Opening up more public services to alternative providers could save over £22bn in the next five years, business leaders have claimed.
The CBI’s Open access report, published today, called for urgent action on the government’s Open Public Services strategy, which seeks to find ways of providing services at lower cost.Research commissioned by the CBI examined 20 discrete service areas currently run mainly by the public sector, including prison management, school catering and social housing management. Opening these services up to more competition could increase productivity by at least 11% and save £2bn, the research by Oxford Economics found.
Extending the principle across all public services would save £22.6bn, the CBI said.
‘Our public services are under pressure as never before, with increasing customer demand, including from an ageing population, and an urgent need to manage costs,’ said CBI director general John Cridland.
‘Carrying on regardless would be a recipe for disaster. The government needs to face this tough policy challenge head on.’
Cridland said the private sector shouldn’t necessarily do everything, but added: ‘Take school dinners – is it really necessary for three-quarters of our schools to be worrying about catering?
‘We need the government to set out which services it is prepared to open up to independent competition, and when.’
Among the report’s other recommendations for government was to ensure that the public sector had the right mix of commercial skills to commission effectively. Contracts should also be structured to focus on outcomes and mechanisms established to address provider failure and maintain service continuity.
Adrian Ringrose, chair of the CBI’s public services board and chief executive of service provider Interserve, said: ‘Providers from all sectors need to understand the government’s visions for public service markets so that they can invest in the new delivery models, technology innovations and supply chains that will deliver the savings and transform the way the public access key services.
‘Ensuring providers from the public, private and voluntary sectors can compete on a level playing field, and their performance is judged on equal terms, means in the end the best provider will provide.’
But the Association of Teachers and Lecturers expressed scepticism at the CBI’s conclusions. Deputy general secretary Martin Johnson said savings could only come from a reduction in quality or a reduction in staff wages.
‘How can reducing spending power help grow the economy?’ Johnson said. ‘In terms of quality, school meals are not a good example, as recent evidence has shown that where regulations are lifted competition by providers leads to less nutritious meals – and it’s the children who suffer.’
