A Domesday Book for public service contracts – better data, better value for money

The management model imposed on British public services in recent decades has fallen apart. According to the Institute for Government (IfG), “notions of how to pursue efficiency, the role of the private sector and competition, and a view of the public as consumers, not citizens – which have enjoyed a remarkable consensus through Labour, Coalition and Conservative governments – are now being questioned”. [1] Shockwaves from the bankruptcy of Carillion plc still reverberate across the sector, rocking established ideas about the audit and governance of companies and the inherent risks of externalising vital parts of public business to them. Northamptonshire County Council’s near collapse has further undermined the claim that outsourcing automatically brings budgetary savings.

Central, devolved and local bodies should be more aware of what it takes to deal with commercial suppliers without risking service failure. In-house and communal provision of services are being reappraised more positively, but in costing their options departments and councils face a yawning information gap regarding contracts and contractors. Government procurement data simply is not good enough because “Critical information that public bodies could use to make more informed spending decisions is often unavailable or incomplete. While government’s performance on collecting and publishing data in some areas has improved, in others it has gone backwards.”[2]

The UK government procures £195bn on goods and services in a year. [3] The NAO estimates half of this is spent on services, e.g. outsourcing and privately-run public services.[4] Private firms now train RAF pilots, cut the grass in royal parks, run IT systems, collect household refuse, staff front-desk receptions, and contract for community health and care for the elderly. Amazingly, the exact figure for public sector outsourcing is unknown and no breakdown of procurement spending has yet been able to value it. The data has not been collected, little or no research has been done, and commentary is often anecdotal or self-interested. This ignorance isn’t inconsequential: it inhibits fully informed service delivery decisions. Tenders, contracts and budgets can’t be reliably linked and accountability suffers as a result.

Early stage data does exist. A fair amount is known about tendering (though the process is still far from transparent), but much of that data is uncodified, segmented and incomplete. It is rarely connected to what is subsequently delivered, let alone the unintended and systemic effects of outsourcing. Data is not shared or disseminated between public bodies, meaning decisions about services (especially the balance between outsourcing and in-house provision) are data deficient. Data gets locked away inside contractor companies and much is sequestered in consultancies, which sell their knowledge at a premium and have a vested interest in promoting outsourcing.

The UK government is also not joined up, with the NHS, central government and local bodies operating in silos. Their commercial dealings are kept hidden and intelligence about markets and contractors is not shared. Knowledge is therefore asymmetric. Companies can compare and contrast the various councils and departments they deal with (Carillion had contracts with hundreds of them), but public bodies don’t share details about a contractor – certainly not Carillion. Nor do they evaluate contractor performance (or, if they do, it is not shared).

A great learning opportunity is going begging. The devolved governments of Scotland, Wales and Northern Ireland can do things differently – all would benefit (as would the Westminster government) if they shared their contracting experience. At a local level even neighbouring councils often hide what they know about a contractor from the authority next door. Of course local authorities have a degree of autonomy in deciding whether to outsource or not. But the effectiveness of their public services depends on better reporting on how contractors have performed in the past.

This paper sets out some remedial proposals, some of which could be put into effect quickly without legislation or new structures. For example, mechanisms already exist to collect and collate the missing data. Councilors, ministers, police commissioners and members of boards could insist on better reporting and share the results.

The benefits of outsourcing are being challenged. Better data – comprehensive, coherent, consistent and readable data – is needed to evaluate existing contracts, as well as to decide the future shape of services. William of Normandy famously determined that effective rule depended on knowing how the land lay, literally, after his conquest of Anglo-Saxon England. The vast terrain of public service contracting needs its own Domesday Book.