MPs slam Govt on outsourcing and call for PFI halt

09/07/2018
Chris Ames

MPs have criticised the Government’s approach to outsourcing, accusing it of having a ‘preoccupation with cost’ while being unable to show it provides 'better services for less money'.

In a new report following the collapse fo Carillion, the Public Administration and Constitutional Affairs Committee called for a moratorium on new PFI schemes, and a review of the financing arrangements for two flagship roadbuilding schemes.

MPs said the Government's overriding priority for outsourcing is ‘spending as little money as possible while forcing contractors to take unacceptable levels of financial risk’.

Committee chair Sir Bernard Jenkin MP, said: ‘It is staggering that the Government has attempted to push risks that it does not understand onto contractors, and has so misunderstood its costs. It has accepted bids below what it costs to provide the service, so that the contract has had to be renegotiated.

‘The Carillion crisis itself was well-managed, but it could happen again unless lessons are learned about risk and contract management and the strengths and weaknesses of the sector.’

The committee said the Government’s approach was made more damaging by the fact that the information it uses to inform the outsourcing process can be ‘either incomplete or simply incorrect’, something it ‘must be aware’ of as it has written contracts that force contractors to pay out when it gets its own data wrong. 

The Government has also been known to forego performance penalties in the initial phases of contracts.

MPs said that ultimately, this has led to worse public services as companies have been sent a clear signal that cost, rather than quality of services, is the Government's consistent priority.

They said contractors had told them that the Government was known to prioritise cost over all other factors in procurements, ‘driving prices down to below the cost of the services they were asking firms to provide’.

‘Worse, the Government was unable to provide significant evidence for the basic assertion behind outsourcing: that it provides better services for less public money, or a rationale for why or how it decides to outsource a service. This was especially true for PFI. Shockingly, the Government admitted to the Committee that the "entire [PFI] structure is to keep the debt of the balance sheet”.’

The committee called on the Government to commit to underpinning contracts with realistic assessments of cost and risk transfer.

MPs also said that the Government ‘should not approve any further PFI projects until they can clearly justify, based on evidence, their claims about the benefits of the scheme’, adding: ‘Ministers should be able to choose to use state finance where it is clear that private finance would bring no benefits.'

The committee said: ‘The Treasury should scrutinise in particular the recently approved transport projects (the A303 Stonehenge tunnel and roads and the £1.5bn approach roads to the Lower Thames Crossing) to ensure that there is good evidence that private finance represents the best value for money in these cases.’

Highways has approached Highways England for comment.

Latest Issue

latest magazine issue

Inside

  • The £2.5bn Surrey partnering contract
  • The politics of protest
  • Stoke's roadworks league
View the latest issue


Highways jobs

Environmental Health/Environmental Protection Officer - Noise

£41,607.00 - £44,598.00
This post attracts an essential car user allowance. The post holder is able to take part in the Council's flexible working scheme. Tower Hamlets, London (Greater)
Recruiter: Tower Hamlets London Borough Council

Engineering Manager

£46,756 - £54,238 per annum
The Engineering Team is responsible for the management of the Council’s fleet of vehicles (circa 330), ensuring... Camden, London (Greater)
Recruiter: Camden London Borough Council

Street Care Operative

Grade 3 - Starting at £18,657 per annum, rising to £19,905
The Council’s Street Care service is responsible for the cleanliness of the whole borough and undertake a range of street cleaning and street care ... Chelmsford, Essex
Recruiter: Chelmsford City Council

Neighbourhood Highways Officers (Western Team)

£28,672 - £32,234 per annum
We are seeking to recruit two Neighbourhood Highways Officers, to be based in Okehampton. Devon
Recruiter: Devon County Council

Demand Responsive Transport Officer

£32,234 pa - £34,728 pa
The role sits within the Integrated Transport Unit. Hertfordshire
Recruiter: Hertfordshire County Council

Head of Highways

£68,640 - £76,148 per annum
We are absolutely delighted to announce that Cheshire West and Chester are looking for a Head of Highways. Chester, Cheshire
Recruiter: Cheshire West & Chester

Highways Team Leader

£25,481 - £25,991
Are you a hard-working and experienced Highways operative, looking for the next step in your career? Cumbria
Recruiter: Cumbria County Council

ICT Field Engineer

£29,577 - £30,451
This is an exciting and challenging time to join us, as throughout the organisation we are... Cumbria
Recruiter: Cumbria County Council

Senior Structural Engineer

£45,768 per annum
The role involves managing the Structural Engineering Team and the budget for structural engineering consultants.   Lambeth, London (Greater)
Recruiter: Lambeth Council

Street Works Manager

£45,594
Are you a self-starter who takes ownership of problems and takes pride in finding solutions? Lambeth, London (Greater)
Recruiter: Lambeth Council

Highways Network Officer

£31.346 - £32.234
Are you looking to progress your career within the Highways and Transport sector? Cumbria
Recruiter: Cumbria County Council

Bridge Engineer

£35,745.00 to £36,922.00
We are currently seeking to recruit an experienced and enthusiastic Bridge Engineer. Kendal, Cumbria
Recruiter: Cumbria County Council

Highways Team Leader

£25 481 - £25 991
Are you a hard-working and experienced Highways operative looking for the next step in your career? Workington, Cumbria
Recruiter: Cumbria County Council

Inventory Technician

£19,312 - £20,493 per annum
We have an exciting opportunity available within the Highways Service at Sandwell Council.  Sandwell, West Midlands
Recruiter: Sandwell Metropolitan Borough Council

Shopmobility & Public Convenience Attendant

Grade 3 - Starting at £18,657 per annum, pro rata rising to £19,905
We are looking for an individual who works well in a small team to deliver an excellent level of service at our flagship Market Road Public Conveni... Chelmsford, Essex
Recruiter: Chelmsford City Council

Waste Collection Operative - HGV Driver/Loader

Grade 5 - Starting at £23,403 per annum, rising to £25,791
If you enjoy working outside and would like to make a positive contribution to the collection of both waste and recycling in the Borough, this coul... Chelmsford, Essex
Recruiter: Chelmsford City Council

Director of Climate Emergency & Behavioural Change

£95,000 to £109,000 per annum
At Waltham Forest we are developing an ambitious, transformative agenda to tackle the global Climate Emergency. Waltham Forest, London (Greater)
Recruiter: London Borough of Waltham Forest

Street Works and Permitting Manager

£44,863 - £51,817
Are you a qualified highways engineer who wants to make a difference to the efficient running of the highway network within Lincolnshire? Lincolnshire
Recruiter: Lincolnshire County Council

Highways Officer

£27,741 to £30,451
Are you someone who is looking to progress their career with one of the most highly regarded highway services in the country? Brompton, Northallerton
Recruiter: North Yorkshire County Council

Highways Officer

£27,741 to £30,451
Are you someone who is looking to progress their career with one of the most highly regarded highway services in the country? Boroughbridge, York
Recruiter: North Yorkshire County Council

Highways Presents

Highways on Fridays

Register now!

Latest Video