04 April 2008
Trade unions have complained that they have been left out of a groundbreaking government review of public sector outsourcing.
The Public Services Industry Review, announced by Business Secretary John Hutton in December 2007, is led by DeAnne Julius, chair of the Chatham House think-tank and a non-executive director of BP and Roche.
It will examine the private and third sectors' role in delivering public services, and how the market can be made to work more effectively.
The review marks the first time the government has acknowledged the emergence of a public services industry and attempted to define it. The deadline for submissions was April 4.
But the Trades Union Congress told Public Finance it was disappointed not to have been invited to sit on the review panel, although it is included on the list of stakeholders. TUC policy officer Rachael McIlroy said it was a 'big mistake' not to include union leaders. 'You can't look at public sector contracting without looking at workforce issues,' she said.
The TUC's submission questions the very premise of the review, which takes the view that outsourcing is here to stay. McIlroy said the review took a 'nuts and bolts' approach to issues such as procurement, while ignoring broader issues such as user experience.
She added that there was concern that the review is solely a Department for Business, Enterprise and Regulatory Reform one rather than cross-departmental: 'They're looking at [outsourcing] specifically in terms of industry. It doesn't fit with how we see the public sector and neglects issues such as social justice.'
'It's time for the government to take stock of the rules of the game and the things that aren't working properly.'
But the CBI said it was right and entirely appropriate that the review was located within Berr. Tom Moran, a principal policy adviser on public services, said it was important the government advanced and championed the cause of the public sector industry.
'One of the things we've called for, for a long time, was that there should be an industry unit within Berr for the public services industry in much the same way there is for manufacturing, finance etc.,' he told PF.
'This review shouldn't be the end of a process; this should be the start of the government committing to the UK public service industry. One of the outcomes we hope for is formal sectoral recognition of public services and the attendant organisational support that goes with that within Berr.'
The review, in part, stems from CBI lobbying. CBI-commissioned research revealed the public services industry employs 700,000 people and generates £25bn in added value to the economy.
The review has also been told that the public sector is paying well above the market rate for some of its contracts. A submission from Compass management consultants, seen by PF, reveals that one government agency is paying 65% above the market rate for computer servers while a major government department is paying 20% more for outsourced desktop, servers and infrastructure.
David Locke, Compass's head of public sector, said said there was an opportunity for improvement and change in the way contracts were let. 'We feel quite strongly that the overall governance and management structures of the contract need sharpening and tightening up. I'm hoping that the review will spend some time focusing on this.'
PFapr2008
