How does outsourcing constrain open policy?

In the previous two posts we have asked if there is a tension between two competing Government agendas – open public services and open policy making. In this post we set out fours ways in which the current approach to outsourcing of public services can stifle open policy.

The ongoing saga surrounding the role (or more often, the non-role) of G4S in providing Olympic security has again highlighted that important aspects of outsourced public services – including performance and contract terms – are often hidden from public view behind a wall labeled ‘commercial in confidence’. This has significant implications for open policy, in at least four respects.

Firstly, outsourcing sometimes obscures performance. The Government’s flagship Work Programme is a case in point. This £5 billion programme has been heralded as a radical approach to reducing long-term worklessness. It uses a payment by results approach where providers are paid on achievement of outcomes. Providers have the freedom to decide how they will deliver the service without prescription from government (often called a ‘black box approach’). The problem is that effective transparent scrutiny is difficult because providers are not able to share data about what is working and what isn’t. They are required to sign comprehensive contracts, which prevent them from sharing performance data unless it is already in the public domain. Providers must also not attract ‘adverse publicity’ from their media work or face consequences if they do. Charities and media commentators have questioned this but ministers have refused to change this.

Rather than protect the policy in its relatively early stages, this has only served to intensify the questions as to whether the Work Programme is working effectively. Various charities are pulling out of the programme or going bankrupt, raising concerns about the viability and sustainability of the policy. Data leaked to Channel 4 News indicated that only 3.5% of individuals referred to A4e are securing a job outcome. The way the Department for Work and Pensions has released performance data about the programme has made it difficult to effectively scrutinize the policy overall, a view shared by ERSA – the welfare to work trade body.

Secondly, where public services are not provided by the public sector, this can result in data no longer being available to public policymakers. Francis Maude has argued that data belongs to citizens and not the state, but this hasn’t been reflected in all contracting processes. In a recent Q&A on open government Vicky Sargent from Socitm pointed to cases where council contact centres have been outsourced and the data about enquiries is no longer available to the council because it was not explicitly included in the contract. Vicky rightly argues that retaining the right to data from outsourced systems is critical.

Thirdly, what this reflects is that different providers are treated differently when it comes to transparency. Local Government departments are required to publish all expenditure above £500 as well as salaries of senior officials.  Similar rules apply to Whitehall departments but the same rules don’t apply to outsourced service providers. The Freedom of Information Act also doesn’t apply to private and voluntary sector providers, even though it would if the same services were delivered in-house. This inconsistency in applying transparency rules between services delivered by the state and those by the private/voluntary sector means that we are seeing ‘black holes’ open up in public service commissioning, to the detriment of public accountability.

Fourthly, this situation is likely to undermine the greater use of evidence in policymaking, for example Sir Jeremy Heywood’s desire to see a social policy equivalent of NICE that could issue social policy ‘kitemarks’ for particularly effective and proven approaches. How could such an approach be adopted consistently across public services? Knowing what works and what doesn’t could help the Government in its ambition to increase social investment in areas such as long-term worklessness, but this is unlikely to be realized if we aren’t able to analyse the performance data, costs and timescales across all programmes whoever provides them.

Transparency and scrutiny is not a luxury, rather it is essential if we are to understand whether policy is working and if it isn’t, how it could be improved. We need to understand the impact of public expenditure and whether it represents value for money. We need to make informed decisions, based on evidence, about existing and future policy. Policy will be weaker if a substantial part of the evidence base is hidden behind a veil of supposed ‘commercial confidentiality’. At stake is whether outsourced services are still ‘public’. If public money is being spent in the public interest, then surely how this money is spent should be transparent.

As we suggested in the previous post, the current situation has allowed a further serious problem to develop, of which the G4S fiasco is just one outcome – the emergence of a small, very powerful but somewhat unaccountable group of providers who have significant interest in public policy stemming from their role in delivering a range of public services from prisons, welfare to work, hospitals through to schools. Given their size and scope, independent and transparent analysis of the activity of these providers is essential if we are to scrutinize how this investment is spent and to what effect. Any future social policy equivalent of NICE surely requires a stronger and more secure foundation than this – something we will address in a future post.

We will be looking at each of the issues raised in this post in more depth in future blogs.  Please tell us what you think.

3 Comments on “How does outsourcing constrain open policy?”

  1. […] posted here: How does outsourcing constrain open policy? « Guerilla Policy blog Comments […]

  2. Alex Kenmure (@idlehands12) says:

    What if the govt/commissioning authority/Guerilla Policy were more aggressive with releasing the information they do have about large private sector contractors as a way for ordinary people to lobby for data and service-based info? For example –

    Mr Smith is the CEO, his email address is, is salary is £500k pa, our contract with his company is worth £xm, his office telephone number is … etc. If you have any problems, please feel free to contact him(!) Oh and by the way here is the same info for his senior management team and the board of

    Interesting this week that the publishing of the NBC chief’s public email address on Twitter caused such a swift and extreme backlash from NBC. That suggests to me that people in these big companies don’t like the light being shone on them. I think it is difficult for people to hold organisation/systems to account, but other people, that is a different story. Transparency and outsourcing can work together I think, but we need to make sure that everyone has the right tools to be able to get at the information that they need to be better informed “customers” (for want of a better phrase). And big companies need to realise that if they are going for these contracts then that means whoever is in charge of the contract will, without fail, be publishing the personal details of the people accountable for that company in big brigh flashing lights for the whole country to see.

  3. Hi Alex,

    Thanks for commenting. I agree with your sentiments – surely the public has a right to know how their money is spent. There is a clear discrepancy between how transparency rules are applied to services delivered by the state and those delivered by the private / voluntary sector. Even when it is the same service.

    CEOs of large outsourcing providers are under increasing scrutiny as evidenced by Emma Harrison and the dividend she received from A4e. However, this is not enough – the Freedom of Information Act should be extended to publicly funded services and rules around transparency such as publishing expenditure and senior salaries should be applied consistently.

    Our concern is related to open policy and the tensions that arise from the open public services agenda. The lack of transparency and accountability over how outsourced services work, their impact and cost makes for bad policy. How transparency rules are applied is a part of this.


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