Bringing back services from the private sector to
government hands can improve quality, increase reliability, and
save money – says a new Institute for Government
report.
Government outsourcing: When and how to bring
public services back into government
hands identifies four
circumstances in which the government should consider returning a
service to the public sector: an
unhealthy or uncompetitive market; the need for flexibility to
make changes to the service; a lack of government commercial
skills to manage an outsourced contract successfully; or a need
to improve the service by integrating it with
another.
In its recent decision to take on management of
probation services from June
2021, the
government has already cited the need for flexibility to respond
to any “future challenges that Covid-19
presents”. The IfG’s report argues
that the government should be prepared to intervene in other
areas, too, to ensure high-quality services can be
delivered.
The report assesses services that have been returned
to government hands by local authorities, public bodies and
government departments over the past decade. Many have been
successful: the DVLA saved £60m by taking back its IT, while
several local authorities have made services more reliable or
better quality – although in some cases higher spending was
needed.
For four decades,
successive governments have expanded the role of the private
sector in delivering services – and
there are many
examples where the private sector has
delivered high quality services for less and helped the public
sector become more efficient and innovative. However,
the IfG report argues that government
must reassess where it could run services better itself. The
collapse of Carillion in 2018 demonstrated the dangers of the
private sector taking on contracts it could not
manage.
The IfG report also recommends that government bodies
considering taking over management of a service
should:
· begin
planning for any insourcing at least two years before the
transition
· run
a pilot scheme first if the service is of national scale or
particularly complex
· conduct
a thorough review of how a service operates, its budget and
staffing arrangements
· hire
experienced managers to oversee the transition.
Tom Sasse, IfG senior researcher and report author,
said:
“Coronavirus has made government think again about
how it delivers services to the public. After 40 years of more
and more outsourcing, now is a good time for government
departments and local authorities to look at what the private
sector does well, and what they could do better
themselves.”
