Insource public services

Ending outsourcing can help government and local authorities reduce costs and improve services.

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The poor performance, and sometimes outright failure, of many outsourcing contracts and private finance initiatives has led public service providers to look again at contracting out. It’s time for reform and a new progressive settlement on public services: a new deal for improving our public services which is honest, open, fully costed and not predisposed towards contracting out.

A rethink of outsourcing and PFI is urgently needed, including:

• Commission a root-and-branch review, examining where outsourcing has worked and why, the ​‘whole life’ costs of contracts, effects on staff and service quality and other social and economic impacts. 
• The government should compile a Domesday Book listing all significant contracts and create a central clearinghouse for evaluating the performance of companies across multiple contracts. 
• A new agency is needed (absorbing the Crown Commercial Service) to regulate, share best practice and evaluate outsourcing across Whitehall and the NHS with parallel arrangements for local government and the devolved administrations. Agencies should be given powers to examine company ownership and internal transfers. 
• With in-house provision as the default option for public services, set out new criteria for ​“make or buy” decisions by public bodies, writing into contracts Freedom of Information requirements, involvement of public and staff, transparent reporting of profit, labour and living wage clauses, union recognition, compliance with fair tax and boardroom remuneration. These criteria might give preference to charities and social enterprise if services are contracted out. 

Unwinding private involvement in public services will be difficult: repayment costs under PFI deals are still rising and exiting contracts could be costly – and require significant expansion of public service capacity. This is already starting to happen: council leaders and politicians in the devolved administrations, for example, are already revising and reforming delivery by contract, showing what can be done. The decisions ahead are not technical. They are political, turning on a wider assessment of the public interest than has been common during the era of outsourcing.

Tags Democratic ownership Active state