Could the Government sell off government back-office functions to close deficit?

Channel 4 news last night mentioned that George Osborne had a back up plan to help close the budget deficit if the spending review falls short. This involves selling off government assets.


They could make money and improve future efficiency by selling off back office functions to service providers who would then build shared services.


Channel 4 journalist Cathy Newman blogged about this yesterday.


Here is a cut of what she blogged: “I’ve been told the minister for the Cabinet Office Francis Maude has been asked to lead the drive to sell off the family silver. The Cabinet Office has confirmed he and the Commercial Secretary, Lord Sassoon, are to chair a committee to “consider issues related to the sale of government assets”. Others on the committee include Chief Secretary to the Treasury, Danny Alexander, minister for government policy Oliver Letwin, Postal Services Minister Ed Davey and the Energy Minister Lord Marland.


Here is the blog post in full.


So could government back office functions be sold off? There were already plans being drawn up on the previous government’s behalf by former civil servant Gerry Grimstone.


In December last year, courtesy of the FT, I wrote the story that Grimstone had been asked to find ways of making money out of government resources. Grimstone had the idea of creating large companies that specialise in providing business process services to public sector organisations. The plan is to sell these companies to private investors.


Grimstone told the FT that there are lots of things in the public sector that are akin to business activity. “We are just embarking on what could turn out to be a radical piece of work on identifying business activities within government and corporatising them.”


Gordon Brown gave more details in a speech in March.

It all seems highly logical to me. What is the point having separate IT supporting identical back office functions? Shared services are believed by many to be the way to save money in government.

If you include central government, local government and even quangos the savings and possible earnings are massive.

This could be devastating for companies that currently make their money providing these very services. Unless they buy them of course.