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The Wealth-Donate-Outsource Scam

Mark Howell

Outsourcing to private companies devours a public asset base built up over decades, offending Labour principles and promises. Privatisation both feeds and is driven by rampant wealth inequality. Big private donations to the Labour Party are at the centre of this scam. Privatisation profits are delivered to the wealthy by ambitious, unprincipled politicians. A rule change submitted last year by the Socialist Health Association, up for decision at the Labour Party conference this year, seeks to change this.

Essentials delivered for-profit not for-need include energy, water, transport and also, via rampant out-sourcing, the NHS, rail, colleges, and the BBC. What is remarkable is the growth of private assets involved. Increasingly the buildings and equipment, as well as the employment contracts, belong to wealthy investors. Old assets are ending their life without being replaced using public funds.

A vast increase in wealth inequality is the driver. Greed and megalomania spur the super-rich to, in effect, steal or destroy public assets. The more money they make the more they feel compelled to devise ways to “invest” in doing it again and again. The profits ‘put to work’ by donating large sums to the MPs and political parties, which corrupts democracy.

Private donations to Labour resumed during the 2020 party leadership campaign. There had been a pause in 2015 when the left led the party, funded as it was instead by millions of tiny donations from trade union members and other supporters. Such donations have continued uninterrupted to today. MPs now at the top of government received substantial sums in the run up to the general election campaign 2024, and the party itself even more.

Keir Starmer received £315,000 from lawyer Robert Latham, financier Martin Taylor and others; Wes Streeting £408,000 from healthcare recruiter Peter Hearn, financier John Armitage and others; Rachel Reeves £557,000 from Autoglass founder Gary Lubner, Labour Together and others. Yvette Cooper also received £622,000 from Lubner, Labour Together and others, as did David Lammy £321,000 and Shabana Mahmood £196,000. John Healey received £152,000 from Barbara Follett, Labour Together and others. (The Register of Interests, via news.sky.com, rounded down to the nearest thousand pounds)

Billionaires John Armitage, Lisbet Rausing and Aruda de Carvalho donated to the party ahead of the last general election. Large sums were also donated by Quadrature Capital (£4,000,000), David Sainsbury (£2,509,000), Martin Taylor (£1,430,000), Ecotricity (£1,000,000), and Suart Roden (£570,000), while Toledo Productions, Anthony Gormley and Fiona MacTaggart donated £500,000 each, along with many others of £50,000 upwards. (The Electoral Commission, rounded down to the nearest thousand pounds). Comparing the business interests of the donors to controversial government policy, the result looks rather like plutocracy as opposed to democracy.

Outsourcing giants like Serco, Capita, G4S, Sodexo, ISS and OCS have benefitted, returning a dividend for their shareholders by a combination of driving down the pay and conditions of their workers and reducing the quality or extent of the services provided. Labour’s promise of the “biggest wave of insourcing for a generation” has been compromised by its favoured politicians’ donations, resulting in payments to private companies delivering social care, which has gone on profit and interest, not improving workers’ terms and conditions and more jobs. Neither sub-contractors providing public services nor their owners are required to be tax registered in the UK.

The huge costs of highly profitable PFI contracts deprive NHS patients of timely care. The company with the PFI contract for the hospital at University College London made pre-tax profits of £190m over the last eleven years out of £527m paid to the company by the NHS for a hospital worth £292m. The Tory ban on PFI contracts must be reinstated and public sector loans used to buy-out existing ones. PFI companies should be taxed to recoup excess profits.

The largest providers of residential care make rent payments to related companies based outside the UK. Debt repayments are made to related companies based offshore charging high rates of interest. Such profit extraction also avoids tax, as does splitting the care home business into separate operating and property companies, which also compromises the recovery of negligence compensation.

Over 100 NHS ophthalmic consultants own shares or equipment in private clinics that provide NHS funded cataract care, extracting millions in dividends. Only a few of these conflicts of interest are declared on the websites of the NHS Trusts where they work, which have seen a drop in the number of cataract operations delivered. This impacts care for patients with more complex conditions. Financial incentives are offered to high street optometrists to refer patients to particular private companies. 

Incredibly, the BBC is no longer allowed to produce drama in house, be it sitcom, contemporary or classic. Digital platforms such as News Online, Sport, iPlayer and Sounds are at risk of being outsourced too, and even the finance department as well. Jobs in Salford, Glasgow, Newcastle and Cardiff are under threat. BBC could be tied into contracts that will not let it adapt amid a rapidly changing media landscape. Recent cuts have left the broadcaster with scarce procurement, legal or management capacity to properly monitor the contracts.

Rail unions are campaigning to end the widespread outsourcing of jobs such as cleaning, security and catering, because staff employed by third-party companies experience worse conditions, and profits should be reinvested in the railway rather than distributed to wealthy shareholders of hedge funds and private equity firms whose directors also cash in.

Universities have long outsourced marketing, IT, administration, catering, procurement and maintenance to companies such Capita. Increasingly, the education process itself is outsourced. To manage and co-run online short-courses and full programs, Pearson, Kaplan, and Study Group partner with many top-ranked universities in the UK. A growing reserve army of hourly-paid academics now offers student support, supervision or even teaches the core curriculum.

The shedding of the public housing stock began forty years ago with right-to-buy and local authority grant cuts. At the same time stock mainly built sixty years ago is increasingly being sold for demolition and reconstruction by developers. In the 1960s, 1.24 million social homes were built compared to 150,000 in the 2010s. In 1969 alone, more social rent homes were built than in the last 13 years combined. As a result, the number of social homes has dwindled in England by 1.4 million since the 1980s.

Nearly half a century of public asset-stripping has depended crucially on not being interrupted by the swing of the political pendulum. New Labour for thirteen years, and recently Starmer Labour, have ideologically refused to reverse the trend. Medical treatment, learning, research, transport, creative content, local services are delivered less often from buildings, using equipment, and under employment contracts which the public own, just so the wealthy can buy up the assets with their surplus profits.

This happens because the Labour Party misleads the electorate about its policy promises while its leadership clique accepts big private donations from the rich in exchange for driving forward outsourcing and privatisation and turbo-charging their careers. Public well-being depends on reversing this trend and building up public assets again. Back this rule change.

Resources:

RULE CHANGE PROPOSED BY THE SOCIALIST HEALTH ASSOCIATION

Chapter 5 Selections, rights and responsibilities of candidates for elected public office

Clause II. Rights and responsibilities of elected members

Sub clause 3. Members of Westminster Parliament

1. General.
2. Labour MPs are expected to meet the highest standards of probity and to take a lead in the Party’s campaigning and community engagement work both locally and nationally. While our affiliates will quite properly donate money, resources and loans to MPs, unaffiliated corporate donation of money, resources and loans to MPs will not be accepted. Donations accepted from individuals must not exceed the amount set for declaration under the Political Parties, Elections and Referendums Act 2000 rules.

Alastair McCapra, chief executive of the Chartered Institute of Public Relations:-

 “At the heart of this credibility gap is the shadowy relationship between business and politics. The entrenched culture of gifts and hospitality in British politics creates the perception of corruption, and the suspicion of back doors to access are damaging a Labour Party that campaigned on promises of transparency, integrity and a break from the past. Political scandals thrive in the gaps between information and silence. If the Government and the business community are serious about building back trust, they must prioritise and accept a relationship that is transparent and accountable to the public.”

Source: The Register of Interests (via news.sky.com, over £10,000 rounded down to the nearest thousand pounds):-

Keir Starmer

Trevor Chinn £50,000   Financier

Robert Latham £100,000   Barrister

Martin Taylor £95,000   Financier

Ecotricity £20,000   Energy supply

Clive Hollick £50,000   Architecture

Wes Streeting

OPD (Peter Hearn) £108,000   Healthcare recruitment

Victoria Sainsbury Perrin £50,000   Groceries

John Armitage £95,000   Financier

Kevin Craig £39,000   PR

Linda Riley £16,000   Publishing

MPM Connect (Peter Hearn) £85,000   Healthcare recruitment

Trevor Chinn £15,000   Financier

Rachel Reeves

David Sainsbury £49,000   Groceries

Gary Lubner £106,000   Autoglass

Green Finance Institute £99,000   Financial advice

Victor Blank £50,000   Banking

Alison Wedgwood £40,000   Water industry

Clive Hollick £17,000   Architecture

Labour Together £96,000   Donations funnel

Neil Goulden £30,000   Gambling

Tim Allen £45,000   PR for pharmaceutical industry

Trevor Chinn £25,000   Financier

Yvette Cooper

Gary Lubner £210,000   Autoglass

Anthony Doyle £19,000   Fund management

Labour Together £113,000   Donations funnel

MPM Connect (Peter Hearn) £280,000   Healthcare recruitment

David Lammy

Gary Lubner £70,000   Autoglass

George Brown £75,000   Not true ID (https://news.sky.com/story/politics-latest-keir-starmer-peter-mandelson-vetting-commons-iran-war-olly-robbins-12593360?postid=5290639#liveblog-body )

Waheed Ali £12,000    Television production

Marie Davis £25,000   Bahamas

Labour Together £68,000   Donations funnel

Richard Greer £11,000   Fund manager

Richard Lewis £30,000   Fund manager

Transilluminate Ltd £30,000   Arts promotion

Broadcasting earnings: in excess of £325,000

Shabana Mahmood

Victoria Sainsbury Perrin £25,000   Groceries

Labour Together £137,000   Donations funnel

Martin Taylor £20,000   Financier

Norton Rose Fulbright £14,000   Law firm

John Healey

Keith Young £30,000   Publishing

Labour Together £39,000   Donations funnel

Barbara Follett £50,000   Author

Linchpin Technology £18,000   Private equity

Nigel Grinyer £15,000   Banking

Source: The Electoral Commission (via electoralcommission.org.uk, over £10,000 rounded down to the nearest thousand pounds) :-

David Walsh £153,000 Gambling

Public Digital Ltd £33,000 Consultancy

Price Waterhouse Coopers £42,000 Accountants

Labour Together Ltd £306,000 Donations funnel

Good Faith Partnership LLP £67,000 Consultancy

Ernst & Young LLP £58,000 Accountants

Faculty Science Ltd £36,000 Artificial Intelligence

Derek Webb £250,000 Gambling

SSE Plc £25,000 Renewable energy

Gary Lubner £45,000 Autoglass

Maqbool Ahmed £100,000 Construction

Susan Rankin £60,000 Cambridge Music Professor

Anthony Gormley £500,000 Sculptor

Stuart Roden £570,000 Israeli financier

Daniel Luhde-Thompson £250,000 Financier

Harish Sodha £50,000 Aid agency travel

Lisbet Rausing £48,000 Food packaging

Paul McManus £75,000 Drummer

Jason Howlett £100,000 Batteries

Simon Moran £25,000 Events

Martin Taylor £1,430,000 Financier

Andy Gray £20,000

Nicholas Razey £50,000 Telecomms

Keith Thrower £20,000 Biotech

David Sainsbury £2,509,000 Groceries

Andrew Brinded £20,000 Software

Arruda de Carvalho £24,000 Brewing

Treeman Rockefella Ltd £100,000 Engineering

Francesca Sainsbury Perrin £30,000 Groceries

Deborah Mattinson £21,000 Opinion polling

Rob Sewell £12,000 Author (RCP)

Tony Bury £100,000 Venture capitalist

Amin Hemani £50,000 Property development

Adrian Binks £25,000 Publishing

Karim Nakhla (Rocktel) £105,000 Property investment

Tony Langham £25,000 Market research

Clive Hollick £90,000 Architecture

Drum Buchanan Ltd £45,000 Property development

Toledo Productions £500,000 Film Production

Lucy Garett £15,000 Barrister

FGS Global Ltd £17,000 Political consultancy

Ian Walsh £100,000

Fiona MacTaggart £500,000 Property development

Mark Foster £30,000 Theatrical agency

Paul Elliot £25,000 Property investor

Daniel Beard £50,000 Gambling

Quadrature Capital Ltd £4,000,000 Hedge fund

Gareth Quarry, Jill Whitehouse £100,000 Legal recruitment

Andy Phillips £20,000

Jack Kirkland £100,000 Construction

David Fish £50,000

Steve Morrison £50,000 Television production

Andrew Dyson £50,000 Fund management

Derek Webb £250,000 Gambling

Michael Craven £53,000 Political lobbying

Robert Latham £50,000 Barrister

Ecotricity £1,000,000 Energy supply

Charlie Parsons Creative Ltd £250,000 Television production

Nicky Wilson £30,000 Art collector

Which donors are super-rich? What is super-rich?

In the UK the richest ten families own £200 billion (thetimes.com/sunday-times-rich-list).

The next richest 350 families own £600 billion.

This amounts to nearly £2 billion each on average but ranges from £350 million to £12 billion each.

All of the above can reasonably be called super-rich.

In addition, many of the investors behind UK privatisation live overseas, mainly in the US, where there are far more billionaires than in the UK, many much wealthier. The richest four Americans own £1200 billion (forbes.com/real-time-billionaires).

The following donors to Labour are super-rich:-

DONOR SECTOR WEALTH

David Sainsbury Groceries £402m

John Armitage Financier £1170m

Lisbet Rausing Food packaging £9,088m

Arruda de Carvalho Brewing £1,161m

Joe Hemani IT distribution £531m

Jack Kirkland Construction £828m

Capita

The decision to award the contract for administering the civil service pension scheme to Capita – starting on 1st December 2025 was outrageous. Capita had already been stripped of the Teachers’ Pensions Scheme contract after it had caused major delays and left the system in disarray. The previous provider of the civil service pensions contract, MyCSP (majority owned by another private company, Equinity) had already built up considerable delays, not least because of the industrial action arising from its refusal to recognise the PCS union to negotiate TUPE [Transfer of Undertakings (Protection of Employment)] terms when the contract passed to Capita.  PCS gave repeated warnings to the Cabinet Office about Capita’s readiness to take over, but these were dismissed on the grounds that ‘assurances’ had been provided.

Recently retired workers who had dedicated their whole careers to public service were now receiving no pension benefits and facing being unable to pay mortgages or other bills. Recently bereaved individuals were re-traumatised by being unable to sort out their financial arrangements. There were even reports of suicides given the anxiety and stress of people being unable to sort out their financial circumstances. The government agrees the situation is “unacceptable” and has mobilised an HMRC task force to help Capita resolve the problems. Contractual penalties have apparently been applied although it is not clear whether this will cover the cost of the ‘assistance’.  A financial assistance package of loans has also been offered to enable people not to incur additional costs by running into debt. Yet when challenged on why they had not terminated Capita’s contract and started to bring the service back in-house, Baroness Anderson (the name taken by former MP Ruth Smeeth) reported that this “was not possible” under the terms of the contract. In fact, the contract does allow for termination in the event of “critical performance failure” but it is not clear how government determines whether this has occurred.

While there is some basis for Labour ministers blaming the previous Government for Capita’s disastrous handling of the Civil Service Pension scheme administration, it is staggering that at the same time they would be prepared to hand Capita further lucrative contracts. But, unbelievably, this is exactly what has happened. At the very same time that MPs are repeatedly raising issues for their constituents and two select committees are holding evidence sessions into these failures, the Department for Work and Pensions has decided to award the “Synergy” contract – worth up to £950m – to Capita for operation payroll services across four major government departments and several arm’s-length bodies. Civil servants are now understandably worried that they will face delays in having their salaries paid, and face financial hardship as a consequence.   

If that were not enough, a fresh failure by Capita has emerged after a data breach exposed the personal details of 138 civil service pension scheme members. The breach included sensitive information, such as names and addresses and has been reported to the Information Commissioner by the Cabinet Office. PCS General Secretary Fran Heathcote said: “This government came to office promising the biggest wave of insourcing in a generation. With every failure like this, the case for bringing essential services back in-house gets stronger.”

The Drawbacks of Outsourcing to Private Care Homes (https://www.chpi.org.uk/reports/plugging-the-leaks-in-the-uk-care-home-industry )

1. There are significant levels of leakage across the care home sector and the type of care home business impacts the amount leaking out.

2. There are significant differences in the level of leakage amongst the largest 26 care home providers.

3. Some of the largest 26 providers use complex company structures to maximise leakage and hide profit extraction.

4. The largest 26 providers pay out significant amounts in rent payments each year, often to related companies which are based outside of the UK’s tax jurisdiction.

5. Debt repayments are a significant area of leakage for some of the largest 26 providers.

6. Much of the debt loaded onto the care homes by the largest for-profit providers is owed to related companies that are often based offshore and at high rates of interest i.e. a form of hidden profit extraction which also avoids tax.

7. Splitting the care home business into separate operating and property companies raises other public interest concerns, including the ability of a care home operator to pay compensation for causing harm, and potential tax avoidance.

8. Leakage is also occurring through management fees and related company transactions.

Recommendation 1: A Care Home Transparency Act – care home providers should be mandated to disclose where their income goes.

Recommendation 2: A new form of care regulation is required to prevent care home companies with unsatisfactory financial models from providing care in the UK.

Recommendation 3: Capital should be made available by the government for the provision of new care homes.