The CBI has stated that the Government could save £22.6bn a year by outsourcing more public sector services.
A report commissioned by the employers’ organisation claimed that by opening more services up to the private sector, savings could be made without affecting quality.
John Cridland, CBI Director General, said:
“Most public services are still largely state monopolised and it’s time to open some of them to competition. That is the way to maintain quality and achieve billions of pounds worth of savings.”
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Oxford Economics conducted an in-depth analysis of 20 public services and found that the Government on average had made savings of 11% without diminishing quality where it had opened them to private sector provision.
The report also claimed that 98% of the management of social housing was still being provided by the public sector instead of being contracted out to private sector firms.
By opening up social housing management to private companies, it estimates that £675m could be saved.
Another £617m could be saved by outsourcing hospital facilities management and a further £190m by improving productivity in waste management.
Last year, the Government published its Open Public Services strategy which identified competition in public sector services as a way of providing savings, but Mr Cridland believes urgent action is needed, as implementation of the plans has been “lost in translation” at the level of officials, where there was too much caution.
The UK’s largest union, UNISON, has hit back following the report, claiming that the findings are fundamentally flawed, and that the 11% figure had been ‘plucked out of the air’.
UNISON General Secretary, Dave Prentis, said:
“Where is the proof that 11% savings can be achieved by privatising public services? The CBI has plucked this figure from the air. All the evidence shows that privatisation is a costly failure that the taxpayer can ill afford. Only last week MPs felt it necessary to call for a blacklist of firms that have failed to deliver on their contracts.
“Privatisation failures carry heavy human costs – just ask an elderly resident of an ex-Southern Cross home. And, as the G4S Olympic fiasco clearly shows, when the private sector fails, the public sector has to pick up the pieces – including the cost.”
UNISON is now calling for an urgent inquiry into privatisation and outsourcing, including the companies that provide public services, their employment practices, the quality of services they provide, as well as the profits they make at taxpayers’ expense.
