The head of a Glasgow charity has strongly criticised Government procurement programmes, saying the provision of public services was increasingly facing "privatisation by stealth."

Joe Connolly, chief executive of Ypeople (formerly YMCA Glasgow), was speaking as the charity faced demonstrations over plans to evict more than 70 failed asylum seekers. It is set to hand responsibility for housing existing claimants to the multinational corporation Serco.

Earlier this year Ypeople lost out to the company in the awarding of a contract for the transport and accommodation of asylum seekers thought to be worth £12.5 million.

While providing accommodation in Glasgow, Ypeople has been housing those who would otherwise be destitute due to the failure of their asylum claim.

However, Mr Connolly warned that Ypeople had lost the contract to provide asylum seeker accommodation and transport in Scotland not because of the quality of its services, but because Serco was cheaper, and that there had to be doubts over the company's ability to carry out the work.

"We were beaten on price, but also on ideology," he said. "We were assessed every year and came out well on cost, quality and sustainability. There were financial penalties if we didn't."

When the UK Border Agency scored the bids for the work, Ypeople's services were judged best, he claims. "We beat them on quality but only just. There should have been a country mile between us."

Serco will subcontract the work to estate and letting agents Orchard & Shipman, but neither company has ever provided this type of support to asylum seekers, Mr Connolly said. In an interview for the Herald's Society page, Mr Connolly said Government procurement in areas such as unemployment and social care was now routinely handing huge public sector contracts to multinational firms. "This is privatisation by stealth," he said.

"If these companies provide a quality service, that is OK, but I'm not sure the evidence is there that they will."

He argues that the need for profits for both private sector companies and their sub-contractors, means a poorer deal for the taxpayer. "Before any services are provided there's a profit margin. But with the voluntary sector, surplus money is ploughed back into services."

A UK Border Agency spokesperson said Serco, and the other two multinationals which won asylum support contracts, G4S and Reliance, had demonstrated they would deliver quality services in a fair and trans-parent bidding process based on both quality and value.