| In terms of Britain’s £175 billion budget deficit and the consequential cuts in public expenditure the procedure of outsourcing as a way to diminish costs is booming. According to a recent article in the Guardian over a fifth of the entire UK government expenses, which total £620 billion, is being spent outsourcing public services.
As this practice becomes more common in the public sector the difference of opinions concerning its advantages and disadvantages are getting controversial. From the British government’s point of view outsourcing is an effective way of saving money: the DeAnne Julius report, initiated by the government itself, estimates that services outsourced to the private sector decrease the spending in an amount of 20 per cent. Companies specialized in outsourcing, for example VT and Serco, state that outsourcing is the best way to save money and maintain services.
Unions claim that outsourcing leads to lower standards, because companies are pressurized to increase profits. This argument is linked to the assumption that cost savings are achieved through cutting jobs and hiring new staff on inferior working conditions.
David Furness, from the centrist thinktank Social Market Foundation, argues on the contrary that members of the union care much more about the protection of labour conditions and terms of the public sector workers than about the service itself. He himself puts much more emphasis on the fact that, different providers competing for contracts, leads to an improvement of the service. Moreover the public sector spending watchdog the Audit Commission maintains that councils tend to miscalculate the savings by disregarding the costs of carrying out the service in-house. According to Guardian “the danger is that councils and government officials, under pressure to cut costs, swallow the private sector’s sales pitch that outsourcing can deliver more for less, and ignore its many drawbacks.”
Despite these controversies it is an inevitable fact that the procedure of outsourcing is booming – this week the outsourcing company Tribal Group declared that it signed a £64 million five-year contract with the government funded education inspection body Ofsted to oversee England’s nurseries.
by Katharina Klett
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