A while ago I worked for Carillion as a hospital porter. Or at least I worked for an agency that provided labour for Carillion – as these outsourcers always themselves outsource, to cut costs further. I was researching my book Hard Work, but try as I might, in every single public sector job I failed to work for the public sector.

Every minimum-wage-level job was outsourced in the two NHS hospitals where I worked, in a primary school kitchen and in a government nursery. Austerity causes the number of public employees to keep falling. But try to find out how many apparently public employees work for these companies, and no one knows.

Blame for outsourcing starts with Margaret Thatcher’s compulsory competitive tendering, which was forced on councils and others. Public managers still doing it often do so reluctantly, under the cost-cutting extremes of Treasury austerity, as lowest-paid employees take the hardest hit.

Carillion had taken over this large London teaching hospital’s portering, cleaning and other services. Its cuts meant there were too few porters to fetch and wheel soaring numbers of patients, leaving wards and operating theatres impatient at delays. Before outsourcing, there had been 16 porters, but they were cut to 11. This is how outsourcing works – cutting staff and holding down pay. Agency workers were paid less than the old staff Carillion had taken over.

By chance, I was working back on the same hospital site where I had worked as a ward orderly 30 years before on the same grade. Before, I had belonged to the NHS; now, at one remove, I belonged to Carillion. When I took my payslips to the Institute for Fiscal Studies to compare the value of my wages with 30 years earlier, they found Carillion was paying me, in real terms, nearly a third less. That was concrete proof of how wages at the bottom had been held down since the 1980s while wages at the top skyrocketed, causing an explosion in inequality.

Jeremy Corbyn on the collapse of Carillion - video

The contract itself, here and everywhere I worked, was rigid and inflexible. Porters were not allowed to touch a patient, even if they fell on the floor – strong men supposed to leave the heaving to often small nurses. Being decent human beings, of course the porters helped – but they could be fired by Carillion, as that work wasn’t in the contract. There was a desperate shortage of Carillion equipment, especially wheelchairs. Porters used to search frantically for them, trying to keep within the strict 15-minutes-a-job rule.

Cleaners protested there were never enough mops and cleaning materials, and that they were forced to use the same ones for wards and toilets. Staff nurses had lost control over cleaners, with no continuity on the wards where anything extra was “not in the contract”.

In another hospital where I worked as a cleaner for an agency, I found managers had lost all cost control too, so the agency was sending in too many cleaners at too high a cost for too little work. But after so many years of outsourcing, managers had long lost the knowledge of how many hours each ward or clinic needed for cleaning.

Talking to outsourced staff since then, nothing has changed: they are far removed from public services they genuinely care about, working to contract when they can see what needs to be done and could be done better.

I have interviewed plenty of managers in the NHS and school heads trying to cope with fixed outsourced contracts – or, even worse, decades-long private finance initiatives – with no control over the service or costs. Today’s NAO report reveals the £200bn – £200bn! – wastefulness of PFIs, all for the sake of a sleight of hand to keep state debt off Treasury accounts.

When Jeremy Corbyn says the Carillion collapse is a “watershed” moment, let’s hope that’s so. For bad managers, outsourcing still feels like the easy option: only recently 400 long-term, loyal National Gallery staff went on strike to stop being outsourced to Securitas, but to no avail.

We wait to see the full fallout from the Carillion earthquake: how many subcontractors collapse, how dangerous is the avalanche set off by it, and whether the lessons are learned. The only “efficiency” saving in many public outsourcing contracts is cheeseparing pay and cheating already low-paid public employees.

• Polly Toynbee is a Guardian columnist