Let’s build a new social contract to link the public and private sectors

For some, the idea that the private sector should profit from the provision of public services is an uncomfortable one. This has been exacerbated in recent years by the recession and a number of corporate issues, which have led to a widespread loss of confidence in companies’ ability to act as responsible corporate citizens.

That the two sectors need each other is beyond doubt. With government budgets under pressure, effective collaboration between the state and industry to deliver public services and infrastructure projects more efficiently is increasingly important.

Similarly, the private sector needs a commitment to spending to ensure that it can continue to expand.

This commercial arrangement should not be viewed with disdain, as it has a critical role to play in returning the UK to growth. The construction industry, for instance, can have a multiplying effect on public expenditure and typically generates around £3 of economic activity for every £1 that is invested. This helps to create more jobs, resulting in better livelihoods.

Furthermore, the infrastructure that construction and support services companies help to build and manage is critical to keeping the UK competitive in the future.

Interserve employs 50,000 people and turns over £2bn per year and we recognise that how we source labour and materials has a meaningful impact on domestic growth and the lives of people from our local communities.

To ensure this is positive, we introduce key performance indicators for using local contractors into many of our contracts and estimate that more than 60pc of our suppliers for UK construction operations are SMEs.

The use of local supply chains in government contracts not only supports domestic economic development, but can have indirect positive social and financial outcomes, which we strive for.

It can provide the impetus for employers to develop their local talent pool through training and skills development – a mutually beneficial arrangement. We have seen many times that providing vocational training to young people in our communities can not only foster entrepreneurialism and improve future employment prospects, but can also increase productivity and reduce employee turnover.

Too often, however, the perception exists that public services provided by companies that generate a profit cannot be in the interests of society.

This criticism and uncertainty around the relationship between the two sectors is hampering our ability to work together effectively and threatens future public-private partnerships, which is unhelpful for everyone.

If we hope to keep operating in the public space, it will be incumbent on the private sector to educate our stakeholders about the benefits we can bring and restore faith in our ability to develop public services in the public interest. In short, the private sector needs to develop a new “social contract” with government and with the communities in which we operate.

What would this “social contract” actually mean in practice? The commitments that outsourcers can make are wide and varied but they have to be transparent and measurable and based on clear targets.

These targets should include financial measures, but should also incorporate wider social factors.

We are proposing a commitment of reinvesting 3pc of our profits into the communities in which we operate, as well as a number of initiatives to improve the skills of the people living there.

Specifically, we are establishing an ambitious target to create 500 apprenticeships over the next five years, and to providing 1,000 school placements every year.

We are also committing to providing healthier meal choices in hospitals, schools and prisons and to exploring the inclusion of “'wellbeing” targets in business contracts.

These are just some examples of the commitments that can be made and it is important that companies taking the initiative today will have earned the right to be successful in the future.

The Government is responding to public concerns and has already started to incorporate sustainability targets into public tenders. This is a practice we feel should be expanded and of which we are already seeing more.

Leeds City Council, for instance, recently put out a brief for the construction of several primary schools which included a specific carbon-reduction target. Interserve was able to help the council meet its objectives by building facilities which rely on high standards of thermal insulation and airtightness to conserve heat.

This construction technique means the schools will use up to 80pc less energy than a conventionally built facility, once completed. The design will further help to reduce overall carbon emissions by 60pc without the need for a renewable energy source.

We must accept that there will be greater scrutiny and wider obligations where public money is involved, but such examples help to demonstrate that public outsourcing can do more than merely deliver a cost saving.

Commercial performance will always be important, of course, but by demonstrably increasing our contribution to society, we can rebuild trust, strengthen our licence to operate, and deliver superior and sustained financial performance.

Adrian Ringrose is chief executive officer of Interserve Plc