A year after Carillion, it's time to shine a light on public service outsourcing

Who provides our public services? How much do we pay them? How well do they work?

If you care about the services we all rely on and which our taxes pay for, these are reasonable questions.

And if you’re responsible for delivering that service – whether a government department, local authority or NHS Trust – they are crucial questions to ask.

But the answers are not as simple as you would think.

Because, despite outsourcing being a key feature of our public services for over 30 years, the government does not monitor, record or provide that data in an accessible and open way.

That’s why today we’ve published a new report that explores the options for making public service outsourcing much more accessible and transparent.

The report calls for the creation of a new independent body that will maintain a ‘Domesday Book’ of all contracts including their performance on the outsourcing of services.

Given private contractors are funded by your taxes, you deserve to know how much profit they make, what dividends they pay, how much their senior management pay themselves, how they treat their workforce, and what their tax arrangements are.

A new Domesday Book for public services will achieve this. It will mean better data – and therefore better value for money for taxpayers.

Clear as mud

At the moment public service contract and performance details are generally only known to the commissioning body responsible and, of course, to the private sector provider.

This data isn’t shared between public bodies, nor is it provided to the public.

Some is available to those with the capacity and resources to monitor the relevant EU procurement journals, deal with FOI requests or buy the data from specialist consultants. But much is shrouded in ‘commercial confidentiality’.

The National Audit Office (the public body responsible for monitoring how our government achieves value for your taxes) estimates that around half of the £195bn that the state spends on all externally provided goods and services goes to the external contractors delivering your public services.

That works out around £3,500 per household annually – but we don’t know exactly because the NAO can provide no precise figure.

Late last year, the Huffington Post broke the story that the DWP was spending £1.4bn on external providers as part of its Universal Credit reforms.

The government’s response was to rubbish the figures but not provide any of their own. Why aren’t the exact figures available and open to all?

Lessons from Carillion

Since 2015, central government departments have published contract data over a certain threshold. And there are moves to ensure that the bigger contractors now publish some performance data and details of some of their social value impacts.

This is all well and good but it’s not enough. This data should be collected across the public sector, from Whitehall to local authorities.

The collapse of Carillion a year ago shone a light on this problem. The Insolvency Service, picking up the pieces, found themselves bogged down tracing which of the 300 or so subsidiary companies in the Carillion conglomerate were providing what services and to which parts of the public sector.

The stunning lack of accountability and transparency for public services delivered through private contractors would be completely unacceptable if those services were provided in house.

What do we want?

If we are to achieve a step change in the way we design and deliver our services, improve contract management and put the public interest first, we need hard data.

Our report launched today sets out the way we think government achieve that change. It has three key recommendations:

1. Improve data collection on outsourced contracts

The Cabinet Office and Treasury have begun making improvements, but progress must be faster.

The Cabinet Office should be given a greater role in collecting data from Whitehall, local authorities, police and crime commissioners, and the NHS.

2. A ‘Domesday Book’ for all contracts

A new public body should be set up that operates at arm’s length from central government.

It would have statutory powers to require both commissioners and contractors from across the public sector to supply it with data.

And it should maintain a ‘Domesday Book’ of all contracts including their performance on the outsourcing of services.

3. Major reforms to improve value for taxpayers from outsourcing

The National Audit Office should become audit supervisor for the whole public sector.

And a new Office for Equity, Efficiency and Effectiveness should be established to maximise social and public value.

This new Office of the 3Es and the NAO should have a clear mandate to assess value for money, efficiency, effectiveness and equity when services are outsourced.