Market Testing (Hansard, 4 November 1997)

§ Dr. David Clark

Following consultation with the Council of Civil Service Unions and the CBI, I have published "12 Guiding Principles in Using Market Testing and Contracting Out" for central Government Departments, including their agencies. I am grateful for the assistance of the Council of Civil Service Unions and the CBI. Wherever possible I have incorporated their suggestions.

The "12 Guiding Principles" have been very well received. They will also apply to private finance initiative projects that involve staff transfers.

The Government's "12 Guiding Principles" are as follows. 1. Our aim is to develop modernised, high quality, efficient, responsive, customer-focused central Government services. Our approach to this is pragmatic not dogmatic. 2. We will work in partnership with the private sector, extending the circle of those involved in public service. 3. We will use market testing and contracting out when in individual cases these can be shown to offer better value for money, that is: better quality services at optimal cost. Our approach to this is pragmatic not dogmatic. 4. Existing plans for market tests and contracting out, therefore, should proceed, unless the Minister is satisfied that in the circumstances of an individual case, better value for money can be achieved by other means, which will enable a Department to live within its running costs ceilings. This judgment should be based on a robust and objective comparison of the particular market test or contracting out exercise and the alternative means available. 5. Ministers remain accountable for services contracted out to the private sector. (That is the Carltona principle is replicated). 6. The energy, skill and commitment of staff are our best assets in modernising public services. They should be properly trained to carry out market testing, contracting out, benchmarking, restructuring and other means for achieving better value for money that is: better quality services at optimal cost. 95W 7. The concerns of those affected by change should be fully taken into account and properly addressed. 8. Where the relevant circumstances apply when work transfers, staff will be protected by the Transfer of Undertakings (Protection of Employment) Regulations (TUPE) and the consultation and information requirements of those regulations should be followed scrupulously. To avoid a successful claim for constructive unfair dismissal when staff transfer from Crown employment in circumstances to which TUPE applies, Departments should ensure that the new employers offer broadly comparable occupational pension provision or suitable compensation. 9. Full, effective and continuous communication is a key to successful improvement and change. It should begin as soon as a review which might lead to change is mooted and it should continue afterwards to share what has been achieved. It should happen even when there may be little to report. That way, staff, and their recognised trade union representatives, can be engaged throughout and rumours can be avoided. 10. There should also be full and open information and communication with Departments' customers and stakeholders. 11. Relations with the private sector need to rest on two-way openness and trust. Until the Government's new arrangements on freedom of information are in place, Departments should apply a liberal interpretation to the existing "Code of Practice on Access to Government Information" and its "Guidance on Interpretation." Unsuccessful bidders need to know why they were unsuccessful and how they could succeed next time. For the public, it is important to know how much central Government services cost, no matter who provides them. Commercial confidentiality must not be used as a cloak to deny the public's right to know. 12. Senior management in Departments must give leadership in all these areas and should encourage innovation and continuous improvement.

The guidance on market testing and contracting out, by central Government departments, is being up-dated to reflect these 12 guiding principles. The Council of Civil Service Unions and the CBI are being involved in this work.