Recently the Times news paper ran a pullout section on the current big thing in business which in case you didn’t know is outsourcing. This is not new I hear you say and you’re right, small scale outsourcing of public sector services has been going on for years but this was usually part of a plan to achieve efficiency savings this is bigger much bigger. It would appear that as we endure another year of austerity with no end in sight public sector organisations have recognised that trimming individual budgets won’t deliver the required savings. Having cut services to the bone, reduced management posts to the bare minimum and frozen staff pay for another year most chief executives are reporting that they have now adopted a long term strategy to operate within a budget which is anything from 20 to 40% reduced. The strategies vary in their detail and pace from organisation to organisation but they are all based on outsourcing.
The Times reports great excitement in the private sector at the prospect of getting hold of the big government contacts. Many are quoted as believing this to be the growth area for their industry seeing opportunities in local government, the NHS and the Civil Service in areas like employment and welfare. The articles in the Times reflects a view of outsourcing that “ lets you get on with what you’re good at whilst we do what were are good at” and talks of partnerships of expertise. All of which is a bit strange if you were reading in your Sunday papers about the unemployed people required to work for nothing and asked to camp under a bridge by the firm that was providing stewarding for the London Jubilee events. The same firm that has won a big government contract for stewarding at the Olympics. This comes not long after the scandal surrounding A4E who were milking the system which was supposed to be about getting unemployed people into work but turned out to be about maximising the income of the company.
It’s not as if outsourcing has a good track record in places where public sector services have been outsourced. Local government led the way with contacts to outsource everything from cleaning to IT and more recently HR, legal and property service. What is confusing is that whilst most local authorities appear to view outsourcing as the only game in Town over half have considered bringing services out sourced to the private sector back in-house. That is the findings of research commissioned by Unison Britons largest public sector union. The report claims that officers in 60% of councils have been asked to consider bringing services back into local authorities as part of achieving budget savings!
Before we dismiss this union sponsored survey as propaganda we should recognise that it brings out into the open that thinking at local government level has moved on even if hasn’t in central government.
Recent scandals concerning the care of people with a learning disability in private hospitals and the finances of private sector companies caring for older people have brought into question whether the care of vulnerable people should be determined by the profit motive. May be health and social care just isn’t suitable to be run as a commercial business and should be a public service.
This survey may also allow officers to say what has to date been unsayable that many local authorities got ripped off by big private sector companies whose aggressive sales tactics, slick marketing and smart legal teams took advantage of officers inexperience of entering into large scale long term contracts for services. The promise of quick big savings, the leap to cutting edge technology and the holy grail of doing more with less was just too much for many councillors to resist. The reality has been a mixture of systems that over promised and under delivered, where people were sold a Rolls Royce when all they needed was a Ford Mondeo and where the biggest saving came from employing fewer staff and paying them less.
The private sector and government ministers have their own reasons for being enthusiastic about outsourcing but many local authority chief executives are questioning whether this is such a good deal and even whether it will deliver saving in the long term.
Blair McPherson author of Equipping managers for an uncertain future and People management in a harsh financial climate both published by www.russellhouse.co.uk
