A cynical ploy for business?

Just 10 percent of 468 local authorities outsourcing significantly, says Capita CEO Paul Pindar

By Michelle Perry | Published 16:30, 24 August 11

cynicalOn first glance, Paul Pindar’s comments to the FT this week about the government’s need to outsource more is a bit like Rupert Murdoch telling us we should all watch more Sky TV because we can learn a lot.

You are forgiven for thinking the statement a cynical ploy to get more business. Indeed the emotive language the Capita boss used in the interview (“criminal” cuts to frontline services) doesn’t help put forward his real argument; that of saving taxpayers money.

Worse still, this from a man who earns a tidy sum of around £900,000 annually, makes the comments seem even more vacuous.

But delve further and he may have a valid point.

He told the FT that 90 percent of the UK’s 500,000 civil servants were performing back and mid-office functions, which could easily be better managed by the private sector.

If this is true, and it quite likely is, then outsourcing to the private sector (not necessarily Capita) would fit snugly with prime minister David Cameron’s push to fuel the private sector to pick up the slack from the swingeing cuts about to take hold of the public sector.

With just 10 per cent of 468 local authorities outsourcing significantly, as Pindar says, it does indeed leave much room for expansion.

But here’s the rub outsourcing can quite easily go horribly wrong. There’s a string of cases as long as my arm that I could cite here where public sector outsourcing contracts have failed abysmally; costing – not saving – the taxpayer a heap of money. But I’ll mention just one: EDS.

In contrast, a well negotiated, well-executed outsourcing contact (and experience should have taught us some lessons in the past decade) can indeed save billions of pounds as Pindar states.

So instead of simply dismissing the Capita boss’s comments as touting for business, maybe the coalition government should review its stance on outsourcing to avoid further angering the British taxpayer by cutting police forces, closing libraries and youth centres and the potential for future riots.

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