Private provision of public services has become big business, with half of all public spending on goods and services going to private providers of contracted-out services. But action needs to be taken to get a better deal for taxpayers and to improve services.
The House of Commons Public Accounts Committee believes that the Government needs to urgently get its house in order so that expenditure on contracts is properly open to public scrutiny, and that measures are put in place which will improve services and secure a better deal for the taxpayer.
The Committee cites recent scandals illustrating the failure of some contractors to live up to expected standards. These include G4S and Serco overcharging the Ministry of Justice on their electronic tagging contracts for eight years and the complete hash that G4S made of supplying security guards for the Olympics. These failures have also exposed serious weaknesses in the Government’s ability to negotiate and manage contracts with private companies.
The Committee also looked at Serco’s misreporting of the performance of its out-of-hours GP services in Cornwall, where the contract was so poorly written that not only did Serco not lose the contract, but they continued to receive bonus payments.
When Capita failed to fulfil its contract to provide court translation services it was fined a mere £2,200 – despite the substantial extra costs to the criminal justice system of delayed trials.
The Committee’s report highlights a lack of transparency and openness around Government’s contracts with private providers, with ‘commercial confidentiality’ frequently invoked as an excuse to withhold information. It believes that it is vital that Parliament and the public are able to follow the taxpayers’ pound to ensure value for money.
The report calls for the extension of Freedom of Information to public contracts with private providers and for access rights for the National Audit Office. There is also a need for contractors to open their books up to scrutiny by officials.
The Committee believes that there is an absence of real competition that has led to the evolution of privately-owned public monopolies which have become too big to fail. Some public service markets such as for private prisons, asylum accommodation or disability benefit assessments, are now controlled by just one or two major contractors. Small and medium enterprises have been crowded out by the complexity of the contracting process, excessive bureaucracy and high bidding costs.
With the Government choosing to contract out more and more public services to the private sector, these issues become ever more important. The report is intended as a recipe for better services, better governance and greater openness.