Government urged to replace Crown Commercial Service with outsourcing regulator after Carillion collapse

Think tank has called on the government to undertake “thorough review of the public sector’s relationship with contractors” amid sector’s woes.


By Richard Johnstone

23 Jan 2018

A report setting out possible reforms to government outsourcing has called on the Crown Commercial Service to be replaced by a new regulator that would monitor the use of private providers for public services.

The Smith Institute report on the use of outsourcing and PFI across the public sector concluded that there was a need for improved knowledge, greater conditionality and improved regulation of private sector providers.

Report authors David Walker and John Tizard said government needed to “pause, reflect and adopt a new approach to delivering public services” amid problems with private providers.

Large outsourcing and construction firm Carillion collapsed last week, while it has been reported that a Cabinet Office team is monitoring the financial health of services firm Interserve amid concerns it could also collapse.


The report said a rethink of outsourcing and PFI is urgently needed, with a particular emphasis on greater regulation and enforcement of contracts to provide greater accountability and transparency, including open book accounting.

This regulatory function goes beyond the work of the National Audit Office, according to the report, which called on the Crown Commercial Service to be replaced with a “proactive, knowledgeable invigilator of outsourcing with the capacity to call in and review dodgy contracts and, where necessary, stand up to pressure from global companies and their attempts at regulatory capture and divide and rule”.

Civil service chief executive John Manzoni revealed last week that Whitehall’s crown commercial representative for Carillion had been “rotated off” the now-collapsed contractor last summer. Walker and Tizard said a new agency was needed to regulate, share best practice and evaluate outsourcing across government.

“The Crown Commercial Service has improved Whitehall’s capability but neither the Cabinet Office nor the Treasury have reliable or complete data on contracts let in Whitehall; no consolidated data exists for the NHS, local government or the devolved administrations,” the report stated. “We don’t know much about the duration of existing contracts or the liabilities attached to early termination; we also lack data on previous performance.”

In addition, the Out of Contract report called on all Whitehall departments and other bodies including councils, NHS trusts and commissioning groups and Police and Crime Commissioners to review their outsourcing and PFI contracts “as a matter of urgency” to set out how long before each contract expires, how well the contract is being met, and whether it can be renegotiated.

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