Thursday, 20 June 2013

Ceisteanna (7)

John Halligan


7. Deputy John Halligan asked the Minister for Public Expenditure and Reform if he intends, in the interests of efficient expenditure of public money, to conduct a study of the cost of outsourcing in the public sector as against the cost of direct employment in the public sector; and if he will make a statement on the matter. [29688/13]

Amharc ar fhreagra

Freagraí ó Béal (5 píosaí cainte) (Ceist ar Public)

The public service reform plan sets out a commitment to evaluate alternative models for the delivery of non-core services in a more cost effective and flexible approach, with a focus on customer service improvement. In July 2012, the Government agreed a range of actions aimed at achieving a focused and integrated approach to external service delivery of non-core processes with the objective of reducing costs and focusing staff resources on priority areas.

Public services vary in their suitability for outsourcing. Some are best provided by the private sector, some by the public service and others when shared between the two. Any study of the merits of outsourcing would have to consider each function carried out by every public body on a case by case basis.

For this reason, a rigorous appraisal process will be applied to any functions considered suitable for external delivery. It is expected that each such appraisal will evaluate the existing in-house service and the external delivery option, and compare both. As part of this evaluation, consideration will be given to whether the service can be retained in-house but with business process improvements. Any final decision to change how a service is delivered will take account of a number of factors, including overall cost, quality of service provided, effectiveness and the public interest.

I thank the Minister for his answer. I raised this issue with him on a number of occasions.

It would be useful to conduct an overall study of this. In the first year I got into the Dáil I asked about the relative cost of direct labour as against outsourcing to agencies, consultants or whatever. I submitted one question but got more than 50 answers - a considerable thick file spread over weeks. I would have to do the same again every year. It is difficult to get an overall picture of the value for money or otherwise from outsourcing.

However, the former Federated Union of Government Employees, FUGE, branch of IMPACT which deals with cleaners, porters, attendants, service officers, etc., has indicated to me that, for example, with the €2 million the Department of Social Protection spent on outsourcing cleaning work last year it could have directly employed 96 full-time cleaners, and that with the €1 million spent on private security which was outsourced instead of having directly employed service officers, the Department could have employed 70 service officers. This IMPACT branch contests that outsourcing in all Departments in its area covering such grades added up to approximately €16 million whereas the same number of staff could have been provided for €9 million - a difference of €6 million. In my own investigations, I have certainly found several examples. How representative these are is difficult to say for the reasons I mentioned but it looks as if it would be much cheaper to employ staff directly rather than outsource the work to agencies, consultants etc. Should we conduct a comprehensive overall study and analysis of this because we are looking for savings everywhere and workers would prefer, if they can make an argument that it provides value for money, for there to be directly employed secure employment rather than the more casual outsourced work which, obviously, is not as favourable to them?

I have an open mind on how we provide services. As I stated, the criteria are what provides the best service to the public on a cost-effective basis, complies with all legal requirements and is efficient. Sometimes that will be an in-house service where there are significant skills built over time. Sometimes it will be a bought-in service because there are large private companies which have skills developed that it would not make sense to replicate. For example, for years every hospital had its own laundry where the unit cost of doing laundry in some of the hospitals was phenomenal whereas there are now very large industrial-scale laundries which are merely much more efficient. It makes no sense to replicate scores of laundries as opposed to using one large commercial one. There are horses for courses.

Deputy Boyd Barrett spoke about individual skill sets like cleaners or security staff. In many instances, it makes sense, because of the uniqueness or isolation of a place, to have full-time staff members do that sort of work. On other occasions, if they are in a city, one has competent firms doing it. As long as there is robust and transparent evaluation, we can make rational decisions. In my Department where we do the evaluations, we would be open to test any analysis done by a trade union or anybody else.

I welcome the Minister's openness to looking at this. On the specific examples I cited, I hope he would engage with the former FUGE branch of IMPACT. They have compiled an analysis, the facts of which I have given the Minister, in which they maintain the Department could get the same services for considerably less money. Obviously, they would favour full-time staff employed in these low-paid jobs. Often it is thought that IMPACT represents higher-paid workers. In fact, IMPACT represents a substantial number of low-paid workers in the Government service.

I agree with the Minister that there must be robust scrutiny of these matters. One cannot generalise too much, but it has been acknowledged that we had a problem, for example, with hygiene in many hospitals. A case at least has been made to me - it must be looked into - that part of the decline in hygiene standards in hospitals is because there are outside contractors which do not have the same allegiance to the hospital. They are in and out and the company or agency picks up its money. They get the job done in the minimum time possible, whereas directly employed staff would have a real feeling, passion, loyalty for and an association with the hospital on a fixed base. There is a case for looking at whether there is a connection between those two issues because we are seeing a much greater degree of outsourcing of such services in the health service. For example, is there a connection with MRSA?

I agree that the issue of quality is important. It is a matter not simply of the cost, but of the quality and product one gets.

I have other explanations as to why the hygiene standards might not be as robust as they used to be. From my experience in Wexford General Hospital when it was run by a matron of the St. John of God Order, I shall simply say that a tight ship was run and you could eat your dinner off the floor. That is the truth of it. That level of oversight no longer exists. Maybe it is not possible or there should not be the level of oversight that existed in those days, but certainly a tight ship was run. Maybe that is an explanation of it.

In terms of the general issue Deputy Boyd Barrett raises, it is important that we conduct robust analysis of the outcome. I am conscious that we constantly measure the inputs into education and other areas, but we seldom measure the outputs. With the new budgeting system, we try to establish what we get for the inputs. We all must ask constantly because our response to every issue is to seek more resources as opposed to asking what we are getting for the resources we are putting in.