Contract Caterers and Public Sector Catering
| Published date | 01 January 1987 |
| DOI | https://doi.org/10.1108/eb055090 |
| Date | 01 January 1987 |
| Pages | 10-13 |
| Author | Clare Kelliher,Steve McKenna |
| Subject Matter | HR & organizational behaviour |
Contract Caterers
and Public
Sector Catering
by Clare Kelliher
School of Hotelkeeping and Catering,
Ealing College of Higher Education,
London, and
Steve McKenna
Research Officer, Department of
Employment
Introduction
This article derives from research being undertaken at Ealing
College of Higher Education which is seeking to assess the
employment implications of the contracting-out exercise in
public sector catering. The research is concentrating largely
on hospital catering and school meals. The attitudes of
contract catering companies to public sector catering are
examined in this article which also seeks to analyse the
implications of their involvement in the public sector for
industrial relations, employment and related issues. Contract
caterers' views were acquired by means of questionnaires
and interviews.
Government Policy and Contracting Out
There can be little doubt that the contracting-out exercise
in public sector catering (particularly at this stage in hospital
catering) is "part of an element within a broader central
Government strategy of reducing the increase in expenditure
in the NHS"[1]. Indeed, contracting out is part of an overall
economic strategy being pursued by central Government
to reduce public expenditure and to induce efficiency in the
provision of public services.
In comparison with local authority services, e.g. school
meals, the process of contracting out has a considerable
history in the health service. In terms of catering services
in the NHS, Government interest in competitive tendering
developed through the years 1981 to 1983,
until,
in
September 1983, the DHSS issued circular HC(83)18, the
central feature of which was the notion of "testing the cost"
of hospital support services and of "getting better value for
money out of available resources"[2]. As Kenneth Clarke,
then Health Services Minister, emphasised at a Study Day
of the Hospital Caterers Association in September 1983:
The Government policy was not to dogmatically privatise NHS
catering,
but rather to ensure that total cost-effectiveness of
the service be provided and that costs of the service be reduced
to the lowest level that will still enable the excellent standards
for which the NHS has become known to be maintained[3].
Since DHSS circular HC(83)18, there have been a series of
additions to the broad outlines of Government policy. In
November 1983, the DHSS issued DA(83)40 to regional and
district health authority administrators[4] which stated that
in "seeking tenders for services and awarding contracts,
health authorities should not specify rates of pay or
conditions of service for contractors' staff". Moreover, the
Government has adopted a new policy for catering "by
switching from individual contracts for hospitals to services
for entire health authorities".
The downward trend in the number of local authorities
offering tenders for services led the Government to produce,
in February 1985, the consultative document, "Competition
in the Provision of Local Authority Services". In that
document, the Department of the Environment argues that
"far too many authorities appear to be unwilling to open
services to competition". However, at present, there is no
legislative obligation on local authorities to privatise their
catering services, although this Government paper does
form the basis for further legislation.
The Response of Contract Caterers
The degree of interest in public sector catering contracts
among contract catering companies is varied and is
chequered with qualifications. It seems clear, however, that
major contract catering companies are very carefully
assessing the prospects for meaningful involvement in the
public sector. One major company is now continually
assessing,
analysing and forecasting developments in the
public sector. On the basis of its research, recommendations
are being made within the company as to the approach to
adopt in relation to public sector contracts. Other companies
are probably doing the same.
A number of contractors have made it apparent that they
are interested in becoming involved in what is a lucrative
market. One company is "committed to working in the NHS
catering sector and has both the operational and financial
resources necessary". Another company argues that it is
"fully in favour of the plans to contract out public service
catering as long as the intention is to obtain competitive
quotations and not to obtain bench marks for the existing
public service employees to attain". While yet another
contractor stated that "the contracting out of public sector
catering has this company's full support, provided it is done
in a sensible and logical way, the contracts are not onerous
on the contractor or authority concerned and that a fair
evaluation of tenders is agreed upon". As far as other
companies are concerned, one very major contractor has
recently renewed its interest in the public sector, while
another was specifically established to bid for hospital
domestic, laundry and catering services.
The Attitudes of Contract Caterers to
Contracting Out
The Involvement of Contractors in the Public
Sector
In the major public sector catering areas of school meals
and hospital catering, two companies are more heavily
involved than others. At the time of writing, the contractor
involved in school meals operated four out of five council
operations. In the London Borough of Merton, it operates
10 ER 9,1 • 1987
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