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Mon May 27 2024

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CBI calls for more outsourcing

24 Sep 12 A report from the Confederation of British Industry todays calls for the government and local authorities to go much further in outsourcing public services, including housing management and waste collection.

Public sector waste - CBI wants private sector to handle more of it
Public sector waste - CBI wants private sector to handle more of it

It reckons that more than £22bn could be saved if the public sector handed over more work to private contractors.

The report, Open access: Delivering quality and value in our public services, says that opening social housing management to more competition could potentially save £675m. Just 2% by value of the market for the management of the UK’s 5.3m social housing units is open to independent providers, it says.

Less than half of waste management, recycling and street cleaning services is carried out by private sector contractors. The report authors reckon at least £192m could be saved by more privatisation.

The report is described as ‘independent research’ and written by Oxford Economics. The authors admit that they relied on data and anecdotes supplied by private sector outsourcing companies because “there is as yet little published information on the scope and performance of services delivered by independent providers”.

They conclude that, across 12 public services, include local government, healthcare and police support services, “average savings of at least 11% were possible when a service was opened up to new providers and there was a range of savings between 10-20%”.

According to the CBI: “Applying the same principles and calculations across the estimated £278bn of public services, which the CBI believes could feasibly be fully opened up, would deliver savings of £22.6bn.”

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For example, 86% of prison management and 73% of school catering is still in the public sector.

CBI director-general John Cridland said: “This report sets out a compelling case for the government to go further and faster in opening up public service markets.”

Interserve CEO Adrian Ringrose, who chairs the CBI Public Services Board , said: “Business has a vital role to play in improving public services. This new research shows that having a diverse range of providers increases quality, stimulates new ways of working and encourages greater efficiency.

“Providers from all sectors need to understand the government’s vision for public service markets so that they can invest in the new delivery models, technology innovations and supply chains, which will deliver the savings and transform the way the public access key services.

“Ensuring providers from the public, private and voluntary sectors can compete on a level playing-field, and their performance is judged on equal terms, means in the end the best provider will provide.”

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