THE BLOG

Can the CBI Ever Change its Public Services Agenda?

26/02/2014 10:55 GMT | Updated 27/04/2014 10:59 BST

Reading the CBI's latest report on public services: 'Creating a Better Purchase' I had a distinct sense of de ja vu.

Sadly, the findings of its recent survey of members on their experience and thoughts on public procurement seemed all too similar to those that the CBI was expressing a decade ago when I was involved with its Public Services Strategy Board. However, and more disturbingly, the findings can once again be too easily read as promoting the commercial interests of these companies as much, if not more than those of the public.

I really do take issue with the underlying assumption underpinning the report which seems to be that outsourcing to the business sector is the single most effective way of improving public services, securing savings and offering a better experience for the public especially service users.

Whilst there is no question that outsourcing can and sometimes has achieved some or all these three objectives, there is no 'consistent' evidence of such positive impact. Indeed, only in the last year, there has been a litany of underperformance, failure and even fraud; as well as public service contractors that have not paid fair taxes. It is a shame and a gross omission that the CBI has only mentioned this tangentially by suggesting that public concern about business ethics is damaging the cause of outsourcing.

I have for some time, along with others, been arguing for an independent enquiry into the effectiveness of public service outsourcing. Such an enquiry could consider:

• the financial and operational results including cost benefit analysis and an examination of net public value of outsourcing in different

- services

- financial environments

-models of business sector engagement

• the role, opportunities and limitations of the market and competition in public service delivery and innovation

• the conditions that have led to effective outsourcing and those which have not

• accountability and transparency issues

• the implications for staff

• and related matters

I would hope that the CBI along with the trade union movement, the public sector and government would support the establishment of such an enquiry. If the case for outsourcing is strong, then its proponents should be ready to see this area of public policy and practice subject to objective forensic scrutiny.

Meanwhile the CBI has produced five key messages based on its member survey and its analysis of what it describea as 'public service markets'. These are:

good procurement leads to better public service delivery and outcomes,

boosting government finances and contributing to economic growth

• the Government has put in place the right systems to create a fundamental

shift in the way government does business - such as the Crown Commercial

Service, the commercial skills training, and Mystery Shopper - but members

perceive progress to be slow

• firms see some improvements in performance in specific areas, but overall

are not yet regarding public sector procurement as efficient or effective,

reflecting perhaps that change on such a scale will take time

• there is concern that recent negative rhetoric concerning 'big business' and

government markets is sending out the wrong message to the market and

inhibiting investment in new services

• strong leadership is needed from ministers and officials to ensure the existing strategy is implemented. A permanent change is needed in the way the public sector manages its relationships with suppliers, with a move to a more collaborative procurement strategy that will unlock savings and improvement

The report makes a series of recommendations based on these key messages. These include: the perennial call to enhance public sector procurement capacity and government commercial skills; standardise and simplify processes; open opportunities up to smaller companies; and greater consistency across the public sector. The CBI wishes to see more certainty so that there will be more investment in the business based public services industry. It also implores government to be careful when seeking to renegotiate existing contracts so that contractors bear some share of the public expenditure cuts by stating that there is only so much further government can go before it makes future contracts uncommercial for all but the largest providers.

There will be few commentators amongst those involved with public sector procurement who would disagree about the need to improve commercial and procurement capacity or indeed to make it easier for smaller companies and new entrants to both bid and win.

However, there will not be such universal agreement on the other recommendations, especially at a time when the public sector is facing unprecedented cuts and, as the CBI itself recognises, significant growth in demand for core public services. Most specifically, there will not be a consensus around the idea that enhancing procurement capacity, competency and effectiveness is the most immediate action required across government or indeed the wider public sector.

I welcome the CBI's survey and this consequent report because it is always important to know what an important and significant section of the economy (and indeed of public service providers) is experiencing and thinking. However, I have to wonder why the report has not addressed more fully (or even at all) critical contemporary issues such as:

• the Social Value Act

• the use of public procurement to secure wider social, economic and environmental goals

• public sector led reform and improvement

• the growing role for the social and charity sectors in public service delivery - and not simply as part of larger businesses' supply chains

• potential alternative roles for the business sector to contribute to public services includign as tax payer

• personalisation and relational public services

• localism and devolution to local places - which might lead to less standardisation but better outcomes; and a very different role if any for central government in most public procurement

• the implications of payment by results contracts and its potential to incentivise the wrong behaviours

• long term prevention and public sector demand management

• how public confidence could be rebuilt in those parts of the business sector involved in public service delivery

• the desire for greater transparency, disclosure and accountability

Earlier in this piece, I suggested that there was an urgent need to review objectively the contribution that traditional public services outsourcing has made. I conclude by suggesting to the CBI and others that the time has also come to consider a new paradigm in public service provision that will involve the public, business, social enterprise and charity sectors as well as new relationships between the sectors, and between them and citizens. Such consideration should ideally address the list of issues set out above and more. It should also be focused on the public interest and that of citizens rather than on provider interests.

I urge the CBI and others to start this 'honest' debate and to move on from the well-rehearsed lines of 'we need better and more procurement of outsourced services and the world will be better'. Rather than creating better purchasing - important as that is - we need to create better public services and better outcomes.