The case for local public ownership

Councils up and down the country are taking services in house, away from under-performing and over-expensive private contractors.

Public services aren't just national - they're local too. From bus services to energy suppliers, bin collection to ICT support, local councils provide a host of services to their communities. These services are vital, and they don't necessarily make a profit - like early learning centres and libraries. The collapse of Carillion has shown us that private companies cannot be trusted to run vital public services. 

We want councils to commit to ending local privatisation, for good. No-one should be making a profit from our vital public services.

Thankfully, in house services are working brilliantly! Have a look at the winners and nominees of 2017's Local Public Ownership Awards for some excellent examples of councils doing it for themselves.

Ending local privatisation makes sense. That's because bringing services in house means:

  1. Less risk
  2. Lower costs
  3. Better quality
  4. Public support and accountability
  5. More flexibility

 

1) Less risk

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Outsourcing is risky! The collapse of Carillion shows the huge risks of relying on private profit-making companies to run our public services.And they're not the only company to fail to deliver on their promises.

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.
 
Our #PrivatisationFails catalogues more of these disasters of privatisation.
 
2) Lower costs

Running a service in house is cheaper than outsourcing, because of the costs of managing the contract, and the dividends paid to shareholders.

CASE STUDY - SEVENOAKS  

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!

Paying shareholders isn't just wasteful - it's financially irresponsible if you're not making enough profit. Public service provider Carillion collapsed in January 2018, partly because it had continued to pay shareholders huge sums while racking up years of debt. 

3) Better quality 

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 pay for.  

Councils, on the other hand, often have experience of providing in house services and meeting people's needs. 
 
CASE STUDY - LIVERPOOL RECYCLING  
 
The new insourced waste collection service aims to save £1 million a year and meet a target of 55% recycling rate by 2020. City centre apartment blocks have been given recycling facilities for the first time as city councillors say this can now be a priority. 

 

4) Public support and accountability

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. 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

5) More flexibility

Every change to an outsourced service can mean spending money and time on changing the contract. Private providers often charge extortionate fees for providing out-of-contract services.

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. They 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 saved an estimated £1.8 million and was able to deploy staff immediately to respond to flooding.
 
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.

What now?

1 in 3 outsourcing contracts signed between 2000 and 2007 have now been brought back in house. The collapse of Carillion was a 'watershed moment' for privatisation. Help us empower and encourage councils to end local privatisation and bring services in house!