Government departments have been asked to examine the costs and benefits of contracting out all proposed new services.

The Cabinet made its decision in July.

It is mentioned in a progress report from the Department of Public Expenditure and Reform on savings and efficiencies from public service reform published today.

The report cites progress in cutting the public sector pay bill, e-government, legislative reform, performance measurement and implementation initiatives.

However, the Government is targeting a further €5.5bn in savings over the next three years.

The Government agreed in July that all proposed new services will include an appraisal of the relative merits of outsourcing to the private sector, particularly in health, education, justice and local government.

There will be a priority shortlist of potential services for outsourcing.

Dialogue has already commenced with businesses, although there is no reference to dialogue with unions who are thought likely to resist the move.

Howlin wants managers to embrace reforms

Minister for Public Expenditure and Reform Brendan Howlin has criticised some public service managers for failing to be sufficiently proactive in driving reform in the public service.

Mr Howlin said the Croke Park Agreement offered the public service an extraordinary opportunity to bring about transformative change and a lot of managers had embraced that.

However, he said others almost viewed it as an excuse not to be proactive.

Mr Howlin exhorted managers at every level to re-read the agreement and use it to its fullest to drive change.

The minister was also asked whether his Cabinet colleagues were being sufficiently proactive in supporting the agreement.

He said his Cabinet colleagues were fully engaged, but that no minister could micromanage right down to complex delivery systems.

Mr Howlin said it was incumbent on managers to engage with the change agenda.

Unions to resist outsourcing moves

SIPTU health division organiser Paul Bell has pledged to resist moves to outsource jobs of his members in the public service.

Mr Bell said he had research to show that in many instances it was more cost-effective to hire direct employees, as contractors were paid higher rates.

He said the new entry rates for recruits, which had been cut by 10%, had increased the competitiveness of hiring direct labour.

However, Mr Bell said he feared that even with the lower rate, direct labour would not be recruited because of the moratorium on hiring in the public service.

He said his union would be calling for urgent negotiations with public service management.

Minister Howlin said that any proposal to outsource services will be evaluated fairly, openly and transparently.

Speaking on RTÉ’s News at One, Minister Howlin said there will be some areas where services will be best provided internally and some areas where it will be more cost-effective and efficient to outsource.

Minister for Social Protection Joan Burton has said that she expects Minister Howlin to bring a memorandum to Cabinet very shortly on public sector reform.

She said that when he does it will be examined in "very great detail".

Ms Burton said the Croke Park Agreement had delivered a huge amount of savings and reform in her department.