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Private sector could run £278bn of public services – CBI

Government could save over £22bn if public services were opened up to competition, a new report suggests.

The CBI believes that certain areas of the public sector, worth £278bn, should be open to competition from private companies, social enterprises and charities, to provide significant savings.

The areas the CBI highlights as most suitable for further competition include the management of social housing, school meals and prison management.

For £2bn worth of public services, the report suggests average cost savings of 11%. If extrapolated to the £278bn of public services the CBI believes should be more open, this equates to £22.6bn savings.

The CBI further points out that the idea has public support – a ComRes poll for the confederation showed 75% of people agreed that a variety of providers would be more successful.

Director general of the CBI, John Cridland, said: “It’s momentum we say is lacking. After the public service white paper we have seen some action in some parts of government, but we’re not seeing enough progress across government in enough of the areas to continue to improve quality and value … The government could be bolder; we think the public would have no problem with the coalition of the willing to provide this role.

“Most public services are still largely state monopolised and it's time to open some of them to competition.”

But Dave Prentis, general secretary of the trade union Unison, slammed the recommendation.

He said: “All the evidence shows that privatisation is a costly failure that the taxpayer can ill-afford. Privatisation failures carry heavy human costs – just ask an elderly resident of an ex-Southern Cross home. And, as the G4S Olympic fiasco clearly shows, when the private sector fails, the public sector has to pick up the pieces – including the cost.”

Tell us what you think – have your say below, or email us directly at [email protected]


Jonesm   24/09/2012 at 22:29

With the evidence of the excessive costs of PFI's the assertion that the private sector is better placed to provide low cost services is dubious.

Alanb   26/09/2012 at 09:26

And what about rail services?

Gary Wells   27/09/2012 at 09:13

Doing the same cheaper is not the answer. Whoever delivers whether it be public, private or third sector, new solutions are needed to reduce spend whilst maintaining or improving quality.

Rose   08/10/2012 at 13:06

They would say that wouldn't they? look at the source of the report. Private industry are there to make money. Nothing wrong with that but its not in their interests to look at ways of reducing duplication and fragmentation from public sector because this would deviate from a contract specification which is usually negotiated on some kind of pay per volume activity.

Lou Scales   17/12/2012 at 13:08

Existing outsourcing contracts have not always provided good value for money. Moreover, certainly in Local Government the best value for money is provoided by in house operations in a few very well managed organisations. We could save much more by learning from others rather than passing our problems to the commercial world to solve. They will solve them to their advantage which genrally means the public will not get the most benefit.

John Charles   03/04/2013 at 12:56

Interesting to see whather the 11% reduction in public sector costs still exists once the profit that the private sector body would require is factored in. If the saving and the profit cancel each other out where is the true benefit to the taxpayer. Continuing outsourcing or sub contracting of work by private sector bodies only lengthens the arm of control and reduces the actual benefit and quality for the end user. The private sector 'good', public sector 'bad' is a tired argument but unfortunately the lobby power of former has always been stronger of the latter whose workforce are required to remain apolitical and rely on the Unions to speak for them which only adds fuel to the fire for the Politicians bent on privitisation.

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