Focusing on 'local' economic benefits - a sustainable solution for public services

From the eighties up until the late-noughties a fairly stable orthodoxy existed amongst many senior policymakers that the transfer of large swathes of local government services to national outsourcing companies was a good thing, would bring much needed investment, transformation of approach and efficiency in delivery. Anyone who dared question the reality of what outcomes would actually be achieved was ostracised and branded as a dinosaur by the industry that built up around the sector.

In APSE, we always try to look for tangible evidence and think through the long-term outcomes in any suggested approach to delivering local government services and it’s therefore fair to say that we held a fairly healthy scepticism of much of the claims of risk transfer, widespread additional employment benefits and pots of gold at the end of the rainbow. From around 2005 onwards we also started to see many contracts which harked back to the CCT days or which were early strategic partnerships start to run out of steam and councils start to insource them. 

A poor response to supporting local government in dealing with long term austerity, by national outsourcing ‘partners’, also tested the trust between them and local government further. The recent collapse of Carillion, with its many public-sector contracts, following on from Connaught and Southern Cross in the past, profit warnings issued by other large sectoral ‘players’ and the National Audit Office report exposing the levels of excessive profiteering in PFI contracts has damaged the faith of even the most zealous of outsourcers amongst policymakers.  

Whilst some authorities will remain comfortable with the service and value for money they are getting from partnerships they have in place; the speed of insourcing has picked up amongst UK local government generally. There are a lot of councils who are now recognising that the flexibility of delivering services directly themselves means that they can be much more responsive as budgets ebb and flow, rather than being locked into long term financial contracts with uncooperative partners. 

Councils have always had strong relationships with businesses based in their area. In a post Brexit world and as local government moves towards self-financing and localisation of business rates the relationship with the ‘local’ private sector will become ever more important. Growing local supply chains, sub contactors and the capacity of local businesses will be an effective way of supporting not only the local economy, by avoiding leakage from it, but also the short, mid and long term financial strategy of the council.

Whilst the collapse of Carillion has brought the reliance on some major national outsourcing companies into sharp focus I don’t really believe that this would have come as a surprise to many in local government, I think it was only a matter of time and which company. Many councils have already been preparing forward strategies that are very different from the past few decades and which give them more control of their own destiny, those that haven’t may be in for some further shocks.