Outsourcing Public Services

This report presents findings from research undertaken by the New Economics Foundation (NEF) which was commissioned by the Trades Union Congress (TUC).  Based on the research, the TUC has identified a set of policy recommendations to address specific issues related to the outsourcing of public services, applicable to both national policy makers but also commissioning and procurement practitioners across the public sector.

Our overall conclusion from this work is that the outsourcing of public services provision to private providers has a detrimental impact on the workforce and a knock-on effect on the quality of care.

The research, conducted by the New Economics Foundation on behalf of the TUC, looked at the scale and scope of outsourcing in five key sectors – social care, health care, offender management, local government and employment services. The report also examined the effects of outsourcing on staff working in a variety of public service jobs, such as care workers, nurses, prison officers and security guards.

The findings show that compared with public service employees, workers in privatised services are more likely to work longer hours, receive less pay and be on insecure or temporary contracts. The resarch also found that low pay and poor working conditions in the private sector can affect the commitment and the motivation of employees and have repercussions on the quality of service provided. This is particularly relevant in ‘relational’ services, such as health and social care, which depend on high levels of interaction between staff and service users.

Based on the research, the TUC has identified a set of policy recommendations to address issues related to the outsourcing of public services. These recommendations include: greater protection of employment standards and collective bargaining in the commissioning and procurement process; clearly defined standards of transparency and accountability for all providers of public services; greater consultation with stakeholders and the need for a public-interest case to be made for any outsourcing; and the public should have the ‘right to recall’ contracted out services due to poor quality or performance

To read the report, please click here.

This research is intended to add to the growing evidence-base about outsourcing of public services in the UK. The research includes both a general analysis of the political and practical drivers of outsourcing as well as detail as to the shape and extent of it:

• Looking at the scale and scope of outsourcing in five key sectors: offender management, employment services, health care, social care and local government
• Assessing the impact of outsourcing on the public service workforce
• Providing a brief overview of three of the main public service outsourcing companies.

As well as bringing together available information, our research makes clear the current limits to understanding quality and cost-effectiveness impacts of outsourcing. We highlight where gaps occur in data and information that would be needed to reasonably assess the value gained or foregone by outsourcing and to hold decision-makers and providers to account.

Our methodology encompassed an extensive review of academic literature, analysis of departmental and contract data in each sector, and analysis of Labour Force Survey data to shed light on workforce impacts. Company information was obtained from company and market reports. A survey was also issued to each of the companies we profiled inviting responses to some of our key areas of enquiry.