The Government’s ability to negotiate and manage contracts with outsourcing providers has been criticised in damning report from the Public Accounts Committee (PAC).
Margaret Hodge MP, chair of PAC, has warned the Government must urgently ‘get its house in order’ and ensure outsourcing contracts are transparent and open to public scrutiny.
She said: ‘Private provision of public services has become big business, with half of all public spending on goods and services going to private providers of contracted-out services. We believe Government needs to urgently get its house in order so that this expenditure is properly open to public scrutiny, and that measures are put in place which will improve services and secure a better deal for the taxpayer.’
The Contracting out Public Services to the Private Sector report published today highlights recent failures in the outsourcing market included Serco’s misreporting of the performance of its out-of-hours GP services in Cornwall, where the contract was so poorly written that not only did Serco not lose the contract, and G4S overcharging the Ministry of Justice on their electronic tagging contracts for eight years.
It also accused the Government of using ‘commercial confidentiality’ as a way of withholding information. PAC is now calling for the extension of Freedom of Information to public contracts with private providers, access rights for the National Audit Office and a requirement for contractors to open their books up to scrutiny by officials.
It said it had met with the four major private contractors – G4S, Atos, Serco and Capita - who were all willing to accept the new measures.
TUC has welcomed the report but said the Government must accept the private sector is not always the best option to run public services. General secretary, Frances O’Grady, said: ‘It is time to end the default assumption that anything done by the public sector is better done by private contractors. The truth is that there has been a growing tide of outsourcing scandals, fraud and service failure.
‘Some of this is down to government incompetence in contracting out, but much is an inevitable result of replacing the public sector ethos with the profit motive and cost-cutting.
Business group CBI has said they welcomed the call for more transparency in outsourcing contracts and open book contracting should become the norm. John Cridland, CBI Director-General, said: ‘The private sector plays an increasingly important role in running public services, as this report notes. The public has a right to know how its money is being spent and the industry has pledged to meet a higher bar on transparency.
‘As the report highlights, it is often the Government which pushes for transparency, so the onus is now on it to open contracts to scrutiny. It also faces a critical challenge that means making sure it has the right skills and capacity to manage competitive, accountable and transparent public services markets.’
A report published by the CBI earlier this month also called for more transparency in outsourcing contracts.
