Councils facing tougher rules on ‘in-house’ services

The move has been welcomed by the Environmental Services Association (ESA), the trade body representing the private waste sector, which yesterday claimed that some local authorities opting to ‘in-source’ services have failed to provide evidence of where this provides ‘best value’ for residents.

Report

Yesterday (3 May), the ESA published a report ‘Public Realm Services – Making the right choice’, authored by consultancy firm Ricardo AEA.

Publication of the report comes after a number of high-profile examples of authorities seeking to bring waste services in-house including Liverpool and Middlesbrough – prompting a debate over the future of public service delivery, particularly around waste collection, in the UK.

According to the ESA’s report, local authorities in England are more likely to have out-sourced public services compared to Scotland and Wales. However, it also claimed that there has been little change in the overall level of outsourcing between 2005 and 2015, apart from a small increase in the number of HWRC contracts being sent out to the private sector.

But, the report comments that due to budget constraints, “There is no doubt we will see a number of high profile authorities deciding to bring services in-house in the coming 12 months, but this will be offset by an equal number who decide to test the market to drive efficiencies to help off-set budget cuts.”

This comes as the government is due to tighten up the rules around transparency in local authority services, with the Treasury having announced in the Spring Budget a forthcoming consultation on new laws requiring councils to be transparent about the cost of the in-house services they provide.

Consultation

A consultation on the new rules is expected to be unveiled in the summer, although details of the exact timetable and scope of the proposals has yet to be revealed.

Currently, local authorities are bound by a ‘best value framework’ which dictates the decision making process that must be taken by councils when opting to change a service provider.

However, according to the ESA report, due to a lack of a robust auditing process, this can become ‘more of a tick box exercise’ for councils who are seeking to ‘in-source’.

The ESA noted: “This report has indicated that there is little evidence of local authorities publishing the evaluation methodology used to support their assessments under the Best Value regime, or indeed the robustness of the assessments completed.”

The report adds: “The key for local authorities is to have a robust and transparent process that is documented to evidence the review of existing services, and options appraisal process, in order to inform future service delivery. As highlighted by the National Contractors Forum and emphasised by ESA members, no favours in the procurement process are sought for bidders, just that the competition is fair and transparent.”

‘Constraints’

Commenting on the findings, ESA’s executive director Jacob Hayler said: “These are difficult times for local government with severe constraints on funding. It is therefore absolutely crucial that authorities are helped to secure the best possible value for their waste services. It is often too hard for authorities to benchmark accurately their services as costs are allocated to different departments, which makes like-for-like comparisons impossible.

“We hope this research will help councils to improve their ability to benchmark their services against the market and realise the best possible value for their residents.”

Speaking at the launch of the report in London last night, Lee Marshall, chief executive of the Local Authority Recycling Advisory Committee (LARAC) backed the findings, adding that councils should “welcome the need for robust data”, while also noting that budget cuts had naturally switched local authorities’ focus on to the cost of services.

He said: “The report talks about robust data to aid decision making, and at LARAC we welcome that. It will bring challenge with it, but local authorities get that on a daily basis.

“We have less and less money and there is more focus on cost, and local authorities should rightly be looking at delivering more cost effective services, whether it is in-house, third sector or private sector. We can’t ignore the need to review our services at regular intervals.”