5 reasons why your council should insource services
Bringing services into local public ownership makes sense. That's because insourcing means
Running a service in house is cheaper than outsourcing! Insourcing means councils can stop wasting money on the costs of managing the contract, and the dividends paid to shareholders.
Councils have been squeezed by austerity policies since 2010 - the hardest hit councils have had their budgets slashed by a third since 2010 and are struggling to stay afloat.
In January 2018, it was announced that public service provider, Carillion had collapsed after share prices dropped dramatically. It turned out that Carillion had been racking up debt for years, but continued to pay shareholders huge sums.
Towards the end of January 2018, public service provider Capita also saw it's share price half in one day, with more than £1bn being wiped off the stock market value. This came after news that the company finances were not doing well.
Insourcing gives councils more control over their resources and budgets, more flexibility to deliver the services that people need, and more security in case of funding cuts from central government.
This Conservative-run district council doesn't outsource at all. Because of the savings and improved efficiency of joined-up in house council services, it has become fully financially self-sufficient. A great example of the benefits of in house services!
The most common reason councils give for insourcing is the poor performance of private providers - they just can’t be trusted to provide a good quality service!
Private providers can underestimate how much it will cost them to provide a service, and end up cutting back on quality after the contract has been signed. We don’t get what we paid for.
Councils, on the other hand, often have experience of providing in house services and meeting people's needs.
Also, insourcing often means improvements for workers rights and employment conditions like the living wage, holidays, sick pay and pensions.
The new insourced waste collection service aims to save £1 million a year and meet a target of 55% recycling rate by 2020. For example, city centre apartment blocks have been given recycling facilities for the first time as city councillors say this can now be a priority.
Sometimes councils need to change or add services - for example, starting to collect food waste as well as normal rubbish and recycling. With outsourcing, every change to the service can mean spending money and time on changing the contract. Private providers often charge extortionate fees for providing out-of-contract services.
When council services are insourced, they can be integrated with other services provided by the same council. Resources and staff can be transferred between services as and when they are needed.
This gives the council and the service crucial flexibility to react to the changing needs of their communities.
Case study - flooding in Cumbria
Cumbria County Council says bringing its services back in house made it easier to handle the unprecedented floods of December 2015. This ended a 10 year contract with Capita and a seven year contract with Amey who were demanding large sums for extra services. Since then, the council has balanced its budget, saving an estimated £1.8 million and was able to deploy staff immediately to respond to flooding.
Outsourcing is risky! Our #PrivatisationFails resource shows the huge risks of privatisation. Private companies have less incentive to do a good job for everyone. They are more likely to drop ‘difficult’ service users who cost more, or to just abandon the service entirely if they can't make a profit.
The outcome of financial uncertainty and the drop in share price for both Carillion and Capita drastically affected the services that these companies held contracts for. Delivering shareholder sums is the first priority for these companies which directly effects the quality of our services and the security of peoples jobs.
An insourced service run by a well-equipped council can provide a consistently good service to every member of the community. They don’t have to rely on private companies to deliver an essential service.
Case study - Somerset ICT Services
IBM, as a partner in the Southwest One public private ICT partnership, were set a target of saving £10 million, but failed to achieve even a third of this. The system was costly, complex and ineffective. IBM then tried to sue Somerset council for £25 million for missed payments, before their contract was terminated completely.
Services run in house are overwhelmingly more accountable to their users. Local councils are democratic organisations - we elect councillors to serve, and they are obliged to answer to us at town hall meetings.
If a local council runs public services, we have more opportunity to use our democratic power to influence decisions. We can have more of a say about what our communities look like.
Plus, insourcing is POPULAR!
- 61% of the public think that local and central government should try to run services in-house first – before outsourcing
- 64% of us distrust outsourcing companies
Sounds good to us! Why can’t all council services be run in house?
1 in 3 outsourcing contracts signed between 2000 and 2007 have now been brought back in house. Read below for more recent examples. We celebrated some of the best examples of insourced council services in our Local Public Ownership Awards.