Agenda item

[Report of the Director of Environment and Neighbourhoods. To be introduced by the Leader of the Council.]

This report sets out the rationale, purpose, and scope of an Insourcing Policy for the Council.

The Leader of the Council introduced this report which set out the rationale, purpose, and scope of an Insourcing Policy for the Council. The new Insourcing Policy marked a significant shift away from the Council’s previous approach, and identified a new policy where insourcing was the default preference.

The Leader highlighted that the Council’s commitment to insourcing was grounded in a belief that all public spending should firstly deliver a public benefit, and that every council’s plan for the delivery of services on behalf of their residents should seek to maximise every pound spent on the delivery of the service itself. Consequently, this Insourcing Policy signalled a significant change of direction for Haringey Council. The Council should no longer be perceived as a Commissioning Council, but a municipality committed to finding ways to directly deliver services to residents.

The Leader emphasised that the administration was moving to reverse at a local level the almost forty year national trend towards outsourcing, which had resulted from not just the ‘opening up’ of public services to the market, but also a legislative regime that had made in-house provision of local services more difficult. This policy had caused a range of harms: it had unfairly meant that local councils lost control over some local services whilst retaining ultimate responsibility for their quality and delivery; it had eroded worker protections and the power and mutual support of organised labour; and the artificially low costing of outsourced projects had meant that the public sector and society more widely have been left footing the bill.

The Leader noted that introducing a preference for insourcing supported the administration’s goals to improve local services for local people, maximise the community benefit it achieved with its budget, increase quality job opportunities and good working conditions for residents, and secured democratic accountability of public services. In Haringey, there was a strong starting point: the Council had retained in-house many services which had been outsourced elsewhere and had already made good progress in bringing more services in-house. The introduction of this policy signalled the Council’s commitment to build on this work.

The Leader welcomed the policy as committing the Council to a strategic review of all externally commissioned services as their contracts come up for renewal. This would assess the efficient management and workings of all externally commissioned services and anticipate opportunities to bring services back in-house, in a way that focussed on what was most important to the administration, and sustainably increases the capacity of the Council.

In response to questions from Cllr Connor, the following information was provided:

• Every contract had a different aspect and the Council would examine every individual case and look at the savings and improved services that residents could expect to be achieved when considering the insourcing of services.
• The Leader reflected that following nearly 10 years of austerity, these circumstances had led local authorities to seek support from the private sector. This had inevitably led to a high number of resources and expertise leaving local authorities. There was now a need to do this differently for residents and  to achieve benefits for the Council
• The overall preference was for direct delivery of services by the Council or through a local voluntary organisation with the appropriate skills to deliver the required service. The Council would avoid procuring organisations which were located a distance away from the borough and had no insight of the borough.

RESOLVED

1. To note progress made to date in relation to insourcing services that could otherwise be delivered by commercial providers;
2. To approve the Insourcing Policy, as set out in Appendix 1;
3. To approve the development of an implementation plan and the commencement of work to build the capacity of the organisation to insource services;
4. To note links with the Council’s Community Wealth Building approach and the forthcoming Economic Development Strategy.

Reasons for decision

The trend among local authorities towards insourcing is driven by several factors, including:

• Financial pressures, noting that insourcing and direct delivery may be more cost efficient and provide better value for money
• Risk management, noting the collapse of Carillion and the need to insulate critical services from commercial failure
• Public expectations, noting that insourced services have achieved higher degrees of user satisfaction than the previously outsourced services

In addition, the following potential benefits of bringing services in-house have contributed to the case for insourced services:

• Better quality services, compared to under-performing outsourced services;

• Value for money and flexibility whereby councils, by virtue of having direct control of services, are better able to respond to changing needs;
• More strategic, holistic delivery of local public services as part of integrated delivery models, made possible by insourcing of services;
• Contribution to local economy, whereby insourcing can result in stronger local supply chains and enhanced local employment;

·         Sustainability, whereby direct control can enable service delivery to reflect environmental considerations and sustainability commitments

It is important to note that these benefits can only be realised, and the Council’s objectives met, when insourcing is done well. The challenge for Haringey, and all local authorities, is not just to make the right individual decisions about insourcing specific services, but also to set the parameters for determining what is practically feasible in terms of insourcing, taking into account capability, capacity, and financial implications relating to the transition to insourced services.

The proposal to approve the Insourcing Policy is being made in order to signal a clear step-change in the Council’s service delivery policy. Having a clear policy will ensure that decisions about whether to insource services are taken in ways which maximise the chances of success.

It also makes a commitment to a structured programme of work to support sustained progress on this agenda, building on work to date. As part of this work, an implementation plan for insourcing will be agreed by Cabinet by March 2020 which will set out further detail on how the Council will adopt a strategic approach to bringing services back in-house, make individual decisions about insourcing services using an updated commissioning framework, and develop the resource and infrastructure needed to support this programme of work.

The policy recognises that the desire to insource services underpins the political priorities of this administration and remains the Council’s preferred model of service delivery. However, the Council must make decisions on a sustainable and legal basis. Where the council looks at proposals of how to deliver any service going forward, the quality of that delivered service and the social and financial value for money must be considered. Furthermore, proposals must be subject to assessment as part of our commissioning processes.

Decision options will include direct delivery by the Council, working with other public sector organisations, extension of current contracts, commissioning of alternative third-party providers shared services, working with community and voluntary sector organisations, or a hybrid model whereby various aspects of a service are delivered by different providers that may be in-house or external. Decisions may also be taken to insource services at a later date, subject to development of sufficient organisational capability and/or capacity.

Alternative options considered

Do nothing

The Council could not adopt an Insourcing Policy. This would mean that either a) no decisions to insource would be made, or b) such decisions would be made in an ad hoc manner with insufficient consideration for the criteria for successful transition to in-house delivery noted at para 4.6. This option would either a) not deliver the administration’s manifesto commitment, or b) would result in an unsustainable degree of legal and financial risk to the Council. On this basis the option to not adopt an Insourcing Policy has been rejected.