Let’s democratise the insourcing revolution!

CLES welcomes the publication of the Labour Party’s report, Democratising Local Public Services. Its bold plan for a 21st century insourcing offers a powerful corrective to the last four decades of outsourcing, commercialisation and, more recently, unprecedented austerity. It appeals to all who have been working to combat the hollowing out, privatisation and undermining of our public services.

However, there are some changes in emphasis and direction required. CLES agrees that insourcing of local public services should be the default position, and that far too much outsourcing is delivered by those who seek profit and extract wealth at the expense of the public service. Nevertheless, we should be building a resurgence of a public service movement and offer a hand to the many organisations and individuals who, whilst not directly part of local government, are equally passionate about public values, public services and are at the forefront of a movement to develop new forms of democratic and citizen involvement. Democratic institutions such as cooperatives, and participatory democratic forms such as community businesses and social enterprises, offer different ways of realising social, economic and environmental value. These organisations are far removed from the rapacious greed of large outsourcers and as such should have some role in the democratisation, delivery and part ownership of service production.

“We should be building a resurgence of a public service movement and offer a hand to the many organisations and individuals who, whilst not directly part of local government, are equally passionate about public values, public services and are at the forefront of a movement to develop new forms of democratic and citizen involvement.”

So, whilst Labour’s paper provides an excellent correction to years of marketisation and privatisation, a deepening democratic and social revolution for our public services cannot solely begin and end at the town hall. Clearly, back door outsourcing – where small alternative forms of delivery are eventually acquired and gobbled up by big private outsourcers – must be guarded against. However, the democratisation of our local public services must make provision to include, where appropriate, other socially just forms of delivery. Consequently, the debate here is not solely public sector insourcing versus private sector outsourcing.

The problem

The report is a response to a deep problem, where our public services have fallen far. Indeed, the last 30 years of outsourcing practice has eviscerated our public services with private sector management techniques and values imported into much of the UK public sector. This has undermined democracy, as the unique public values which embody the relationship between the local and national state and citizens are now often indistinguishable from that of producers and consumers. In short, the relationship has been commercialised.

A reliance on private provision has been most dramatically illustrated by the collapse of outsourcing behemoths such as Carillion and G4S, who, in a race to the bottom on cost, have compromised the safety and dignity of people who rely on public services.

Labour’s report

As such, Labour is proposing a framework whereby whenever contracts between councils and contractors expire, or are terminated, there is a presumption that they will be insourced. To accommodate some forms of alternative delivery the report argues that a council must be able to satisfy a number of conditions. These include the presence of a sufficient existing supply of high-quality providers; a sufficient existing workforce and no evidence of greater cost efficiency if the service were to be provided inhouse. Only where a council satisfies itself that the conditions proposed have been met will it generally be permissible for a service to be outsourced. There may, the report argues, be other good reasons to maintain outsourcing arrangements which relate to preventing risk to service users or capacity barriers around insourcing.

Furthermore, the report argues that where outsourcing is to continue, changes are needed to plug the accountability gap for outsourced local public services. Action is urgently required to rebuild connections to local communities and to address the economic failings of outsourced provision. For example, the proposal notes that hours of work, and all other conditions, should be no less favourable under outsourcing than if the workers were employed by councils.

CLES’ view

“A new era for public services which are constructed by and for the people needs to slam the door on those who seek to profiteer and merely extract taxpayers money. However, it must also keep the door open for those who can stand alongside local councils in delivering deeper democracy and social justice.”

CLES broadly supports the idea that insourcing should be a council’s default position. However, we would seek to ensure that the following points also apply.

1. We must be mindful that localities, traditions and local economies are often very different. Some councils in the UK, in the south west for example, have forged close links with cooperatives and mutual enterprise on the understanding that they can add distinct social, economic and environmental value to the commissioning process. Decent terms and conditions notwithstanding, these arrangements ought to be respected and should continue.
2. Public service reform requires both the national and local government to work in harmony to ensure the delivery of excellent public services. Clearly national legislation must enshrine local inhouse public service provision as the default position. Nevertheless, within this the council must have clear flexibility to fit local circumstances and be allowed to make its own choices. Whilst this recognition is implicit in Labour’s proposal it needs to be more overtly stated.
3. In addition to outsourcing being contingent on certain stringent conditions being met, we also need to consider how we socialise the whole market. In this the existing Social Value Act is imperfect, often creating bureaucracy, and a series of tick-box exercises. Therefore, as part of or alongside any new public services act, there should be the introduction of a social license, not only for the provision of services, but also goods. Any provider who wished to operate in this market would be required to discharge clear social obligations.
4. Practically, given so much of our public estate and services have been outsourced, there is clearly a timeframe to when services can be brought back in house. This may relate to length of contract but also the financially prohibitive nature of bringing service fixed assets back in house (i.e. residential care homes). In this, there may need to be a use of cooperatives and other forms of public/cooperative partnerships as a staging post, before full local council repatriation.

In short, whilst we welcome Labour’s report, we must find a way to mobilise a social movement for decent, dignified public services where public values are fully restored. In this we must ensure that any future legislation and process, which finally slays the beast of extractive outsourcing, is sensitive to the plurality of democratic and citizen ownership models. A new era for public services which are constructed by and for the people needs to slam the door on those who seek to profiteer and merely extract taxpayers money. However, it must also keep the door open for those who can stand alongside local councils in delivering deeper democracy and social justice.