Independent Police Complaints Commission wants new powers of inquiry to reflect the outsourcing of jobs

The police watchdog has aired its growing frustration over the Home Office's failure to close a loophole that allows privately contracted officers to escape investigation.

Despite apparent government support for outsourcing of policing duties, ministers have shied away from introducing measures to make all private staff in the sector independently accountable.

Last month private firms were invited to take over some of the responsibilities of the West Midlands and Surrey police forces, including investigating crimes, managing intelligence, patrolling neighbourhoods and collecting CCTV footage. More than 60 private firms attended the "bidders' conference" for contracts with the two English forces, with critics raising questions about the suitability of some companies showing interest.

The Independent Police Complaints Commission – responsible for investigating deaths in custody, public complaints and allegations of wrongdoing – wants the power to investigate all staff who carry out police duties in a move to preserve public confidence in the service. At the moment the IPCC has no automatic power to interview or discipline private staff, even if misconduct or individual failures contribute to a death.

Deborah Glass, deputy chair of the IPCC, told the Observer: "We believe it is vital for public confidence that all those who perform police-like functions and powers are subject to independent oversight.

"It cannot be right for someone doing the same job as a police officer not to fall within the IPCC's remit simply because the police have contracted the job to a private company. But any change in this area requires a change in the IPCC's powers. We have told the Home Office that we believe these powers are necessary, indeed crucial."

More than 14 months have passed since the IPCC first raised the need for legal powers to cover all private staff. Since then, the government has extended its support for outsourcing of traditional police roles to private firms.

The IPCC has investigated several incidents in which private staff were working alongside police officers when a detainee suffered harm or death.

An IPCC spokesman said the current situation meant it could not collate complaints from the public relating to private firms involved in policing.

South Wales, Lancashire and Cleveland are among those forces already outsourcing frontline police jobs. Among the firms apparently seeking to include their role in policing is G4S, the world's largest security firm. It already manages four UK prisons, three secure training centres and immigration centres. In addition, G4S has a £200m contract with Lincolnshire police under which half the force's civilian staff will join the private company. A primary concern among campaigners is G4S's involvement throughout the criminal justice system.

Ben Priestley, Unison's national officer for police, said: "Private companies are already heavily involved in prisons and are making inroads into probation. With the government now intent on opening policing up to privatisation, the disturbing prospect of multinational companies controlling our entire justice system looms large."

Yesterday G4S said it, too, wanted the government to increase the IPCC's remit over its staff. A spokesman said: "We would very much welcome our staff being subject to the same rules that govern police staff. In addition – and in the absence of statutory regulation – we have included IPCC compliance into our strategic partnership contract with Lincolnshire police.

"G4S believes that private companies working with the police should follow our example."

Last week Interserve, the international support services and construction group, announced a new alliance with Durham Tees Valley Probation Trust. It is the first national agreement between a private company and a probation trust.

"The public will pay the price as policing becomes less accountable," added Priestley. "And if contracts go wrong, public money will have to be used to mop up the mess. Our cherished tradition of policing by consent is in danger of becoming policing for profit."

Critics are also concerned about the number of senior officials moving from the public to the private sector. In February, Yvonne Thomas of the National Offender Management Service joined Interserve. And G4S recently appointed the former deputy director at the Ministry of Justice, David Griffiths, as director of probation and community services.

A Home Office spokesman said it was looking into "whether the IPCC's remit could be extended to cover private contractors carrying out a range of other policing duties such as call handling".