Serco and the Vast Outsourcing Scandal

As Caledonian Sleeper train staff become the latest outsourced workers to go on strike against Serco, we look at its role in a vast operation of converting public services into private profits.

On Monday workers organised by the Rail, Maritime and Transport (RMT) union on the famous Caledonian Sleeper overnight railway service began a 48 hour walkout. The service, which runs between London Euston and Scotland, was formerly operated by Scotrail but since 2015 it has been hived off as a standalone franchise to outsourcing giant Serco.

Serco, in accordance with the terms of their franchise bid, replaced the 1970s British Rail carriages with brand new rolling stock, purchased from the Spanish manufacturer CAF. Placing workers last, as always, the new stock was furnished with totally inadequate rest berths for the crew manning these long-haul services on shifts of up to 15 hours at a time.

The mounting fatigue experienced by Caledonian Sleeper employees under conditions imposed by their new employer has played a key role in the dispute, as one of the workers explains:

We are striking because of a fatigue factor coming from so many reasons, but the drop overflowing the glass has been not having a proper place to rest. Currently we have to go to a berth to take our hour rest – during Covid, once the bookings started to increase, we asked for another cabin so that we don’t have to go to the same space during the pandemic, one person at the time. The company refused.

So, we have to keep social distancing, and wear gloves and masks, and be extremely careful – but when we go to our rest we’re getting in the same cabin where another colleague was resting just a minute earlier.

Although Britain’s railway privatisation scandal has been the subject of intense criticism from the Labour Party, unions and the general public for many years now, some may be surprised to see Serco at the centre of this particular fiasco. Their name has never been far from the headlines over recent months, associated with the debacle around the failing Test and Trace system – for which they were handed millions in public funds on behalf of the NHS.

It seems obvious that Britain’s public health response, much like its railways, should be operated in the public sector. But, after 40 years of neoliberalism, the capacity of the state to rise to these challenges has withered away. After decades of dependency on private sector profiteers, the response of the British state during this crisis has been to throw good money after bad, providing the failed outsourcers with unlimited recourse to public funds.

Serco is a vast machine for collecting contracts from governments to run public services on their behalf. Yet even the most cursory look over their track record reveals a litany of failure. The most infamous of these is their continued operation of Yarl’s Wood Detention Centre, where the company has been the subject of cover-up accusations over the endemic sexual abuse of inmates.

Serco’s own website lists the areas in which it “shapes UK public services”: defence, healthcare, transport, justice, immigration and “citizen services.” This last category, apart from sounding like something from Starship Troopers, is a euphemism for those services local councils are meant to provide, such as bin collection.

Unsurprisingly, Serco has been at the centre of a scandal in this area too. Tribune readers will recall that Unite members in Bexley won a pay deal through strike action against Serco, to whom the Labour-run local authority had outsourced services. This agreement has since been reneged on by Serco, leading to a fresh round of balloting by the Bexley bin workers this week.

A lot of fingers in a lot of pies then. In every sector in which they are involved, wealth is syphoned off, resulting in a reported operating profit of £102.5 million in 2019 – every penny of which is public money diverted from public services into FTSE 250 shareholder pockets.

Serco operates in concert with other outsourcers who have become almost indistinguishable from the state itself. Other examples include G4S, who employed the UK Border Agency guards that killed Angolan political refugee Jimmy Mubenga aboard a British Airways flight in 2010, and whose failure to employ enough security guards for the 2012 Olympics led to thousands of troops being deployed in their place.

Until recently the outsourcing giant Carillion maintained a near monopoly over the construction and maintenance of physical public infrastructure, particularly road, rail, and hospitals. Its collapse into liquidation in 2018 left the taxpayer with a bill of at least £150 million, not to mention placing the tens of thousands of workers in its supply chain into insecurity. Private sector involvement is sold to the public as increasing efficiency, improving performance and lowering cost – but Serco, G4S and Carillion make clear that it fails on its own terms.

Serco’s role as a Train Operating Company (TOC) is a relatively unique one, however. Britain’s rail is mostly run by specialist state-owned enterprises, albeit mainly from elsewhere in the world. The British state maintains some capacity to run rail and has acted as the “operator of last resort” after private sector operators on Northern and LNER plunged their services into crisis.

London Underground also remains publicly owned, despite multiple attempts to dismantle and privatise it over the years. The rest of the network is divided up between foreign states, including France (Transport for Wales, Docklands Light Railway), Italy (Avanti), the Netherlands (Scotrail, East Midlands Railway, Greater Anglia, Merseyrail, West Midlands Rail), Germany (London Overground, Grand Central, Chiltern Railways, Cross Country), and Hong Kong (Crossrail, South Western Railways).

The exceptions in this picture are companies like FirstGroup, GoAhead and Stagecoach, who all specialise in transport provision but made their names running bus services after deregulation and the privatisation of the National Bus Company and the London buses in the late 1980s. They were some of the first to enter fray during on the profit-making bonanza which resulted from dismemberment of British Rail under John Major in the 1990s.

Serco are therefore the only TOC of their type, a “public service provision” organisation more familiar with moving prisoners than passengers, and so their management pose a different challenge to unions such as the RMT. They have refused to enter into conciliation talks brokered by ACAS, which would be standard practice between the RMT and a “traditional” TOC, and have insisted all talks be brokered by… themselves. They act with the impunity that their quasi-state status affords them.

The Caledonian Sleeper dispute comes at a time when, across Europe, sleeper travel is becoming increasingly popular as an alternative to aviation, in light of both the Covid and climate crises. Services that were once deemed unfashionable and subject to reductions and cuts are now being bolstered again.

In the UK, only two sleeper services currently operate – the other is the Paddington to Penzance Night Riviera, operated by a FirstGroup franchise, the Great Western Railway. These services will be vital in encouraging people to move away from domestic flights as we look to transition to a post-carbon future, not to mention providing an attractive UK holiday during a time of global lockdown.

The Caledonian Sleeper workers on strike outside Euston Station are, incidentally, in Labour leader Keir Starmer’s constituency. Whether it is against outsourcing, or in support of greener transport, these workers are at the frontline of wider struggles which we are all called to take part in. The labour movement must rise to the challenge.