Accounts Services Agency (Hansard, 11 February 1994)

§ Mr. Eggar

PA Consulting Group has completed its review of the options for the future of the Accounts Services Agency. In parallel, the Department has reviewed the scope for its financial accounting services to be met from the private sector, concluding that all but a small number of the services currently supplied by the agency could be contracted out, with appropriate safeguards.

I have accepted PA's recommendations that: the proposal for a management-led employee buy-out should be declined, primarily because it was based on the assumption that competitive tendering was unnecessary. Competition is essential to ensure value for money; the agency should be moved into the private sector by competitive tendering of the services contract; and the contract should be offered with the expectation that the agency's existing staff and assets would be transferred to the successful bidder.

The agency needs the expertise, financial resources, and freedom of the private sector to be able to improve its efficiency and to take full advantage of market opportunities. Strategic contracting out has been chosen as the preferred route to achieve this because it focuses on the service contract to DTI, and it would enable more staff and assets to be transferred to the private sector. Substantially the same outcome would be achieved as if the alternative route of privatisation had been chosen, but at a lower cost and on a shorter time scale.

This course of action will allow the Department to obtain the best value for money in the provision of its financial accounting services. PA estimates that the saving could be 10 to 20 per cent. per annum. Up to 90 permanent staff could transfer to the contractor. This will ensure continuity in the supply of a core service to the Department. The agency will gain access to the expertise and financial resources of the private sector which will give the existing team the freedom to take advantage of market opportunities without the constraints of operating in the public sector. This will result in a better service to all its 506W customers and greater opportunities for its staff than would have been possible if the agency were to have remained in public sector ownership.