Leaked note suggests private companies may have to partner with non-profit firms to win outsourced work

The government has scaled back its plans to outsource many state services and could require private companies to form a joint venture with a non-profit body in order to take them on, according to a leaked note.

The note, obtained by the BBC, details a meeting in recent weeks between Cabinet Office Minister Francis Maude and the director general of the CBI, John Cridland.  

It said the government would not fully outsource services because it feared a public backlash over profiteering by private companies.

“The government was not prepared to run the political risk of fully transferring services to the private sector with the result that they could be accused of being naive or allowing excess profit making by private sector firms,” it said.

It also suggests that outsourcing firms will have to partner with charities or new public sector mutual organisations if they want to win outsourcing work.

“The government is very open to ideas for services currently provided within the public sector to be delivered under a private/government joint venture. The government is committed to new models of partnership, and private sector organisations need to offer joint ventures - joint ventures between a new mutualised public sector organisation and a ’for profit’ organisation would be very attractive,” it said.

However a Cabinet Office spokesperson later told Building that it would “not [be] necessary” for private firms to enter into JVs with other non-profit bodies.

Details of the final policy will be revealed in the Open Public Services White Paper, expected to be released later this month.

On 20 February, David Cameron wrote in the Daily Telegraph that the government would create a new presumption that all “public services should be open to a range of providers competing to offer a better service”.

Companies including Capita and Serco are hoping to capitalise on a wave of outsourcing by cash-strapped public bodies.

Last week, Capita Symonds revealed that it was angling to become a strategic property manager for the Ministry of Defence.

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