Tough times for Government outsourcers?

Despite the rhetoric, Conservatives and Labour seem to be taking a similar approach to outsourcing.

Arguments about the role of the private sector in delivering public services have been a major theme in the run up to the election campaign. The NHS is one of the most important concerns for voters and one of the areas where the polls show that the Labour Party has been consistently ahead as the party which the public believes can be trusted with its management.

Labour is keen to build on this advantage with campaigns which help to develop the narrative that they are the only party that can be trusted to protect the NHS. The Party recently announced a policy to a five per cent limit on the profit made by companies providing private services to the NHS. The policy is aimed at drawing attention to what they claim is a threat of ‘privatisation’ of the NHS from a future Conservative government.

Whilst this policy might undermine confidence in the development of the NHS market for private providers, it is likely that many will consider ways to circumvent any cap, for example by establishing joint ventures with NHS providers.

The SNP has announced its intention to vote on UK issues which will affect the funding of Scottish services, and they have pledged to support Labour’s anti-privatisation agenda. This might lead to efforts to repeal parts of the Health and Social Care Act 2012 which extended the scope of competitive tendering, rather than a whole scale reversal of the role of the private sector in the NHS.

What Labour has said about the future of central government outsourcing and procurement suggests the continuation of current trends rather than any radical departure. Their ‘Zero-Based policy review’ on the efficiency of government included a number of recommendation on areas such as buying more off the shelf IT solutions, opening up government procurement to SMEs, and improving the management of procurement. These are all things that the Conservative Party said that they would do prior to the 2010 General Election and the Coalition Government has tried to achieve with differing levels of success through Francis Maude’s procurement reforms.

The one area where the Labour Party is promising reform is a move towards commissioning a number of currently national programmes at the local level, including employment support contracts which are currently delivered under the Work Programme.

Whilst local commissioning would be a departure from the current structure of contracts, it can been seen as complimentary to the direction of travel which has been set by the Coalition with their devolution of funding for key areas of service provision through the City Deal process and the recent ‘Devo Manc’ deal to devolve funding over health and social care to Greater Manchester.

Despite the fact that the Conservatives claim Ed Miliband will return the country to 1970’s socialism, while Labour claim that the Conservatives will unleash a wave of privatisation, the development of outsourcing is likely to continue along the same trajectory as under both the Coalition Government and the Labour Government before that.

Michael Dugher (the current Shadow Cabinet Office Minister) or Lucy Powell have been tipped as  potential successors to Francis Maude’s role, in the event of a Labour-led government, while Liz Truss or Greg Clark are contenders if a Conservative-led government is returned to power.

But whatever the result in May, the financial challenges facing the next government and the reality of increasing demands on public services mean that both parties know the private sector will have a continuing role in the delivery of services.