After a series of outsourcing scandals, the government should be putting its focus on the public and social sectors
The resignation of Chris Hyman, CEO of Serco, is one of many recent stories affecting public service outsourcing.
There have been other hasty departures of senior executives at Serco and G4S, and lots of stories and reports that affect the future of outsourcing. There are police investigations, Serious Fraud Office investigations, an Office for Fair Trade inquiry, Public Accounts Committee and National Audit Office reports, evidence of underperformance and in the case of welfare medical assessments, some crass behaviour, contract terminations, and much more.
Meanwhile, in too many cases, frontline staff have been forced to accept less than the minimum wage. Social sector providers have been under-funded and forced to act more like corporate businesses to bid for work and funding, only to find themselves excluded from service delivery opportunities.
The litany of issues goes on, and they must have dented public confidence in public service outsourcing to large corporations. There is a growing level of public unease about both the nature of what has been described as ‘predatory capitalism’ and the wider ethics of some of the business sector, as well as intellectual and popular challenges to what has been the dominant orthodoxy of ‘neo-liberalism’. In terms of public services this is demonstrated by a poll, carried out last month by Survation for We Own It, which found that 46% of the electorate were more likely to support a party in favour of publicly owned and managed services rather than outsourcing, while only 11% were less likely.
There is also growing anecdotal evidence that some public sector bodies, including some local authorities, are now questioning the wisdom of traditional public-sector outsourcing. Leaders in these organisations are not convinced of the service and financial benefits; or of the appropriateness of inflexible long-term contracts in a period of austerity, cuts and uncertainty; or of the benefits that might accrue from lengthy and expensive procurement processes.
However, the government seems intent on proceeding with major public sector outsourcing programmes such as the probation and rehabilitation service. There is similar activity in the wider public sector, including the NHS and local government.
This surely is the time for public sector leaders to question the wisdom of outsourcing as the default model.
Perhaps public opinion is ahead of politicians and public sector executives on this issue. There is a growing view that competition and market-based approaches may not be the most ethical and practical means of securing long-term sustainable and responsive public services. There are great differences between transactional ‘back office’ support and IT services – and social care, offender rehabilitation, children and education services or health provision. The public differentiates between these.
Some argue that by removing and replacing senior executives, adopting new ethical codes and rebranding, businesses that have had a bad press will be able to put the past behind them and win new contracts. And while we should applaud those businesses for encouraging their leaders to accept responsibility and ‘fall on the sword’, I am far from convinced that the solution is that simple.
Equally, some argue that what matters most for the public sector is not having a political debate on the role of a market versus a social approach to commissioning and delivery of public services – but rather, investing in improved procurement processes and professionals. I have little doubt that the latter is necessary and would make a positive difference. However, I am also convinced that on its own it will fail to address the fundamental issues that need to be debated and answered, such as:
• The limits of markets in public services.
• Models for new collaboration with the social, voluntary and community sectors.
• Opportunities for co-design and co-production with service users and communities.
• The role of staff or user-led co-operatives on how to modernise and invest in publicly managed public services.
• When public services are outsourced, how to secure full transparency, accountability and ethical approaches.
Public leaders need to focus not on traditional outsourcing but on affordable, sustainable and responsive public services that contribute positively to public and social value – a focus more towards the public and social sectors.