Private sector contractors accept competition and its consequences

The revelation following the BBC Sunday Politics show (8 November, 2015) that the private sector operated as a “cartel” and that their involvement in waste collection did not increase competition is a curious inversion of the argument generally put forward for outsourcing waste collection, as opposed to keeping the service in-house.

The Government’s Open Public Services white paper of 2011 put the issue well. Taking a neutral ideological stance on which sectors should run public services, the idea was to ensure a “truly level playing field between the public, private and voluntary sectors” such that “competition is free and fair”. The argument was not whether the public or the private sector offered the best service, but rather it was about opening public services to competition so as to provide better value for money for the taxpayer. The white paper also stated that in the course of commissioning, commissioners should “seek and fully consider a minimum of three providers, from whichever sector, when they contract services; and transparently link payment to results”.

But under Best Value, Competition is but one of the four Cs for reviewing service performance, alongside Challenge, Compare and Consult. Competitive tendering is discretionary, so much so that according to the Audit Commission in their 2007 report Healthy Competition, “competition has been consistently the least applied of the four Cs in Best Value”. Procurement rules also allow contracts to be taken in-house without recourse to competitive tendering.

Irrespective of who ultimately provides the service, the taxpayer can only be certain of obtaining best value if the service provision is open to competition – without which, it is difficult to see how this objective can be achieved.

Private sector contractors accept competition – and its consequences – as part of the normal cut and thrust of business, whether it is between other private sector operators or between the private and public sector. Downgrading this particular element in the procurement of waste collection services does not do local communities any favours.