19 December 2008
By Paul Dicken There is anxiety amongst public sector commissioners about the ‘viability’ of contractors following the sharp downturn in the economy, the chief executive of the Audit Commission has warned. Speaking at a Public Finance round table event on public sector outsourcing, Steve Bundred said: ‘In the short term there is a concern about the robustness of the market. There is a lot of anxiety out there about the viability of certain contractors that people are talking to.’ At the December 12 event, sponsored by the Aldridge Foundation, participants raised concern over the lack of actual risk transfer in outsourcing deals. Bundred issued a stark warning about the potential consequences of the ‘collapse of strategically important suppliers’ on which public sector bodies were dependent. Bundred said that beyond the next general election there would be ‘really serious pressure on public expenditure’. He added that outsourcing provided opportunities for ‘economies of scale’ and innovation to enhance provision. He said: ‘The question in my mind is what do we need to do between now and over the course of the next 18 months to two years to ensure that when the reduction in public expenditure… really starts to bite, we’re able to maximise those opportunities.’ Keith Sonnet, deputy general secretary of the public sector union Unison, and John Tizard, director of the Centre for Public Service Partnerships at Birmingham University, told the round table that traditional models of outsourcing needed to be rethought. They also called for workforce issues to be addressed, saying that protections for transferred staff were often ignored or not taken seriously. Looking at the new approaches for outsourcing, participants said consortiums of providers were likely to offer the necessary specialisms and skills to make contracts beneficial. Nick Bell, deputy chief executive at Essex County Council – where a radical move to make the council largely a commissioning body is being considered – said that there was ‘a wider opportunity for consortium partnerships’.