Memorandum by the Business Services Association
(PSR 5)
The Business Services Association is a policy
group for major companies providing outsourced services to companies,
public bodies, local authorities and government departments and
agencies. The combined annual turnover in the United Kingdom of
its 20 member companies is around £15 billion. Member companies
employ directly and indirectly more than 500,000 people.
BSA member companies are among the leaders in
providing services across the public sector. They are actively
involved in the majority of PFI and PPP projects across the whole
range of Government Departments and Agencies, NHS Trusts, Local
Authorities and Local Education Authorities. As such they are
engaged in implementing Government's agenda for modernising public
services.
The Association itself is closely involved in
working with Government to develop and deliver the principles
for modernising public services. As well as representing the providers
of relevant services, all employees of BSA member companies are
users of these services. This gives them and member companies
a clear perspective on quality and end-user requirements. Those
views are reflected in those of the Association in its submissions
to Government across a whole range of issues.
In line with the PASC's request, this Memorandum
concentrates on Questions 6-18 of the Request for Evidence. A
further paper dealing with the remaining issues will be submitted
within the next 10 days.
THE CONCEPT
OF A
PUBLIC SECTOR
ETHOS AND
THE INVOLVEMENT
OF THE
PRIVATE SECTOR—IS
THE CONCEPT
OF A
PUBLIC SERVICE
AN ANACHRONISM?
Q7. Is there a public service ethos, and how
can it be defined?
Much has been said elsewhere about the Public
Sector Ethos which we take to be what the Committee defines as
the Public Service Ethos for the purposes of this Inquiry. We
are not convinced that a PSE really exists. If it does, it is
frequently centred round the ideology of public provision of public
services.
On the other hand we do strongly believe in
a real Public Service Ethos—that is, an ethos of delivering
high quality services to the public, regardless of the provider.
We are convinced that what is important is what works and not
who provides, and that what really works is that which works best
in the interests of the end users.
We do not regard this as a semantic distinction
but as a fundamental principle which should underpin all service
provision in the public sector arena. It is to this latter definition
that we attach the initials PSE throughout the remainder of this
submission.
Q8. How is the public service ethos different
from the private (or voluntary) sector ethos?
There is a perception that because the private
sector has to make a profit, it must have a different ethos from
that of the public sector. We accept that there is a difference
between companies which need to make a return for investors and
public bodies which are centrally funded, in whole or in part.
Nevertheless, the same drivers of efficiency, effectiveness and
economy are present in both sectors. In the private sector this
is driven by shareholders and clients; in the public sector it
is driven by Departmental Ministers, NHS Trust Boards, Local Councils
and LEAs. Their aims are no different. The 3Es apply equally forcibly
and for the same reasons—only the best can succeed.
Q9. Is a public service ethos necessarily
a good thing? Can it be an obstacle to the effective delivery
of services to the public?
For too long, the public sector has believed
that it has the right to deliver services to the citizens of this
country without due regard to what those citizens require and
want in terms of service quality, flexibility and delivery. Many
in the public sector now realise that this is no longer acceptable,
if it ever was. The age of consumerism has changed permanently
the way in which consumers regard public services and this has
been reflected in Government's commitment to modernise public
services. We wholeheartedly support that campaign. Citizens deserve
the best in public services and public sector bodies must seek
the best providers to deliver services of appropriate quality
to meet that standard.
Q10. Would the creation of a single public
service help a public service ethos?
We do not believe this is either possible or
helpful.
There is little commonality between the parts
of the public sector. Their diversity is part of their strength.
Many parts of Government are run by agencies. Local authorities,
local education authorities and NHS Trusts are statutory bodies.
Their drivers and challenges differ widely. The only community
of interest is that all are in the public sector. In that respect
there is already one public sector, but many public services.
Q11. Is it possible for profit-oriented organisations
to maintain the public service ethos?
Companies which are involved in the provision
of public services must have embraced the PSE or they would not
tender in the first place or remain within the sector in the longer
term. Profit is a red herring in this debate, as has been pointed
out in the answer to Q8.
The average profit return on public sector service
contracts currently is between 1 and 3 per cent. In PFI this will
be higher because of the style of the contract and its longer
term nature. Thus, companies are not in the market for high returns.
In any event, contracts won by the private sector are subject
to competition so that the public sector client is assured of
having obtained a good price for the services it wishes to be
provided.
It is necessary in this context to clarify what
is meant by profit. Clearly, shareholders demand a return on their
investment but it is left to companies to determine how that investment
is achieved. Within the return which companies seek on contractual
activity is included investment in training, development of new
processes and products, and development of innovative solutions
to future service developments and requirements. Unlike public
bodies, companies have no separate pot of money which can be used
to fund such activities. The so-called "profit" element
is, therefore, not "ill gotten gain" but development
seed corn.
Q12. What measures, if any, need to be put
in place to ensure that the search for profit does not undermine
the public service ethos?
There is no search for profit, as has been outlined
in the answer to the previous question. This is a myth peddled
by those with an interest to do so.
Q13. Can lessons be learned from the experience
of private sector involvement in public services in other countries?
There is much which can be learned from the
experience in other countries. In France many health related services
are provided by private companies. Local authorities, too, rely
on private companies to provide most of their services rather
than embracing direct service provision. The Netherlands and Germany
also have experience which would be useful to the Committee. BSA
members are active in those countries and can assist the Committee
with first hand experience.
Q14. Do private sector people working in and
around government, including secondees, task force members and
others, undermine the public service ethos? Are special measures
needed to regulate their activities and prevent possible conflicts
of interest?
The purpose of secondments and other such appointments
is to enrich the capabilities and understanding of the public
sector in order to address more effectively the policy issues
of the day. We accept that conflicts may potentially arise for
secondees between the interests of the company and those of the
government department or agency. This issue has to be addressed
within the secondment contract and monitored throughout by those
involved.
Q15. Many companies are becoming increasingly
aware of social and ethical issues. Does this make them more suitable
for work in partnership with the public sector, or does it make
no difference?
Companies have been aware of these issues for
a long time, probably longer than public bodies. This is necessary
because of the private sector client base for which they provide
services. Clearly, as the interests of the private and public
sectors coincide in these areas co-operation between them in the
provision of public services becomes easier and more beneficial.
Q16. Do the views, motivations and attitudes
of public sector workers differ from those in the private sector?
Does any difference in motivation have an effect on the delivery
of public services?
There are differences in the ways in which public
and private sector employees operate. Both are, or should be,
focused on the users of the service. In the private sector there
is the ability to reward employees financially for exceeding targets
in service provision which is an added incentive to do well. This
is not possible in the public sector.
Financial incentives are, however, not the main
driver. Private sector companies are keenly aware of the value
of their reputation as providers of quality services. In this
they share common ground with public sector providers. Unfortunately,
the experience of member companies is that such motivation is
often lacking within the public sector because of lack of incentivisation
by management and the tighter circumscription of jobs and responsibilities.
However, it must be remembered that private
companies employ the same staff who were working for the public
body immediately prior to the transfer of the contract. They work
for the same client and serve the same people.
Q17. There is conflicting evidence as to whether
the public is in favour of private sector involvement in public
services (MORI polling, June 2001) What in your view is the truth
about public attitudes?
Despite the results of various polls, we believe
that the public is more interested in good service delivery than
in who provides the service. Private companies would not continue
to be used by public sector clients if there was a real concern
among the public users of the services.
Q18. If there are to be rules regulating private
sector involvement in public services, should they also apply
to, for example, the voluntary sector? Should there be less stringent
regulation where profit is not involved?
There are already sufficient rules of engagement
applying to the involvement of the private sector in the provision
of public services without any suggestion of further bureaucracy.
The involvement of the public sector is meant to be in partnership
with the public sector. The public procurement directives, Better
Quality Services, Best Value and the principles regarding PFI
and PPPs already provide a firm, clear basis for such involvement.
We see no good reason for any further rules.
While we appreciate the particular issues applying
to the voluntary sector, we see no good reason why standards of
quality and service provision should be any less strict for the
voluntary sector than the private sector. The interests of the
users are the same regardless of who provides.
Norman Rose, Director
General
October 2001
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