The Outsourcing Debate - What about Public Sector Companies?

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Liberal Democrat leader Sir Vince Cable recently gave the government a grilling in the House of Commons over its level of exposure to any potential failing of Capita, with the business process management and outsourcing solutions giant performing a £700M rights issue earlier this month. This discussion also saw the notion of outsourcing itself come under attack, with one Labour MP questioning whether there are “deep systematic problems with the Government’s dogma-driven privatisation model”.

The debate around the pros and cons of outsourcing is of course nothing new, but it is worth remembering that not all outsourced services are delivered by the private sector. In fact, between April 2017 and the end of January 2018, approximately 22% of the £1.5B spent on the outsourcing of back office/admin services – a market led by Capita – was with companies owned by the public sector.

Alongside the NHS Commissioning Support Units and big players like Crown Commercial Services, lesser-known names such as Hoople (owned by Herefordshire Council and Wye Valley NHS Trust), Strata Service Solutions (East Devon, Exeter and Teignbridge Councils) and Compass Point Business Services (East Lindsey and South Holland Councils) are providing a significant proportion of these services to their respective shareholder authorities and others. In the words of Hoople, “an increasing number of other local authorities, healthcare and public sector organisations” are outsourcing their services to the organisation, with Hoople already having “cut costs and increased efficiency for its shareholders”.

In his Commons response to Sir Vince, Minister for Implementation Oliver Dowden made his position on the matter quite clear - “Outsourcing delivers efficiencies”, he said, meaning more money to spend on health, education and core services.

“That is why the Labour Government did it, why the Coalition Government did it and why this Government continues to use outsourcing.”

Here at Porge we add up and categorise the invoices paid by over 1000 public sector bodies - including the NHS Trusts and the CCGs. Our database includes over 90 million categorised invoices. So if you need to know what’s really happening in the public sector, talk to us about our fact based Public Sector Market Insight Services.

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