The pension administration mutual being set up by the government will be the first of a wave of new business models that could shake-up central government outsourcing contracts.
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Speaking at The Crown and suppliers: A new way of working, a government procurement conference in London, Katharine Davidson, director of strategy in the Cabinet Office Efficiency and Reform Group (ERG), said the My Civil service Pension (MyCSP) mutual currently being set up will be the first example of a new way the government will work with suppliers.
MyCSP was announced earlier this year as the first example of a government body spun out into a mutual and partnered with a private sector company. MyCSP will administer 1.5 million civil servant pensions, and will be owned by three groups: the 475 staff, the government and a private company that will run the service. Four companies were on a shortlist to be the private sector partner that would run the scheme but Indian IT services Wipro pulled out leaving Capita, Xafinity and JLT to fight it out.
Davidson said mutual and joint ventures, which retain a government stake, will be more common in the future as the government strives for “better” service arrangements.
“Everything is up for grabs and the pie is bigger,” she told an audience of 800 representatives from suppliers.
She said the value in mutuals, which she says makes them a better option, is driven by the fact that the success of the organisation is in the interest of all the stakeholders: taxpayers, staff and the private sector partner.
Taxpayers will get better value and post-deal services, according to Davidson. Meanwhile employees will have an ownership stake and as a result will be more likely to innovate, and the private sector partner will be able to engage more with the public sector.
She said this will help increase public sector productivity levels: “The new business models will help the public sector close the productivity gap [that exists between it and the private sector].”
The government will announce a new position early next year, known as head of commercial at ERG, to drive the strategy, which will create a “pipeline of opportunities for new models,” said Davidson.