UK

Five reasons to welcome Labour’s plans on public services

16 July 2024

Labour has promised “the biggest wave of insourcing of public services in a generation”. We welcome this commitment, but what does it mean? 

Over the last 14 years we’ve all seen what happens when public services are run by private companies hungry for profit. Whether it’s the scandalous behaviour of the water companies, the wholesale degradation of a 500-year old institution like Royal Mail, the preventable deaths of 557 people linked to outsourcing in the NHS, or the chronic underperformance of contractors like Serco, the private sector has demonstrated that it cannot be trusted to run our vital public services. 

It’s been obvious for quite some time that both the public, and the councils that serve them, benefit when public services are brought in house. The most recent report from the Association for Public Service Excellence (APSE) shows that 3 out of 4 UK councils were planning to bring services in-house in 2019. According to the report, 78% of local authorities say insourcing gives them more flexibility, two-thirds say it saves them money, and over half say it has improved the quality of the service while simplifying how it is managed.

So it’s good to see a commitment to end outsourcing in Labour’s Plan to Make Work Pay; and, linked to this, in Deputy Prime Minister Angela Rayner’s letter to local authorities inviting them to take on more autonomy. From our point of view, this is definitely the right way to go.

Here are our five reasons why:

1. It’s a better deal for the public purse - outsourcing means we waste money on shareholder profits and the costs of managing inflexible contracts. 
2. Less risk, greater control because when outsourcing goes wrong - like it did so spectacularly with the collapse of Carillion - it’s national and local government who have to pick up the pieces, usually with a hefty price tag attached.
3. Fair conditions for workers - outsourcing means making profits at the expense of workers’ rights and job security. Bringing services in house means workers should have decent employment, terms and conditions, improving their lives and their morale. 
4. It keeps spending in the local economy - Instead of funnelling money to multinational corporations who will extract as much as they can, we can keep wealth in our communities through bringing council services in house. For example: in 2018 Stoke-on-Trent City Council ended a housing maintenance contract with a national provider on the grounds that local residents were getting poor service that didn’t offer value for money. It formed its own services provider, which purchases 78% of its goods from within Stoke postcodes. It’s now better placed to deliver a good service by using local supply chains, which in turn recycles spend into the local economy, as well as improving service quality. 
5. Public accountability - Labour’s proposals include extending Freedom of Information requests to private companies that hold public service contracts, and public consultation when these services come up for tender. But we think the concept of public accountability and oversight should go further (in fact, we’ve been campaigning for this for 10 years!). We’ve already set out an example of a supervisory governing board for Thames Water, which would include customers making decisions alongside councils and trade experts. This model could work just as well at the council level when services are brought in house.

BUT - and it’s a big but - if councils are going to run services directly they need to be given the capacity to do so. Our councils have been desperately underfunded for years, and the number of public amenities we have lost as a result runs into the tens of thousands. Local government grant has plummeted 40% in real terms between 2009-10 and 2019-20. One in five councils report they are on the brink of declaring bankruptcy. 

The new government must invest in councils and local public services to get the best deal for citizens, communities and the economy. We know it’s early days for Labour, but if they stick to their commitments on public services then they will have got off to a good start. 

Share this blog and help show Labour why they need to move forward with services that work for people not profit.

This is what Labour said about procurement, public services, and outsourcing in their Plan to Make Work Pay: a New Deal for Working People: 

“Labour will learn the lessons from the collapse of Carillion and bring about the biggest wave of insourcing of public services in a generation. A Labour government will end the Tories’ ideological drive to privatise our public services”... 

“The next Labour government will also examine public services that have been outsourced as part of our drive to improve quality, design better services to meet changing needs, ensure greater stability and longer-term investment in the workforce, and deliver better value for money”.... 

“In most cases, the best time to achieve value for money for publicly run provision will be when existing contracts expire or are broken through a failure to deliver. Before any service is contracted out, public bodies must carry out a quick and proportionate public interest test, to understand whether that work could not be more effectively done in-house. The test will evaluate value for money, impact on service quality and economic and social value goals holistically.”