Outsourcing the public sector

The public sector is at the top of today’s political agenda, but none of the mainstream parties are talking about its erosion through outsourcing. Yet according to UK Public Sector Outsourcing, a report by Kable Market Intelligence Services, the public services market in Britain is set to grow from just under £45 billion this year to more than £67 billion in 2006-2007. Growth will be fastest in the Ministry of Defence, rising from £1.1 billion this year to £4.2 billion in 2006-8, whilst the NHS outsourcing market could grow to £16.4 billion in three years time. “There are now few ideological or policy limits to the use of outsourcing in the UK public sector,” the report concludes. 

This is good news for the outsourcing companies (see Red Pepper’s ‘Know Your Enemy’ column to find out who’s getting rich and at what cost) but bad news for the public. There is little credible evidence that outsourcing provides value for money, and government claims that outsourcing transfers risk to the private sector often turn out to be flawed. Even where penalty clauses are included in contracts the government has been reluctant to enforce them for fear of scaring off future private investment. The democratic arguments also favour publicly run public services. Public bureaucracies may creak at times, and would often benefit from more participatory practices, but private provision makes that even harder. The outsourcing of services necessarily results in an outsourcing of accountability, since private companies are primarily accountable to shareholders rather than patients, pupils and other services users.  OR

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