Government Looks At Carillion and Public Sector Outsourcing – Peter Smith Comments

I’ve sent off my submission to the Parliamentary Public Administration and Constitutional  Affairs committee, which is running an inquiry intoSourcing public services: lessons learned from the collapse of Carillion inquiry”.

Let’s see what they say about my 15 pages of words of wisdom (or incoherent rant, take your pick) – but here is the first part of my executive summary. This is in answer to the committee’s first question - Does Government make effective decisions on how to source the delivery of public services?

  • What framework should the Government use when deciding what the most appropriate approach to sourcing a function or service is? Are decisions made systematically and consistently?
  • Do policy makers have the right skills, information and incentives to make sourcing decisions effectively – including do they have the operational and commercial expertise to be able to understand what is deliverable
  • Does the public sector have the capacity to deliver services in-house when that is the most appropriate route?

So, here we go with the Peter Smith words of wisdom …

  1. Does Government make effective decisions on how to source the delivery of public services?
  • There are fairly clear good and bad reasons for outsourcing, which should always be referred to when considering a particular situation.
  • Some government outsourcing has been positive – for the buyers, the citizen and even for the staff outsourced. We should also not forget how bad the public sector was at one time in terms of  delivering some services.
  • However, government bodies have not always followed a logical analysis of the pros and cons. Too often decisions have been led by ideology, made without real analysis, or driven by desperation (“we don’t know how to do this ourselves …”)
  • Some suppliers also grew without having any deep capability initially in what they did – government created certain markets and some firms such as Capita were very much the creatures of that early ideological drive towards outsourcing in the public sector.
  • The business case for outsourcing has been easy to “fiddle”, decisions are rarely reviewed in a systematic manner, and only recently have questions about “insourcing” been asked.
  • Skills (or lack of) is an issue although there have been improvements in recent years. There is a need for better understanding of the issues by Ministers, senior civil servants and managers including those not in professional commercial roles. Contract management is still undervalued by government as a role.
  • There are some issues with information and incentives but in terms of making the outsourcing decisions, those are less critical factors than lack of understanding, skills and rigour.
  • Analysis around “understanding what is deliverable” often runs into the political imperative. Even if there is no existing market for probation services for example, or offender tagging, there is a political drive to find “someone” who can do the work, rather than accepting that something might simply be undeliverable by external firms. And sometimes market creation works, but often it does not.
  • When in-house is in theory the best delivery route, the public sector may not have the skills – either because it never did, or because it lost them through outsourcing. Sometimes, but not always, that situation can be resolved but it may take some time.

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