The Horizon scandal demonstrates how civil service under Labour needs to get to grips with business ­­

Under intense public and political scrutiny and renewed media attention, former Post Office CEO Paula Vennels has relinquished her CBE; Liberal Democrat leader Sir Ed Davey – under pressure as a former Postal Services Minister – is finding that sorry seems to be the hardest word, and Fujitsu, responsible for the flawed IT system, has suspended bids for government contracts (although it continues to retain lucrative work in several Whitehall departments). However, amidst these repercussions, the significant role of civil servants as both commissioners and overseers of outsourced services and contracts is in danger of being overlooked. We can’t allow this to happen.  

The Horizon scandal – now accepted as being one of the biggest miscarriages of justice in British legal history – is the latest example in a long and unhappy litany of public sector contract failures, which include the collapse of Carillion; the G4S and Serco electronic tagging scandal and the disastrous outsourcing of probation, a decision which subsequently had to be reversed. These failures wasted millions in taxpayers’ money, delivered substandard services, and eroded public trust.

Across my 16 years in the private sector, I have witnessed the aftermath of public sector contract failures. It is rarely a straightforward issue. Failures were often rooted in organisational culture and capabilities, a lack of effective governance or leadership oversight; or the inability to set clear expectations or provide transparent communication about project performance. Ultimately, responsibility for such shortcomings should also rest with those responsible for managing public sector procurement: civil servants.

Iain Anderson’s business relations review for the Labour Party has looked at the need to invest in civil service understanding of businesses. This observation is not new; Tony Blair’s Labour government encouraged collaboration between civil servants and business, fostering skills development and a better understanding of different working environments. Fast forward to 2014 Francis Maude was calling on the civil service to improve its commercial capability, when he was Cabinet Office Minister under the coalition government – although it seems his motive was squeezing public spending over civil service professional development.

Earlier this month the Business and Trade Select Committee held an evidence session in Parliament about the Horizon scandal. Chair of the Committee Liam Byrne MP opened by reflecting on the impact of ITV’s drama ‘Mr Bates vs The Post Office’.

When asked about the impact of the Post Office Horizon scandal on confidence within the government procurement process, Lord Arbuthnot, shared that during his time as Chair of the Defence Committee, he had seen some procurement contracts, which he described as a waste of public money. However, the Post Office Horizon scandal stands out because of the human impact on the sub-postmasters. Alan Bates refrained from commenting on future procurement decisions but shared he understood that Fujitsu is “entrenched” within defence and other systems in the country. He added that a significant factor for consideration is that the Post Office didn’t have the technical expertise to fully understand the Horizon system and relied on Fujitsu for advice. In his view, customers relying on their supplier to be their IT experts was a major problem and the Post Office should have sought a third party for advice, rather than rely on Fujitsu alone.

So why not take all public services back into government control – I hear you ask. Because simply bringing everything back under state control and running it directly isn’t the answer. Despite our current experiences with train operating companies, British Rail really wasn’t any better, and the civil servants didn’t stop the Horizon scandal. The private sector isn’t the enemy, but public-private understanding does need to be better.

For example, in 2019 the Institute for Government published a comprehensive report into outsourcing assessing its successes, failures, and learnings. Examples of areas where data indicates outsourcing has – by and large – worked are waste collection, cleaning, catering and maintenance. The report offers multiple recommendations, from enhancing commercial skills to ministerial accountability regarding suppliers. This report should be mandatory reading for any incoming government.

It is imperative that our politicians get this right. Around 80% of UK jobs are in the private sector. In a climate where there is not a lot of public money around, the public sector is going to need the private sector firing on all cylinders. And if relations between government and business are better, we will have a better chance of delivering that economic growth. As Lord Peter Mandelson emphasised at a business event organised by the City of London at Labour Party conference in Liverpool, the UK needs public-private collaboration to accelerate investment and drive growth.

Progress has been made with the Crown Commercial Service providing leadership and the establishment of the Commercial College for learning and qualifications. However, to truly bridge the gap, the government should go further by funding business degrees for civil servants. Institutions like the Institute for Government, The Strand Group at King’s College London, or the Guildhall School of Business and Law at the London Metropolitan University can offer valuable training in how government could better interact with the private sector.

Improving commercial capabilities alone is insufficient; additional steps, such as stronger independent oversight processes, are also essential. Too often governments have – as evidenced by the Institute for Government – outsourced services with no market of good suppliers or in pursuit of unrealistic cost savings. We need to address the disconnect between government and business culture. We need civil servants and ministers who ‘get’ business.

Implementing independent recurring audits of major outsourced public service contracts can prevent issues from festering until total project failure. Early, impartial project performance assessments and timely parliamentary scrutiny can detect problems sooner, enabling course correction.

As the inquiry into the Post Office scandal unfolds, the future government must accelerate a significant improvement in the commercial capability of the civil service – not to squeeze every penny out of public service delivery, but to build genuine partnerships and business understanding. Without decisive action, citizens will bear the brunt through disrupted services, wasted taxpayer money, and miscarriages of justice.

To read more from Tijs Broeke, see Fighting fraud – How a Labour government can make Britain safer on our streets and online.

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