Outsourcing cannot be surgically removed. But it can be reformed

Westminster Outlook

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The Independent Online

Many doctors will not be delighted that, on top of saving lives and treating injuries, they are expected to help reduce nearly £2bn of waste in the NHS. They are healers, not accountants.

Yet a report by the Academy of Medical Royal Colleges, published yesterday, argued persuasively that “one doctor’s waste is another patient’s delay”. Doctors are best placed to evaluate what resources are wasted and how to prevent that, be it better use of medication or cutting time spent in theatre.

As much as anything else, medical professionals have no obvious choice but to become part-accountants if they want to halt the march of outsourcing vast chunks of the NHS to the private sector. For example, 35,329 cataract operations were performed by privately in 2012-13, double the number five years earlier. 

As a country we still need to cut spending. Contracting out costly services to the likes of Atos  and Capita, with their commercial nous, has been the Coalition’s signature policy in achieving that.

Ignoring whether or not this actually works, the idea itself will not be reversed, even under a relatively left-wing Labour government should Ed Miliband win next year. Outsourcing threads through the fabric of the state to the extent that it now ties it together.

Banning companies from public sector contracts after a failure in one area just won’t work, as they will typically have a host of assignments spanning Whitehall departments. Unravelling all those deals, then holding costly new selection procedures, is a task that no government is likely to undertake.

If doctors want to delay the inevitable – that, ultimately, the NHS will largely be run by huge corporations – then they will have to accept more responsibility when it comes to making savings.

But what we also need to do is think through how to reform outsourcing in order to make this extension of privatisation work – or at least prevent a litany of further disasters that have so far stretched from Serco and G4S overcharging on security contracts to the e-Borders immigration IT fiasco.

We could look at turning the notion of “golden shares” on their head. These were a signature of Margaret Thatcher’s many privatisations, leaving the state with a tiny but powerful stake that meant it retained a degree of control over the company.

Typically, this was used to impose a degree of questionable protectionism, allowing governments to block foreign takeovers of strategically important companies. The golden share in Rolls Royce, privatised in 1987, meant the engine maker could not appoint a foreign boss until the terms were relaxed in 2011 – and even then, either the chairman or chief executive had to be British.

Under my idea, a group that wanted to bid for public sector contracts would have to agree that the main British subsidiary had a golden share, with a public sector board director looking after the taxpayer’s interests and ensuring that any failures with our money are exposed and punished.

It would also mean that a company wanting public deals would have to limit its private sector outsourcing work in Britain. Tying their fortunes to the state would entice them to do a better job.

The EU has already clamped down on golden shares, arguing that they can infringe on free movement of capital. This more extreme idea would be still more legally fraught, while there is a danger that there would be little competition with few willing to accept the terms of the golden share.

I suggest this not because I think this roughly sketched notion is obviously practical, but because there is a need to start a debate into how to reform what is now the hidden state.

Tony Blair is mining the wrong seam of information

 As my colleague Andy McSmith reported earlier this week, the Northern Ireland select committee wants to quiz Tony Blair as part of an inquiry into promises made to suspected terrorists prior to the 1998 Good Friday Agreement.

Our former PM has offered written answers to queries, which, according to  committee chairman Laurence Robertson, means Mr Blair is “effectively” refusing to appear for a proper grilling. But Mr Blair is terribly busy trying to bring peace to the Middle East and, so the blurb goes, “encourage understanding of world faiths”.

Lest we worry that he doesn’t have time for his business interests, he is to make the keynote presentation at the world’s biggest mining investment conference, South Africa’s Mining Indaba, next year. Attendees at this deal-making extravaganza, such as the Ivanhoe Mines founder Robert Friedland and former Goldman Sachs economist Jim O’Neill, will, according to the press release, receive Mr Blair’s “unique and charismatic insights to our global delegation who are vested in capitalising African mining”.

Mr Blair can point to his efforts to improve governance in Africa, but this shows how business and politics can be a toxic mix. He should be explaining why 187 people received letters reassuring them they were not wanted by UK police, not wowing the likes of BHP Billiton and Anglo American in Cape Town.

Twitter: @mleftly