Leaked documents have cast doubt on the government's enthusiasm towards wholesale outsourcing to help it cut public sector costs and suggest that joint ventures would be a more palatable remedy to excessive government costs.
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According to a BBC report, leaked documents suggest ministers view the wholesale outsourcing of public services to private companies as "unpalatable".
The documents obtained by the BBC suggest ministers would prefer charities, social enterprises and employee-owned organisations to provide services. It says the government will cut costs, but will avoid a return to the wholesale outsourcing of the 1990s.
"The minister's messages were clear cut... the government is committed to transforming services, but this would not be a return to the 1990s with wholesale outsourcing to the private sector - this would be unpalatable to the present administration," it read.
"The government was not prepared to run the political risk of fully transferring services to the private sector with the result that they could be accused of being naive or allowing excess profit making by private sector firms."
But there could be a place for joint ventures. The leaked documents said: "Government is very open to ideas for services currently provided within the public sector to be delivered under a private/government joint venture."
An example of a successful shared service is the joint venture between IT service provider Steria and the Department for Health. NHS Shared Business Service (NHS SBS), as it is known, uses an Oracle platform and a single set of processes to run the back offices of NHS trusts. About 100 NHS trusts now use the service.
NHS SBS has been a success. It promises trusts up to 30% cost savings and even paid the NHS back £1m last year.
Martyn Hart, chairman of the National Outsourcing Association (NOA), said: "It is clear that the jury is still out on how effectively charities and social enterprises can deliver public services, and it would be a surprise if the government is able to achieve the level of cost reduction it is seeking by just using charities and social enterprises, particularly as most of the examples we have seen of this working already have been small and isolated."
He adds that this could be an opportunity for suppliers to work out ways of partnering with the public sector. "Perhaps this will mean an increased opportunity for service providers to deliver outsourcing in a number of different ways, and we could see more examples of joint ventures and partnerships as a result."