A new report on the outsourcing of public sector services in the UK comes as a timely warning for Australia, one of the authors says.
UK civil servants took too much for granted, overstated savings and often rushed in unprepared and unprotected when the public sector took the decision to go down the outsourcing path, the damning new report from a UK government think tank says.
It provides numerous lessons for Australian agencies hoping to achieve better outcomes, efficiency, quality and cost savings through outsourcing.
Sarah Nickson, researcher at Institute for Government (IfG) and one of the authors of the new report Government outsourcing What has worked and what needs reform? released this month, previously worked for the Department of Prime Minister and Cabinet in Australia.
She says the study suggests outsourcing projects often succeed or fail for similar reasons.
Ministers, motivated by ideology, often push through decisions, yet there’s a lack of investment in the right capabilities.
“For example, outsourcing employment services in the UK has failed some job seekers because the government has struggled to write contracts that incentivise providers to give sufficient time and attention to the most disadvantaged. Similar criticisms were made of Australia’s Jobactive program,” Nickson says.
A scathing Senate report earlier this year said the government’s Jobactive employment service, which uses contractors to deliver employment services to unemployed job seekers on government income support payments, was not fit for purpose and was failing those it was intended to serve.
Savings assumptions overstated
Tom Sasse, senior researcher at IfG and another author of the report, says that when UK services were first outsourced in the 1980s and 1990s, cost savings as high as 20-30 per cent were believed possible.
However, that’s no longer typically the case: evidence in the report shows that savings today are more likely to be around 5-10 per cent. . .