Outsourcing more waste management services could save £190m, according to a report from the Confederation of British Industry.
The study says that local authorities spend around £2.4bn a year on regular domestic waste and recycling collection and street cleaning, with just over half provided in-house with the rest outsourced to independent providers.
Based on an estimate of 15% savings from productivity improvements by using independent providers, cost savings of £190m could be achieved with a fully open waste services market, the Open Access report concludes.
The study, carried out by Oxford Economics, examines the provision of 20 services by local authorities, outlining how much is spent and what proportion is sourced internally and externally. It aims to identifying savings that will help councils to continue to provide quality services while dealing with an average 14% cut in budgets.
It concludes that overall, the government could save almost £23bn from opening up more public sector work to independent providers, based on average savings of 11% worth £2bn across the 20 services.
CBI director-general John Cridland said: “Our public services are under pressure as never before, with increasing customer demand, including from an ageing population, and an urgent need to manage costs. Carrying on regardless would be a recipe for disaster. The government needs to face this tough policy challenge head on. Most public services are still largely state monopolised and it’s time to open some of them to competition.”
He added: “We need the Government to set out which services it is prepared to open up to independent competition, and when.”
In response to the report’s findings, John Wilkinson, managing director of May Gurney Public Services, said that outsourcing public services to private and third sector providers could also deliver better quality services, by using specialist skills and maximising economies of scale within contracts.
He added: “However the greatest potential for government and local authorities to save money and deliver better services lies with more than just outsourcing contracts. Working with private and third sector experts to re-engineer and redesign services can have an even more transformational impact.”
May Gurney has sponsored a study from think tank New Local Government Network,which looks at how the goverment can use ‘creative commerciality’ to unlock the value of assets such as property, services and staff knowledge, rather than selling the assets.