Is the time ripe for a surge in outsourcing across our public services? A number of commentators think so, with the Guardian recently declaring that the ‘austerity drive will hand billions’ to the private sector.
There is evidence to support this thesis, including claims from outsourcing firms that opportunities are rapidly expanding. Capita, which announced improved revenue and profit figures last week, confirmed that its ‘bid pipeline’ was the strongest for many years.
Similarly, rival operator Tribal tells Public Finance to expect ‘transformation rather than evolution’ as outsourcing moves from back office to front line (see Outside In)
Much of this rhetoric, however, could be seen as sales pitches from companies rocked by a private and then a public sector recession. Cutbacks across government might actually lead to contractors taking a severe hit.
Cabinet Office minister Francis Maude reinforced this alternative analysis when he called in senior executives from 19 major suppliers earlier this month. The shocked bosses were asked to ‘take a haircut’ on new and existing contracts.
But if the private sector faces a light trim, public services can expect a return of the short back and sides – or even worse.
Public bodies are under enormous pressure to make savings of up to 40%, and many see outsourcing as the only way to achieve this. In the longer term, greater private sector input seems inevitable.
If this transpires, then it is vital that outsourcing is used to transform the standard of services and not simply to shave money from the budget.
Otherwise, as John Tizard points out on his PF Blog ‘No return to CCT’, there is the danger of a return to local government’s unloved and unmissed programme of Compulsory Competitive Tendering. The result would be cheaper services, but at what cost to quality and employment conditions?
Such fears are fuelled by Maude’s announcement that he is ‘minded’ to scrap the two-tier workforce code. The code, which ensures that new recruits to an outsourced contract are treated no less favourably than Tupe-protected colleagues, guarantees basic employment rights.
This has not always been the case, as those who remember some of the worst models of CCT will no doubt testify.
Great progress has been made in public services in recent years. We must be careful that, in the rush to restyle the sector, we do not throw out the good along with the bad.
