Declining appetite for outsourcing in local government

A new report from New Local Government Network (NLGN) has found that the appetite for outsourcing within local government to the private sector is declining.

From Transactions to Changemaking: Rethinking partnerships between the public and private sectors reveals that a significant minority of local government leaders, chief executives and mayors indicated that they would outsource less (39 per cent), while nearly half indicated no change (46 per cent). Only 15 per cent indicated that they would outsource more.

The figures suggest that, driven by funding and demand pressures, councils are seeking greater control over service delivery arrangements. Alongside this, councils are increasingly exploring new, innovative forms of partnerships such as trading companies and joint ventures.

The NLGN argues that the picture is more mixed than the current simplistic ‘outsourcing versus in-house’ debate, suggesting that there is a need to reform how partnerships work in practice to make sure they are less transactional and more geared towards delivering genuine social impact for public spending.

To achieve this, the government must recognise that partnerships with the private sector are not a solution to funding reductions as a ‘cheap option’.

Adam Lent, director of the NLGN, said: “Our findings show that the public sector is already rethinking its relationship to the private sector. But the current national political debate is missing the point. The government takes a business as usual approach to outsourcing, while the Labour Party advocates taking everything back in house. Our research finds that it is not a question of more or fewer partnerships, but establishing better ones. With new measures to boost oversight, make contract performance more transparent and to enhance the social return on public investment, partnerships will be fit for purpose for today’s challenges.”