London Daily

Focus on the big picture.
Saturday, Jul 11, 2026

The myth of the 'efficient' private sector has been busted by Covid

The myth of the 'efficient' private sector has been busted by Covid

Countries who kept their response to the pandemic in-house have fared much better – will the UK learn its lesson?
Last Friday, as towns and cities across the UK faced up to renewed lockdown restrictions, executives at Serco had reason to celebrate.

Serco is one of the dozens of private companies that have been contracted by the government to provide services as part of the national test-and-trace system. One of its contracts with the Department of Health and Social Care could be worth up to £410m. And at the end of last week, shares in the company soared by 18% after it announced profits vastly greater than forecast earlier this year.

Rarely has a government been so successful in its attempts to hollow out the NHS and the public sector as Boris Johnson’s has during this pandemic. The egregious costs of those private contracts are now well documented. Last week we learned that senior consultants from Boston Consulting Group are being paid as much as £6,250 a day to work on test and trace.

That means in just one week they take home what nurses are paid in a year. Growing evidence shows this approach isn’t working: countries that have largely retained testing and tracing in-house have fared far better in the crisis. This goes for wealthy nations such as Germany, as well as poorer ones such as Cuba.

To understand why Britain – a country that boasts one of the oldest and historically most effective national public health systems in the world – has chosen to outsource its response to Covid-19, we need to look back to the interests and ideas that have shaped its welfare state. Today, outsourcing has been normalised, but it is in fact a new phenomenon.

The institutions that make up the British welfare state emerged following the second world war. The National Health Service in particular found support among liberal and Keynesian politicians, who realised that economic recovery after the war required a healthy workforce.

As support for communism grew in the east during the 1950s, fears of revolution from below gripped politicians of all stripes. In short, the welfare state was an era-defining idea supported by an unusual coalition of interests.

In the decades after 1945, migrants to Britain, including the Windrush generation, became the builders, nurses, doctors, administrators, cleaners and technicians needed to create a nationwide welfare system. During this golden age of British welfarism, practical experience gained through long public service careers and the work of administrators, often women, were seen as critical for running services well.

But in the 1980s, all this began to change – both in the UK and elsewhere. The Conservative government that was elected in 1979 recognised neither the value of public sector expertise nor of public service provision.

Under the leadership of Margaret Thatcher, the government launched a full-frontal assault on both. As the ideology of neoliberalism came to define economic policy through the ensuing decades, a related set of ideas took hold within the public sector, backed by corporate interests.

New public management was based on the false pretense that private competition in the public sector leads to improvement and cost-saving. Adopted by the Conservative and New Labour governments of the 1990s and 2000s, NPM reforms introduced quasi-market structures and private sector models of corporate governance into areas such as healthcare, schools and elderly care.

Success was increasingly measured in terms of “doing more with less” in the short term, with little consideration for the longer-term loss of capabilities and knowledge that resulted from outsourcing large swathes of the welfare state to private companies.

In few areas was this transformation more radical than in IT. Throughout the second half of the 20th century, key developments in computing were driven by public sector institutions.

Many governments had an in-house management and development agency that could be fielded out to other departments where support for IT was needed - operating similarly to today’s private sector consultancies, but for a fraction of the price, and with a much longer institutional memory.

But by the turn of the millennium, most public sectors were outsourcing IT and digital infrastructure to multinational companies, and their capabilities in these areas diminished.

The election of the 2010 coalition government accelerated these long-term changes. Its austerity agenda was not just about cutting budgets to reduce Britain’s deficit, but also involved the restructuring of public services and the outsourcing of management to ostensibly reduce direct costs.

The 2012 Health and Social Care Act, for example, transformed how NHS services are commissioned and provided in England as part of a wider cost-cutting agenda. Existing processes were uprooted and management consultancies were brought in to deal with the disarray that ensued.

The Royal College of General Practitioners and trade unions had warned that making local GPs responsible for commissioning services under this new system would not work; GPs don’t necessarily have the time, knowledge or capacity to make commissioning decisions.

And indeed, they were right: we now know that clinical commissioning groups have spent millions of pounds on management consultancy firms including McKinsey, PricewaterhouseCoopers and Deloitte since the implementation of the act.

Today, the twin ideologies of NPM and austerity cast long shadows over the public sector. Structures within welfare programmes that once provided the checks and balances necessary to prevent the hollowing out of the welfare state have been slowly unpicked. After decades of outsourcing, Britain’s public sector was left enervated and underresourced in the face of a deadly pandemic.

Far from being a nanny state, NPM and austerity have also infantilised Britain’s public sector; it doesn’t have the confidence or capacity to take on challenges such as test and trace – even if the government wanted it to.

Instead of a truly integrated national system capable of stopping the virus, Britain has a patchwork of private companies and struggling local authorities trying to plug gaps.

But these weaknesses do not justify delegating the pandemic response to a collection of profit-driven companies. There is no reason to think that Serco, or Sitel, or a group of graduates working for KPMG have the expertise to take on these challenges either.

Contrary to what Serco’s chief executive has claimed, the decision to outsource public sector capabilities is a purely ideological move. There has never been a better time to rebuild our welfare state.
Newsletter

Related Articles

0:00
0:00
Close
Scottish Fishing Industry Calls for Emergency Support Amid Rising Costs
UK Supports Stronger European Response to Russian Actions in Ukraine
Devon and Cornwall Police Release Suspect in Ann Widdecombe Murder Investigation
Scottish MPs Demand More Government Support for Fishing Industry
UK Aviation Sector Faces New Rules as Parliament Reviews Passenger Protection Reforms
King’s College London Disciplines Students Over Pro-Palestine Campus Protests
Ministry of Defence Expands Military Capabilities Through New Precision Strike Investment
United Kingdom Condemns Russian Treatment of Ukrainian Children at International Security Forum
House of Lords Reviews Civil Aviation Bill to Strengthen Passenger Rights and UK Aviation Competitiveness
UK Aerospace and Defence Industries Contribute Nearly Forty-Seven Billion Pounds to Economy
UK Government Advances Consultation on Possible Social Media Ban for Children Under Sixteen
United Kingdom Ratifies Global High Seas Treaty to Protect Marine Biodiversity
United Kingdom Joins United States Precision Strike Missile Programme With One Hundred Ninety Million Pound Investment
UK Senior NHS Doctors Vote for Further Strike Action Over Pay and Contract Disputes
BBC Leadership Resigns After Donald Trump Launches Ten Billion Dollar Defamation Lawsuit
UK Fiscal Watchdog Warns Andy Burnham Government Faces One Hundred Billion Pound Budget Challenge
The AI Invoice Shock: Layoffs Didn't Save Managers Money — They Cost Them More
Concern: Sexually Transmitted Bacterium Among Men Develops Antibiotic Resistance
Following Massive Investor Demand: SK Hynix Raises 26.5 Billion Dollars on Nasdaq
Passenger Partially Pulled Out of Ryanair Jet After Cabin Window Fails Mid-Flight
After Four Years, and Under a Heavy Veil of Secrecy: King Charles Meets His Grandchildren, Harry and Meghan's Children
Cross-Party MPs Call for National Climate Emergency Broadcast
Bayeux Tapestry Arrives in the United Kingdom for Landmark Exhibition
United Kingdom Launches Modern Slavery Prevention Programme in Vietnam
Police Warn Against Misinformation Following Disorder in Glasgow
Pension Reform Takes Effect to Consolidate Workplace Savings Industry
Treasury and Bank of England Monitor Economy as Energy Price Pressures Ease
Government Orders Treasury Reform of Disciplinary Procedures Following Civil Servant's Death
Ofcom to Require Major Technology Platforms to Block Scam Advertisements
Labour Apologizes Over Gaza Position in Bid to Rebuild Support
High Court Rules UK-France Asylum Agreement Protection Cuts Were Unlawful
Metropolitan Police Open Murder Investigation Into Death of Former MP Ann Widdecombe
University College London Report Proposes Replacing Council Tax and Stamp Duty With National Property Tax
Treasury Places Amazon, Google, Microsoft and Oracle Under New UK Financial System Oversight Rules
Severe Heatwave Drives Dangerous Ground-Level Ozone Pollution Across Two Thirds of European Union
Westminster in Freefall as Farage's By-Election Gamble Triggers Broader Systemic Crises
Institutional Fractures and Political Volatility Reshape Britain's Domestic Landscape
Deadly Fire, Health Emergencies and Political Upheaval Shape a Volatile Global News Cycle
UK Energy Strategy Focuses on Storage and Offshore Wind to Support Renewable Transition
Regional Governments Gain Greater Role in Britain’s Infrastructure and Economic Strategy
Britain Strengthens Technology Sovereignty Through Tougher Artificial Intelligence Competition Rules
UK Government Expands Artificial Intelligence Use Across Public Services Despite Privacy Debate
UK Universities Warn of Financial Pressure After Sharp Fall in International Student Enrolment
Welsh Government Completes Rail Nationalisation With One Point Five Billion Pound Modernisation Plan
Northern Ireland Records Export Growth as Companies Benefit From Dual UK and EU Market Access
Greater Manchester Launches Two Billion Pound Plan to Convert Empty Commercial Sites Into Housing
National Grid Connects Europe’s Largest Battery Storage Facility in Yorkshire
UK Defence Ministry Plans Royal Navy Autonomous Fleet Deployment to Indo-Pacific
Scotland Approves Europe’s Largest Floating Offshore Wind Project Near Aberdeen
Competition and Markets Authority Blocks Forty Billion Pound Technology Deal Over AI Security Concerns
×