Privateers cash in on public cuts

The alarm was raised after outsourcing giant Serco revealed a staggering 22 per cent rise in pre-tax profits to £101.4 million over the six months to July.

Serco's profits are the first firm evidence that private companies are raking in huge sums thanks to the government's public spending squeeze.

The company has won a series of public-sector contracts that includes processing benefits in Hertfordshire and a £415m deal to run Belmarsh West prison in Greenwich.

Another £650m waste management contract for the West Midlands council of Sandwell will see the firm collect and recycle rubbish in the area for the next 25 years.

Serco also runs the Docklands Light Railway (DLR), London Mayor Boris Johnson's bike hire scheme and Yarl's Wood detention centre, which has been at the centre of controversy following allegations of degrading treatment towards women and child immigrants detained there.

RMT general secretary Bob Crow has accused DLR management of bullying and the union was on the verge of strike action over the summer before it was averted by last-ditch talks.

But as the country braces itself for the biggest-ever government spending cuts in living memory it isn't just Serco that's rubbing its hands in anticipation at massive profits.

Other companies are set to follow suit by cashing in on the cuts.

Building firm Carillion has already announced it expects to take a leaf out of Serco's book by capitalising on the government's plans to close down the public sector and outsource it to profit-making companies.

Firms across the country are eagerly awaiting the coalition government's October spending review, which will confirm where the public-spending axe will fall.

"Companies such as Serco make profits by cutting jobs, reducing workers' pay and pension rights and by delivering a service on the cheap," said Left Economics Advisory Panel chairman Andrew Fisher.

"As this coalition government prepares to make deep cuts in public services, it is clear that privateers will be standing by to deliver their cut-price model of public services and this government will be only too willing to divert taxpayers' cash into the pockets of their shareholders."

An RMT spokesman said that it was "nothing short of obscene" that private companies are siphoning cash out of vital services in profits while the government is intent on cutting public spending.

He added: "The private sector isn't about providing services, it is about maximising profits, whatever the cost to the people who use or work in them."