The government is being urged to end its 'love in' with outsourcing work to private firms.

A report has claimed there are 'deep flaws' in such contracts including poor value for money, huge social costs and a greater benefit for overseas shareholders and multinational companies.

The Smith Institute says that public delivery of services should become the 'norm' in the wake of the collapse of construction giant Carillion.

The think tank said there should be a comprehensive examination and audit of all outsources and Private Finance Initiative (PFI) deals.

Public sector outsourcing contracts are currently valued at £100bn a year, with a further £95bn of liabilities, said the report.

There should be a new regulator to scrutinise the contracting business, to include directors' pay, working conditions, union recognition and tax avoidance, it was suggested.

Despite the rapid growth of outsourcing and PFI, the report said there was a lack of reliable data and a failure by the government to properly scrutinise deals.

Paul Hackett, director of the Smith Institute, said: 'As the Carillion debacle shows, outsourcing and PFI contracts have become part of the DNA of government.

'This reliance on, and bias towards, private firms for public services has gone on for too long.

'We need a new approach based on public service values and community benefit rather than private profiteering.'

Jon Trickett, shadow cabinet secretary, labelled outsourcing and PFI as 'failed dogmatic experiments'.