The government needs to learn lessons from its mistakes with outsourcing, and enact the practice for the "right reasons", according to a think tank.
The report Government Outsourcing: What Has Worked and What Needs Reform? by the Institute for Government states that when done poorly outsourcing has "caused harm and waste".
A string of high-profile failures, such as the collapse of Carillion, only served to highlight this. However, the report says that rather than bringing public services back into government hands, as the Labour Party has suggested, the government must outsource for "the right reasons".
This means where private providers benefit from "expertise, economies of scale or new technologies that enable them to deliver services better or more cheaply, or where competition can improve performance".
It should not outsource where there is no reason to think it would work, as with probation, or in pursuit of "unrealistic cost savings" and it "must develop better evidence to inform these decisions", claim researchers. When government chooses to outsource, it must do it better: understanding what it is buying, choosing bids that deliver sufficient quality and value for money, allocating risks intelligently and managing contracts effectively.
Such purpose and rigour, it says, will be key to government navigating its way out of the wider problems it currently faces, including low trust in contractual relationships and declining competition. The authors report that by publishing the Outsourcing Playbook, the government "has made an important first step towards addressing the problems we have identified in this report" but there was "a real risk that it will not improve practice on the ground" and that it had to be accompanied by "the resources, skills, capabilities and accountability required to deliver change".