Editor’s Budget blog: The suspicion hanging over in-house services
0The Budget looks set to make the use of in-house services a contentious issue all over again. As every s151 officer knows, the question of whether services are delivered by in-house teams or external providers is rarely far from causing a ruck.
But George Osborne looks set to prod the sore spot once more with a line in the Budget noting that the government is to consult on new rules forcing councils to be more transparent about the cost of using in-house services.
Of course, at the measure isn’t mentioned in the Chancellor’s speech. It was to be found deep in the Budget red book under the heading “Markets and regulation”.
Which is instructive and points to a suspicion at the Treasury that in-house service providers fail to provide good value and the costs need exposing to the full glare of public scrutiny.
This, of course, is speculation. There is too little in the Budget book to know precisely what is on the mind of the Chancellor, or any other minister involved in leading the way for better public services. But it does seem fair to assume the consultation implies doubts are present in central government, at least in some form. Past championing of outsourced services only supports this view.
But it’s worth asking if these are the right sort of doubts. Perhaps the consultation should also examine full disclosure of the costs and terms of outsourced services. After all, just as many “experts” develop concerns about those. And they too can be shrouded in secrecy, covered, as they frequently are, by commercial confidentiality.
Some councils have indeed shut down contracts with external providers having calculated they can do better themselves. In March this year The Guardian reported that many councils are falling out of love with external providers, with many returning service delivery to council staff and managers.
Some outsourced services prove particularly contentious. In January Bournemouth council brought a contract for ICT, HR and facilities management back in-house after placing it with Mouchel (subsequently acquired by Kier Group), and this a contract whose merits had featured in the employment tribunal of the council’s former s151 officer.
Barnet council has become controversial for outsourcing almost everything, leaving the few remaining council staff to manager multi-million pound deals with contractors.
The problem is that many, not all, outsourced contracts only reveal their true qualities once they are in operation and this can result is unforeseen costs to the public purse.
Contract negotiation is tricky and (whisper it quietly) private sector firms appear to know more about this part of the process than council staff. Procurement, often running into millions of pounds, can be hazardous with the risk shifting almost imperceptibly to local authorities and, ultimately, taxpayers.
It’s a pity then that government is not inviting a more open discussion of outsourcing in general rather than suggesting, with this consultation, that going in-house is the problem. Public service provision should be about more than dogmatically declaring “outsourcing good, in-house bad”.
