U.K. approach to outsourcing merits study

Few countries have moved as aggressively ? and as successfully? as the United Kingdom in transforming theprovision of public services. The private delivery of federaland local public services in the United Kingdom exceeds $150billion, up from $60 billion in 1995. This dramatic growth includes aremarkable diversity of services, from refuse collection to health care,from military support to environmental protection. Equally striking isthat the growth, while initially spurred by the Conservative Party government of Prime Minister Margaret Thatcher, has really taken offunder the leadership of the Labour Party.In light of this dramatic growth and thecontinued public demand for increasedimprovement and efficiency in British publicservices, John Hutton, secretary of state forbusiness, enterprise and regulatory reform,commissioned a major study of the effectivenessand challenges of the public servicesindustry. Conducted outside the realm ofpolitics or interest groups, the study aimedto ensure "that we have a thorough understandingof how we engage with" the privatesector and nonprofit organizations as a keyelement of "ensuring our goals of excellent,fair and cost-effective public services areachieved," Hutton said.The study found, that when done properly,outsourcing and privatization generallyresult in long-term cost efficiencies and, ofequal importance, contribute significantly tothe domestic economy.The public services industry employs morethan 1 million Britons and comprises morethan 5.7 percent of the gross domestic product.Moreover, the total economic impact ofthe public services industry is responsible formore than 2.3 million jobs across the UnitedKingdom. In the United States, studies of theso-called shadow workforce have reachedsimilar conclusions associated with federaloutsourcing and privatization.Furthermore, the U.K. studyfound significant evidence thatoutsourcing and privatizationgenerate quality that is at leastequal to and often better thanthat which government provides.This is evidenced by a2006 survey in which 95 percentof former public-sectormanagers surveyed agreed thatservice to the customer hadimproved.The study did not dodge the difficultissues of maintaining competition, sustainingworkforce capabilities, ensuring governmentperformance of inherently governmentalfunctions or negating any negative effectsoutsourcing or privatization might have onexisting government employees. Indeed, inBritain, companies must hire the affectedgovernment workers, and employee pensionbenefits may not be reduced by outsourcingor privatization. Although many of theseissues are also prominent in the UnitedStates, the British take a much longer-rangeview of the process: they focus heavily on"value for money" as opposed to immediatecost savings. They also genuinely encourageinnovation and pursue partnerships withindustry and public employee unions.We can learn much from the Britishoutsourcing experience and from thisstudy. The issues the British are grapplingwith are equally acute at all levels of governmentin the United States. And thestudy reflects conclusions that have beenfound in similarly objective U.S. analyses.Yet there are key differences.Perhaps most significant is the longterm,bipartisan will the British governmentand its stakeholders have demonstratedin focusing on improvingservice delivery to the citizenryin an era of increasinglycomplex challenges. TheBritish openly acknowledgemistakes and failures, andthey use them as learningtools to drive improvementrather than as cudgels toassign blame or as an excuseto reverse course. That mightbe the most compelling lessonof all.