Unison: Outsourcing profits cost the public £6.1 billion a year

• Outsourcing privateers made £6 billion in profit from public services in 2025, new report from Common Wealth finds 

• More than a million people now locked into poor pay and conditions in outsourcing para-state which consumes 1 in every £10 of public service spending 

• Findings come despite Labour Government's promise of largest wave of outsourcing in a generation 

An estimated £6 billion of profit was extracted from public services such as health, social care and transport by private outsourcing companies last year, according to a new report. 

To give context to this astonishing profiteering, the £6 billion is the equivalent of an extra 300,000 adult social care carers.  

The Common Wealth report Back In-House: The Case for Ending Outsourcing has found that over a million people now work in the outsourcing para-state, where vast corporations operate public services for profit. 

The Labour Government promised the largest wave of insourcing in a generation before the last General Election but this research concludes that the para-state is now consuming over one in every ten pounds spent on public services in Britain. 

Common Wealth's report, commissioned by the UNISON and RMT unions, exposes the reality of government outsourcing, with ever greater numbers of workers locked into a system of low pay, insecurity, poor conditions and meagre pensions. 

The report, released just before Labour Party Conference, argues that insourcing would improve the lives of people across the country and rebuild public services across the public sector. It urges the government to go further with their insourcing policy and embrace an insourcing revolution.  

This includes recommending government direct all public sector organisations to engage with unions and develop insourcing strategies, including plans that can help identify quick wins to bring more services in-house. 

It comes as outsourcing company OCS is in the process of buying out Mitie to create Britain's first super-giant outsourcer likely to employ around 100,000 workers. 

The report, authored by Common Wealth's Senior Data Analyst, Sophie Flinders and Senior Research Fellow, Eleanor Shearer, additionally examined the finances of the Big Six outsourcing firms OCS, Serco, G4S, Mitie, Sodexo and ISS finding that, between 2019/20 and 2023/24, the firms cumulatively made £1.5 billion in profit. 

Unison general secretary Andrea Egan, said: 

Every pound of taxpayers' money that lines the pockets of profiteers is a pound less for vital services. Huge swathes of precious cash are being siphoned from the NHS, social care and local communities. All while budgets are being squeezed ever tighter. The way to get better value for money and improve services is to bring public contracts back in-house. Insourcing is a no-brainer. 
 

RMT general secretary Eddie Dempsey, said:  

Outsourcing is the privatisation of our public services.  It exploits workers while draining vast amounts of money from public services to generate huge profits for greedy outsourcing giants. 

Andy Burnham is right to call for greater control of public services and delivering this through insourcing would be more efficient and would also be hugely popular with public service users and workers.   

 
Notes: 

• While the Government is establishing a public interest test for central government  contracts, which comes into force in 2027, their existing plans do not affect the wider public sector and are unlikely to achieve insourcing at a large scale. 

• Earlier this month, Common Wealth analysed the rise of an outsourcing premium, in which public money is siphoned to private firms with contracts for essential services, many of which are owned by institutional investors like private equity and sovereign wealth funds.   

• The proposed private equity buyout of one of the Big Six, Mitie, by OCS, another of the Big Six, owned by American private equity firm Clayton, Dubilier & Rice, would remove an important layer of public oversight from the UK's largest outsourcing company.  

• If OCS are successful, Mitie would be delisted from the London Stock Exchange and no longer subject to the same financial reporting and transparency requirements as a publicly listed company. 

• This deal would usher in a new phase of UK outsourcing, concentrating a significant share of public service delivery in the hands of a single firm. In 2023/24, Mitie and OCS generated a combined revenue of £3 billion from UK public sector contracts (Mitie £2.3 billion, OCS £745 million), eclipsing Serco, the second largest public outsourcing supplier, which generated £1.4 billion from public contracts in the same year. 

 
Sophie Flinders, report author, said: 

Each year, billions of pounds are extracted from public services by for-profit outsourcing companies £6.1 billion was taken as operating profit in 2024/25 alone. Too often than not that profit comes from cutting pay, slashing pensions, denying sick pay of the workers that deliver the services, rather than genuine innovation. And for too long the government has allowed outsourcing giants Mitie, Serco and Sodexo to grow rich from worsening living standards. Public sector wide insourcing would restore decent work of over a million people across the country. The Government should work with the unions to make insourcing a reality. 

Eleanor Shearer, report author, said: 

Like a private contractor overpromising and underdelivering, outsourcing has never produced the benefits we were told it would, of driving up quality and driving down cost. Instead, outsourcing giants have profited from slashing the wages and worsening the conditions of workers in essential public services. Labour's promises to end the era of outsourcing by default need to be matched by ambitious action, working with unions to produce insourcing plans, tightening up protections for workers, and ensuring our services are run for public benefit, not private gain. 

Back In-House: The Case for Ending Outsourcing