“Is it normal that an administration such as our Ministry of Health is not able to fulfil a number of tasks that should be within its remit?” This question was asked by a French senator during the hearings on the role of the McKinsey consultancy in the coronavirus vaccination campaign, and it also concludes our investigation into the increasing transference from the state to the private sector.

A new report by the European Federation of Public Service Unions (EPSU) and its affiliates, produced jointly with the University of Greenwich, examines the scale and impact of privatisation in all its forms – public-private partnerships, outsourcing, consultancy – in the state administrations of a dozen European countries and the European Commission. It highlights, for the first time, the European dimension of the growing role of consultancy firms, which have become increasingly influential players in public administration.

EPSU has been investigating the commercialisation of public services – such as health and social services, local and regional administration, and immigration detention centres – for a long time. It has been driving down employment, wages, weakening the trade union presence and social dialogue, and ultimately, services to citizens financed by their taxes. It also skews the public interest in favour of corporate greed, and it is the lowest paid workers and the most vulnerable citizens who suffer the consequences.

State administrations have long outsourced so-called ‘auxiliary’ functions, such as cleaning, reception, security, to companies offering low wages, but then have increasingly turned to expensive consultancies to carry out the core tasks of the state: drafting public policy, drafting legislative initiatives, public contracts, public sector restructuring plans...and proposing staff cuts, hence creating a need for more consultants.

The use of consultancy firms often goes unnoticed because it is seen as a transfer from the public to the private sector that also generates jobs.

These firms – Accenture, McKinsey, PwC, EY and Deloitte, to name the best known – offer much more than advice and are becoming ‘para-governments’, with their own political agendas, raising concerns about transparency, accountability and the cost of public services.

In 2019-20, organisational consultancy for the public sector grew to 14 per cent of the total cost of organisational consultancy in Europe. The figures range from 31 per cent in Greece, 22 per cent in Denmark and the UK, 17 per cent in Spain, and 9 per cent in Germany and France.

The enforced use of consultants

Outsourcing is not a choice, but a necessity. In previous reports we have denounced the decline in employment in, for example, tax administrations or labour inspectorates. The employment limits imposed on many ministries and the Directorates General of the European Commission have led to the use of outsourcing and consultancy firms to do what public authorities can no longer do.

It is clear that austerity has been an ideal breeding ground for this ‘privatisation culture’ which has deprived the public sector of vital in-house skills and knowledge, especially in the area of digitalisation.

These ‘gaps’ have been filled by consultants at a much higher cost, who then apply ‘private sector’ techniques, creating a higher demand for consultancy services. And this expenditure is not reflected in staff costs. Thus, the use of consultants is a way of circumventing any potential rules on freezing or cutting staff.

This ‘consultancy culture’ also contributes to the phenomenon of staff leaving the public sector for the private sector, only to return to the public sector as private consultants. It is often thought that these consultants bring expertise, but what happens is that they take expertise away from the public sector and, paradoxically, increase bureaucracy.

A public future is not a pipe dream

The final part of our report, based on interviews with our affiliates, shows that restoring services internally is not a fantasy, but part of the answer to regaining control of our administrations.

Through strong trade union mobilisation and groups defending public services and the transparency of institutions, it is possible to reclaim public services, as the cases of the cleaning services in the Netherlands and the statisticians in Sweden, among other examples, show. This must be a priority for the entire trade union movement.

It is also important to fight for more public investment to strengthen states’ capacity to fight tax evasion by large companies, including the aforementioned consultancies (more tax inspectors), violations of workers’ rights (more labour inspectors) and to improve services to citizens.

Finally, the use of consultants should be limited, some would say banned. Examples such as the BlackRock investment fund, accused by the European Ombudsman, Emily O’Reilly, of having produced a report on banking supervision for the European Commission at a very low cost in order, presumably, to influence the European executive’s policy decision affecting more than 500 million people, show us that these consultancies do not act in the public interest, but in their private interests. In Austria, the federal administration has decided to make less use of consultants, as a large-scale reform of the public sector by consultancy firms has brought the sector into disrepute; in France, following the McKinsey tax evasion scandal, there is talk of reducing their presence and no longer using them automatically.

The evidence shows that the public sector, when properly resourced and responsive to the real needs of our changing society, is capable of delivering effective, quality services.

Public services that are democratically controlled by our elected representatives, courts of auditors, journalists. Public services that promote genuine collective bargaining with trade unions and that put people – not profits – and citizens’ interests first. That is the public future that trade unions must build.

Private sector consultants cannot be allowed to take over the public sector. This is tantamount to handing over the keys of state administrations to private consultancies. This has a devastating effect on the confidence of citizens in the integrity of public administrations when making decisions in the public interest, especially since consultancies serve several masters for a fee.

Authorities must abandon these practices, otherwise they may be financing their own destruction.