Time to sharpen the thinking not the pencil

With the Public Accounts Committee warning central government to sharpen up on procurement and transparency, high profile failures at Serco hitting the headlines and authorities including Liverpool reviewing their private sector partnerships, public service outsourcing seems to have reached a crossroads.

The best private sector providers have brought benefits to local government and those that are in it for the long haul can no doubt cope with the criticism. But the veneer has inevitably worn off what seemed like some of the shiniest of deals as a result of the recession and budget cuts leaving authorities contractually bound into long term partnerships to the tune of multi-millions of pounds they can no longer afford.

The smarter end of the private sector will recognise that if they want longevity they need to be fully in tune with local government's agenda, which is about being as effective and efficient as possible, but is also about ensuring wider public value in terms of addressing issues such as youth unemployment, climate change, public health and housing demand and also supporting local businesses so they have some share of the £200bn public sector spend.

I suspect that whoever is elected in 2015 there is not going to be a flood of new money for local authorities so they need to consider how best to deliver within the existing dire financial situation. They need to ensure maximum value - not just in financial terms but in the widest possible sense. And this calls for a dramatic realignment of thinking on the part of their private sector providers. News of bad practice is dominating coverage of outsourcing at present, but the best in the market will hopefully recognise they need to both embrace transparency and align themselves more closely with the all too real needs of the communities councils serve.

Local government has sharpened up its procurement practices in recent years - more so than central government some might indeed argue. The report by Margaret Hodge and colleagues, among other evidence that private sector providers are far from perfect, can only serve to make councils all the more savvy. Played correctly, this could be a chance for councils to get more of what they want out of deals with the private sector. But this requires going beyond the hype and beyond the price – and ensuring true public value.