David Walker is too pessimistic about public sector outsourcing. The recession will see the private sector more involved, not lessby Andrew Haldenby / December 20, 2008 / Leave a comment
Published in December 2008 issue of Prospect Magazine
Should we all be buying shares in Serco, the public sector out sourcing giant? David Walker’s recent article (“Out with the out sourcers?” Prospect, December 2008) is right that recent moves towards greater outsourcing in the public sector are currently under pressure. But what will actually happen in the coming recession remains an open question. The recent pre-budget report reveals the full, sorry state of the government’s finances, and analysis of the document clearly shows that whichever party is in power is going to have to find savings of £37bn on the Treasury’s own figures. Against such a background, the downturn may well provide an impetus for more outsourcing, not less. And this would be no bad thing.
Let us start with the facts. Walker is correct to note that Blair-era promises of public sector outsourcing are currently going up in smoke. Only as recently as 2004, John Reid was speaking of 15 per cent of NHS operations being carried out by private sector companies. In fact (while the figures are complicated) it is now no more than two per cent and probably falling. Brave promises on initiatives like independent sector treatment centers were quietly cut back under Gordon Brown.