Labour’s plan for insourcing: A plan for councils, not communities

Last week the Labour party released a plan to weigh the scales in favour of insourcing public services. The plan sets out how they would make in-house services the default, and where outsourcing is justified, they would improve contract standards.

A welcome critique, but we need to apply scrutiny across the board

The critique of outsourcing is welcome, as we know that competitive tendering has often not worked for voluntary organisations and social enterprises seeking to deliver services. However, it is disappointing that this paper reduces the debate to public versus private, which doesn’t fit with the vision outlined in their Civil Society Strategy. Labour’s analysis doesn’t recognise the demonstrable benefits of involving the voluntary sector in service delivery. Their examples focus on private for-profit providers, and conflate the failures associated with:

  • a profit-making business model
  • the competitive method of outsourcing
  • the capacity and ability of councils to manage outsourcing processes.

We should absolutely challenge the myths and shortcomings of outsourcing, but we should equally question the myths that surround direct state provision. Institute for Government have called for Labour to improve their evidence base for policy making in this area. The benefits they outline about in-house provision are not necessarily exclusive to provision directly provided by councils and could be achieved through reducing barriers to collaborations. For example, there are excellent examples of the public and voluntary sector coordinating and aligning services. Scrutiny based on service outcomes should apply to all providers, including those in the voluntary sector.

The proposals 

Labour proposes making in-house provision a default option but recognise there could be instances where outsourcing is a better option. Councils would need to satisfy 10 tests in order to justify outsourcing or have a ‘good reason’. A good reason would include:

  • not having the capacity to insource a service
  • outsourced provision better mitigating any risks associated with contact with ‘at-risk people, exercise of coercive powers, or infringement of people’s rights’.

There is a question here about how much and what type of evidence would be needed to meet these requirements, but it would seem likely that these two options could frequently be justified by councils to continue outsourced provision.

The paper also proposes better standards in outsourced contracts, including compliance with the Human Rights Act and the Freedom of Information Act, engagement of local supply chains, and gender pay audits. Improving standards in this way could be beneficial so long as they are applied in a proportionate way.

Legislation would be put in place to push councils to take up this approach, potentially limiting the freedom of elected councils and councillors to work with local people to decide the best way of providing services. Insourcing is already happening, so it is questionable whether legislation is needed.

Labour’s plan focuses on councils, but there needs to be clarification to understand what these changes mean for other public bodies. The case studies in this report focus on areas like cleaning and waste, so more work is needed to understand the consequences for other types of services.

Better for communities?

On the surface this appears to be a plan informed by the failures of for-profit business, with the aim of strengthening councils. An approach that truly puts communities first would start with what communities want and need, rather than begin with a default to either insourcing or outsourcing. Furthermore, a plan for communities would recognise the role of voluntary organisations that are often uniquely connected to communities.

The paper briefly recognises that there could be a case for continued outsourcing services to not-for-profit community groups, especially where there is strong trust in that provider and a need for distance from the state. But the case for involvement is more widely applicable than the paper indicates. We would like to see recognition of the ways in which the voluntary sector has often pioneered approaches to service delivery that have built upon and challenged traditional ways of working in the public sector.

The plan uses the language of ‘local’, ‘giving power back to communities’, and ‘participatory, inclusive insourcing’. It is unclear how their approach would make this a reality especially for people who are excluded from existing accountability mechanisms. This shift will come from a different way of working with people rather than just a move towards insourcing.

Labour describes insourcing as part of their commitment to community wealth building, and a way of improving local jobs, investment and democracy. There is little mention of the role of the voluntary and community sector in generating community wealth – even though these organisations are a vital part of the fabric of local democracy.

Ultimately, we think that the public and voluntary sectors share common values of public benefit and service, and so are natural partners. We will seek ongoing engagement with the Labour Party to ensure that the role and value of the voluntary sector is recognised.

What do you think?

Insourcing is happening already, most notably in relation to leisure services. We would like to learn more about your experiences of insourcing. How has it impacted on your organisation and communities? Please email me at rebecca.young@ncvo.org.uk.

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Rebecca Young Rebecca Young is a senior policy officer at NCVO, working primarily on public services and volunteering policy. Before joining NCVO, Rebecca led on mental health, housing and disability policy at the National Union of Students.

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