Councils show loss of appetite for outsourcing, says survey

12 Oct 18

Local government’s desire to outsource public services is in decline, a think-tank study has shown.

A survey by the New Local Government Network found 39% of council chiefs intended to outsource less over the next two years, compared to 15% who were looking to outsource more.

The think-tank’s report From Transactions to Changemaking: Rethinking partnerships between the public and private sectors’ said that “dwindling confidence” in outsourcing suggests councils were seeking control over service delivery arrangements, driven by funding and demand pressures.

One hundred and ninety one council leaders, chief executives and mayors responded to the survey, released on Wednesday, which found that 46% of councils expected no change in the amount of services they outsource.

NLGN said that high profile failures like the collapse of Carillion have “dented public confidence in partnership arrangements” but despite this, government departmental spend on outsourcing continues to grow.

But councils are exploring new, innovative forms of partnerships such as trading companies and joint ventures, according to the think-tank.

NLGN’s study claimed that reform is needed in how partnerships work in practice to make sure they are less “transactional and more geared towards delivering genuine social impact for public spending.”

To achieve this the report suggested the creation of an accountability code of conduct and a social responsibility accreditation system for all contracts over £200,000 and open book accounting on contracts over £1m.

NLGN also recommended scrapping Social Value - as defined in the Social Value Act - and replacing it with a stronger measure of social impact such as allowing public sector commissioning bodies to enforce payment of living wage through all contracts.

The think-tank proposed the initiation of a government-backed review into improving transparency over private sector contracts for public services, to ensure data on cost, quality and performance is openly available.

The report claimed that political parties have “pigeon-holed themselves into competing cheerleaders for in-house or outsourced solutions” but that this is too “simplistic” a debate.

NLGN director Adam Lent said: “Our research finds that it is not a question of more or fewer partnerships, but establishing better ones.

“With new measures to boost oversight, make contract performance more transparent and to enhance the social return on public investment, partnerships will be fit for purpose for today’s challenges.”

Read NLGN Jessica Studdert’s blog for PF on the themes of the report.

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