Outsourcing Stuff

A Hodgepodge of Outsourcing Jargons and What They Mean

A method used by public sector organisations, charities and private companies for gauging their performance by comparing it with the performance of other organisations, typically of a similar size. The government encourages public sector bodies to compare their score on various published performance indicators as way of improving public services. Many organisations are now members of so-called benchmarking clubs in which they compare published and unpublished performance information.

Best value
Regime that aims to continuously improve local government performance through a programme of reviews and inspections. Councils must examine their services according to four guiding principles. They must challenge how, why and by whom a service is provided; compare its performance with that of other authorities; consult service users; and use competition to get the best service available.

Compulsory competitive tendering (CCT)
Regime that forced councils and NHS authorities to let private sector companies bid to provide a range of local government services and non-clinical health services. Initially applied only to six blue-collar service areas, including cleaning staff and school meals. Later extended to take in a wider range of services, including some white-collar jobs. Superseded in 2000 for local government by best value.

Agreement created between two or more organisations, often to help deliver a service or set out a formal relationship, for example between the NHS and private healthcare companies, or between local and central government. The concordat signed between the health secretary, Alan Milburn, and the private healthcare industry in November 2000 enables the treatment of tens of thousands of NHS patients in private facilities.

Contracting out
The practice of outsourcing services once provided ‘in house’ by a council, NHS body or charity. For example, local authority social services departments “contract out” meals-on-wheels services to charities and commercial organisations, paying them for the service rather than carrying it out themselves. The contracting out of public services to private companies for profit is a controversial issue.

Direct labour organisation (DLO)
Part of a council that delivers services such as highways and building maintenance and construction. Created under compulsory competitive tendering in the early 1980s to create a split between the customer (the council) and the service provider (the DLO), which allowed the DLO to bid fairly for services alongside private sector companies.

Direct service organisation (DSO)
Provides council services such as catering, cleaning and refuse collection. Similar to direct labour organisations, but created later, under a fresh round of compulsory competitive tendering legislation in the late 1980s.

Enabling state
The enabling state is the phrase used to describe how responsibility for delivering public services traditionally provided by the state is passed to private or voluntary organisations (or “arms length” government agencies). Underpinning this is the idea that smaller, local and specialist providers are more effective and efficient at delivering publicly-funded services than large centralised bureaucracies (such as the NHS). Thus the prime minister, Tony Blair, in his speech to the Labour party conference in October 2002 said: “Just as mass production has departed from industry, so the monolithic provision of services has to depart from the public sector. People want an individual service for them. They want government under them not over them. They want government to empower them, not control them… Out goes the big state. In comes the enabling state.”

NHS franchising involves identifying and appointing a top management team to the “biggest challenges”, whether taking over failing trusts or key modernisation initiatives, or running strategic health authorities. The “franchise” bid for a top job will involve the team – which can be from the private, voluntary or public sector – producing a business plan and operational strategies and appointing its own top team.

Local improvement finance trust (NHS Lift)
NHS Lift is a private limited company set up by the NHS and private sector property developers under the public-private partnership initiative in order to fund, replace and refurbish primary care premises in England.

Awarding a contract to a private, public or voluntary sector organisation to supply a service previously run by a public sector body such as a council or hospital. See contracting out above.

Private finance initiative (PFI)
A controversial method of providing new public buildings and projects such as schools, hospitals, roads and homes by using private sector money up front that is later repaid with interest by the state. Under strict rules for the initiative, introduced in 1992, a private sector consortium designs, builds, finances the project – and then operates it for a period of at least 25 years. The consortium’s fees are paid from public money, with an element of that fee dependent on it meeting performance standards throughout that period. Also known as public private partnerships (PPPs).

The transfer of undertakings (protection of employment) regulations 1981, pronounced “too-pee”, which protect workers’ terms and conditions when the employer they work for changes. Usually relates to conditions of workers when their jobs are privatised or transferred to the private sector.

Two-tier workforce
Created often when a private company takes over the running of a public service. Workers previously employed in the public sector have their terms and conditions protected by law but new joiners currently have no such defence. An agreement in February 2003 between the government and unions seeks to abolish aspects of the two-tier service in local government by guaranteeing wages and conditions “no less favourable” than the public sector for new staff hired by contractors. But it does not apply to staff who have already been hired on lower wages, or to staff in the NHS or the civil service.

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