Given the recent history of outsourcing, the UK’s failure is not surprising. The same firm now entrusted with tracing Covid contacts, Serco, has in the past few years admitted fraud and false accounting in contracts for offender-tagging. Its auditor and now partner on testing and tracing, Deloitte, was also fined £4.2m for signing off Serco’s fiddled numbers. Meanwhile, the effect of outsourcing probation services to private companies was so damaging that the job had to be brought back “in-house” last year, the chief probation inspector judging it “irredeemably flawed”. A study of outsourcing last year by the Institute for Government found that, while contracting more routine services such as catering and waste collection from private companies appears effective, “government should be cautious about extending outsourcing of frontline services”.
The arithmetic of outsourcing explains much of the problem. To make it worthwhile, public bodies typically look for savings of around 20 to 30% of existing costs. The private company also needs its own double-digit profit margin, so the cost at which it provides the service needs to be far lower than it was in the public sector. Lower wages and skills and thus poorer service follow.
Such narrow calculations in any case miss the longer-term costs foisted on the taxpayer: dealing with the increased reoffending from failed probation and prison rehabilitation, for example; or picking up the pieces from what MPs called the “fiasco” of outsourced disability benefit assessments or an “abysmal” deal for Capita to run military recruitment.
Of yet more profound consequence is the erosion of the state’s ability to perform its core jobs. The Covid crisis has exposed the extent to which management consultancy prescriptions now shape services, gearing them up for yet more outsourcing. The “vision, purpose and narrative” of the new National Institute for Health Protection, for example, comes courtesy of McKinsey. Small wonder even a Cabinet Office minister, Lord Agnew, last month warned that Whitehall was “too dependent on management consultants”, which “infantilises the civil service”.
Undermine's the government's core-competencies. Hence NationStateUnderAttack