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Outsource magazine: thought-leadership and outsourcing strategy | February 28, 2015

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Private sector to the rescue...

Private sector to the rescue…
Martyn Hart
  • On February 9, 2011
  • http://www.noa.co.uk/

If the last year has taught us anything, it’s that 2011 will see government departments moving outsourcing rapidly to the top of their list of priorities. Indeed, we’ve already seen a number of private organisations bidding for public sector contracts to provide everything from street cleaners to back-office bureaucrats, and it’s a trend that we’re set to see more of in the coming twelve months.

Nicholas Ridley, the former environment secretary in Margaret Thatcher’s cabinet, once said he believed the ‘ideal’ council was one that utilised practically nobody and meets just once a year to award contracts to private firms. Speaking in 1988, he claimed outsourcing would take politics out of the public service equation, making everything from education to refuse collection a simple transaction.  Although this might have been unthinkable as recently as a few years ago, many are starting to wake up to the fact that, for the public sector at least, it is now a reality.

According to analysis by the consultancy firm, Deloitte, local councils are spending around £42bn a year (40% of their total expenditure) on private sector firms.  Deloitte also believes third-party suppliers will make up 44% of total public sector spend by 2014/15 and there are fears among unions the figure could end up even higher.

Suffolk County Council have already explored ways to outsource the running of all libraries, youth clubs, highway services and children’s centres to private firms.  The expectation is that big private contractors such as Capita, Serco and Sodexho will benefit as councils and quangos follow Suffolk’s lead and outsource services in a bid to save money.  But is this a dangerous move?

It’s true that there is a risk that we’ll see private companies becoming so powerful that they will be able to determine what services are provided and how much they charge. In such an event, we could see the public sector looking to outsource cheaply, at the cost of improved service, in order to achieve quick gains over the next four years.  Obviously, a project that is initiated on cost alone stands a much bigger chance of ending in failure. Nevertheless, if the right due diligence is in place, it’s clear that outsourcing can achieve real results for the public sector.

To deliver high levels of savings and to protect front-line services, new ways of working across central government departments have developed which means that the private sector will need to change the way it deals with contracts. Maybe we need to see the outsourcing industry stepping up to the mark to working in partnership with government departments and local authorities in the coming months and years, if they are really to drive efficiencies without sacrificing service?