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5 February 2021

Why Covid-19 should finally end the UK’s outsourcing mania

The success of the vaccine roll-out and the failure of Test and Trace is proof that politicians have put too much faith in private companies.   

By Jonn Elledge

Correlation is not causation, but all these things are nonetheless true: Dido Harding has a degree from Oxford University in politics, philosophy and economics; Dido Harding is a Tory peer, married to a Tory MP; under Dido Harding’s leadership, test and trace has been an utter disaster. One might argue that most of Dido Harding’s attempts to explain this failure have also been an utter disaster – earlier this week she managed to give the impression, surely wrong, that she had no idea viruses did anything so wacky as mutate. But that latter view is more subjective, and only tenuously connected to today’s topic, so I’ll leave it as a piece of parenthetical snark and move on.

There are many things that could plausibly explain why the government did not spend the first lockdown building a test and trace system that worked well enough to prevent the need for a second lockdown. The reluctance to close the borders. Rishi Sunak’s insistence on subsidising evenings out, and his reputation-wrecking failure to adequately fund people to self-isolate. (Harding also, bafflingly, seemed to suggest that giving people money to self-isolate could have consequences worse than not doing so and letting them wander off into the community, coughing all the while.) Then again, perhaps, it was just pure, unadulterated incompetence.

But a big reason for the government’s failure is surely the people it hired to implement the programme. Harding’s Harvard MBA was followed by stints with the management consultancy McKinsey, the holiday firm Thomas Cook, the professional services company Manpower and a number of retailers. She later became CEO of TalkTalk in 2010 where, on her watch, a cyber-attack cost the company £60m and 95,000 customers. Her sterling leadership through this crisis earned her the magnificent headline “TalkTalk boss Dido Harding’s utter ignorance is a lesson to us all” in Campaign magazine.

How well she performed in those roles, however, is not the issue. The point is there was nothing on her CV suggesting an interest or expertise in healthcare until October 2017, when the government appointed her chair of NHS Improvement, which oversees NHS trusts and other health service providers in England. Her skills and experience are in business and administration. She’s a generalist.

In this, she mirrors some of the companies to which NHS Test and Trace outsourced its work. Bits of the programme were performed by Public Health England, Randox Laboratories, the pharmacist Boots, and companies with specific expertise in logistics. But many went to a litany of more generalised services companies, whose names will be familiar to anyone who has watched the British state try to outsource itself over the past 20 years: Serco, Mitie, G4S, Deloitte. Sodexo, one of the companies tasked with running community testing centres, started out life as a French catering firm.

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These companies have taken on hundreds of government functions over the years and, if only through the law of large numbers, have performed quite well in some of them. But the reason they have thrived is less because of the quality of their services than because of their world-class abilities in negotiating profitable contracts. They too are generalists, whose success stems less from their sectoral expertise than from their general business and administrative skills.

But the ability to successfully manage a contract, and the ability to deliver the services the public actually want, are not always the same thing. In normal times, this lack of alignment is annoying. These are not normal times. 

There is another way. The vaccination research programme has been led by the Jenner Institute at Oxford University, a partnership between government, academia and the private sector. The roll-out has been led by medics and NHS managers. These are bodies that understand the sector they’re working in and measure their success through metrics other than contractual goals or shareholder value.

Again, correlation is not causation, but it’s nonetheless striking that this programme has been one of the most successful in the world. It’s certainly gone a whole lot better than Test and Trace.

For decades now there’s been a consensus, on parts of the left as well as the right, that a smaller government is a better one: that, whenever something can be outsourced, it should be. But that has often meant favouring private-sector generalists  who answer first and foremost to their shareholders  over publicly employed specialists, who have other, more publicly minded, motivations.

The events of the last year are a reminder that a contractual relationship is often a poor substitute for real expertise. Smaller is not always better. We have not had enough of experts.