Private and third sectors key to delivering public services

13 July 2008
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14 July 2008 | Jake Kanter

More than 32 per cent of all public services are outsourced to the private and third sectors, according to a government report.

The Department for Business Enterprise & Regulatory Reform (BERR) commissioned the Public Services Industry Review - Understanding the Public Services Industry: How big, how good, where next? six months ago. The work was done to discover the extent to which public services are now delivered by the third and private sectors and determine how the government could best support this growing industry.

Led by DeAnne Julius, chairman of foreign policy think-tank Chatham House, the six-month review found the number of government suppliers providing services to the public has grown 130 per cent since 1995 and now makes up £79 billion of its procurement spend.

Health services, which totalled £24.2 billion, was the largest area of spend in 2007-8. Social protection was next with £17.9 billion, followed by defence at £10.1 billion. In the past 12 years firms in the education industry have attracted the biggest rise in funding, with spend growing over 8 per cent every year to reach £7.3 billion in 2008.

It is believed outsourcing to private or third sector organisations has achieved average savings of around 20 per cent through competitive tendering. The report said in the future the government wants to switch to a procurement process that focuses on value for money, rather than cost cutting. It also wants to create more partnerships with suppliers.

John Cridland, deputy director-general of the CBI, said in a statement: "The growth of the UK public services industry here and abroad is a good news story and deserves recognition."

The government is expected to respond to the review in the autumn.


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