Insourcing can deliver real benefits through better governance, better service integration, more sustainable operations, and ultimately higher quality service provision for end users.
The last ten years of austerity have provided much impetus for local authorities to outsource the provision of public services, often awarding contracts to those large companies who can provide goods and services at the lowest possible cost. However, this trend is now reversing, with councils across the country bringing services back in-house (insourcing); although this tends to be for pragmatic rather than ideological reasons.
In addition to the above, positive effects may include stronger local supply chains and enhanced local employment conditions. There is an upsurge in public sector insourcing and, increasingly, it is viewed as a pragmatic means to address service improvement, service efficiency and to recalibrate local services to local needs.
Case study – Liverpool City Council
The initial outsourcing of frontline services in Liverpool took place in 1991, based on the belief that this would facilitate “best value”. Several services were outsourced and re-tendered on a rolling basis over the following decade including refuse and recycling, street scene services, grounds maintenance and highways services, which included gully cleansing, highways maintenance and road-markings.
However, the outsourcing push led to staff redundancies, as well as changes in employee terms and conditions. Also, whilst contracts were outsourced on the belief that this would save the council money, these savings have failed to materialise in later years, with quality also deteriorating. Given this context, the Council decided to review its contracts and, in 2015, a decision was made to move refuse collection and street scene services back in house. Efficiency was cited as a key driver in the decision to insource along with service quality and better integration of the service. This move created an immediate saving of £1.4m with an additional target to save £2m over three years. Moreover, insourcing had a stabilising effect on workforce, lessening the reliance on agency or non-permanent staff. It also helped create 100 new jobs in the local area. This is helping to provide a positive message in the local economy and with the internal workforce: namely, that there is a viable alternative to unstable, ad-hoc employment.