Services ‘suffer as cheapest price wins’

PUBLIC SERVICES are suffering because the Government is prioritising cost over quality when outsourcing them to the private sector, according to a new report.

The collapse of Carillion has exposed fundamental flaws in how the Government awards contracts worth £250 billion for services and projects each year, the Commons Public Administration and Constitutional Affairs Committee (PACAC) found.

Public confidence in the system has been “seriously damaged” by construction giant Carillion going under and services have got worse because contractors know the Government prioritises price over quality, according to the report.

The MPs said the Government was unable to present real evidence to back its key claim that outsourcing produces better public services for less money. The study found the Government’s overriding priority for outsourcing is “spending as little money as possible while forcing contractors to take unacceptable levels of financial risk”.

The report states: “It is intolerable that the Government is spending £250bn with little evidence that it is currently following its own procedures to secure value for money. The Government’s preoccupation with price has been noticed by the market and is a matter of grave concern. The Government’s failure to assess the quality of services as well as their cost is lamentable.”

MPs found the Government’s “preoccupation with cost” meant it had to renegotiate more than £120m of contracts since early 2016 in order “to ensure public services would continue”.

The Cabinet Office stressed the Government remains “committed to ensuring a healthy and diverse marketplace” of companies bidding for government contracts.