Outsourcing setbacks for Newcastle and Newham

18 Oct 01
Newcastle City Council's controversial plans to involve the private sector in service provision have suffered a double blow.

19 October 2001

A private meeting of the local authority's ruling Labour group on October 15 unanimously expressed a preference for in-house provision of services over privatisation. The resolution also outlined stringent criteria by which future private sector involvement will be judged.

Council leader Tony Flynn told Public Finance: 'We can't always provide the level of investment required and have to look at everything on its merits. But in-house provision has to be the starting point because it's the way we have traditionally delivered services.'

The authority has come under pressure from unions and Labour councillors over its plans to engage a strategic partner and create a joint venture company to run the city's IT and related services.

In the second setback, BT has been left as the sole company shortlisted for the IT contract. Rival CSL pulled out of its bid in the face of sustained opposition from Unison and other public sector unions to the transfer of council staff.

  • The London Borough of Newham has decided to end its housing benefits contract with CSL because of its failure to clear the backlog of claims.

    Newham's Cabinet committee decided on October 15 to bring the department back in-house. The seven-year contract, worth nearly £5m annually, has been a failure since it began in June 1999 and was severely criticised last year in a report from the Benefit Fraud Inspectorate.

    The authority has refused to reveal the extent of the backlog. But Michael Gavan, chair of Unison's Newham branch, told Public Finance that there were 17,000 outstanding claims at the start of this month and each one was taking three months to resolve.


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