§ Mr. RooneyTo ask the Secretary of State for Social Security what is the outcome of her review of the outsourcing projects initiated by the previous Government. [12323]
§ Mr. Gordon MarsdenTo ask the Secretary of State for Social Security (1) what criteria she has adopted in her considerations of transferring the ownership and management of her Department's property estate to the private sector. [11880]
(2) what assessment she has made of the employment implications of transferring the ownership and management of the Department's property estate to the private sector; [11926]
(3) what plans she has for transfer of the ownership and management of her Department's property estate to the private sector; and if she will make a statement. [11877]
§ Ms HarmanI can today announce how we intend to proceed on a number of projects designed to involve the private sector in the delivery of social security. The decisions we have taken on these projects, which were inherited from the previous Administration, are in support of our commitment to modernise the delivery of social security to make it simpler, better and more efficient.
The manifesto made it clear that:
this would be a government of ideas and ideals but not of outdated ideology, what counts is what works;it would reject the dogmatic view that services must be privatised to be of high quality, but equally we see no reason why a service should be delivered directly if more efficient means are available;We have reviewed the projects inherited against:
our objectives for modernising the social security system;our commitment to work within the announced spending totals for the first two years of Government;our aim of getting best value for public money and of reducing the burden on taxpayers;the scope to apply private sector expertise, discipline and economies of scale in procuring public services and the ability to secure increased investment from the private sector;the need for continuing flexibility for government to make future changes to services;the opportunities for improving the quality of service for customers; andthe implications for staff.We believe that there has been evidence in past privatisation of:
Cost cutting at the expense of concern for quality. In support of our clear commitment to a quality social security service we will establish a minimum quality of service threshold against which we will assess all bids from the private sector. If a supplier fails to reach this threshold, we will not expect to award them a contract no matter how low their price;592WInsufficient priority to managing conformance to quality of service standards during the contract period. We will tackle this by strengthening the contract monitoring regime to include a stronger assessment of suppliers' performance on service quality. We will also require greater evaluation and feedback on performance against the new quality standards;Insufficient attention to the concerns of staff. We have made clear our commitment to take account of the needs of staff in considering the involvement of the private sector. We will therefore place greater emphasis on management of people when evaluating contracts; we will carefully evaluate suppliers' management of past staff transfers; and we will issue new guidance to potential and current suppliers, making clear what we believe to be good employment practice;The conclusions we have reached on the individual projects are as follows: Estates and accommodation services (PRIME)
We propose to proceed with PRIME—private sector resource initiative for management of the estate—which will transfer the ownership and management of the DSS estate to the private sector. The project will bring specialist private sector expertise to the management of the estate, delivering reduced operating costs, increased flexibility to respond to the changing patterns of service delivery, and scope for additional investment in property improvements. The property transfer will enable us to secure full value for the large DSS estate and to share in gains from further property development, while retaining departmental control on the location of outlets.
As well as the PRIME project, we also propose to explore whether further private sector involvement could improve the delivery of associated office support services, mainly in the Benefits Agency. High-quality service to customers requires effective support to staff in services such as typing and reprographics. These services are currently delivered through a patchwork of public and private sector teams as a result of previous market tests. The current approach does not guarantee quality or efficiency and has not been flexible to changes in service delivery. The PRIME contract requires some reorganisation of office service arrangements and provides an opportunity to reorganise on more efficient lines. We now propose to start the process of testing what the in-house teams could do, under a more effective contracts regime, and what the private sector could offer. Before taking final decisions, we will ensure that any transfer to the private sector meets our new strengthened criteria on quality of service, evaluation of performance and concern for the staff issues.
Child benefit centre (PROSPECT)
PROSPECT was established by the previous Government to outsource child benefit and guardian allowance operations in Washington. The previous Government's proposals were driven by dogma and we will not proceed with them. We wish instead to see a proper examination of options other than full scale outsourcing.
There is a need to improve the quality of service at the child benefit centre, and we have asked officials to prepare an alternative approach based on our principles for a modern service. Options for involving the private sector will be considered in this context.
593WBenefits agency medical services
The IMPACT 97 project was established to transfer the delivery of Benefits Agency medical services—BAMS—to the private sector. The bulk of doctors who provide the medical advice and conduct medical examinations in support of benefit claims are independent contractors, not employed by the Department. The future of BAMS has been under discussion for several years now; the majority of non-medical support staff involved have chosen to transfer to an external company if the project goes ahead, and staff want an end to the uncertainty. There have also been extensive negotiations with contractors who are aware that a final announcement is imminent.
We have decided to proceed with this project, involving the private sector to bring enhanced management expertise to BAMS, with investment in new technology, delivering reduced running costs and service improvements. As a result of the outsourcing, we expect to see an improved quality of service to customers, covering areas such as the arrangements for making appointments for examinations, the process for delivering medical advice on benefit claims and the quality of the accommodation in medical examination centres.
We will now proceed to invite final bids from the contractors shortlisted. The final decision on award of contracts will feature further qualitative evaluation of potential suppliers' management capability for provision of the service and an evaluation of the arrangements for the transfer of staff affected.
BA area director partnerships (ADAPT)
The ADAPT project was established to deliver a two-phase approach to involvement of the private sector. The first phase entails a period of partnership between three private sector consortia and three BA area directorates which will explore, without payment from the taxpayer, whether external input can help our objectives to modernise the delivery of social security. The approach fits well with this Government's approach to public-private partnerships. It enables us to bring in external expertise to identify new ways of working and to test what the partners have to offer without commitment to any particular outcome. We have decided that the project should continue and the three partners will be announced shortly. If the first phase produces effective proposals for improving service delivery, we may proceed to a second stage and award contracts for delivery of services.
Contributions Agency competitive benchmarking
In addition to the series of outsourcing projects, we have also reviewed the project within the Contributions Agency to benchmark services against the private sector. The CA benchmarking programme assesses the scope to apply private sector expertise, discipline and economies of scale in procuring public services. The ongoing programme has so far tested the quality and scope for improvement of three areas of the Contributions Agency operations—international services, deferment of national insurance contributions, and insolvency services.
This benchmarking programme meets our criteria, adopting a non-dogmatic approach of judging things by what works; avoiding a single presumption that the 594W private or the public sector is always the solution and assessing the best way forward against the scope for improvement by existing staff.
We have decided that Contributions Agency staff should continue to manage international services and deferment, bringing in improvements in service through in-house efficiency measures. On insolvency services, which handle national insurance debts of insolvent companies and bankrupt individuals, we have concluded that we should begin the testing of offers from external suppliers, applying our strengthened principles for involvement of the private sector. The early indications from the benchmarking programme confirm that there may be gains to be made from testing our service against the best in the private sector. We have decided that the competitive benchmarking process in the Contributions Agency should continue, extending to other areas of service.
Stand-alone support IT applications (SASA)
The Department has a major programme of IT change and we have decided that it should concentrate its expertise on the development and maintenance of key strategic mainframe systems. The development and management of stand-alone systems will be more effectively supported in the private sector, which has greater expertise in this area and will be able to deliver a better quality service at reduced costs. We have therefore decided to proceed with the transfer to the private sector of the development, support and maintenance of the Department's non-strategic, stand-alone, business support computer systems—SASA. The contract will cover around 740 systems ranging from those on a single PC to networked applications running up to 200 PCs, using a diverse range of software packages.
Conclusion
These decisions on the involvement of the private sector will help to deliver a modernised social security service. Where our modernisation strategy entails involvement of the private sector in the future, we will apply the criteria we have set out for the review of outsourcing, asking of every project, "Does it work? Is it fair—to customers, taxpayers and staff?".
A separate announcement will be made in respect of services in Northern Ireland. Further details on the individual projects will be announced in the very near future.