[Originally posted on Liberal Democrat Voice, 08/05/11]

The reports this week were that the Government is planning to scale back its proposals for outsourcing public services. A significant policy shift means that the delayed Open Public Services White paper will not feature proposals for “wholesale outsourcing” to the for-profit private sector when it finally emerges in a few weeks time.

Notes drawn up by the CBI following a meeting with Cabinet Office Minister Francis Maude, leaked to the BBC, suggest that the Government remains committed to “transforming services”. But the White Paper will focus on moving services from the public sector to charities, social enterprises, and employee-owned organisations. Mutual organisations could be created by mutualising existing government service providers. For-profit private sector organisations are not being excluded entirely. They can be involved in joint ventures with mutual or voluntary sector providers.

This represents a marked change of tone from the Green Paper published last November and speeches and press briefing earlier in the year. Private enterprises were then placed alongside social enterprises and voluntary and community organisations as potential alternative service providers. And the strong sense was that it was private providers that were going to drive costs down and save the Government money. This week’s news has come as a surprise to the private outsourcing industry.

Does this reorientation represent an acceptance of criticisms of outsourcing? Critics have portrayed any move to switch services from public to private providers as being little to do with delivering genuine efficiency gains and more to do with extracting excessive profits, reducing service quality and degrading workers’ terms and conditions.

The answer appears to be “No”. The reason for the change of direction is apparently that wholesale outsourcing is considered politically “unpalatable”. The Government sees an unacceptably high political risk of being accused of naivety or allowing profiteering from erstwhile public services. I read that as saying not that the Government has decided privatisation is a bad idea but that it has realised it won’t get away with it. Perhaps it has been reflecting on developments in Suffolk.

On the other hand, the article suggests:

The change will also raise questions about whether the Conservatives are bowing to Liberal Democrat pressure to focus more on delivering public services locally rather than privately.

That statement seems a little odd in its juxtaposition of locally and privately, seeing as they aren’t mutually exclusive. But I think we know what it is driving at.

A significant impediment to genuine liberal democracy is the unchecked concentration of power, either economic or political. A risk the Government would have run if it fell further into the clutches of the multinational outsourcing industry is precisely that of concentrating economic power. This would place the Government in a relationship of dependency and at the behest of those economic interests. And these are processes that are difficult if not impossible to reverse once powerful interests become sufficiently entrenched (a point I have discussed further here). Move provision away from the public sector by all means. But do so in a way that seeks to sustain a pluralist society where control rests, as far as possible, locally.

We may never discover whether this is a case of a telling intervention on the part of the Liberal Democrats in government. It may be entirely a product of political calculation. Either way, it is a positive development from the perspective of sustaining a healthy liberal democracy.