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Union warns of outsourcing fraud risk

13 September 2011

Procurement fraud in the public sector could get worse as a result of government plans to outsource more services, a trade union has warned.


Unison, the public sector workers’ union, claims outsourcing contributes to £1.3 billion of the £2.4 billion annual cost of procurement fraud to the public sector.

But this amount could rise if proposals to tender more services to the private sector under the government’s Open Public Services white paper are implemented.

More tendering could “create more opportunities for price-fixing, false invoicing and other forms of fraud associated with public sector outsourcing”, Unison said.

The £1.3 billion estimate includes £825 million from central government and £470 million from local government.

Unison also warned that contracting with the private sector leads to under-performance and poor value for money, as well as “costly and disruptive restructuring and procurement processes”.


“Billions of taxpayers’ cash is wasted during the outsourcing of public services,” said Dave Prentis, general secretary of Unison.

“Many employers have to bring services back in-house after money, quality and efficiency have gone down the drain. The taxpayer needs to know the risks employers are willing to take to sell off services. The government’s open public services white paper can only lead to the public paying a higher price for fraud. We will continue to campaign against it.”


The Cabinet Office said it would respond once Unison has submitted a formal response to the white paper, which it plans to do later this year.
 
The £2.4 billion cost of purchasing fraud was highlighted in a Cabinet Office report in June, which showed £1.5 billion lost in central government and £855 million to local government.

The analysis was conducted as part of the government’s 2008 report Public Services Industry Review which examined the procurement cycle and covered fraud including cartels and fraudulent invoicing.

This article first appeared on the website of Supply Management magazine, a sister publication to FM World.

Other news for Tuesday, 13 September 2011:


Suppliers join London unis' framework

Chester Boyd strikes catering gold

Mercury signs £28m deal with Somerset

Mitie and Essex set to sign outsourcing deal

Union warns of outsourcing fraud risk