Outsourcing companies will have to draw up 'living wills' saying what would happen if they go bust under plans announced by the Government.
It follows the collapse of giant construction firm Carillion early this year and concern over risks facing several other companies providing services to the public sector.
The living wills would detail contingency plans setting out how public services could continue if a firm collapsed, enabling them to be transferred to a new supplier or taken in-house.
New government plans will require greater transparency and a promise that outsourcing will act as a 'force for good'.
Cabinet Office minister David Lidington told the Business Services Association: ‘Carillion was a complex business and when it failed it was left to Government to step in – and it did.
'But we did not have the benefit of key organisational information that could have smoothed the management of the liquidation.
‘By ensuring contingency plans can be quickly put in place in the very rare event of supplier failure we will be better prepared to maintain continuity of critical public services.’
The move came the day after LocalGov predicted that ministers would have to take action to prevent further disruption caused by outsourcing to big companies.
We said in a Spotlight on Monday that: 'Senior decision makers must be pondering the political consequences of another outsourcing disaster' and ministers would be having a rethink on 'the wisdom of relying on big private sector organisations to provide public services.'