One third of public sector contracts cancelled due to poor returns

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Research from Totaljobs.com, in conjunction with independent research consultancy Step Ahead, outlines a ‘lack of skills’ as a key reason as to why more than one third (38%) of public sector contracts were cancelled last year and warns of future failures should more effective processes not be quickly established.

A failure to effectively manage past contracts saw one quarter (23%) of organisations bringing contracted outsourced services back in-house in an effort to save costs and boost quality. The research of key decision-makers from central government departments, local authorities, NHS trusts and police services, confirms that two fifths (40%) feel that in-house consultancy skills need to be improved, while 55% saw a need for improved project management skills.

The report outlines the first comprehensive analysis of how employment cuts in the Public Sector have affected output and sets out recommendations to remedy this:

  • Establish a Rightsourcing Advisory Group that can oversee a programme of work to improve the skills for delivering the Open Public Services. This could involve representatives from trade unions, large contractors, social enterprises and voluntary and community sector organisations, small businesses and public sector commissioning organisations.
  • Create a Public Service Learning Academy, overseen by the Rightsourcing Advisory Group, where public sector organisations, large contractors, trade unions, voluntary and community sector organisations, social enterprises and small businesses can learn, contribute ideas, exchange best practice and develop skills to design, commission and deliver high quality public services on an on-going basis.
  • Develop outsourcing guidelines for commissioners to ensure the principles of public service reform are met, particularly in relation to SME, social enterprise involvement and local responsiveness.
  • Develop a self assessment diagnostic toolkit and learning development programme that will enable public sector workers to make an effective transition to the private and voluntary and community sectors.

Mike Booker, Public Sector Director, Totaljobs.com: “This report is the first to outline repercussions to the bottom line of Public Sector employment cuts. Intervention from the private, public and third sectors is needed in a collaborative approach to help up-skill a smaller Public Sector workforce and provide the jump-start needed to create growth. Only by uniting policy with opportunity and aspiration can society collectively prevent future skills shortages directly affecting output into a long-term issue in the future.”

Mark Froud, Chief Executive of StepAhead research concludes: “The debate over public sector outsourcing is far from over. However, it is clear that public service reform will mean a change in the skills that are needed amongst people involved in commissioning and delivering services. Good public services have always relied on having people with the right experience and attributes, but this needs to extend to the skills to manage contractors if we are to achieve the essential savings to the public purse.”

The research allows for further analysis of the barriers public sector HR chiefs believe hold their organisations back from achieving the cultural and institutional changes called for by the Cabinet Office’s Efficiency and Reform Group. The research, discussed at a panel session in Westminster by UNISON, British Chamber of Commerce, National Outsourcing Association and Capgemini, highlights that cost dominates the outsourcing debate. 62% of the 100 public sector HR Directors surveyed see such contracts as route to cost savings in contrast to just a quarter (26%) who believe they deliver better quality services.

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