Partner Article

CBI urges Government to outsource public services

The Government could save £22.6 bn by opening up public services to private sector competition.

A report commissioned by CBI through Oxford Economics said that outsourcing public sector services to independent providers could be the answer to public spending reduction issues.

CBI said that “ploughing on regardless is not a option” and called for urgent Government action to find alternatives to lowering service costs.

Oxford Economics surveyed 20 services areas and found that cost savings of at least 11% could be made from productivity improvements.

Services such as social housing management are currently monopolised by the public sector (98%), with 86% of prison management under state control, and 73% of school catering.

The Government is likely to reduce spending on these areas by 8% in 2014/15, and CBI has called for immediate action to be taken to allow private investors to contribute to service provision.

CBI’s report has outlined key measures that will save the Coalition billions, including advice that says the Government should make the market more transparent so comparisons can be made between performance and providers.

The employers organisation also said the Government should address the failings of current providers, promote contracts that focus on results, safeguard commercial skills in the public sector and establish relationships with all types of service provider.

The public recently showed support for increased competition within public services, according to a poll carried out by ComRed for CBI.

Results showed that 75% of people said a variety of providers would improve services, rather than relying on one company.

Two thirds of respondents said they thought Government spend would be reduced by varying the types of services providers.

John Cridland, CBI Director-General, said: “Our public services are under pressure as never before, with increasing customer demand, including from an ageing population, and an urgent need to manage costs. Carrying on regardless would be a recipe for disaster.

“We need the Government to set out which services it is prepared to open up to independent competition, and when.

“Businesses recognise that there are justified concerns following recent high-profile failings and that they have to work hard to maintain public trust by consistently delivering high quality services.”

The chair of CBI Public Services Board and chief of Interserve, Adrian Ringross commented: “This new research shows that having a diverse range of providers increases quality, stimulates new ways of working and encourages greater efficiency.

“Ensuring providers from the public, private and voluntary sectors can compete on a level playing-field, and their performance is judged on equal terms, means in the end the best provider will provide.”

Initial results showed that £675m could be saved in social housing management, £240m of potential savings could be found by opening up the prisons estate, and £517m could be saved by outsourcing hospital FM services.

This was posted in Bdaily's Members' News section by Miranda Dobson .