Private sector set for boom as departments outsource

The much-anticipated outsourcing bonanza kicked off today, with the Department for Transport, the UK Border Agency, the Ministry of Justice and the Department for Work and Pensions all using the spending review to earmark savings by giving work to private firms.

The Border Agency said it will save £500 million by working with more commercial suppliers. The Ministry of Justice set out plans to harness private-sector expertise in prisons.

Serco already runs a host of British prisons including Dovegate and Ashgate. Others are run by global security giant G4S. The Department for Work and Pensions said it would replace wasteful and ineffective welfare-to-work schemes with a new Work Programme that will "drive higher performance by paying private and third-sector specialists on the basis of the additional benefit savings they secure".

The Chancellor said: "All services paid for by government do not have to be provided by government".

He added that road management and adult social care functions could also see more involvement from outside contractors.

Outsourcing firms claim they cut around a third off the costs of State-run services.