OUTSOURCING more public services could save the Government around £22bn without hitting quality, according business leaders.
The CBI said “inertia” in Whitehall was stopping more state-funded programmes being run by the private sector and warned ministers that shunning reform would be a “recipe for disaster”. Its Open Access report, based on a study carried out by Oxford Economics, found improved productivity from bringing in businesses and independent organisations would lead to an 11% cut in costs.
John Cridland, CBI director-general, said the private sector was not always best but insisted increasing pressures on the state meant the Government must change the way functions like administration are run. He suggested schools should not waste time running their own meals service when they could outsource provision and focus on educational needs.
“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,” he said.
“Carrying on regardless would be a recipe for disaster. The Government needs to face this tough policy challenge head on. Most public services are still largely state monopolised and it’s time to open some of them to competition. That is the way to maintain quality and achieve billions of pounds worth of savings.
“That’s isn’t to say the private sector should do everything. But, take school dinners – is it really necessary for three quarters of all our schools to be worrying about catering?
“We need the Government to set out which services it is prepared to open up to independent competition and when. Businesses recognised 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 Government published its Open Public Services White Paper last year and insists progress on reform is being made. A Cabinet Office spokesman said: “Improving public service delivery has been a Coalition priority since day one. We have recently made a number of senior appointments, who all have significant commercial experience, to reform the way we deliver services and provide value for money for the taxpayer.
“These appointments include a new Government Chief Operating Officer and will enable us to go even further with our crucial efficiency and reform agenda and build on the £5.5bn of efficiency savings achieved last year.
“This Government recognises we need to deliver public services differently in future, in more nuanced and flexible ways, and we are working closely with industry to achieve this. As part of this, we are considering a range of different models.
“While we fully support outsourcing where there is clear evidence that this will boost productivity, we are also backing a new wave of employee-owned mutuals which we know can provide better, more efficient public services.”
Dave Prentis, general secretary of Unison, said the report was “fundamentally flawed”, with no proof that 11% savings can be achieved by privatising public services. “The CBI has plucked this figure from the air. All the evidence shows privatisation is a costly failure that the taxpayer can ill afford. Only last week MPs felt it necessary to call for a blacklist of firms that have failed to deliver on their contracts.”