Rebranding will not solve the problems of public service outsourcing

3 Apr 18

Outsourcing needs more than a refresh and rebrand, argues John Tizard. A pause to collect some evidence is urgently required.

It is interesting but not surprising that the public service outsourcing industry is calling for the industry to fight back against the political and public concern of the policy and practice of outsourcing public services.

The Global Sourcing Association (GSA) – one of the industry’s trade associations – is calling for the outsourcing community to come together and help to reshape and improve the industry in the face of media and political opposition in the aftermath of the Carillion collapse, and ongoing technology-driven disruption.

Chief executive Kerry Hallard has said: “Outsourcing is and remains a critical part of public sector service delivery and of the economy as a whole – and while recent attacks on the model have often been extremely wide of the mark it’s clear that the industry’s standing in the public eye needs urgent improvement.”

She also said that the current situation provides an opportunity to demonstrate what she describes as “the almost incalculable value that we deliver every day” and “to take a root-and-branch look at the entire space and ask where we might be able to make genuine changes for the better – and whether we need a wholesale reshaping of the industry to ensure our ability to deliver on our value proposition remains unimpeded”. There is a hint that some rebranding may be required.

The CBI continues to repeat the assertion that outsourcing should always be considered as a means of improving quality, reducing costs and offering value for money. It continues to state that, if only the public sector were to be a better client, outsourcing would do even better. The assumption seems to be that the public sector should serve the business sector: this seems self-serving. 

One would expect that the GSA, CBI and others in the industry or representing it to make such positive claims for the benefits of public service outsourcing – benefits they argue reach the public, as service users and taxpayers, as well as the companies involved.

I wonder if they have fully understood the seismic impact of the Carillion collapse for our public services and how they are delivered and managed.

I welcome the fact that many people in public services industry companies and trade associations are now acknowledging that traditional ways of outsourcing are over, and that reform is necessary.

But I would question their assertions that public service outsourcing has improved the quality, effectiveness and efficiency of public services. There is no comprehensive evidence to support this view and plenty of anecdotal and individual project evidence to suggest otherwise. This lack of evidence makes the pursuit of evermore outsourcing even more incredible.

Over the last few decades it has increasingly been assumed by politicians and senior public sector executives that outsourcing public services to the business sector is normal public policy management practice. This does not have to be the case nor should it be.

There needs to be a pause in public service outsourcing to allow for a comprehensive review of outsourcing, and its impact on matters such as service quality, employment standards, public expenditure and democratic accountability. Such a pause would allow for either fundamental reform of public service outsourcing, the introduction of new regulation and stopping the ever onward march to more and more public service contracting.

I would argue that it is time to reaffirm that the default option for public service provision should always be ‘in-house’ public management. Interestingly, local authorities of all political persuasions are ending outsourced contracts and bringing services back ‘in-house’ delivered by public sector employees with public sector management.

This policy of the default being public sector provision should be enforced through regulation. Consequently, when a public body is considering outsourcing it should undertake a transparent and strategic ‘make or buy’ decision process, which considers fully the implications of the proposed approach with a comprehensive risk assessment. Such a decision-making process should involve service users, staff and trade unions and other stakeholders. A public body that decides to outsource must be required to publish and consult on the business case and it must demonstrate the public value of outsourcing.

Government should introduce wider regulation to include requiring public sector procuring bodies to consider bidders’ track record, ethical and governance standards, ownership structure and business models; and it should also set standards for employment practices, transparency and accountability, and auditable financial and operational reporting. There will need to be a new national regulator.

The future of public service outsourcing requires a fundamental shift in approach and a renewed commitment to a public service ethos with the default delivery model being the public sector itself.

Simply rebranding outsourcing and/or the companies involved is not the answer any more than assertions that outsourcing adds public value or that the collapse of Carillion was a one off are.

It would be in the public interest if the GSA, CBI and others were to stop asserting that public service outsourcing is positive and agreed to support the call for a pause in outsourcing pending an evidence-based review of its efficacy and a fundamental reappraisal of its value and application.

John Tizard and the Global Sourcing Association’s Kerry Hallard both participated in CIPFA’s recent round table debate on the future of public service outsourcing. You can read a report of the debate here.

  • John Tizard

    John Tizard is an independent strategic adviser and commentator on public policy and public services. He works with a range of public, private, third, union and academic organisations. He now holds several non-executive, trustee and chair roles in the VCS and arts sectors. He was a senior executive both at Capita and Scope, and is a former joint council leader

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