THIS march, shadow chancellor Rachel Reeves announced a new key policy, an “office for value for money” (OVM) — what she called an “independent hit squad, with real powers to hold the government to account.”

But Labour has failed to highlight some key recent reports by the National Audit Office (NAO). The NAO is the nearest thing to Reeves’s proposed OVM, but I suspect Labour has not been grabbing some of their reports, because they independently come up with the wrong answer by showing the failure of outsourced public services.

Highlighting what she called billions of pounds of “wasteful government spending,” Reeves said her new OVM would “conduct spot checks,” “investigate value for money in procurement” and “publish findings, providing a powerful public check” on waste.

Reeves sold her plan as an improvement on the NAO, the government’s main spending watchdog. Reeves told Channel 4 News:

“At the moment you’ve got the NAO who review budgets, and review government spending, after the event.” She said her value-for-money squad will be better because they can review difficult contracts “before the money is spent.”

The NAO looks at “value for money,” and while it is not perfect, it is a very important government spending watchdog. The NAO has a certain narrowness because it generally must accept, rather than question, the overall shape of a policy. But within that, the NAO always has a useful view on the costs and benefits of government programmes.

With Labour promoting what sounds like a souped-up NAO, it is a bit worrying that the party seems to be ignoring the actual, here-and-now NAO.

I’m thinking in particular of two recent NAO reports. Just before Christmas the NAO issued a major report on Restart, the Department for Work and Pensions (DWP) scheme to try to reduce post-Covid unemployment. Restart is not small: the government will spend £1.7 billion on the contracts to run Restart between 2021 and 2025.

The NAO found the government was overpaying contractors — who were a familiar gang of privatisers, including well-known firms Serco, G4S, Reed in Partnership, Maximus, Seetec and Ingeus.

Covid did not lead to the increases in unemployment that many feared. Consequently only half the expected 1.4 million claimants will go on the scheme. This should be good news, except the DWP has written over-generous contracts which give outsourcers loads of cash even though they are dealing with fewer people.

The contracts include “fixed fees” designed to help private providers “build their capacity.” These fees did not reduce when far fewer unemployed people needed the service. The NAO said this was a mistake, unambiguously stating: “We believe Restart could have cost less.”

Not only did the DWP write over-generous contracts, but the contractors’ performance is also very poor. Restart is based on a previous “workfare” scheme called the Work Programme.

This was notorious for “parking and creaming,” where contractors “park” difficult-to-help unemployed people and “cream” off fees for those that would get jobs anyway without their help.

The DWP introduced “customer service standards” to stop “providers solely focusing on people who are easier to get into work” — but the NAO found that “providers have mostly failed to meet” these standards.

In short, the NAO found Restart contractors are overpaid, are failing to meet standards and are probably cheating by “parking and creaming.” You might think Labour would be tearing into this government waste — here go G4S and Serco and all the others ripping off the public again — but no, Labour’s response was very muted indeed. There was a brief statement from Jonathan Ashworth, but no sustained criticism.

More recently, in May, the NAO released a report on outsourced probation work. The Home Office handed out £200 million in contracts to help prisoners resettle.

But the NAO found these “resettlement” contracts have such “poor performance” and lack of monitoring that it is hard to say if they are doing any good at all. These Commissioned Rehabilitation Services (CRS) deals are with providers who are supposed to help ex-prisoners into jobs and houses and keep them out of jail.

The Probation Service simply did not know how they are performing — they “cannot demonstrate that its new CRS contracts are making a positive difference to offenders” because the government “does not systematically monitor all providers’ activities or offenders’ outcomes.”

When the Probation Service did investigate some contracts “its baseline audits revealed poor performance.” The NAO said “common problems” included “a lack of clarity on reasons for referrals; insufficient activities to meet offenders’ complex needs; and inadequate assurance of the work providers had delivered caused by poor record-keeping.”

The Tories were hit by a scandal when its multi-billion probation privatisation scheme crashed into failure in 2020. This smaller, also failing, privatisation hands many probation contracts to charities, but also to privatisation specialists. Ingeus and Seetec, both of whom ran the previous, failed private probation service have contracts worth £34m and £22m under this new scheme.

The background to this failing probation privatisation is a desperate squeeze on the remaining, publicly run probation service, which sees “severe staff shortages, high caseloads and high sickness absences.”

I could find no Labour response to this NAO report at all. I think there are two problems here. Firstly, Labour is not really jumping on official watchdog reports that show the government's wasteful spending on privatisation plans because Labour wants to run similar privatised welfare schemes themselves if elected. They want public services run by G4S, Serco et al just like they did under the last New Labour government.

Secondly, while Reeves compared her OVM with the NAO, she also said it would be created by “bringing together people who are already supposed to be doing this sort of stuff in the Treasury and at the Crown Commercial Service at the Cabinet Office.”

The Crown Commercial Service is a pro-privatisation unit established by Tory minister Francis Maude, which has been involved in some of the very wasteful “no-bid” Covid contracts, like Serco’s contact tracing service. Reeves’s OVM could become a continuation of Tory plans to outsource services and claim this is “good value.”

Follow Solomon Hughes on Twitter at @SolHughesWriter.