Public sector social enterprises are making redundancies or turning away from public service market, and give public sector procurement policy as one of their biggest barriers to sustainability.
The report is commissioned by Social Enterprise UK, and calls for urgent action to strengthen the Public Services Social Value Act to create more transparent markets. Public service contracts should take into account ‘additional social value’ when being drawn up, the report finds.
It says that charities and social enterprises are being pushed out of public sector markets, despite their reinvestment of profits back into local communities, whereas private firms providing public services take wealth out of the communities and are difficult to hold to account.
This is backed up by a recent public poll where two thirds of adults in the UK voted that it is unacceptable for shareholders to profit from running public services such as hospitals, children’s homes and care homes.
The report says there is mounting evidence that social enterprises and charities, which reinvest their profits into additional services, are being driven out of public service markets. This leads to a lack of competition and gives commissioners little choice of provider.
Atos, G4S and Serco are among the private sector providers that are given the public services contracts and the report finds that they are thought to be too big or complex to fail.
The report says:
Evidence points to companies providing lower-quality services in their drive to maximise shareholder profits.
These private firms, contracted by central and local government, are difficult to hold to account and operate without transparency.
Shadow minister for the Cabinet Office, Jon Trickett, said:
Under this Tory-led government the outsourcing of public services has changed in scale and character, without any systematic attempt to understand or analyse the impact of this process and without any attempt to win consent amongst the public.
There appears to be an absolutist conviction that everything public is bad and that all private provision is automatically good.
Government should apply the Public Services Social Value Act in a meaningful way. The truth is there needs to be a detailed debate about the future of our public services in this climate of outsourcing.