Unison has claimed that more widespread use of outsourcing in public services will result in higher levels of fraud.

The government’s Open public services white paper, published in July, called for more services to be provided by private companies, social enterprises and the voluntary sector.

In its initial response to the paper, Unison claims that £1.3bn is lost in fraud through the outsourcing of services every year.

This is calculated by assuming an even distribution of the government’s estimate that procurement fraud cost the public sector £2.4bn a year. A public services industry review in 2008 concluded that 55% of government procurement spending was on services outsourced to private and third sector companies.

Unison said that open markets would also create more opportunities for price-fixing, false invoicing and other forms of fraud, while spending cuts meant public bodies were employing fewer staff to check for impropriety.

General secretary Dave Prentis said that taxpayers’ money had been ‘wasted’ during the outsourcing of public services.

‘The whole drawn-out, costly exercise is often a recipe for disaster. Many employers have to bring services back in-house after money, quality and efficiency has gone down the drain.

‘The government’s Open public services white paper can only lead to the public paying a higher price for fraud.’

Unison’s full response to the white paper is due at the end of September.

http://www.publicfinance.co.uk/news/2011/09/outsourcing-costs-13bn-a-year-in-fraud-says-unison/