite. Austerity is what’s tossed to the rest of us - and it isn’t just hurting those at the bottom, it means Britain is now operating on an almost war-footing, with just about every citizen at risk of becoming collateral damage. In January they imperilled all of us by banning all but emergency cases from hospital waiting rooms because our ravished health service can no longer cope. This month, it’s our army that’s revealed as diminished.
The collapse of Carillion has destabilised thousands of schools futures, halted our infrastructure building and for 20,000 Carillion workers, a future without a pension is now on the cards. Credit to Labour’s Frank Field as chair of the Work and Pensions Committee for now showing the same dogged determination to hold Carillion’s board to account that he showed to discredited tycoon Phillip Green for his failure of care to BHS employees whose pension fund had also been ransacked prior to its collapse.
Unless we halt them, the Tories will remain desperate to inject some life into this dying outsourcing culture which has seen privateers laugh all the way to the bank at our expense. From the day John Major started the PFI boom, we were repeatedly told that this was a good way to fund public investment as the private sector took on the ‘risks’. Sadly, New Labour followed suit and PFIs and outsourcing grew rapidly during the Blair and Brown era. Those of us who continuously argued against this costly way of delivering investment and services were cast aside as ideological deviants.
But as the collapse of our public services - including the very programme by which we recruit to our army - becomes endemic, so does outsourcing itself, which is being revealed as ideologically deviant. There are now 700 PFI projects around the UK including for schools, hospitals, prisons and motorways. There is also a very a compelling body of evidence that the costs of these deals outweigh the benefits- with £200billion due back to these companies over the coming years for £60billion worth of buildings. PFI is the equivalent of taking out a payday loan to pay for building and running our public services. The annual charges for these deals amounted to £10.3billion in 2016-17 – with around half of this cost being for interest repayments and charges rather than services for local residents.
Which is why my union is calling on all Labour MPs to debate and vote on amendments 1 & 3 to the Finance Bill, at its third reading this Wednesday. These amendments require the Government to calculate how much would be raised by implementing a windfall tax on PFI companies. And it is for now a pragmatic stepping stone en route to solving our PFI problem as well as a means to land another blow on this bad for Britain Tory government.
National Audit Office (NAO) research show PFI contracts have made the costs of public building projects 40% more than relying solely upon government money with additional charges, such as insurance and cash requirements, pushing up costs further. The NAO also highlight the failure of the 2012 Conservative Government review of PFI to address any of the concerns about the costs of borrowing or overcharging by these companies. And the real tragedy is that the contracts were always designed, as my union warned at the time, to ensure cancelling them would be more costly than remaining with them. Clever clauses were inserted to the contracts requiring the lenders and the shareholders to be ‘fully compensated’ and left no worse off because of authority default than if the contract had proceeded as expected.
The contracts also require the Government to cover the interest rate swaps used to ensure that these deals were profitable. The NAO estimate this would add a further 23% to the costs of buying out these contracts. In total it could cost up to £220billion – money which would not go into our public services but back to these multi billion pound companies and their shareholders.
That’s why PFIs have never been worried about calls to cancel their contracts. But the work of Labour MP Stella Creasy and others to impose a windfall tax is a credible threat to excessive PFI profits which, thanks to Tory cuts to corporation tax, will fall to 17% by 2020, allowing them to continue to prosper whilst our public services are made yet more meagre. As Stella’s points out, the NHS is facing an unprecedented funding gap of up to £34billion over the 5-year period to 2020/2, but we don’t have to wait for a Labour government to get PFIs to pay back into the public coffers. Winning this amendment means we can begin to use the state’s power to bring these companies round the table to renegotiate all PFI deals. If these companies won’t negotiate substantial reductions in their repayment costs, then parliament can use the threat of bringing in a tax on their windfall profits.
The tide is now with Labour. No matter what desperate moves the Tories make to try and save outsourcing, privatisation and PFI, they’ll be a busted flush. The public mood is against them. All Labour MPs must now do the right thing and let the will of the people be heard in Parliament on Wednesday.
Let’s hit the outsourcers where it hurts in their profits. Let’s force them to up their taxes in the here and now and advance the cause of a more cost effective and democratic way to run our public services and investment. It’s not just in our Labour Party interest, this is the will of the people! Let’s serve them.
Manuel Cortes is general secretary of the TSSA