In last week’s Plan for Growth, published alongside the Budget, the government unveiled ways to make it easier for SMEs to access public sector procurement, encouraging them to tender for service delivery to an unprecented level. Combined with the OFT report into public sector commissioning, and the forthcoming Public Service Review – expected to allow private companies to take on all kinds of public services, from hospital or school management to park maintenance or refuse collection –the UK is facing a radical shake-up to the way public services are delivered.
At first glance, these measures may seem a logical way of managing the cuts – certainly for some organisations there could be something to learn from private organisations, which have long reaped the benefits of purchasing power and economies of scale. Equally, the commercial sector is well versed in holistic risk planning and business continuity management; something that may prove vital for the public sector in the months to come.
But the involvement of a private sector company in public sector delivery also presents a number of challenges that reach right to the heart of the public sector; for example, private businesses may have different strategic goals and even a different ethos to a public organisation. Therefore to ensure that the often very specialist and very local services don’t suffer, leadership teams will need to keep a close focus on short and long-term strategic goals.
There will also be the need to ensure procurement excellence in local government, requiring a focus on best outcomes rather than best price, as well as a long-term approach to any agreements that are made. Procurement is an evolving relationship, with ever changing risks, and must not be taken as a ‘one moment in time’ service. Consequently, all parties involved will need to consider these issues - both immediate and in the future - to keep standards continuously high.
When any additional party becomes involved in service delivery relationships become more complex and can be harder to control. As supply chains diversify and even perhaps take on an international aspect, clear service agreements between public and private will be critical in ensuring standards are kept high and deadlines are met in the right way. And, in the case of outsourcing, it is important for local authority chief executives to remember that outsourcing a service does not necessarily mean outsourcing responsibility for its delivery or, indeed, failure.
In re-thinking the provision of services, local government organisations must also keep the risks of reputation damage and negative public sentiment in the front of their minds. The direct impact of service failure could be bad enough – but negative public or media perception of the organisation could make things even worse, even causing a backlash against providers.
Private sector involvement in public services does have the potential to bring benefits and efficiencies. But, as the cuts continue to take effect over the coming months, finance directors and chief executives alike must not lose sight of their ultimate aim: providing services to communities. Whilst there will undoubtedly be pressure in some instances to enter into agreements quickly, this is no time for short-termism and knee jerk reactions.
Andrew Jepp is director of public services at Zurich Municipal
