A Labour government would introduce legislation prioritising in-house contracts over outsourcing for local authorities, in areas including waste management, under plans announced this weekend.
The proposals would make insourcing of public services by councils the “new normal”, Labour politicians have said.
Andrew Gwynne, Shadow Secretary of State for Communities and Local Government, revealed plans for the Local Public Services Act alongside Shadow Chancellor John McDonnell at the launch of a report on democratising local public services on Saturday (20 July).
Mr Gwynne said that the legislation would put insourcing first, create a framework for deciding when services should be kept inhouse and ‘increase standards’ for contracting out.
He added: “Not only is insourcing value for money – but it means that residents’ money will go directly to local services for local people rather than into the profits of private companies.
“Labour will end this racket and ensure that our vital public services are delivered in the interests of the people our local authorities are here to serve, not in the interest of outsourcing firms’ profit margins and wealthy shareholders.”
The proposals state that when contracts reach the end of their expiry period or when they are lawfully terminated, in general the contract will come back in-house.
However, where significant capacity barriers exist or community providers can best manage at-risk groups the in-house presumption will not apply.
If local authorities do seek to outsource a contract there will be a framework for them to work through – they must assess the options based upon ten criteria, including whether there are high-quality providers or if at-risk groups will be affected.
“Not only is insourcing value for money – but it means that residents’ money will go directly to local services for local people rather than into the profits of private companies”
The law will also establish minimum standards for contractors, meaning that working conditions should be no less favourable than if workers were employed directly, local supply chains must be used and gender pay audits conducted, along with other measures.
The report singles out waste management as a promising area for in-house contracts and states that ‘there seems to be a strong case, which needs to be tested in context, to reject ongoing outsourcing of street cleaning, benefit services, and waste management, barring exceptional local circumstance”.
The move by some councils towards insourcing has become a fierce topic of discussion within the waste management sector, with some local authorities favouring the option as providing a greater level of control over services, but others perceiving it as higher risk than contracting to the private sector.
Last year Mo Baines, head of communication and coordination at the Association for Public Service Excellence, said that the primary reasons for insourcing were service efficiency, service quality and increased customer satisfaction (see letsrecycle.com story).
A number of waste contracts are highlighted in Labour’s report as examples of insourcing success.
Waste services in the East Riding of Yorkshire and at Three Rivers district council, as well as refuse collection under the Wear Valley district council are all cited as instances were councils have saved money by bringing contracts in-house.
Thanet’s in-house refuse collection, recycling and street cleansing – which was introduced in 2006 – is said to have led to a 10% increase in recycling rates and savings of at least half a million pounds.