William Eichler 31 May 2019

Three-quarters of councils move to insource services

Local authorities are rejecting the outsourcing of services in favour of delivering services in-house, a not-for-profit local government body has found.

A new study from the Association for Public Service Excellence (APSE) has revealed an increase in popularity for bringing services in-house.

Based on a 2017 survey which attracted 208 respondents, the report shows that 73% of councils indicated that they had started – or were in the process of starting – insourcing a service.

Around 45% reported having already completed the process.

Rebuilding Capacity: the case for insourcing services argues that insourcing has become a popular response to austerity because it gives councillors and service users more democratic control of service provision.

The report also says that the ‘promised efficiencies’ of outsourcing have failed to deliver, with contract management fees, variation fees on work and difficulties in specifying complex services leading to cost increases.

Around 64% of local authorities cited greater efficiency as their reason for turning to insourcing and near to 60% said they were doing so to improve quality.

The APSE report also argues that long-term contracts are ‘inflexible’ and that the idea of transferring risk to private providers is an illusion because councils are forced to intervene when contracts fail.

‘Outsourced contracts can often be inflexible; limiting innovation and ultimately costing more to deliver and manage; adding costs that the public purse can ill-afford,’ said the report author Mo Baines.

‘Insourcing is not a passive reaction to contract failure but is increasingly a pragmatic and proactive response by councils to deliver better quality services that add rather than extract value.’

APSE chief executive Paul O’Brien commented: ‘By taking back control of local services, insourcing can make it much easier for councils to adopt a community wealth building approach to service delivery; allowing for supply change management, jobs and skills and environmental endeavours.

‘As austerity continues to bite, this report has found that insourcing has helped many councils across the UK lock wealth into their local communities and drive prosperity.’

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