Selling public services – why think tanks promote the ‘Whitehall consensus’ for outsourcing

In posts over the past few weeks, we’ve looked at the issues of accountability, transparency and reliability raised by the Government’s ‘open public services’ agenda, in particular its plans to outsource more public services. We’ve focused especially on how outsourcing threatens to undermine another recently announced Government initiative, that for ‘open policy making.’ In the absence of reliable and rigorous evidence for the benefits of outsourcing, why have so many think tanks continued to push outsourcing?

Some of the loudest cheerleaders for outsourcing have been in think tanks. In addition to conservative parts of the media, many think tanks have played an important role in promoting the ‘Whitehall consensus’ in favour of outsourcing – whatever the reality of outsourcing at the frontline for the people who use public services and the people who provide them.

The explanation for some think tanks ignoring the public and public service workers is that often think tanks consider them to be part of the problem. Starting in the 1970s, a group of commentators began to characterise organised frontline workers and service users as the underlying cause of the country’s problems. These commentators were often found in, or heavily informed, by right-wing think tanks such as the Institute of Economic Affairs and the Centre for Policy Studies.

Their argument was that public sector workers and ‘interest groups’ (including people who benefit from services) in effect hold politicians to ransom until governments pay them off by spending more on services. This only serves to make these interests stronger and so turns the “collectivist ratchet” inexorably away from a free society and towards the big state. As a result, not listening to frontline workers (and ‘self-interested’ service users) became a matter of political principle – the only route to genuine reform in the public interest.

Another implication of this argument was that if the state couldn’t be slashed overnight (because interests in favour of the state were too strong), then private companies should at least be given a much greater role in delivering public services. This would produce more efficient and effective services. It would also reduce the power of public sector unions – and possibly pave the way for privatisation.

A related argument often made by some think tanks has been that public services are over-regulated – over-inspected, over-measured, and over-directed. Combined with outsourcing, in practice this means that private companies taking over the running of public services should expect less close inspection than used to be the case with the public bodies that previously ran services (although the same commentators are largely quiet when it comes to addressing failures of ‘light-touch inspection’ such as Winterbourne View).

It’s not surprising that right-wing think tanks pushed this argument – it’s their job to promote their particular ideology and they do it unashamedly. What’s more surprising is that supposedly progressive left-of-centre organisations have also promoted the Whitehall consensus in favour of outsourcing and less regulation – or as they prefer to put it, for more ‘diversified provision’ and greater ‘innovation’. The question is why – and why they have often seemed so uninterested in asking the more fundamental question as to whether outsourcing improves the quality or efficiency of public services, especially from the point of view of the people who use and pay for these services.

Think tanks often present themselves as fiercely independent – as ‘intellectual outriders’ that are prepared to ‘think the unthinkable’. In reality, think tanks also need to pay the bills, and outsourcing interests often have deep pockets. This is the time of year when think tanks promote their party conference events. Sponsors of think tank events at last year’s party conferences with a direct interest in outsourcing included PwC, VertexPearsonCareers Development Group, the Association of Employment and Learning ProvidersSodexoAvantaManpowerWorking LinksDeloitteKPMG, and G4S.

Most of the time, government feigns ignorance regarding the potential influence of these interests. Last week however, the Department of Health dismissed a paper written by Conservative MP John Redwood for the Centre for Policy Studies as “misleading and inaccurate” in part because of “influence” (unspecified) by Partnership Assurance – “an insurance provider known to be critical of a cap on care costs” (in his paper, Redwood had called on the Government to abandon proposals by the economist Andrew Dilnot to cap the costs of elderly social care).

It’s ironic of course that the Government dismissed the Centre for Policy Studies’ argument for the same reason that the CPS has consistently used for dismissing the views of public sector workers and service users – that of narrow ‘self-interest’ at the expense of genuine public interest. Applying the same logic would mean that government should ignore the arguments made by many think tanks when it comes to outsourcing public services. Should it – and will it?


5 Comments on “Selling public services – why think tanks promote the ‘Whitehall consensus’ for outsourcing”

  1. I was just thinking about this (and was thinking of following up on this post: http://wp.me/pYCOD-rP). In the international development sector this is clearer than ever. When I joined ODI (probably the UK’s largest think tank) in 2004 there were about 70 staff. When I left at the end of 2010, around 150-160. Now, less that two years later, 200. This is a growth industry. What fuels this? Sure, there are more funders (the Gates, for instance), but the biggest driver is DFID: directly or indirectly. The same is true for other players who have seen their ‘development’ arms grow in the last few years. KPMG and PWC are two of the biggest winners in this outsourcing bonanza. PWC is now managing the 60million plus Climate and Development Knowledge Network and has just been granted a 300million education fund to manage. KPMG is both in charge of several governance and transparency funds (which then go on to sub-contract NGOs, think tanks, and consultancies around the world and the UK) and the UK Aid watchdog.

    It is clear, then, that outsourcing is in the best interest of these very British ‘Beltway Bandits’.

    DFID, it seems, outsources everything: from developing entire programmes (even writing the business cases) to developing its policy on a particular issue, to evaluating the projects it funds and even to communicate its work. I knew that DFID has outsourced its Research for Development portal (http://www.dfid.gov.uk/r4d/) but I had not realised how deep the outsourcing went until last week when I found that its Twitter Account (@DFID_research) is also outsourced. So, basically, a private firm manages the government’s official communications.

    DFID also outsources its recruitment. A consultancy firm (founded by former DFID staff) managed, certainly during 2010, the recruitment of social development advisors and often provided short to mid term staff covers -who then went on to subcontract the same firm as consultants. Do not be shocked. This happens all the time. The case of DFID staff who develop a project while and DFID and then go on to implement them while on secondment at a DFID sub-contractor would not surprise anyone in the industry.

    Worst still, DFID has outsourced its thinking capacity. It relies on (and I have been one of them) generalists in think tanks and consultancies (often difficult to differentiate) to come up with the ideas to pursue.

    They rely greatly on what they call Research Programme Consortia: large multi-country and multi-organisation 5 year initiatives that focus on one policy issue but that is too detached from context and too difficult to manage (across different types of organisations and political needs) to be able to offer much that is of real use.

    Or they commission ONE study and act on it rather than review options. But what does DFID think? We do not really know. Unlike the World Bank (and other donor agencies such as IDRC) DFID does not produce its own research. Their staff, many of whom have PhDs and are perfectly competent and more experts than those they sub-contract, are buried in administrative tasks that leave little time for critical thinking.

    In the end, the large programmes and the consultancies are far more expensive. It costs to manage them and then it costs to communicate their findings BACK to DFID. And in the process it dumbs down DFID’s staff who lack the opportunities to keep their research skills fresh.

    A much better model would be one in which DFID staff and think tanks/consultancies meet in public to debate their own ideas. To achieve this though DFID needs to do less and focus on doing this better; attract more competent researchers and analysts and encourage the ones they already have to do more of it (this need not be expensive: IDRC has an interesting internship programme that attracts young but experienced researchers -most with postgraduate degrees); and keep people in one place long enough for them to learn something about the country and issue they are working on.

    • Apologies for the belated reply Enrique – I wasn’t aware of the DFID situation, which is fascinating – it sounds like the world’s first virtual government department! I also especially like your proposal for an alternative approach, which as you suggest would probably be less expensive, more effective – and much more transparent. This is worrying if DFID represents the future of open policy – I’d very much encourage you to write this example up further if you’d be interested in doing this (or haven’t done this already), since it has broader implications.

  2. skwalker1964 says:

    Excellent article! Given “that private companies taking over the running of public services should expect less close inspection than used to be the case with the public bodies that previously ran services”, you might be interested in promoting my petition to make private providers of public services subject to the Freedom of Information Act just like public entities are:

    http://epetitions.direct.gov.uk/petitions/38851

    • Thanks Skwalker – we agree that outsourced public services should be transparent and held accountable on the same terms as public sector providers (and indeed, we need to improve transparency and accountability in both publicly and privately-provided services). Happy to promote the petition, and this is a subject we’ll be returning to in subsequent blogs.

  3. […] article from the Guerilla  Policy an independent social policy think tank (irony there) : Selling public Services why think tanks promote the Whitehall consensus for outsourcing  looks at the issue from the point of view that the public and the public services themselves are […]


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