27 April 2007
The chair of the CBI's Public Services Strategy Board combines a commitment to business with a long-held passion for Ipswich Town Football Club. He tells all to Joseph McHugh
You probably haven't heard of Kevin Beeston but he and his friends are involved in every aspect of your life. From leaving the house in the morning, throughout the day until you get home again, they are lurking in the background.
Sounds sinister? Not really – it is just the face of modern public services. You see, Kevin Beeston is chair of the CBI's Public Services Strategy Board and he and his friends are the chairs and chief executives of the major private companies that are increasingly providing services that used to be the preserve of government.
During the day he is chair of support services company Serco, and we meet at its elegant mock-Regency offices in Richmond upon Thames in southwest London.
Beeston is now six months into his CBI role, which he took on after Capita's Rod Aldridge resigned during the cash-for-peerages imbroglio.
Beeston says the Public Services Strategy Board has been instrumental in getting the government to listen to the voice of business as it tries to widen the use of markets and competition in public services.
'Tony Blair was elected on a platform of public service improvement. We as existing private service providers didn't have a voice as an industry, to say, “we're already here, we have the capacity, knowledge and experience to help you make these changes”.
'But now we've achieved a real recognition that business needs to be consulted early on in the formulation of policy around public service delivery.'
Serco has benefited handsomely from this policy shift. But despite being a major player in the government contracts market, it has managed to maintain a low profile and avoid a similar fate to its rival Capita, which has been pilloried for a series of high-profile failures.
Thanks to its strong performance, though, Serco is starting to move out of the shadows. Last month it posted an impressive set of results for 2006: pre-tax profits soared by 38% to £107.4m, while turnover grew by 13% to £2.55bn. It is already a FTSE 250 company – and well on its way to breaking into the FTSE 100.
Serco, which derives 90% of its income from the public sector, wins half of all the contracts it bids for and nine out of ten of its existing contracts are renewed. As a result, it runs… well, just about everything.
There's a good chance the firm empties your bins, runs your sports centre, and keeps your park looking neat and tidy. It also operates several jails, the Docklands Light Railway and a couple of airports.
With fingers in so many public sector pies, it is small wonder that Beeston has firm views on what the government needs to do to keep business on board as it pursues its controversial reform agenda.
Unsurprisingly, he backs the drive to open up services to a broad range of suppliers, but warns that markets will not develop and be sustained unless ministers are prepared to take political risks and face down their critics.
He's a stout defender of the Private Finance Initiative, nimbly reaching for the statistics to support his arguments – '70% of PFI projects are delivered on time and on budget, three-quarters of non- PFI projects are late or significantly over budget'.
But Beeston says the suspension of hospital PFI schemes last summer, while all projects were reviewed and many downgraded, damaged market confidence. Lessons need to be learnt.
'The opportunity that exists for the private sector to bring about significant transformation of public services is not being grasped sufficiently. That manifests itself in procurement delays and uncertainty over some projects and over policy,' he says.
'Business needs to have much more certainty. If we're going to invest in bid costs, in the staff and in the processes we need to put them together, we need to see those hard policy decisions coming through in deliverable procurement contracts.'
Beeston's no-nonsense attitude can probably be explained by his background. Born in Ipswich, he grew up in Great Yarmouth. The son of a motor mechanic and an insurance clerk, he is proud of his working-class roots.
Beeston's ambition and drive came to the fore early on and, after grammar school and A-levels, he was impatient to get on with his career so decided to start work rather than go to university.
'It was Birds Eye or the power station. Those were the two main employers in Great Yarmouth. But Birds Eye was part of Unilever at the time and had offices all over, and I knew if I wanted to build a career I needed to move to the Southeast,' he explains.
Beeston stayed there for five years, qualifying as an accountant, but jumped ship following the company's refusal to fast-track him because he was a non-graduate.
He joined Serco in 1985 as a financial analyst and since then he's done pretty much everything except sweep the floor. He was soon hauling himself up through the ranks, making it to the chief executive's job for Serco's international division.
Not long afterwards he was given a broader canvas to display his talents, joining the group board as finance director in 1996. Three years later he became group chief executive and, in 2002, reached the Serco summit as executive chair.
From September, the 44-year-old will become non-executive chair and will work for Serco one day a week. The rest of the time, he says, he will spend on other commitments. This should give him more time to spend on his hobbies. A life-long supporter of Ipswich Town, he describes the football club as his 'big passion' – so much so that he is now on the board of directors.
These days, living in Shepperton, Surrey, he doesn't get to matches as often as he would like. Instead, he and his wife Jayne take their three children, two sons, aged 15 and 13, and an 11-year-old daughter, to watch London Irish play rugby.
Beeston's relative youth, though, means he has plenty of time to establish a second successful career. An advisory role with government, giving the business perspective on the reform agenda, is surely not far away. Those who know Beeston say it would suit him.
A colleague who works with him closely at the CBI says: 'Kevin is one of the most enthusiastic advocates of reform and has a real commitment to using competition to transform public services. From a business point of view, he also knows what's necessary to deliver the services people want.'
That knowledge has certainly stood Beeston – and Serco – in good stead, as the latest set of results testify. He also has firm views about the future direction of government policy on public services. Unsurprisingly, he backs a much broader push to open up services to competition but he wants the new prime minister – whoever that may be – to take a much bolder stance on driving through reforms.
'There is a mood for reduced taxes and that means less money for public investment. That's how it should be – we should create a highly competitive, low-tax economy – but it does mean we need to become more efficient,' he says.
'Ten per cent of services are provided by non-public bodies, 90% by public institutions. The issue is getting that 90% to be more efficient. A generation ago we thought that telecoms needed to be a public asset, that the airline had to be public, and the oil company. That's all changed. We have to look at what is best for consumers and citizens. In my view, the answer can never be one monopolistic provider.'
Citing research by pollsters YouGov, Beeston says that despite the protestations of the unions, the public is relaxed about mixed provision as long as the end result is high-quality services.
He asks, somewhat mischievously: 'Does it really matter if you and I have different logos on our coats? What matters is that both of us get the job done.'
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