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BSa The Industry’s Voice No.4-Facing the political challenge

13 November 2008

The contribution that outsourced support services makes to the economy and the public sector is now recognised but the argument is far from won, as Mark Fox explains

This is a testing economic and political time for the UK and its business community. The business and outsourced service industry is not immune to instability and uncertainty in either arena.

It is the primary role of the BSA – The Business Services Association – to promote the UK business and outsourced service industry. Our is a major UK industry driving improved productivity, raising standards and investing in people – skills and training across the private and public sectors.

The provision of public
services on increasingly limited budgets is at the heart of the political debate and is set to be one of the dominating themes of the General Election, whenever it comes. The current financial haiatus adds to the pressure on businesses and those procuring services.

Pre Budget report
The BSA has recently submitted for the first time a submission to the Pre Budget Report process. In it we bring together for the first time on behalf of the industry a coherent and coordinated view on issues that cover finance, taxation, pensions and accounting standards. It is fundamentally important for the BSA to have a strong and coherent position in this area if it is to be effective in its public policy work and successful in defending the industry’s interests.

The stakes are high because at the centre of the debate is how a whole swathe of public sector services provided by central and local government should be delivered from education, health, and defence through to environmental, transport and welfare services.

All agree that the private sector has an increasing role to play but there is little consensus on how it should do it. There is no agreement at all between the parties about how the private sector’s involvement in public
sector service delivery should be characterised. The Government has developed the concept of the Public Service Industry. The Conservatives are deeply sceptical of the notion and talk straightforwardly about
outsourcing contracts to the private sector.

In the middle of this increasingly heated debate sits the UK outsourcing industry. The industry is the largest in the world, second only in size to the United States, and operates across the private as well as the public sector. The public sector part of the industry, of course, is the bit that grabs the headlines and interests politicians and policy makers.

The scale of the industry in the public sector alone is impressive:

....In 2007/8 its revenues totaled £79bn, generating £45bn in value added and employing over 1.2 million people.

....Add indirect growth and employment the PSI contributes £88bn of value added to the GDP and supports 2.3 million jobs.

The recent report by DeAnne Julius was an important milestone in improving the understanding and scope of the industry. BSA members are involved across the full range of the provision – including health, education, waste management, defence, the Olympics and housing, and not just through PFI projects but across the whole range of public procurement issues.

It made many useful recommendations but behind the scenes the report caused much heated debate between Ministers and the trade unions. The industry needs to work hard to ensure this important report is not left to gather dust on a Whitehall shelf. As the General Election approaches and the political battle heats up pressure is mounting on the Government, and those who aspire to Government, to make their plans for public sector reform clear. Battle lines are being drawn.

The message to policy makers from the BSA is clear: “If you are interested in better public service provision, improving social mobility and driving up standards and innovation then ensure the economic and regulatory frameworks do not hinder us in what we do. We need a level playing field between the private and public
sectors, we need the simplification and speeding up of tendering processes. We need much more transparency in tendering processes at local as well as central government level.”

It also has to be said that when a service is outsourced from the public to the private sector it does not abrogate the public sector’s responsibility to manage that contract effectively. Too often the industry has
become a convenient political scapegoat. We need to push back on that and ensure good private sector companies are not deterred from competing for public sector contracts.

So, this is a challenging period for the industry across the private and public sector service delivery areas. Through the BSA the industry is clearly establishing a strong voice in Westminster and in the media.

● Mark Fox is Chief Executive of the BSA

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