Observer column: 28 July 2017
Insourcing in fashion?
In June 2019, the council's refuse and street cleansing contract will end. That's much earlier than was intended, but it's being terminated by mutual agreement, between the contractor and the four councils who are part of the same joint waste contract (Hastings, Wealden, Rother and Eastbourne).
It's Hastings Council's intention to bring the street cleansing part of the contract back in-house, and run it directly by the council. While it's relatively easy to specify a contract for collecting domestic refuse, it's much harder to specify street cleaning. In a tourist resort such as Hastings, the demands on the service will vary from day-to-day, and are hard to predict. It's much easier to run the service directly, so we have control over where cleaning is done and when, and to what standard. The in-house service will also include clearing fly-tips and bulky waste collections, too. Running the service in-house will mean we're able to change the way streets are cleaned, and try different approaches, without having to vary a contract.
But it's not just in Hastings - bringing services back in-house is coming back into fashion. At a conference I was at recently, different councils were talking about 'insourcing' services to make them more responsive and to save money. Ten years ago, they would have been talking about 'outsourcing', for exactly the same reasons.
Running services in-house makes a lot of sense. Apart from greater flexibility and control, it means you don't have to pay for the profits margin of an external company. So why did outsourcing become such a dominant trend? Back in the 1980s, some council direct services were run very inefficiently, and with some dubious employment practices - one London Borough I was involved in allowed refuse collection jobs to be inherited, father to son (there were never any women employed in the service). But rather than modernise these in-house, not-for-profit services, the Thatcher government introduced Compulsory Competitive Tendering, which made councils invite private companies to run their services instead. This meant a lot of council services were privatised, and direct services were lost. Some councils managed to resist this and kept their services in-house, but for the most part, council direct services teams were lost, and even though Compulsory Competitive Tendering was abolished over ten years ago, councils continued to outsource their services partly because the general view was that outsourcing was cheaper, and partly because it was too difficult to re-establish in-house services.
It will always be necessary to compare the cost of running services in-house with the cost of using a contractor, to make sure the council is getting 'best value' from its in-house teams. But I've never bought into the idea that outsourcing is automatically more cost effective and efficient. Councils can, and do, run services in-house just as efficiently as private companies, and without the need to make a profit at public expense. We'll be looking at bringing other services back in-house too, in Hastings - building maintenance and building cleaning are obvious ones. Refuse collection itself in the future perhaps, although it was too difficult to do that at the same time as street cleansing. So I'm pleased to see the trend go full circle. Council services should be run for the public good, rather than for private profit.
Council Leader's column