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Public confidence in public services outsourcing has been severely dented – if not holed below the waterline

Monday October 7th, 2013

A recent poll by the ‘We Own It’ campaign organisation identified that a staggering 58% of those surveyed believe that Serco and G4S should be barred from bidding for public service contracts if they are found guilty of fraud. Both companies are under investigation following accusations relating to Ministry of Justice contracts.

John Tizard

John Tizard

Some politicians and commentators have gone further. Sadiq Khan (the Shadow Secretary of State for Justice) has called for these same two companies to be excluded from the current rehabilitation and probation service procurement. Others want to see them and any other company found to have committed criminal acts to have all their current contracts terminated.

In practice I suspect that such universal termination might be legally difficult if not impossible, depending on existing contracts (other than those where the criminality occurred) and performance.

More realistically, however, I do foresee the likelihood of companies found guilty of serious criminal acts related to public sector contracts being blocked from bidding for new work.

Polls suggest a growing support for a bigger role for charities, the voluntary and community sector, co-operatives and social enterprises to deliver public services and maximise social value. There is even stronger public support for direct public services too, especially in education and health.

Popular legitimacy and support for traditional public sector outsourcing to the business sector is being dented by public opinion; and could at some stage be sunk.

Polls also indicate strong and growing public support for the re-nationalisation of the railways and even the utility companies. This should be a reason for politicians to pause; I do think that we should pause and consider carefully this apparent ‘mood change’ among citizens.

While outsourcing and privatisation are very different, with different accountabilities and residual roles for the public sector, the seeming rising opposition to both appears to be driven by a range of issues, including: a wider worry about the nature, behaviours and ethics of contemporary businesses (the ‘responsible capitalism’ agenda); public accountability when public money is being spent on behalf of the public; media and other reports on service failure and underperformance in some high-profile contracted services; at a time of austerity, a concern that public money is adding to company profits; and many more. 

Some of the opposition is also based on a political and morally grounded commitment to strong and effective public services; and a pragmatic view that public services with the right investment, revenue funding, leadership and motivated, trained and well-rewarded staff can match the best commercial services.

Whatever the reasons for the current public concerns and political discourse, those companies whose business is to bid for and manage public services, and those in government and the wider public sector who advocate extending outsourcing to the business sector, really do need to wake up and ‘smell the coffee’.

Companies need to consider how they can better demonstrate their ethical and commercial standards. And in my opinion, they will, in future, have to be willing to be ‘fully transparent’ in terms of financial and operational performance – as well as be able to prove their ability to add ‘social value’, and not simply shareholder value. 

Political leaders and senior public sector executives should reflect on the current public mood and ask whether there are better ways of securing outcomes with social value than to adopt outsourcing as the default approach.

An opportunity is emerging for the public sector to consider alternative (and perhaps, more assured) means of securing improvements in public service productivity and outcomes. It also has opportunities to apply the Public Services Social Value Act and to introduce measures such as the Public Services Users Bill, which is being promoted by ‘We Own It’ to ensure greater transparency and accountability for outsourcing decisions and monitoring. 

Of course, the real and much larger prize is the opportunity to properly connect several key public policy agendas (including: the pursuit of growth; responsible capitalism; public transparency and accountability; democratic renewal; localism and community empowerment; the strengthening of civil society and the growth of the social sector; Social Value; living wage; and many more) with the reform of public services. Now, a focus of that kind really is worth being a major plank of this or an aspiring Government’s manifesto – and it might just capture the public mood.

 

John Tizard
Online: www.johntizard.com
Twitter: @johntizard
Linked In: John Tizard

 

Gov Opps training partner, PASS (Procurement Advice Support Service) runs relevant training courses on public and private sector procurement. To get more info on the courses, and all other PASS courses, click the links below:

All PASS Events

http://www.passprocurement.com/events/public-events/introduction-to-public-procurement/

http://www.passprocurement.com/events/public-events/legal-impact-on-public-procurement/

http://www.passprocurement.com/events/private-events/preparing-perfect-tenders/

http://www.passprocurement.com/events/public-events/writing-a-tender-specification/

 

2 Comments

  1. John – Most interesting poll findings and analysis. Lurking in the middle of this appears to me to be the rise of weakly accountable commissioners – who grow more powerful by the minute. They might be characterized by attention to rules and procedure rather than mission and purpose. Their modus operandi appears to be increasingly slow, out of touch and out of synch with what the public wants and expects. We are still wedded to a system which collects tax and related revenues (fairly inefficiently through an overcomplicated system); allocates tax revenues (and borrowed money) through a very expensive and not entirely functional political system (viz problems with any part of government machinery which needs a time span of more than 3 years for delivery – ie most of our public services) and engages commissioners and others in a very complicated and expensive system of commissioning and procurement to spend the money on services. It certainly is time to look at the how the whole thing works.

  2. Sheila Reilly

    I have always been against private ownership of public sector organisations due to real lack of accountability and profits being put before public benefit. Under globalisation it feels as though we have no influence over anything these days. The public have been duped under the past government and the coalition into the selling of things that ultimately owned by them

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