Outsourcing is not popular. Just 21% of the public trust outsourcing companies. Only 22% of the public think Atos, Capita, G4S and Serco are motivated by providing the best service to the public - while 80% think this should be important.

But what actually happens when one of these companies takes over running public services for a council?

UNISON West Sussex recently released a report on the impact of outsourcing back office functions at West Sussex County Council to Capita. The report, produced by independent researcher Andrew Holt, found that the outsourcing deal had led to lower quality services, lower staff morale, and less transparency and accountability.

What this research does is demonstrate that the public’s perception is backed up by research on the impact outsourcing has on the quality of services and staff.

The contract in question was worth £154 million over 10 years, and signed in June 2012. The functions outsourced through the contract - known as the Services Outsourcing Contract, included everything from recruitment, human resources management and payroll to customer service centres and online service delivery. The report was designed to examine 1) whether the contract was meeting performance objectives, both in terms of cost savings and in terms of service and performance, 2) the impact on staff and morale, and 3) whether or not there is social value, or value for the community taking into account a wider notion of value than simply the cost. (Councils are allowed to award contracts using wider notions of value as a result of the Social Value Act 2012.)

Key findings:

Accountability and transparency lacking

• In line with other research on outsourcing, there is a lack of publicly available information to permit independent scrutiny of contract performance.
• The report also finds there is insufficient separation between the council as commissioner and Capita as supplier., For example, given so many Capita staff are involved so closely with the council., it’s hard for them to assess the contract and manage it properly.

Worse services

• 50% of respondents felt that services had got worse – and just 2% said they had improved.
• 65% of staff felt they weren’t offering a better service under Capita, and 55% felt more under pressure.
• The contract is preventing innovation and leading to a standardised treatment of service users.

Profit coming before people

• One way social value has been undermined through the contract is the increasing use of offshoring service provision. At the time of writing, Capita was about to outsouce many of it’s operations to India. Capita says it has a contractual obligation to deliver cost savings, and that this means it needs to move jobs abroad if necessary. But as the report states “social value will undoubtedly reduce if jobs are relocated elsewhere without some kind of quid pro quo taking place.”

Negative impact on staff

• 70% of respondents disagreed or strongly disagreed with the statement “There is good morale in my workplace”.
• 76% of staff transferred from WSCC felt morale was lower since transferring to Capita.

Poor process and governance

• The report details that the deal was rushed through, and that there is evidence that the council doesn’t have sufficient capacity to manage a contract of this size. This dovetails with other findings, which have highlighted how councils have been given misleading advice on loans, by Capita in particular.

The full report is here. It is worth a read for anyone with an interest in what happens when outsourcing giants take over council services. This type of contract, covering back office functions, is now commonplace – the Met Police recently did this too, and the quality of that decision has also been called into question.

Outsourcing giants need to be held to account by all of us who use public services. And we need to be able to encourage councils to look at the bigger picture when taking decisions to outsource. Sign the petition for public services for people not profit.