CBI claims government could save £23bn by outsourcing

A new report from the Confederation of British Industry claims that the government could save around £23bn by opening up more public services to the private sector.

by Michael Northcott
Last Updated: 19 Aug 2013

Thanks to the G4S security debacle during the Olympics, public confidence in government outsourcing deals has taken a bit of a battering. But the CBI reckons such private sector deals should be more common across the public sector, and could save the government billions of pounds. In its report, the organisation said that anything from school dinners to social housing management and prison management could be contracted out to private sector firms. 

The ‘Open Access’ report was conducted by Oxford Economics featuring in-depth analysis of 20 public services. It found that the average cost saving amongst a range of services could be as much as 11%. The research also found that 98% of social housing management is still handled entirely by the public sector, as well as 73% of school catering. 
The CBI’s director general, John Cridland, said: ‘Most public services are still state monopolised and it’s time to open some of them to competition.’ Take school dinners – is it really necessary for three-quarters of all our schools to be worrying about catering?’ The report found that the minority portion of facilities management in schools already open to the private sector has resulted in £209m of savings. Compelling stuff.

Still, no-one expects the CBI to argue against more private sector contracts. Not to mention that the G4S episode (where the security firm admitted just weeks before the Olympics that it would not be able to provide enough security personnel), has damaged public confidence in private contractors. Some MPs last week even called for a blacklisting system for private firms that make a mess of their contracts, so the CBI is probably swimming against the tide by releasing its report today.

Nonetheless, whilst government departments are battling to absorb budget cuts of 8% by 2015, the pressure to achieve this savings may result in increased private management of services regardless of public opinion…

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