UK government to protect companies with new outsourcing rules

The UK government will on Wednesday announce measures to reduce risks taken by private firms that provide public services, as it seeks to assist companies that have become increasingly wary of taking on new government business in the wake of Carillion's collapse last year.

An "outsourcing playbook" will outline guidelines for government departments to reduce risks to their private partners, with the UK government currently hiring companies to manage elements of public services such as healthcare, transport, schools and prisons.

The document will stipulate that responsibility for risks should "sit with the party best able to manage them" and that civil servants should not expect private companies to shoulder unlimited liabilities when things go wrong.

The new guidelines are intended to ensure improvements to public services, while also requiring public departments to speak-out when services would benefit from being managed in-house rather than with the assistance of the private sector.

On Wednesday, cabinet office minister Oliver Dowden will tell business leaders at the Confederation of British Industry that "a more considered approach to risk allocation will make us a smarter, more attractive client to do business with".

The UK government has been scrambling to address the issue of outsourcing since Carillion went belly-up last year, leaving creditors and pensioners facing steep losses, putting thousands of jobs at risk and thrusting unfinished government contracts into disarray.

Since Carillion's demise regular bidders in big government contracts such as Babcock, Capita, Serco, G4S, Mitie and Compass have faced increased share price pressure as the relationship between the government and its private partners faced scrutiny.