The value of insourcing
Local authorities and other public sector organisations exist to deliver services to the public. Unlike private sector businesses, their purpose is to achieve the best possible quality of service for the public purse, rather than profit. Increasingly, many public sector bodies are now seeking to insource their services, taking them away from private sector partners, recognising the potential to save costs, drive higher quality services, retain more control with accountability, and keep more of their budgets circulating within their own local economies.
Why go in-house?
One of the important benefits of this trend towards in-house public service delivery is the positive impact it has on local people, and specifically those employed to deliver those services. Instead of being employed by a large national, or even international company delivering a public service, local public sector organisations that insource services can employ local people.
With quality of service and social value as the drivers, rather than profit, public sector organisations that manage services in-house are directly employing the staff they use. Therefore, they have control over pay and conditions and have the opportunity to prioritise things like job security, enhanced workers’ rights, and employee terms and conditions. Local authorities and other public sector organisations may see direct benefits from employing more local people too, including more in-depth local knowledge that can elevate employee performance, drive better citizen experiences, thus helping the organisation build better ties with the wider community based on an increased sense of connection and mutual understanding.
Increasing employment opportunities for local people has a number of other benefits too. When insourcing drives an increase in local employment, the local economy benefits directly, as people have more money to spend in their local shops and with other local businesses. It also helps to improve the skills base for the local community, with people being employed and trained by the local authority or other public sector body, who may then take their skills and experience out to other local employers, or be involved in helping train new workers within their organisation.
In some regions where unemployment rates are above the national average, local public sector organisations can make an important, positive difference, bringing more people into work, and thus inspiring younger generations about their own prospects and future career opportunities. The saying goes: “You cannot be what you cannot see.” Where young people grow up in areas of high unemployment, they naturally find it more difficult to envision a better future for themselves, potentially perpetrating the cycle of low expectations and under-achievement.
A case in point: Hackey Council
Driving benefit to the local community via employment opportunities is a factor for many public sector organisations seeking to shift from outsourcing to insourcing their services. In Hackney, the borough council has a track record of insourcing a long list of services including benefits, recruitment, waste collection, IT, and jobs teams.
“Residents want to see their Council services run by local, committed public servants”
In 2021, the council brought 360-plus staff into direct employment, insourcing the management of school caretaking and cleaning, parking enforcement, office cleaning, winter and gully cleaning, and fleet maintenance. The move was expected to reclaim the £12m previously spent with private sector providers, while improving reliability of service, helping build a fairer local economy, and creating extra employment opportunities for young people and those out of work. Deputy Mayor Councillor Rebecca Rennison said of the decision: “Residents want to see their Council services run by local, committed public servants that understand their community and can respond quickly in a crisis – not unaccountable private companies.”
Creating opportunity
Public sector organisations such as local councils require a huge range of skills and experiences, with job opportunities for a wide range of citizens. They provide an extensive and disparate range of services, from parks, sports facilities, and libraries to street lighting, adult and children’s services, and waste removal and recycling. They employ lawyers, accountants, drivers, teachers, health and care professionals, building trades, gardeners, and more.
It is therefore crucial that local authorities and other public sector bodies are able to attract and retain high quality talent to fill these roles, so their services can be delivered to the highest standard. One way to achieve this is to implement modern, digital technology that has been designed specifically for public sector organisations, with solutions that elevate efficiency and productivity across all functions. In a typical local authority these could include finance and spend management, HR, payroll, employee performance management, in-house legal teams, education, social care provision, field service management for social housing teams, and much more.
Public sector organisations need to invest in technology on a par with that used in private sector companies if they are to attract good people to fulfil their service objectives and deliver the best value for the public purse, deliver social value, and ensure local jobs for local people.
If you’re in local government, don’t skip our invaluable white paper ‘To Insource or Outsource, that is the question’ where we explore the pros and cons of taking services in-house.