Saturday, 19 September 2009

Outsourcing - an undemocratic option that destroys local economies

Richard Wachman wrote an article in The Guardian earlier this week (see here) suggesting that councils may resort to outsourcing as a way of saving money in difficult times. It might seem to be an easy answer for councils. But If outsourcing is the answer, then councils are asking the wrong question.

There are may reasons to oppose outsourcing - reduction in service levels, loss of democratic accountability, the costs of monitoring contracts, lack of flexibility in contracts - but perhaps one of the least discussed, but most potent reasons, is that of the negative impact on the local economy.

Contractors who win procurement contracts tend to make their profit by driving down the wages of the staff employed by them. Either that, or they re-locate their work to a different part of the country. Either way this has a negative impact on the local economy as there is less money to spent locally. So councils who outsource services, risk working against their economic development objectives - and developing the local economy is a fundamental function of any council.

APSE (the Association of Public Service Excellence) have produced a publication that backs up the argument against outsourcing. Earlier this year APSE produced a guide to "insourcing" where councils have brought services back in house after failed outsourcing ventures. In APSE's own words:

"APSE’s latest research ‘Insourcing: A guide to bringing local authority services back in-house’ explores the growing trend of local authorities insourcing services that have previously been outsourced. Looking at the pragmatic reasons that councils have taken to return services to in-house provision this publication looks at a number of issues. It demonstrates the benefits that can be achieved from insourcing. These include: better performance; increased public satisfaction; greater value for money; efficiency savings; responding positively to changing policies and challenges; joining up services coherently at neighbourhood level; helping meet strategic goals, such as tackling climate change; and boosting local employment and economic development."

You can order the report here - it makes very interesting reading. All councillors should read this report before they decide to outsource.

What local communities need is publicly run, democratically accountable, high quality services run by people who live in the communities they serve. Outsourcing cannot deliver on these requirements.

No comments:

Post a Comment