Outsourcing of Public Services

Jim Shannon Excerpts

Tuesday 18th December 2012 Westminster Hall

[Chris White (Warwick and Leamington) (Con)]

I called for a debate this afternoon on the outsourcing of our public services. I am grateful to Social Enterprise UK, in particular Celia Richardson, for putting together the report, “The Shadow State”, and for raising this important matter and providing fresh insight.

Although politicians can easily become fixated on the high-level discussions in politics, we need to remember that one of the most important roles of government for most people is the provision of high-quality, front-line public services. Over the past 200 years in Britain and throughout the world, Government have become more and more central to the delivery of services vital for millions of people: health care, child care, policing, prisons, helping people back to work, education and transport are just a few of the areas that the public sector reaches. Since 1945, Britain has seen a vast centralisation of such responsibilities away from the local level and from independent organisations and towards central Government. In 2010 prices, the budget has gone from £234 billion in 1945 to £660 billion.

A large proportion of the budget has been spent on public services, and we have seen massive improvements in many areas. I am proud of some of the achievements that have been secured, but we face difficult economic times and cannot expect to keep spending large quantities of money in order to increase the quality of public services. The vast structures of the public sector, which were appropriate in the 1940s and ’50s, are now starting to struggle to deliver the improvements in services and the productivity increases that we need for the decades ahead.

Over the past 20 years, Governments of all colours have increasingly turned to the private sector for delivery of public services, in order to reduce costs and to provide better outcomes. Oxford Economics has estimated that the current outsourced market for public services has an annual turnover of £82 billion, representing 24% of the total spend on goods and services by public services. Rightly, therefore, in July 2011 the Government released their “Open Public Services” White Paper, which sought to lay out the future direction of public services through five key principles: first, wherever possible to increase choice; secondly, to decentralise public services to the lowest appropriate levels; thirdly, to open public services to a range of providers; fourthly, to ensure fair access to public services; and, fifthly, to make public services accountable to users and taxpayers alike.

[Jim Shannon (Strangford) (DUP)]

Is the hon. Gentleman aware that a recent Confederation of British Industry report stated that more opportunity for private and independent sourcing of public services could produce savings of £22.6 billion, while maintaining the quality of service? Is that what we should be looking at?

[Chris White]

I appreciate both the point made by the hon. Gentleman and the CBI’s report. I will be coming to some of those issues later in my comments.

I support those five principles, which I am confident that Members in all parties support as well. The Government have been clear that they are seeking to increase the amount of public services delivered by independent organisations. Seymour Pierce has predicted that the value of the public services sector will increase to £140 billion by 2014. That is a huge amount of public money and, rightly, we should be concentrating on how that money is spent and on how we ensure maximum benefit for our community. A concern, however, is that the principles outlined in the “Open Public Services” White Paper, to make our public services more accountable, more transparent and more in the control of communities, have not been realised in practice.

One deep concern is explained in the Social Enterprise UK report, “The Shadow State”, which has highlighted a significant lack of transparency and accountability, with information from those delivering our public services hard to come by. It also highlighted the increasing dominance of our public services by a small group of large multinational businesses and the difficulties that small business, charities and social enterprises have experienced in accessing provision of our public services.