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23 October 2019
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LABOUR PLANS AN ‘INSOURCING REVOLUTION'

The Labour Party has published what it describes as a “blueprint for a radical overhaul of local government”.
Winter of discontent
© Getty

05 August 2019 | Martin Read & Herpreet Kaur Grewal


Democratising Local Public Services – a Plan for Twenty-First Century Outsourcing was launched last month by Andrew Gwynne, the shadow secretary for communities and local government.

It proposes new legislation for a local public services bill based on an ‘insourcing framework’ that would see councils obliged to return services to in-house provision unless there were particular complexities involved in doing so.

Labour’s deputy leader John McDonnell says the change in law would take place during the first term of a Labour government.

“We have seen multiple failures at the local government level, where contracts have [since] been brought back in-house,” said McDonnell.

“Corporate services in South Derbyshire, grass-cutting services in Aberdeen, technical services in Sefton, parking services in Worthing … Across all these services areas, across the country, we see the same patterns: Cost overruns. Disappointed expectations. Targets missed. To put it simply, outsourcing is a broken business model.”

The CBI’s chief UK policy director Matthew Fell called the idea “devoid of evidence yet dripping in dogma”.

Vinci Facilities’ commercial director Rory Murphy said that McDonnell’s statement “chimes with the ongoing trend to review how local authorities and other public bodies manage their services”.

He added: “We firmly believe the outsourcing model works. If Labour are elected and introduced changes we would have to adapt – like any responsible business – shifting our focus to those sectors where our expertise is both trusted and recognised to add value.” 

Murphy rejected the idea that the outsourcing model is ripping off the public sector.

“If contracts are agreed upon and managed in partnership, the emphasis is always going to be on positive outcomes for the public. So the outsourcing model has the ability to deliver both community benefits and social value.”

IWFM CEO Linda Hausmanis said: “This is not about a stark choice between insourced and outsourced services. IWFM wants to see a model of service delivery driven by quality and value and not by cost alone. Outsourcing, when done according to best practice, is a valid and valued service delivery model.”

Hausmanis also said IWFM would like “to encourage them [Labour] to expand the Social Value Act so that government commissioners – central or local – do not just use social value for a wider scope of contracts but are also measured against concrete criteria when evaluating the contract”. 

Labour’s report follows a series of recent pronouncements in favour of returning public services to in-house provision, including one by the Association for Public Service Excellence (APSE), which appeared in Facilitate last month. In it, APSE suggested insourcing was “a means for councils to organise activities to support income generation and commercial activities” and “a process of innovation in its own right”. 

LABOUR’S OBJECTIONS TO PUBLIC SECTOR OUTSOURCING

  • There is ‘an opacity of information about outsourcers’ financial returns’ 
  • Contract law has proved an ‘inadequate mechanism’ to hold contractors to account
  • Councils can suffer a ‘loss of faith’ from being associated with contractors’ failures
  • Outsourcing has led to the incurring of ‘significant costs’ through tendering processes that have been ‘artificially deflated’, with promised cost-cutting ‘illusory’
  • Contractors ‘are not subject to full legal accountability’

PUBLIC SECTOR OUTSOURCING: A 40-YEAR HISTORY

1979

Margaret Thatcher becomes prime minister in the spring following the so-called ‘Winter of Discontent’, during which public services were hit by mass strike action. It is widely held that this crisis in local authority service provision led to the Conservatives’ victory.

1980

The Planning and Land Act 1980 introduces compulsory competitive tendering for construction and maintenance work.

1988

The Local Government Act introduces CCT for cleaning, catering, grounds maintenance and other council services.

1994

The Deregulation and Contracting Out Act frees up access from private contractors to council work.

1999

Under a Labour administration, The Local Government Act introduces the idea of ‘Best Value’ to local authority service procurement.

2012

Public Services (Social Value) Act leads to current initiatives to consider the wider social impact of privately provided public services.



Emma Potter