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5 March 2014 | Will Green
The CBI is calling on the UK government for simpler and more transparent contracts with outsourcing firms.
Announcing new proposals to “boost transparency and trust” in the private and third sectors, the organisation also said the government was not positive enough about outsourcing. The CBI said the UK public services industry made up more than 7 per cent of GDP and supported 5.5 million jobs.
John Cridland, CBI director-general, said: “Public services businesses recognise they operate in an industry which rightly demands close public scrutiny, which is why we are unveiling a range of measures to boost transparency and accountability.
“We can’t ignore the fact that confidence in the sector has been badly hit by several high-profile failures and that it will take time and meaningful change to rebuild it.”
Its recommendations include:
1. Every contract negotiation should include how information is to be released to the public.
2. All government contracts should be published online, “as long as the client is happy for this to happen”, and when they are not it should be explained why.
3. All contracts should include a presumption in favour of open book accounting.
4. The National Audit Office should be able to review government contracts with the private sector on a “structured and systematic basis to avoid adding regulatory burden”.
Ruby McGregor-Smith, chief executive officer of Mitie and chair of the CBI’s public services board, said: “There is a desire on the part of the private sector to explain what they do in a more transparent way.” She said contracts were too complex and they needed to include a “simple executive summary that says what both sides are trying to achieve”.
Contracts also needed to include clear steps describing what happens if things go wrong, said McGregor-Smith. “If a challenging issue comes up how are you going to deal with it?” she said. “Help us put it into a contractual context.” She said problems with contracts such as those with G4S and Serco had “common themes”. “Some of the common themes through this were, what was procured and how, was it appropriate and fit for purpose, what contract methodology was being used and were both sides getting what they thought was right,” she said.
McGregor-Smith said she did not believe there was a shortage of firms capable of taking on big contracts and that smaller contracts were not necessarily the answer. “I think there are enough suppliers who can do the work,” she said.
“If you want to achieve 30 per cent savings you have to do things in a big way to achieve those savings.”
She also said she would be happy to be subject to the Freedom of Information Act, which currently only applies to the public sector. “I don’t have a problem with it. As long as my clients are happy we are very relaxed about it,” she said. She added: “We think it’s going to be a fantastic decade of transforming public services – we just want out clients to understand that as well."