As Prime Minister David Cameron said during a speech made to Civil Service Live in early July, “By bringing in a whole new generation of providers – whether they’re from the private sector, or community organisations, or social enterprises – we can bring in the dynamic of competition to make our public services better.”
Admittedly, the UK already has a good head start over many other countries, It has become a global leader in opening up public services to competition to drive innovation and efficiency into service delivery. As a result, there is an active supply market in the UK delivering a diverse set of public services and using a multitude of business models. However, because the approach to and extent of outsourcing by central government varies significantly from department to department and from function to function, there is huge scope for further developments as well as lessons to be learned.
Outsourcing in different government sectors
Healthcare – Outsourcing is present in certain aspects of both primary and secondary care, although the picture is mixed. However, there is scope for further outsourcing in areas such as long-term care, failing acute trusts and PCT community services, among others.
Justice and immigration detention – Outsourcing has become a key aspect of a number of areas, including custodial services, prisoner and immigration detention and escorting sectors. There is scope in areas such as police support services and shared services.
Employment services – Currently, the bulk of outsourced employment services is delivered by a patchwork of public, private and voluntary providers. However, the contracting of Flexible New Deal has led to the introduction of the prime-contractor model, where one provider using a payment by results/service integration model co-ordinates delivery through a broad network of public/private/third sector organisations. This could transform the approach to outsourcing of these services.
Defence – The UK defence sector has long acquired some services from the private sector, most notably within the dockyards, the main operating bases and in areas of equipment and facilities support/maintenance. An increasing proportion of support services have also been outsourced and there is considerable scope for further outsourcing in a number of defence activities.
Science – The science market is small but strategically important, and in the pursuit of commercialisation the government has used a variety of models. For example, The Laboratory of the Government Chemist was privatised as LGC, while the National Physical Laboratory was restructured under a government-owned and contractor-operated (GOCO) model. Areas that could be considered for further outsourcing include the 160 public sector research establishments.
Transport – The transport market is a fairly mature market in terms of outsourcing but there are still possibilities for further outsourcing among the many Department for Transport (DfT) agencies, including certain aspects of the Highways Agency and enforcement services.
