I have to confess to something. Some years ago I paused to gawp at a scene in a Californian national park: a ranger, decked out like Ranger Smith from The Yogi Bear Show, but doing heavy construction work.
Perhaps some context would help: it was not the fancy dress that drew me in. As a British person, I was bemused at the idea of having state employees who do building work. In the UK, that would be a job for a private contractor.
The willingness to involve private enterprise in state work is a longstanding feature of the UK. And it is quite possible that a lot of new public work is going to hit the market in the coming years.
First, it is reasonable to assume that the Labour party will lead the next UK government — and there will be an effort to ramp up the state’s capacity. After 13 years of budget squeezing, the government is a little threadbare and underpowered — in services ranging from the NHS to defence.
Second, senior Labour figures are clear that the party has moved on from Jeremy Corbyn and is not opposed to private provision where it works — subject to a few caveats.
If the quickest way to get things on track is to go outside the public sector, that is what a Labour government would do. It seems likely that a fair bit of work will come to the private sector — and the biggest source of this will probably be the NHS in England.
The repair backlog alone on hospitals is now £9.2bn and new buildings are also needed. Construction will surely be a big source of business.
It is quite likely that new patient services will also be commissioned privately, with more independent treatment centres for simple procedures and processes.
Expanding the output of the NHS will need management support as well. After a decade of fixating on getting money “to the frontline”, its management layer is too thin. If the NHS is to expand, as well as have new facilities, it will need more strategic and administrative expertise, not least to deal with long-running problems such as its eternal struggle to fix its old and highly fragmented IT systems.
This is the moment when companies who are eyeing up that work need to get themselves fit to bid.
First, the procurement processes are likely to change. Take the MCF3 — the Management Consultancy Framework. This is the handbook that governs most tendering for “the provision of objective advice” — a huge chunk of outsourcing. An updated version, MCF4, is expected during the next parliament and is likely to involve tougher targets for diversity, inclusion and other factors.
Lisa Quest, a partner who specialises in the public sector and policy at consultancy Oliver Wyman, said: “There is already a social impact question in MCF3, but the application is very varied by different commercial teams [in government departments]. We expect to see more even application of standards from MCF4 on elements like gender, racial and class diversity.” Getting into shape will, for some companies, take some time.
Second, there will be more scrutiny of contracts. The scandal over the procurement of personal protective equipment during the pandemic was terrible for the reputation of state-business partnerships. Companies took advantage of a global crisis to make fortunes selling sometimes-unusable kit.
In recent years, there has also been a realisation in government that the aggressive pursuit of lower-cost contracts tended to lead to bad services. It also made outsourcing a bad business — just ask the former shareholders of Carillion. And Britain outsourced unwisely; crises from the Grenfell Tower fire to the pandemic showed up a lack of expertise, and even staff who could be easily deployed, in the public sector.
There will be more transparency on contracts for public work. Business should think beyond that, though. Is there anything you don’t want to appear in the press about your pay gaps or tax records? Anything that would annoy the median voter? Maybe don’t do it. Behave as you would want your own subcontractors to behave.
And it is possible, too, that the cost of outsourcing failures for businesses will rise. Risk-sharing on projects with private contractors has been tried time and again, but the political atmosphere might make it a feature of more contracts. There is commercial support for this approach. “Impact-based pricing will promote firms who are experts in their fields and willing to align their incentives on achieving impactful results,” said Quest.
All this scrutiny might drive higher standards in outsourcing. Let’s hope so. There’s no point in depriving Ranger Smith of work if you are not going to do a better job.
