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Guide combines three-tier practical advice on managing outsourced deals locally

In light of the imminent increase in public service outsourcing as a result of Spending Review cuts, the Institute for Government (IfG) has published an interactive guide to help local public servants better manage outsourced contracts.

The organisation said that Whitehall will only be able to drive up efficiency for less cash if it relies increasingly more on outside providers to deliver essential services.

But the government has a notoriously poor track record of managing outsourced services, the IfG said – citing the shutdown of Kids Company, Serco’s overcharging for electronic tagging and the G4S failure to fully staff the Olympics as examples.

In order to help practitioners in all levels of government – from probation and local government to health and employment – the IfG drafted a single resource designed to tackle the longstanding outsourcing issue by offering practical advice.

Dr Jo Casebourne, IfG’s programme director, argued for the guide’s relevance in the current fiscal environment: “Many of our schools, care homes, prisons, and other public services are now run by private providers who receive taxpayers’ funding. The public services industry is worth approximate £90bn today, and is still growing.

“The [prime minister] will only be able to deliver on his promise of ‘delivering more for less’ when civil servants are able to work with these providers more effectively.”

The resource is split into three sections, the first of which sets the stage by explaining the complexities of public service market systems.

The second section outlined advice on how public service markets can be managed more effectively and details where things have gone wrong in the past, while the last section includes a tailored report with practical suggestions for addressing identified risks.

George McFarlane, CBI’s head of public services, said: “By drawing on the experience and expertise of the private sector, which brings innovation and investment to public service delivery, businesses can help the government achieve its vision for a ‘smarter state’.

“The relationship between the government and businesses shouldn’t just be about two signatures on a contract – partnership is essential and firms want to see dialogue by default as the transformation of public services begins to take shape.”

But despite the effort to help staff manage outsourced contracts, many public sector bodies argue that these deals can harm the effectiveness of services if not tightly assessed.

Earlier this month, the London Assembly warned that plans by the Metropolitan Police to outsource its services to the private sector presented huge risks and could reduce the mayor’s flexibility in helping the police deal with funding reductions.

And in PSE’s Oct/Nov edition, chief of the Chartered Institute of Internal Auditors, Dr Ian Peter MBE, said that central government departments and local authorities must seek assurance on the management of risk before undertaking major outsourcing projects.

He acknowledged the “substantial” advantages of outsourcing, but reiterated that benefits could only be realised if outsourcing arrangements are designed and managed effectively, with proper assessment and control over risks.

And in July, the National Audit Office claimed that the government must know more about how much outsourced public services actually cost the companies who deliver them and how much profit they are making. It called on Whitehall to negotiate greater access to, and make better use of, open book accounting data.


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