The Guardian reports that ‘restricted’ documents sent to senior MPs in January of this year reveal the Iain Duncan Smith is considering outsourcing state pension administration to private companies.
As part of the government’s ‘austerity’ drive, the Department for Work and Pensions is looking to save £2 billion from its operational budget by 2016.
The document says that the department needs to consider strategic shifts in the way pensions and other benefits for over 65’s are managed. It says, “This includes a review of the pension service’s current delivery model and alternative delivery models.”
According to the document, the department has already gone as far as it can in making the delivery of pensions efficient. The government has ten pension centres around the UK and employs around 7,000 to administer £80 billion in state pensions, £7.7 billion in pension credits, and £2.8 billion in other pension benefits.
Pensions expert, Ros Altmann, told the Guardian that she was concerned by the idea that firms such as Capita, Serco or G4S could be brought in to administer £100bn in public money to millions of pensioners. “We’re dealing with a vulnerable group and a massive number of people, so I would be seriously concerned about outsourcing a service like this, which is working well, with a view that it might make some short-term savings,” Altmann said.
The DWP told the Guardian that there were currently no plans to outsource the pensions service.
The track record of the mega-corporations (of which there are only a few, as Altmann refers to) is hardly going to instil confidence in their ability to administer such a large public fund.
Serco in particular seems to be very well established within government circles, with one of their former executives, Patrick O’Connell, who was part of the recent tagging charge scandal which cost the tax payer £50 million, appointed as a director in the government’s HS2 rail project.
It casts doubt on whether the public can have any confidence whatsoever in the government’s plans to outsource many public services, with contracts going to a small selection of companies or their subsidiaries.
Perhaps when they are kicked out of government, we will see current ministers offered lucrative board positions for looking after their corporate friends. Or perhaps the ministers share portfolios may have increased significantly as a result of these companies gaining highly lucrative government contracts and paying staff below par salaries.
We shall see.
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