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UK is world leader in outsourced public services, says independent review

DEPARTMENT FOR BUSINESS, ENTERPRISE AND REGULATORY REFORM News Release (2008/138) issued by The Government News Network on 10 July 2008

The contribution of outsourced public services to the UK economy has grown 130% since 1995 and now represents the most developed public service industry in the world, according to a report on the Review of the Public Services Industry published today.

The industry has grown so significantly over the past twelve years that it is now second in size only to the US, and with a turnover of £79 billion contributes more to the UK economy than key industries such as communications and electricity, gas and water supply.

Secretary of State for Business John Hutton said:

"It is clear that private and third sector organisations play a valuable part in delivering modern public services and our substantial investment over the past ten years has paid off. This is now a thriving sector that employs over one million people and makes a major contribution to the UK economy. It is helping maximise taxpayer investment and improve quality as we strive toward world class public service delivery.

"UK companies and the services they deliver are of increasing global interest in this growing market. Across health, education, welfare, transport and criminal justice the tried and tested UK model is of increasing global interest in this growth market.

"I welcome Dr Julius's Review and we will now come forward with measures to support the future development of this sector. The ideological battle over using private and 3rd sector providers is over. What matters to the public is not who provides but how well a service is provided. Government has a key role in ensuring the competitiveness of this sector of our economy. As policy maker and procurer we ultimately get the markets we deserve."

The Review, commissioned by Mr Hutton and led by economist Dr DeAnne Julius, recommends that to further support this industry the Government should:

- Reinforce and demonstrate a long-term commitment to open up public service markets and maintain effective competition.

- Appoint a Director of Service Delivery for all government departments and local authorities, who should have senior level responsibility for commissioning service delivery.

- Work together with industry to raise the profile of the public service industry domestically and promote its export potential through UKTI

- Work to reduce bidding costs by agreeing clear and consistent objectives, simplifying bid documentation, reducing uncertainty around timing and engaging in earlier and more open communication about desired outcomes and risk allocation.

- Ensure commissioning objectives are clear, consistent and balanced so that value for money is maximised.

- Provide a level playing field for public, private and third sector bidders by considering such measures as tax treatment and pension obligations and costs.

- Encourage partnership working between contractors and providers.

Report author Dr DeAnne Julius said:

"Innovative public policy over a number of years has allowed a diverse collection of big and small, private and voluntary enterprises to step in to this significant and now world leading British industry. Together these firms provide a huge range of services - from welfare to work at the local level to complex military support packages - and in doing so make a significant contribution to UK citizens and taxpayers.

There is a clear case for action to ensure conditions for growth of the public services industry continue. I very much hope that the analysis and recommendations developed in this Review will help government to continue the drive towards world-class, personalised public services for all."

On the back of the Review's findings, next week Hutton will lead a trade mission to the US, accompanied by some of the UK's biggest public service companies.

The trip will be the first of its kind solely dedicated to raising awareness of Britain's public service industry, and discussing opportunities at a state and federal level within the US market. The group will meet with senior Government and State officials, leading public sector industry experts and the US national trade association - the Professional Services Council.

Notes to editors.

1. The Public Services Industry Review was launched by Secretary of State John Hutton on Wednesday 5th December 2007 at an address to the CBI's Public Services Forum. It aimed to provide an analytical framework and factual basis sufficient for defining the UK's 'public service industry' (PSI) and to identify areas for policy development, if warranted. It examined the increasing contribution made to the UK economy by firms and other organisations who deliver services in the NHS, the prison service and right across the public sector, as well as examined the market's scale, employment base and characteristics of its leading players. The Review also set out to determine the value of the PSI's contribution to the UK's economy, productivity and international competitiveness.

A copy of the report can be found at http://www.berr.gov.uk/about/economics-statistics/economics-directorate/page46965.html

The following link will go to the main Public Service Industry Review page, containing a short introduction to the review and links to the PDF files for all three reports (DeAnne Julius and two Oxford economics Reports)
http://www.berr.gov.uk/about/economics-statistics/economics-directorate/page46937.html

2. US Trade mission

John Hutton will lead a UKTI trade mission to the US on the 15th of July, 2008, where he will raise awareness of the UK'S models of public service delivery and UK skills, expertise and service excellence in this area. UKTI's role is to help companies secure access to emerging markets, overseas Government contracts and end-users and support promotion activities.

3. Dr DeAnne Julius CBE

DeAnne Julius is Chairman of Chatham House and a non-executive director of BP and Roche. She also serves on the advisory boards of UK and US hedge funds and is Vice President of the Society of Business Economists.

From 1997-2001 Dr Julius was a founder member of the Monetary Policy Committee of the Bank of England. From 2001-2004 she served on the Court of the Bank. Prior to joining the MPC, she held a number of positions in the private sector including Chief Economist at British Airways and Shell. She has been senior economic advisor at the World Bank and a consultant to the IMF and UNCTAD. For the British government she chaired the Banking Services Consumer Codes Review Group and served on the Policy Commission for the Future of Farming and Food and the National Learning & Skills Council.

Dr Julius is a dual US/UK citizen. She holds a BSc from Iowa State University and a Ph.D in economics from the University of California.

4. The Department for Business Enterprise and Regulatory Reform helps UK business succeed in an increasingly competitive world. It promotes business growth and a strong enterprise economy, leads the better regulation agenda and champions free and fair markets. It is the shareholder in a number of Government-owned assets and it works to secure, clean and competitively priced energy supplies.