How to ensure taxpayers get better value from private sector

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The decision by the Department of Transport to offer a contract to Seaborne Freight to run ferries in the event of a no-deal Brexit has now been scrapped. This was a company with no ferries and no experience of operating ferries, as part of a plan to use a port that, at the moment, is not capable of receiving ferries. It appears the contract was offered by the Department of Transport in contravention of the government’s own purchasing rules, without the usual competitive tendering processes.


But even if the existing rules had been followed, there is still the danger that the resulting purchase was based too much on price, and too little about the character or quality of the business being engaged. Before Seaborne, there was G4S, entrusted with the vital task of handling security for the London Olympics, and incapable of doing so.


There has also been a fiasco in the attempt to use private companies as providers of probation services. Just over a week ago it was announced that Working Links, owned by the German-based asset management group, Aurelius, had collapsed. The same day, HM Inspectorate of Probation published a report saying that Working Links staff wrongly classified offenders as low-risk in order to meet government targets.


The Guardian reports that the provider was criticised in the report for allowing business imperatives to trump the quality of its services, which the inspectorate ranked as inadequate, warning that similar practices could be present in other regions of the UK.


The chief inspector of probation, Dame Glenys Stacey, said that Working Links probation staff in Dorset, Devon and Cornwall were “under-recording the number of riskier cases because of commercial pressures” and completing sentence plans without meeting the offender involved.


In the report, the inspectorate said that the risk offenders posed to society had been downplayed just to meet government targets.


“Effort is focused disproportionately on reducing the risk of any further contractual (financial) penalty,” Stacey said. “For some professional staff, workloads are unconscionable. Most seriously, we have found professional ethics compromised and immutable lines crossed because of business imperatives.”


Government procurement from the private sector needs to be more rigorous and trustworthy. The companies selected need to have some sense of purpose beyond imply making money out of complying with paper requirements.


Government needs to be less dependent on a small cluster of very large listed companies operating on tight margins and having no obvious affinity for the communities to which they are providing school meals, hospital cleaning, security probation, or transport services.


As Chancellor of the Duchy of Lancaster David Lidington put it in a speech about the lessons from Carillion,


“For too long, businesses have not trusted the government to look beyond pure cost, or to apportion blame fairly when things go wrong. And the result is that, for too long, the public has understandably begun to question whether private sector involvement in public services is working for them. And therefore, I see it as the duty of both government and industry alike to restore, repair and rebuild that trust between us.”


Now the Cabinet Office is supporting an initiative by BSI, in which Tomorrow’s Company has been closely involved, to change things. It was six years ago, soon after the Southern Cross fiasco,  that Tomorrows Company first argued, in a report entitled Tomorrow’s Business Forms,  for action by government to improve public procurement. Tomorrow’s Company said then that taxpayers needed to be given confidence that the companies which get government business can be trusted to deliver what they promise, and to behave responsibly while doing so.


In the wake of Southern Cross, Carillion, and many other bad experiences, the public is entitled to ask that government deals with companies that are competently led, behave decently, pay their bills; treat their employees well, and have respect for the environment. Ideally, they would also be companies with some roots in, or affinity to, the places to which they are providing a service. They should not be companies that are in it for a quick buck, and ride roughshod over the interests of employees, suppliers or local communities.


In his speech David Lidington also said


“And that means government doing more to create and nurture vibrant, healthy, innovative, competitive and diverse marketplaces of suppliers. A marketplace that includes and encourages small businesses, mutuals, charities, co-operatives and social enterprises. And therefore, harnesses the finest talent from across the public, private and voluntary sectors.”


Research and experience alike tell us that strong and enduring relationships are crucial to the effective delivery of such services. There is no shortage of case studies and guidance principles offered by organisations such as the Institute for Collaborative Working.


So we should celebrate a proposed British Standard BS 9009 which is intended for external providers supplying to the public sector. BS 9009 is currently out for public consultation.


The standard is notable for having three tiers. This design is intended make it easier for smaller and simpler business organisations to achieve recognition and so earn the chance to work with the public sector.


The BSI consultation is open until 4 April and there is a public consultation meeting at BSI, Chiswick on 4 April. The details are here. Please do comment on the draft and help shape the creation of a test for the trustworthiness of suppliers and partners for the public sector.