Public sector outsourcing needs ‘wider social value’ to survive

New report claims commissioners are currently “freestyling” in trying to quantify social value.

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Public sector outsourcing can survive if contracts are selected for “wider social value”, a think-tank says.

With councils looking to lead on housebuilding, Reform recommends government review the regulations that govern outsourcing rather than limit private and third sector involvement.

The newly released report says building skills and expertise at both central and local government level would ensure commissioners have the capacity to conduct technical tasks such as contract design and management – and ultimately guard against expensive or ineffective procured public services.

Instead, the report sees contracts selected for their ‘wider social value’ such boosting local employment and skills.

Some £284bn is spent on outsourcing services each year by the UK government, and while civil servants in central government are acknowledged as having improved their commercial skills, the report recognises a “skills gap” in local government.

To tackle this, the report recommends extra funding to bolster training for councils as well as a new online training platform.

Reform says better data and guidance would allow service providers to “quantify and compare the potential social value of different contracts” where commissioners were currently “freestyling” in trying to quantify social value when commissioning contracts.

Meg Hillier, chair of the Public Accounts Committee, wrote in the report’s foreword: “Government cannot absolve itself of responsibility when it contracts out the delivery of services to the private sector.

“These contracts involve vast sums of taxpayers’ money and often deliver front line services to the public.”

A Cabinet Office spokesman said: “Outsourcing has been used by successive UK governments to improve our public services, enabling us to access specialist skills and innovation from the private sector.

“We have recently published our Playbook, which introduced new outsourcing measures, extended the use of the Social Value Act across all central government procurement and put in place training for thirty thousand contract managers in the civil service.”