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FEAR OF OUTSOURCING HOLDS BACK GROWTH

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Efficiency opportunity spurned ...
Efficiency opportunity spurned

By Kerry Lorimer, finance editor

Local government is falling behind the rest of the public sector in its willingness to outsource services to private firms.

Research by IT analyst Kable has predicted that despite immense pressure for efficiency savings, outsourcing by councils will increase by just 16% over the next four years, compared to a potential growth in the public sector as a whole of more than 50%.

Senior analyst Seyi Agboola said many of the services local government could outsource have already been contracted out. 'But there is no reason why libraries could not be outsourced, and there is potential for councils to work together to gain efficiencies,' she said.

Local government efficiency champion Barry Quirk, chief executive of Lewisham LBC, said the research rightly identified opportunities for increased efficiency through further public/private working.

'[It] focuses mainly on the central government market, but there are bound to be fresh opportunities to consider new approaches to service delivery in local government,' he said.

Chris Bilsland, corporate director of resources at Somerset CC, said councils take a long-term attitude to building partnerships.

'Our view is that the time for outsourcing is past,' he said. 'Of course we want the customer-focused approach, the economies of scale, the inward investment and the innovation that only collaboration with the private sector can bring. But we also want a business transformation approach that will improve all our services, which can only be delivered through a genuine partnership.'

Outsourcing

Social services Care-home services have been almost totally outsourced to the private sector over the last decade.

Central services Only 14% of the local government ICT and business process market is currently outsourced. But Kable has earmarked this as an area for substantial growth.

Environmental services The largest item in environmental spend is waste collection and disposal, the outsourcing of which has stabilised since compulsory competitive tendering began in 1987. Half the market is now delivered by the private sector and half by direct labour organisations.

Comment - Don't ignore the savings

Figures should be treated with caution, and the research from Kable is no exception.

However, the prediction by the IT analyst that councils will be unwilling to embrace the private sector in the future chimes uncomfortably with their less-than-stellar track record.

There are, after all, key local government services that remain completely untouched by private hands. In some areas, such as core social services, public perception may make private sector involvement undesirable. But in others, such as libraries, are there such excuses?

At a time when local government is under more pressure than ever to show it is serious about efficiency, it cannot afford to be seen to turn its back on the most obvious route for savings.

kerry lorimer@emap.com

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