Insourcing update: The value of returning local authority ... · Insourcing update: The value of returning ... The value of returning local authority services in-house in an era of

Insourcing update: The value of returning local authority services in-house in an era of budget constraints

June 2011 Report by APSE for UNISON

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UNISON insourcing update: The value of returning local authority services in-house in an era of budget constraints

Contents

Foreword 3

Executive Summary 4

Background 4

Surveyresponses 4

Staffingissues 4

Examplesandcasestudies 4

Thebenefitsofinsourcing 5

Lessonslearned 5

Conclusions 5

Introduction 6

Insourcing: the context 6

Previouspolicies 6

Currentpressuresonlocalgovernment 6

Workforceissuesandemploymentprotection 7

Insourcingasapositiveresponsetocurrentchallenges 8

Summaryofsurveyresponsesandkeyfindings 10

Respondentsandcounciltype 10

Insourcingbyvolumeandservicetypes 11

Councilsconsideringinsourcing 11

Reasonstoinsourceaservice 11

AdvantagesofInsourcing 12

Employmentmatters 13

Posttransferchangesandserviceimprovementplans 14

Case Studies 20

CUMBRIACOUNTYCOUNCIL 20

FIFE 22

HILLINGDON 24

ISLINGTON 26

NORTHTYNESIDE 28

REDCARANDCLEVELAND 30

ROTHERHAM 33

THURROCK 35

Insourcing: the analysis 37

Insourcingasacosteffectivesolutioninresponsetocurrentbudgetconstraints 37

Insourcingasanefficiencydriver 37

Insourcing,flexibilityandcapacity 37

Insourcingandserviceimprovement 37

Insourcingandlocalaccountability 38

Insourcing,strategyandsynergy 38

Insourcingdeliveringaddedvalue 38

Insourcingandtheworkforce 38

Insourcing,simplicityandriskminimisation 39

Conclusions 40

Step1:Analysethecurrentsituation 41

Step2:Benchmarking 42

Step3:Preparingthein-housebid 42

Step4:Bringingtheservicebackin-house 43

Step5:Deliveringtheservicein-house 43

Methodology 44

Endnotes 46

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Foreword

Thecurrentorthodoxyaboutservicedeliveryhasamisplacedandunjustifiedbeliefthattheprivatecontractorsarecheaperandmoreefficientthanthepublicsector.Themediawouldhaveusbelievethatthisisthefutureandthereisnoalternative.

Butprivatisationcanriskthepay,pensions,termsandconditionsandjobsoftheworkforce,andinnumerouscasesitsimplydoesn’tliveuptotheclaimsmadeforit.

Hard-nosedcouncilsofallpoliticalpersuasionsaretakingpublicservicesbackin-houseduetothefailingsofprivatecontractorstodeliver.Thequality,accountability,flexibility,andhardeconomicsofprovidingservicesin-housearesomeofthekeybenefitsthathavepersuadedeventrue-blueConservativecouncilstodropprivatecontractorsandlooktotheirownstafftoservethepublic.

ThisresearchcommissionedforUNISONgivesthedetailedevidenceofmajorcontractsbeingbroughttoanendandservicescomingbackin-house,benefittingserviceusers,workers,andcouncil-tax-payersalike.

UNISONactivists,politicians,andseniorcouncilofficersshouldtakenoteofthelessonsfromthisresearchand,especiallyatatimeofcutstopublicspending,lookattheeconomicandotherbenefitsthattakingservicesbackin-housecandeliver.

Dave Prentis

General Secretary, UNISON

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ExecutiveSummary

Background

SeverebudgetarypressurefacedbylocalauthoritiesacrosstheUKisencouragingcouncilstoreviewtheirservicedeliveryarrangements.Decisionsastohowtoresponddependuponboththeoverallstrategicdirectionoftheauthorityandpragmaticanalysisofcircumstancesonaservice-by-servicebasis.Whilesomeauthoritiesareexternalisingasmuchaspossible,thereisevidencethatothersarebringingasignificantnumberandrangeofservicesbackin-houseinordertogainmaximumvaluefromdecreasingresources.APSE’s2009publicationexaminedthephenomenonof‘insourcing’inlocalgovernment.1Evidencesuggeststhatthephenomenonhascontinuedandthatinsourcingisanincreasinglypositiveoptioninaneraofbudgetconstraints.

Survey responses

Asurveywasundertakenamonglocalauthorityofficersandelectedmemberstodeterminewhichservicesarebeinginsourced,whytheyarebeingbroughtbackin-houseandwhatoutcomesthisisdelivering.

Outof140surveyrespondents,57%hadeitherbroughtaservicebackin-house,wereintheprocessofinsourcingorwereconsideringdoingso.Themajorityofrespondentscamefromenvironmentaldisciplines,followedbyhousingandbuildingmaintenance.Therewasevidenceofinsourcingacrossabroadrangeofotherservices.

Aneedtoimproveefficiencyandreduceservicecostswasthemostfrequentlycitedreasonforinsourcingwithalmost60%ofrespondentssayingthatthishasbeenakeyreason.Aftercost,44%ofrespondentssaidaneedtoimproveservicequalitywascriticaltothedecisiontoinsource.

Theadvantagesofinsourcingwererankedas;greaterflexibility,increasedefficiencyand

reducingcostsandtimeassociatedwithcontractmonitoring.

Insourcingwasregardedasameansofdeliveringefficiencysavingsinthefaceofmountingbudgetarypressure.Thescaleofsavingswasrelatedtothescaleofthefunctionbroughtbackin-house.Almost13%ofrespondentsreportedthatinsourcingcoulddeliverefficiencysavingsofupto£25kperannum,8%reportedsavingsofupto£250kperannum,and6%anticipatedsavingsintheregionof£500k.Afurther5%saidthattheyenvisagedsavingsofupto£1millionperannum.

Staffing issues

Thenumberofstaffinvolvedintransferringservicesbacktoin-houseprovisionvariedaccordingtothescaleofthecontract.Halfoftherespondentstothisquestionsaidtheywouldrestructuremanagementandafurther46%intendedtomulti-skillstafftodojobsdifferentlyoracrossboundaries.Inmostcasesemployeeswhohadpreviouslybeentransferredtoexternalcontractorsweretransferredbacktotheauthority.

Examples and case studies

Theresearchhonedinonsome50examplesofinsourcinginarangeofservicesareasacrosstheUK.Theseexamplesexaminereasonscitedforinsourcing,whichcentrearoundcostsavings,flexibility,servicequalityimprovementsandabilitytoenhancelocalaccountability.

Casestudiesinthisreportprovidein-depthexamplesofthebackgroundbehindthedecisiontoinsource,theoutcomesachievedandthelessonslearned.ExamplesfromaroundtheUKshowwheresignificantcostsavingsarebeingachievedasaresultofinsourcing.Surveyfindingsonqualityissuesareborneoutbycasestudies,whichshowthatcouncilsthathavebroughtservicesbackin-housearedeliveringhigherqualityservices.Thecasestudiesalsomakecleartheimportanceofincreasedflexibility,providedbyinsourcing,isparticularlyinthecurrent,difficultfinancialtimes.

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The benefits of insourcing

Existingevidence,thequantitativesurvey,examplesofinsourcingandcasestudieshaverevealedanumberofbenefitsthatstemfromreturningservicesin-house.Theseinclude:

– Improvingefficiencyandreducingcosts– Theabilitytointegratearangeofservices– Enhancedflexibility– Minimisingrisk– Regainingcontrol– Reducingcostandtimespentmanaging

contracts– Boostinglocalengagementandaccountability– Greaterstaffmotivationandimprovedservice

quality– Maintainingexpertiseandcapacity

Lessons learned

Anumberofmessagesemergedclearlyaslessonstobeconsideredwheninsourcing.

Analysisoftheresearchevidenceshowedthatundertakingathorough‘optionsappraisal’andtakingtimetoreachdecisionsandimplementthemisimportantattheoutset.Earlyinvolvementofstaffandtradesunionsisvitaltosuccessfullyreturningservicesin-house.Bringingservicesbackin-househasbeenachanceforauthoritiestoredevelopinternalexpertiseandcapacityattheendofacontract.Itcanbelinkedtonewsmarterworkingtoeliminatewasteanddesignservicesefficientlyarounduserneeds.

Localaccountabilityandresidentengagementhasbenefitedfromcouncilsthathaveinsourcedbyhavingreadilyidentifiablein-houseteamsprovidinghighlyvisibleservices.Insourcingcanthereforehaveavalueintermsofcouncilreputationaswellasdeliveringpositiveoutcomes.

Conclusions

OurfindingsfromthelatestresearchoninsourcingconductedbyAPSEshow:

– ThecaseforinsourcinghasgrownevenstrongersinceAPSE’sinsourcingguidewaspublishedin2009.

– Councilsofallsizes,locationsandpoliticalcontrolarecontinuingtobringmoreservicesbackin-house.

– Intensebudgetarypressuresareactingasakeydriverininsourcing.

– Insourcingisviewedasaflexiblemeansofdeliveringserviceswithinthedifficultanddynamiccontextinwhichlocalgovernmentisoperating.

– Environmentalservicesarethemostlikelytobebroughtbackin-house,followedbyhousing,butabroadrangeofservicesarebeinginsourcednationally.

– Councilsarefindingthatinsourcingcontributestowards:accountability;flexibility;efficiency;costeffectiveness;serviceimprovement;strategyandsynergy;addedvalue;riskminimisation;andworkforcemorale.

– Staffingissuesareavitalconsiderationwheninsourcingandlessonslearnedfromcasestudiesshowthatconsultationandcommunicationisakeyfactorwhenreturningservicesbackin-house.

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Introduction

APSE’spublicationinJanuary2009,Insourcing: A guide to bringing local authority services back in-house,identifiedatrendforservicesthathadbeenoutsourcedtobereturnedtodirectprovision.Thisdiscussedreasonsforinsourcing,identifiedbenefitsitcouldbringandofferedpracticaladviceforcouncilsconsideringreturningservicesin-house.ThisnewInsourcing Updatepublicationpresentsthelatestinformationonlocalgovernment’sreturnofservicesin-housewithinthecurrentcontextofbudgetarypressuresandshowsexamplesofinsourcingandevidenceofbenefitsitcanbring.

Researchhasfound:whichauthoritiesarebringingwhichservicesbackin-house;whyinsourcingisconsideredthebestoption;andthebenefitsitcanbringinthesecurrent,difficulttimes.Ithasdrawnuponsurveyandcasestudyevidencetoexploretheargumentthatin-housedeliverycanbeapositiveoptionatapointwhencouncilsfacepressuretoprovidethemostefficient,andcost-effective,andflexibleservicespossibleinthecontextofunprecedentedreductionsinresources.Thishasuncoveredcommonmessagesandlessonsforauthoritiesconsideringinsourcingservices.

ThisReportonthefindingsoftheresearchisdividedintosections:

– TheContext:Thefirstsectionoutlinesthecontextinwhichfurtherinsourcingistakingplace.

– TheEvidence:Thesecondsectionpresentsthefindingsoftheon-linesurveyandprovidesexamplesofinsourcingandcasestudies.

– TheAnalysis:Thethirdsectionanalysesthekeythemesthathaveemergedfromresearchandoutlineslessonslearnedandconclusionsreachedfromexaminingtheevidence.

– Finally,thereportidentifiesachecklistforfutureactionatalocallevel.

Insourcing:thecontext

Thissectionlooksatpreviouspoliciesthathaveimpacteduponservicedeliverydecisions,thecurrentpressuresfacinglocalgovernmentandwaysinwhichinsourcingcanbeapositiveoptioninaneraofbudgetcuts.

Previous policies

Nationalpolicyonlocalgovernmentcontractinghasbeensubjecttochangingpoliticalperspectivesoverthepast30years.

TheCompulsoryCompetitiveTenderingregimeintroducedbytheConservativeGovernmentinthe1980sledtotheseparationofclientandcontractorrolesincouncilsandtheapplicationofmarketbasedprinciplestoservicedelivery.ThiswasreplacedbytheBestValuesystemunderLabour,whichtookaccountofqualityaswellascost.Apluralistapproachprevailedforthefirstdecadeofthe21stcentury.EconomistDeAnneJulius’sreviewforthedepartmentforBusiness,EnterpriseandRegulatoryReformin2008,foundthatthe‘publicservicesmarket’wasworth£79bnannual(BERR).2APSE’sinsourcingresearchin2009foundthatdecisionstobringservicesbackin-houseweretakenonapragmaticbasisatlocallevelratherthanbeingdrivenbyideology,withinsourcingtakingplaceincouncilsacrossthepoliticalspectrum.

Current pressures on local government

Thecurrentfinancialclimateinwhichlocalauthoritieshavetooperateiswell-documented.Thepositionismadeworsebyfront-loadingthe28%cutstolocalgovernmentinyearoneofathreeyearfinancialsettlement.Theseverepressureofhavingtomakedrasticbudgetcutsisleadingtorapiddecisionstoremodelservicedeliveryoptions.

Localgovernmentisatacrossroadsinrespondingto:

– CSR2010budgetcuts

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– Greaterdemandforservices– Cutsinpersonnel– Needforevergreaterefficiencyandcost

savings– Needtomaintainperformanceimprovements– Thelocalismagenda

Thismeansauthoritiesneedtofindthebestpossiblemeansofachievingservicetransformationandongoingefficiencieswithinextremelychallengingcircumstances.

TheCoalitionGovernment’sstatedvisionuponcomingtopowerwastopromote‘BigSociety’,devolutionofpowertocommunitiesandgreaterprovisionofpublicservicesbythirdsectorbodies.Howevertheintentionofexpandingprivatesectorprovisionofservicesisnowbecomingincreasinglyevident.InDecember2010,CabinetOfficeministerFrancisMaudeannouncedtheabolitionofthetwo-tiercode,whichensuresoutsourcedpublicsectorstaffandnewemployeesworkundernolessfavourablepayandconditions,asdiscussedbelow.3BothAPSEandUNISONexpressedconcernsthatthismeantareturntosomeoftheworstpracticesoftheCompulsoryCompetitiveTenderingregime.4Atthetimeofwriting,theGovernmentisalsoreviewingthe“FairDeal”protectionforthepensionsofstaffoutsourcedfromLocalAuthorities.

ThePrimeMinisterDavidCameron’sDailyTelegrapharticleinFebruary2011spokeofbreakingdown‘monolithic’publicservices.5Aforthcoming‘OpenPublicServicesWhitePaper’willsetoutthegovernment’splansforincreasedmarketisationandcompetition.Localauthoritieshavecalledforthepluralistapproachtoservicedeliverytobemaintained.6PublicationoftheWhitepaperwasdelayeduntilafterlocalelectionsinMay,withcommentatorssuggestingthiswasduetoadesiretoreduceinternalstrifewithintheCoalitionGovernmentoverthiscontroversialissue.7MediareportsofleakedgovernmentalmemosrevealthattheappropriatescaleofpublicserviceprivatisationisnowbeinghotlydebatedbyCoalitionministers.8

Workforce issues and employment protection

Localauthoritiesthatoutsourcedservicesinthelate1980sandearly1990’sfacedconsiderableoppositionaslegaluncertaintiesprevailedovertheapplicationorotherwiseoftheTransferofUndertakingProtectionofEmploymentRegulations(TUPE).Successfullegalchallengesconfirmedthatinthevastmajorityofcases,wherepublicservicesaretransferredtoprivatesectorproviders,TUPEwouldapply.However,outsourcingstillcreatedseriousemploymentissues.Theemergenceofthe‘twotierworkforce’wherebynewstarterswereemployedonlessfavourabletermsandconditionsofemploymentthantransferredstaff,leadingtoanoveralldiminutioninpayandconditions,ledtodemandsforbetteremploymentprotectiononoutsourcedpublicservicecontracts.Inresponsetotheseconcerns,theCodeofPracticeonWorkforceMatterscameintoeffectin2003tofurtherprotecttransferredstafffromthedevelopmentofa‘twotier’workforce.

Interestinglyhowever,casestudiesidentifythatinmanycasesstaffstillfacedlowmorale,alackoftraininganddevelopmentandthatservicedeliveryandcustomersatisfactionsufferedasaresult.Thisappearstosupporttheabilityofthecounciltoplayaroleasastandardsetterinemploymentterms,withtrainingandworkforcedevelopment,acriticalelementofthesuccessfactorsindeliveringhighqualitypublicservices.Inotherwords,evenwheretheCodeofPracticeandotherelementsofemploymentpracticewereappliedtooutsourcedcontracts,therewasstillanegativeimpactonservicedelivery.

Infuture,astheGovernmenthasannouncedareviewofemploymentregulationsandtheCodeofPracticeonWorkforceMatters(asitappliestoEnglishlocalauthorities)hasbeenunilateralwithdrawnbyGovernment,onemightexpecttoseeamoreseriousimpactonemployees’payandpensions,andthereforeservicedeliveryinfutureoutsourcedcontracts.CommunitiessecretaryEricPicklesconfirmedinMarchthatthelocalauthoritytwo-tiercode,whichensuresnewemployeesreceivethesametermsandconditionsasstaff

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previouslytransferredtoexternalcontractors,wasbeingabolishedwithimmediateeffect.Unionsandthink-tankshaveissuedwarningsthatthiswillimpactonthequalityofservicesdelivered.9

Atthetimeofwriting,theGovernmentisconsultingonareplacement‘memorandumofunderstanding’astohowthosecontractedtodeliverpublicserviceswouldbemindedtotreatemploymentmatters.Thismayprovetofurtherweakenthecaseforoutsourcingorrenewalofexternalcontractsgiventhepotentialforpooreroutcomesinworkforcetraininganddevelopment,moraleandservicedelivery.

Insourcing as a positive response to current challenges

Againstthisbackdrop,councilsfacingunprecedentedfinancialconstraintsmightbetemptedtolookforshort-termresponses,particularlyifthemessagefromcentralgovernmentistoencourageprivatisation.APSE’spublicationin2009 Insourcing: a guide to bringing local authority services back in-housefoundlocalauthoritiesquestioningwhethercontractingoutwasautomaticallythebestoptionhowever.Itprovidedtangibleevidencethatthosecouncilsthatdecidedto‘insource’werereapingrewards.Limitationsandrisksinvolvedinexternalisingserviceswererecognised.Inlightofcurrentchallengesitwouldappearthatreturningservicesin-houseisanincreasinglypositiveoptionforconsideration.Indeed,oneoftheauthoritiesthathaddecidedtofocusona‘commissioning’roleratherthandirectlyprovidingserviceshasputitscontroversialplanstooutsourcearaftofservicestotheprivatesectoronhold10.ProminentacademicTonyTraverspointedoutthattheextensiveoutsourcingofservicesithadplannedwouldprovesodifficultitwouldtaketenyearsratherthanthefewmonthstheauthorityhadenvisaged.11

Thelimitationsofoutsourcinghavebeendocumentedbyanumberofindependentsources.InternationalaccountingfirmDeloittehasarguedthat,outsourcing‘oftenintroducescomplexity,increasedcost,andfrictionintothevaluechain,

requiringmoreseniormanagementattentionanddeepermanagementskillsthananticipated’12.Itsreportonlocalgovernment’sexperiencesofIToutsourcingadvisedcouncilstotake‘properownership’andensuregoodgovernance.13

The value of keeping things simple, avoiding friction in the value chain, conserving management time and ensuring local accountability are therefore key factors to consider when councils are assessing service delivery options.

IntheUSA,astudy14foundafifthofallpreviouslyoutsourcedserviceswerebroughtbackin-house.PresidentObama’sviewsonkeepingUSAjobslocalasopposedtooutsourcinghasbeenmuchpublicised.Hisadministrationislookingatinsourcingkeyservicessincehehassaidthatinmanygovernmentagenciesoutsourcinghasgonetoofaranderodedtheircorecapacitytomanagecontractorseffectively.15

The value of maintaining core capacity in public services is also therefore a key factor to consider when councils are assessing service delivery options.

Insourcingisnotalwaysaresponsetonegativeexperienceswithexternalproviders.APSE’spreviousresearchfoundthat,inanumberofcases,councilsregardedinsourcingaswayof:respondingpositivelytochangingpolicies;joiningupservicesattheneighbourhoodlevel;orhelpingmeetstrategicgoals,suchastacklingclimatechange.Insourcingalsogivescouncilstheabilitytoshiftresourcesquicklytotacklelocalneedsandemergencies.

Insourcing can therefore be regarded as a flexible option for local authorities responding to a range of current policy drivers.

AnAuditCommissionreport‘For better, for worse’ in2008highlightedthecomplexitiesinvolvedinoutsourcingandstrategicpartnering.16Italsoquestionedsomeofthereportedefficienciesarisingfromoutsourcing.Authoritiesthathadenteredintolargescalelong-termstrategicpartnerships

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hadfounditdifficulttonegotiateefficienciesrequiredunderGershonefficiencytargets,astheywerecontractuallycommittedwithprivatesectorpartnerswhodidnotwantthistoimpactontheirprofits.

APSE’s2009publication‘Insourcing: A guide to bringing local authority services back in-house’ remainsthemostcomprehensiveanalysisoftheinsourcingphenomenoninUKlocalgovernmenttodate.Thissetoutbenefitsthattheoptionofreturningservicesin-housecandeliverandprovidesvaluableprimarydata.

Theresearchfounddecisionstobringservicesbackin-houseweretakenforpragmaticreasonsratherthananyideologicalstance.Itfocusedanalysisonsome50examples.Reasonscitedbehinddecisionstoreturnservicesin-housewerethatitoffered:awayofaddressingpoorperformance;ameansofbeingmoreresponsivetochangingpolicyagendas;anopportunityformakingefficiencysavingsandreducingcosts;awayofachievinggreaterservicesynergy;ameansofimprovinglowstaffmorale,duetopoortermsandconditionsandshort-termcontractsthatimpacteduponservicequality;andaneedtoimprovecustomersatisfactionandlocalaccountability.Dealingwithcontractorswasalsofoundtotakeupmoreseniormanagementtimethananticipated.

Insourcing can therefore be viewed as a means of improving efficiency, staff morale and service quality.

Insourcingcanbeameansofdeliveringbenefitswhileminimisingrisks.ZurichMunicipal’sreport‘Publicsectorsupplychain:risks,mythsandopportunities’inJune2009,saidlocalauthoritiesare‘unawareandunderprepared’foroutsourcingrisk.17Seniormanagersandriskassessmentofficersfeelunclearandillequippedtomanagetheresultingrisks,accordingtothisreport.Thereportwarnsofthe‘potentiallycatastrophic’implicationsonlocalgovernmentservicesascouncilsdramaticallyincreaserelianceonbackofficeoutsourcingandfrontlinepartnershipworking.Itsetsoutpotentialfinancial,legaland

reputationalramificationsforlocalauthoritiesofsupplychainfailure.Examplesofriskscitedare;suppliercostoverrun;dataprivacybreaches;andmismanagedsocialcarecontracts.Thisisanincreasinglyimportantfactorgivenvolatileglobalmarketconditionsandhighprofilecollapsesofcompaniesprovidingpublicservices.Thecouncilremainsresponsibleforservicesregardlessofwhodeliversthemandin-housedeliverycanthereforeensurecontrolandstabilityinthefaceofunstableprivatemarkets.

Insourcing can therefore help to minimise risk in the delivery of local government services.

APSEhasbeengatheringexamplesofwaysinwhichin-houseservicesarerespondingtotheneedtodeliverefficienciesandcostsavingsinresponsetobudgetconstraints.Its2011publicationAvoiding the Road to NowheredrewtogetherexamplesfromaroundtheUKshowinghowin-housedeliverycanbeameansofdeliveringefficienciesandproducingcostsavingsinlocalgovernment.18

Furtherobjectiveinformationonthebenefitsofbringingservicesbackin-houseemergedinMay2011fromtheSocietyofInformationTechnologyManagers(SOCITM),whichrepresentspublicsectorITCmanagers.SOCITM’sreport19Costs of Outsourcing – Uncovering the Real Risksoutlinesevidencethatoutsourcingtechnologyservicesisusuallymoreexpensivethanretainingthemin-house.Itconcludes:‘Onalike-for-likebasis,theoutsourcedoperationsareusuallymoreexpensive’.Ithighlightsthe‘hiddencosts’thatcanbeassociatedwithexternaldelivery.Thereportcomparescostsbetweenoutsourcedandin-houseservicesandfindsthatalthoughtheoutsourcerwillincursimilarcoststotheclient,itwilltypicallychargemoreasaresultofriskpremiumsandthecostofborrowingintheprivatesector.Costsassociatedwithtenderingandpreparation,andaprofitmarginonthewholesummustalsobetakenintoconsideration.

InSOCITM’sview,in-housecouncilteamsarecapableofprovidingeconomiesandefficiencies.Akeypointofthereport’sfindingsisthatlocalauthoritiesthatcannotdeliverefficienciesfrom

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in-houseservicesareunlikelytofindefficiencieswhenmanagingacontract.Italsoshowsthereisadangerassociatedwithlosingin-houseskills.

In-house services can therefore be a more cost effective option for delivering services.

Havingestablishedthecontextinwhichinsourcingistakingplace,wenowpresenttheresultsofresearchshowingtheprevalenceofinsourcing,thereasonsforinsourcingandtheadvantagesitcanbring.

Insourcing:theevidence

Havingexaminedthecontextinwhichinsourcingistakingplace,wewillnowconsiderthefactorsinfluencinginsourcingandnewexamplesofservicesbeingbroughtbackin-housesinceAPSE’s2009insourcingresearch.APSEundertookareviewofexistingmaterial,asurveyamongcouncilofficersandelectedmembersandinterviewswithcasestudyauthoritiestoexamine:incidencesofinsourcing;reasonsbehinddecisionstoreturnservicesin-house;andtheoutcomesthatarebeingachieved.

Summary of survey responses and key findings

Respondents and council type

Thesurveyreceived140responseswith65.3%ofallrespondentscomingfromaservicedirectororheadofserviceorseniormanagementlevel.ThemajorityofrespondentswerefromEnglishauthoritiesmakingup71%ofallrespondentswithafurther16.9%fromScotlandand8.9%fromWalesand2.4%fromNorthernIreland,(see figure 1).

Figure 1

70.9%

16.4%

9.7%

2.2% 0.7%

England Scotland Wales Northern Ireland Other

Is you authority based in

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Respondentswerefromamixtureofauthoritytypeswiththehighestproportionof22.2%comingfromEnglishUnitaryauthoritiesand16.7%fromMetropolitanauthoritiesand15.1%fromdistricts.13.5%werefromScottishunitaryauthoritiesand5.6%fromWelshCountyCouncils.

Insourcing by volume and service types

Ofallrespondents57.3%hadinsourcedorwereintheprocessofinsourcingorconsideringinsourcingaservice.18.4%ofrespondentsstatedthattheyhadneveroutsourcedaservicewhilst31.1%saidthattheyhadapluralapproachtoservicedelivery.Onacumulativebasis45.3%ofrespondentscamefromenvironmentaldisciplinesfollowedby18.8%fromhousingandbuildingmaintenancedisciplines16.7%fromRoadsandHighwaysservices.Theremainderofrespondentswerefromavarietyofdifferentdisciplinesincludingleisure,transportandfleet,economicdevelopmentandpolicyandplanning.

Councils considering insourcing

Whileservicesthathavealreadybeenbroughtbackin-houseorhavetakenformaldecisionstoinsourceareinthepublicdomain,asignificantnumberofotherauthoritiesareconsideringbringingservicesbackin-house.Servicesthatarebeingconsidered

forinsourcinginclude;groundsmaintenance,transportandfleet,customercontact,andbuildingcleaning.Theseauthoritieshaverequestedanonymityduetocommercialconfidentialityandsensitivityoverhumanresourcesissues.

Reasons to insource a service

‘Aneedtoimproveefficiencyandreduceservicecosts’wasthemostcitedreasonforinsourcingwith58.7%ofrespondentsagreeingthatthishasbeenakeyreasonforinsourcing,(seefigure2).Atotalof42.9%ofrespondentsalsoagreedthat‘Aneedtoimproveservicequality’wascriticaltoadecisiontoinsource.Atotalof33.3%citedthattheyhadtakentheopportunitytoinsourceaservicewhenacontracthadcometotheendofitsterm,demonstratingthatlocalauthoritiesweretakingtheopportunitytothoroughlyreviewvalueformoneyissuesatthepointofacontractdetermination,ratherthansimplyrenewingacontract.

Interestinglytheneedforamoreflexibleservicewasalsorankedby31.7%ofrespondentsand27%ofrespondentscitedthattheywishedtoreduce‘clientmonitoringandcontractmanagementtimeandcosts’throughinsourcingaservice.

Userandclientdissatisfactionalsofeaturedhighly,with27%ofcouncilsreportingthatdissatisfaction

Figure 2

Please tell us from the list below what were / are the main reasons for insourcing the service(s)? You may tick more than one box

0% 10% 20% 30% 40% 50% 60% 70% 80%

Other

A desire to join up services better across different council departments

A need to respond to the needs of more vulnerable citizens or service users

Changing policy needs

Need to have a more flexible service

Contract coming to the end of its term

Client (council) dissatisfaction with an external contractor

Service user dissatisfaction with an external contract

A need to reduce client monitoring / contract management time and costs

A need to improve efficiency and reduce service costs

Need to improve service quality

Market failure / company collapse or company going into administration or liquidation

Environmental /climate change reasons

Ability to rationalise property and or assett use

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withacontractorwasaprimaryreasonforinsourcing.Thesurveyfound20.6%ofrespondentsalsoreporteddissatisfactionamongstendserviceusers.

Advantages of Insourcing

Someoftheadvantagesofinsourcingwerelistedasefficiency,flexibilityandreducingcostsandtimeassociatedwithcontractmonitoring(see figure 3).Thislatterreasoncanbeacostandresourceintensiveactivitythatcanbehiddenfromoriginalcontractcostbenefitanalysis.Atotalof64.2%ofrespondentscitedgreaterflexibilityasbeingoneofthemainadvantagesofinsourcingfollowedby61.2%whocitedgreaterefficiencyfrominsourcing.Inthecontextofreducedbudgetsthisisnoteworthy.Thesurveyfound55.2%ofrespondentscitedsimplifiedcontractmanagementwith52.2%claiminggreaterlocalaccountabilityasbeinganadvantageofaninsourcedservice.

Whilstworkforceissueswerelistedtheywerelessofaprioritythanotherreasonsforinsourcingtheyweresignificantwith32.8%describing‘improvedstaffmorale’asapositiveoutcomewith25.4%sayingthattheyhadseenimprovedstafftermsandconditions.

Figure 3

Insourcing, efficiencies and financial considerations

Itwasimportanttoestablishthroughthesurveywhetherinsourcingwasconfinedtolargerorsmallerbudgetareasorspreadevenlyacrossservicesanddifferentbudgetvalues(see figure 4).19.4%ofrespondentsreportedbudgetsinexcessof£4,000,000with3.0%reportingbudgetsbetween£3,000,000to£4,000,000and9.0%ofrespondentsreportedbudgetsbetween£2,000,000and£3,000,000and7.5%reportingbudgetsbetween£1,000,000and£2,000,000.

Figure 4

Respondentswerealsoaskedifsavingswereanticipatedfrominsourcingaservice(see figure 5).Anoverwhelming57.1%reportedthattherewouldbenocostincreasesandincorrelatingresponsestootherrepliesitisclearthataprimarydrivertoinsourceaservicewastheabilitytodeliverbetterfinancialcontrolsalongsideserviceimprovementplanningandchangestoserviceprovision.

What do you consider to be the main advantages of insourcing? You may tick more than one box

0% 10% 20% 30% 40% 50% 60% 70% 80%

Other

Improved staff morale

Better terms and conditions for staff

Greater local accountability

Simplified service delivery

Simplified contract management

Greater flexibility

Greater efficiency

0% 5% 10% 15% 20% 25% 30%

There is more than one budget to which this question applies

Don't know

Above £4,000,000

£3,000,000 to £4,000,000

£2,000,000 to £3,000,000

£1,000,000 to £2,000,000

£500,000 to £1,000,000

£250,000 to £500,000

£100,000 to £250,000

up to £100,000

What is the annual budget for this service? Where you have insourced more than one service please add the budgets together but tell us how much for each of the services in the box provided if known

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Figure 5

Respondentswereaskedspecificallyiftheyanticipatedanyperannumefficiencysavingsandacumulative63.4%ofrespondentssaidthattheydidanticipatefinancialsavingsfrominsourcing(seefigure5).36.5%wereunabletoquantifyafigurebut12.7%reportedefficiencysavingsupto£25,000perannum,7.9%reportedsavingsofupto£250,000perannum,6.3%anticipatedsavingsintheregionof£500,000whilstafurther4.8%saidthattheyenvisagedsavingsupto£1millionperannum.Thesefiguresshowthatakeyconsiderationforlocalauthoritiesinbringingaservicebackin-houseistheanticipationoffinancialsavings,throughmoreagileandflexiblewaystomanagelocalservices.

Theseareinterestingresultswhichtendtosupporttheuseofinsourcingtodevelopmorecostefficientwaysofdesigninganddeliveringservices.Whilst36.5%ofrespondentswereunabletoquantifybudgetorefficiencysavingsbutthiswasdueinparttosomeofthenewerexamplesofinsourcingwherefirstyearbudgetoutcomeswereyettobefinalisedorwheredatahadbeen

distortedbyservicemergerorreorganisationofservicesposttheinsourcingtakingplace.Howeverthecumulativefigureof63.4%ofrespondentsanticipatingbudgetsavingssupportsinsourcingasameanstosavemoney.

Employment matters

TUPEappliedinmostcasesofinsourcingaswouldbeexpected.Thevolumeofstafftransferredduringinsourcingvariedsignificantlywith16.7%ofrespondentsstatingthatthenumbersofpeoplesubjecttotransferwaslessthan10employees(see figure 6).ThiswasparticularlythecaseinsmallspecialistcontractssuchasITsupportservices.

Highernumbersofstaffweremoretypicalinfrontlineservicedeliverywith7.4%ofrespondentsreportingmorethan250stafftransferees.Onacumulativebasis44.5%ofrespondentsreportedlessthan100stafftransferredorwouldtransferuponinsourcingaservice.

Figure 6

0% 5% 10% 15% 20% 25% 30% 35% 40%

Other

Don't know

We will save up to £1,000,000

per annum

We will save up to £500,000

per annum


per annum


per annum

We will save up to £50,000 per annum

We will save up to £25,000 per annum

Do you anticipate saving money or generating efficiencies through insourcing? If so by how much PER ANNUM. Please tick one answer

0% 5% 10% 15% 20%

Other

Don't know

More than 250

Between 100 and 250

Between 50 and 100

Between 20 and 50

Between 10 and 20

Less tham 10

None

How many staff will be transferred?

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Thesurveyalsosoughttoestablishwhatwouldhappentostaffaftertheirtransfertothelocalauthority(see figure 7).Atotalof53.7%reportedthattheintentionoractionwastoharmonisetermsandconditionsofservicewiththoseofthelocalauthorityand48.1%sayingthattheywouldalsoharmonisethepayrateswiththoseofthelocalauthority.Just3.7%statedthattheywouldcontinuetopaytheex-contractorpayratesand7.4%sayingthattheyintendedtomaintaintheex-contractortermsandconditions.

Atotalof42.6%ofrespondentshadalsoputinplacearrangementstoensurestaffwouldhaveaccesstothelocalgovernmentpensionscheme(LGPS)butcommentsreflectedthatinsomecasestherewascontinuityoflocalgovernmentpensionarrangementsduringtheoutsourcedcontractarrangementssothisfigureunder-reportsthevolumeofstaffthatwouldhaveaccesstotheLGPS.

TheseresponsesperhapsbetterreflectthechangestotheTUPEregulationsin2006,whichprovideagenerallymorepermissiveframeworkforreasonablevariations.Itislikely–thoughnotevidenced–thatthechangestoharmonisetolocalauthoritypay,andtermsandconditionswouldbeadvantageoustoemployees.

Figure 7

Post transfer changes and service improvement plansRespondentswereaskedabouttheirspecificplansforposttransferactionsincludingwhethertheywouldrestructurethestaffingcompliment,employmoreorlessstaff,restructuremanagement,retrainandorre-skillstaffandmulti-skillstafftoworkdifferentlyoracrossboundaries(see figure 8).

Figure 8

50%ofrespondentstothisquestionsaidthattheywouldrestructuremanagementandafurther46.2%intendedtomulti-skillstafftodojobsdifferentlyoracrossboundaries.Just7.7%intendtoemploymorestaffand13.5%willemploylessstaff.

Overall51.9%intendedtorestructuretheoverallstaffingcomplimentbutthisisconsistentwithotherresponseswithinthesurveythathavestatedthatinsourcingwouldbeusedasameanstodevelopserviceimprovementplans,developefficiencysavingsandprovidemoreintegratedservicedeliveryoptions.Itperhapsalsoreflects,thoughnotevidencedwithinthesurvey,thesilonatureofcontractsthathavebeenoutsourced,particularlysomeoftheearlierexamplesofoutsourcedcontractsinenvironmentaldisciplines.Theseearlieroutsourcingarrangementsdonotappeartoreflectdevelopmentsatalocalauthoritylevelwith,forexample,movestowardsholisticneighbourhoodserviceteamsratherthandeliveryofspecificservicessuchasstreetcleansing,groundsmaintenanceandrecycling.0% 10% 20% 30% 40% 50% 60%

Other

Don't know

Non-harmonistation of pay rates (maintaining

ex-contractor pay rates)

Non-harmonistation of terms and conditions (maintaining

ex-contractor terms and conditions of service)

Hamornisation of pay rates

Harmonisation onto council terms and conditions

of service

Admission to the local government pension scheme

Which of the following matters have or will be considered for transferred staff?

0% 10% 20% 30% 40% 50% 60%

Other

Multi-skill staff to do jobs differently across service

boundaries

Reskill or retrain staff

Employ less staff

Employ more staff

Restructure management

Restructure the staffing compliment

Do you intend, following the transfer of staff and / or the service insourcing, to do any of the following? You may tick more than one answer.

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ExamplesofInsourcingTable: further examples of councils bringing services back in-house since APSE’S 2009 insourcing report

Local authority Service area Core reasons cited for return in-house

ENVIRONMENTAL SERVICES

BanbridgeDistrict

Recycling – Councilhasdecidedtobringtheservicebackin-houseinMarch2012attheendofacontract

– Councilestimatesthiswilldeliver£3msavingsoverthreeyears

NorthTyneside Recyclingcollection

– Rollingprogrammeofreturningservicesin-housefromJanuarytoJuly2009

– Newservicedeliverymodel

– Improvedservicequality

– Greaterflexibility

LewesDistrict Kerbsiderecycling

– CouncildecidedthatkerbsiderecyclinginLewestownandsurroundingvillagesshouldcomeunderdirectprovisionfromMarch2011

– Tocontinuallyimprovetheservice

– Todelivercostsavings

Northumberland Refusecollectionandstreetcleansing

– ServicesinBerwickreturnedin-housefromcontractorinSpring2011

– Fleetrenewal,lowercarbonemissionsandimprovedcustomerservice

– Lowermaintenancecosts

Rotherham Groundsmaintenance

– Broughtbackin-housein2010atnaturalendofcontract

– Enabledtheservicetobeintegratedwithstreetcleansingaspartoftheauthority’sStreetprideservices

– Improvedperformance,flexibilityandcustomersatisfaction

Thurrock Wasteandrecycling

– Largerangeofwasteservicesputouttotenderin2010

– Decisiontotakewasteandrecyclingin-houseexpectedtosave£2m

WyreBorough Streetcleansing – Returnedin-houseinApril2012

– Significantsavingsareanticipated

– Partofcouncilplantosave£312,000overall

NorthernMetropolitanBorough

Groundsmaintenance

– Consideringreturninggroundsmaintenancein-houseatendofcontract

– Needforgreaterflexibility

– Respondingtochangingpolicyneeds

EDUCATIONANDSOCIALCARE

Bradford Education – Returnedtolocalauthoritydeliveryin2011atcontractend

– In-houseplanstoimproveeducationalattainmentputinplace

Leeds Education – TerminatedexternalcontractinMarch2011aftertenyears

– Integratedchildren’ssocialservicesandeducationdepartment

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EDUCATIONANDSOCIALCARE

Newcastle Educationcatering

– Servicereturnedin-housein2007

– SchoolcamebacktocouncilserviceinJanuary2011tocaterfor1400pupils

Stoke-on-Trent Educationandsocialcare

– Returnedin-housein2010

– Counciltakingbackcontrol

ITC

Broadland IT – DecisioninNovember2010toinsourceatcontractend

– Costandqualityofservice

– Increasedflexibility

CoventryCity IT – Returnedin-houseattheendofcontractinMarch2011

– TocentraliseallICTactivityinanewdepartment

– Tointroduceclear,strongandeffectivegovernancearrangements

– Businesscaseforchangesexpectedtodeliver£5mayearsavings

EssexCountyCouncil

IT – Decisiontoreturnin-housein2009

– Todeliveramoreeffectiveserviceatabetterprice

Wiltshire IT – Camein-housein2009tomeetneedsofnewunitaryauthorityaftermergingfivecouncils

– Partofatransformationprogramme

– Todeliver27%costsavingsinoneyear

ECONOMICDEVELOPMENT

BristolCity Economicdevelopment

– Torespondtoneedsofmorevulnerableserviceusers

– Desiretojoinupservicesmoreeffectively

Telford&Wrekin Economicdevelopment

– Economicgrowthandtourismpromotionbackin-houseinMarch2010

– ToformanewintegratedserviceOneTelfordtopromotetheareaasabusinesslocation

– Toenablethecounciltobeincontroloftheborough’sfuture

HOUSINGANDBUILDINGMAINTENANCE

Basildon Housingmanagement

– Cabinetapprovedreturnin-housefromALMOinSpring2011

– Optionapprovedbytenants

– Expectedtomake£1msavingsannually

– Successfulbidforfundingtoimproveproperties

CotswoldDistrict Housingadvisoryservices

– In-houseserviceresumedin2009

– Yieldingsavingsof£70kayear

– Greatercustomersatisfactionandafallinhomelessness

– Improvedqualityofoverallservice

Ealing Housing – Returnedin-housefromALMOinApril2011

– Expectstosave£5moverfouryears

– Tenantssupportedthemove

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EastDorset Housingadviceandhomelessnessagency

– Returnedin-houseinOctober2010

– Reviewedongroundsofcostandneedforimprovements

– Needtoincreasecapacityfordeliveryofstrategichousingenablingservice

EastRidingofYorkshire

Buildingmaintenance

– Solidfuelservicingreturnedin-housein2010

– Trainedupexistingemployees

– Greaterflexibility

– Residentsprefertoseethecouncil’sownstaff

– Costsavingof£120kayear

Fife Gassafetyinhousing

– Onein-houseserviceacross27,000propertiesasofOctober2011

– Servicehadpreviouslybeensplit

– Estimatedminimumof5%savingsoverfiveyears

HammersmithandFulham

Housing – Returnedin-housefromALMOSpring2011

– Expectedtosavemorethan£400K

Hillingdon Housing – Returnedin-housefromALMOinSpring2010

– Residentconsultationfavouredthisoption

– Cuttingcostsofduplication

– Continuingserviceimprovement

– Expectedtosaveaminimumof£300kayear

Newham

Housingmanagement

– Returnedin-housefromALMOinApril2011

– Simpler

– Moreefficientandeffective

– Supportedbytenants

– Costsavingsanticipated

Perth&Kinross Premisesmanagement(Buildingcleaning,cateringandsecurity)

– Camebackin-houseinearly2011

– Partofoverall£100kcostreductionmeasures

– Councildecideditwasmoreeconomicaltohandleitself

Rotherham Housing – Tobereturnedin-housefromALMOin2011

– Tosavetheauthority£1mayear

Slough Housingmanagement

– Returnedin-housefromALMOinJuly2010

– Needtoimproveservicequalityanddelivergreaterefficiency

– Reducedunnecessaryoverheadsandincreasedvalueformoney

Surrey Buildingmaintenance

– Returnedin-houseinApril2010atendofcontract

– Bettervalueformoney

– Improvementstoservice

WestLindsey Homelessnessandhousingadvice

– Returnedin-housein2009

– Efficiencysavingsof£35kayear

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Scottishauthority Buildingservices – Coreservicein-houseandconsideringbringingelementsthatarecurrentlyexternalin-housewhencontractendsinlate2011

– Needtosavemoneyandprotectlocaljobs

NorthernMetropolitanBorough

Buildingmaintenance

– Consideringbringingservicebackin-houseascontractiscomingtotheendofitsterm

– Aneedtoimproveefficiencyandreducecosts

– Aresponsetochangingpolicy

CORPORATE

BlaenauGwent Emergencycallcentre

– Backin-houseinMay2011toreintegratewithCCTVandcontactcentre

– Reconfiguredinternalstaffingarrangements

– Localknowledgeandunderstandingprovidedbyin-housestaff

– Costefficienciesof£27kayear

Cumbria HRandpayroll – Backin-housein2009havingbeenpartoftenyearstrategicpartnership

– Movingawayfromlargescaleoutsourcingmodel

– Opportunitytodevelopnewservicedeliverymodel

Middlesbrough Accountancy – Returningin-houseinJune2011

– Consideredakeystrategicservicethatshouldberunbythecouncil

Middlesbrough Propertyservices

– Returningin-houseinJune2011

– Servicerequiresreconfiguration

CORPORATE

MiltonKeynes Procurement – Broughtbackin-houseinAugust2011

– Councilwantedstrategicratherthanprocessfocusedprocurement

– Willcontributetoarangeofdepartmentalsavingstargets

Payroll – Broughtbackin-houseinNovember2011afteroptionsappraisal

– Improvedvalueformoney

RedcarandCleveland

Contactcentre – Initiallyinsourcedin2007andsubjecttoongoingservicetransformation

– Serviceimprovementsandcostsavingsdelivered

– Enablednewservicepointsinlibrariesin2010

Southernauthority

Callcentre – Consideringreturningaspectsofcontractin-house

– Inresponsetoreductionsinfunding

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REVENUESANDBENEFITS

Ipswich RevenuesandBenefits

– PartnershipbringinginstafffromtwootherauthoritiesfromApril2011

– Greaterefficiencyandlocalaccountability

Southwark Revenuesandbenefits

– Returnedin-houseinApril2011

– Desireformoredirectcontrol

– Toprovideamodernisedserviceinacosteffectivemanner

– Toimproveperformance

MISCELLANEOUS

CoventryCity Citycentremanagement

– Tobereturnedin-houseatendofcontractin2012

– Todeliverestimatedsavingsof£0.5m

Middlesbrough Frontofhouseleisureservices

– Returningin-houseinJune2011

– Somestaffwereemployedbyacontractorandsomeweredirectlyemployedanditwasconsideredbettertobringthemallin-house

Sefton Securityservices

– Outofhoursmonitoringbroughtin-house2009

– Needtoimprovequalityofservice

– Reducedcostsbyusingexistingstaff

HIGHWAYSANDTRANSPORT

Ealing Highways

– Backin-houseinApril2011atendofcontract

– Moreflexible,resident-focusedservice

– Estimatedcostsavingsof£3.3mayear

Cumbria Highwaystechnical

– Broughtin-housein2011whenstrategicpartnershipended

– Economicdevelopment

– Abilitytomaintainexpertiseandclient-sidecapacity

HIGHWAYSANDTRANSPORT

Cumbria Highwaysmaintenance

– Tocomebackin-houseatendofcontractinApril2012

– Enablesgreaterflexibilityandcontrol

Rotherham Highways – Contractnotrenewedwhenitcametoanendin2011

– Allowsflexibilityinresponsetobudgetconstraints

Scottishauthority Transportandfleet

– Consideringreturningtransportandfleetin-houseascontractiscomingtoanend

– Aneedtoimproveefficiencyandreducecosts

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CaseStudies

Following on from the quantitative survey and examples of insourcing, our research focused upon a series of in-depth case studies in order to examine the background to decisions to bring services back in-house, the outcomes that have been achieved and the lessons that have been learned from the insourcing process. Case studies were selected in order to provide a geographically representative spread, a reflective timeframe and cover a diverse range of services. Redcar and Cleveland has been included to demonstrate how an insourced service has responded to the transformation agenda and ensured continuous improvement over a number of years.

CUMBRIA COUNTY COUNCIL

Human Resources and Payroll, Accounts, Highways and Economic Development

Key points:

– Insourcingispartofaprogrammetosave£1.5mayearattheendofastrategicpartnershipdeal

– Insourcingispartofbusinessprocessre-engineeringtoimproveservices

– Bringingsomeoftheservicesbackin-housewillallowmoredirectcontrolandflexibility

Quote: “Bringing it back in-house allows greater control and ability to deliver efficiency savings.”

Background

CumbriaCountyCouncilwasoneofthefirstauthoritiesinthecountrytoenterintoalarge-scalestrategicpartnershipwithanexternalcontractorin2001.Thecontractwassplitintodistinctblocksofservicesdeliveredby540transferredstaff:highwaystechnicalservices,economicdevelopment;property;pensionsadministration;occupationalhealth;humanresources;payrollandaccountspayable.

Withthe£20mayearcontractduetoexpireinFebruary2011,thisprovidedachancetoreviewthecouncil’sservicedeliveryarrangements.TheCabinetconsideredhowservicesshouldtobedeliveredwhenthecontractcametoanendandanextensiveperiodofoptionsappraisaltookplace.AfterdueconsiderationCabinetrecommendeda‘mixedeconomy’approach–tostrengthenthecouncil’sclient-sidecapacityacrosssomeoftheareas,procureandutiliseframeworkcontractsandexploresharedservicesopportunitieswithotherpublicsectorbodies.

Whilethetechnicalaspectsofthecouncil’shighwaysservicesweredeliveredunderthestrategicpartnership,maintenanceworkisdeliveredbyaseparatecontractorunderacontractthatisduetoexpireinApril2012.ItwasdecidedthatanintegratedhighwaysserviceistobeintroducedinApril2012whichwillfurtherprogress

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workalreadyundertakeninapplyingsystemsthinkingmethodologiestoimproveservicedelivery.

Thecouncilexaminedserviceconfigurationandtookaconsciousdecisiontogoforamixeddeliveryapproach.PensionsadministrationisnowdeliveredinpartnershipwithLancashireCountyCouncil.OccupationalhealthissharedwithMorecambeBayAcuteHospitalTrust.Theotherserviceshave,in-effectbeeninsourcedandsupplementedwithsomespecialistcall-offframeworkswhereappropriate.Itwasdecidedthattheservicedeliveryapproachforfuturehighwaysmaintenanceworksshouldbeonthebasisofdoingthecorebodyofworkin-housewitharrangementswithlocalcontractorsforspecificprojectswhereappropriate.

Results

WhenCumbriaCountyCouncilfirstoutsourcedtheextensiverangeofservicesunderthetenyearstrategicpartnership,hundredsofstaffweretransferred.Humanresourcesandpayrollwerethefirstservicesformerlydeliveredbythestrategicpartnershipthatwerebroughtbackin-housein2009.Thisenabledtheseservicestobepartofamodernisedcouncilstructureandnewtechnologytobeintroducedinordertoimproveefficiency.

Thereturnofhumanresourcesandpayrollin-housewasfollowedbythereturnof270staffdeliveringhighwaysandpropertyservicesinFebruary2011.EmployeeswereTUPEtransferredandthecouncilisnowpreparingfortheimplementationofsinglestatusarrangements.Theauthorityhasbeenmovingawayfromthepreviousstyleofalargescaleoutsourcedmodelandtakingtheopportunitytoimplementvariousnewservicedeliverymodelsforthefiveservices.

AlanRatcliffe,Cumbria’sassistantdirectoroforganisationaldevelopment,says:‘Thepartnershiparrangementin2001wasinnovativeandproducedanumberofbenefitstothecountycouncilatthetime.Thingshavechangedalotintenyearsandtheauthoritywantedtohavegreatercontrolandflexibilitytorespondtothemodernisationagenda.Bringingservicesbackin-house

alongsideinnovativeandflexibleservicedeliveryarrangementsincludingworkinginpartnershipwithotherpublicsectorbodiesallowsgreatercontroloverservicedeliveryandtheabilitytodeliverefficiencysavings.’

Whenhumanresourcesandpayrollwereinsourcedtwoyearsagoitwaspartofawiderservicereorganisationprocess.‘Itwasakeycomponentindevelopingourpeoplemanagementserviceasitallowedustoputallourtransactionsystemstogether,whichgivesuscontrolofthewholeprocessfromrecruitmentthroughtowhenpeopleleave.’Replacingcorefinance,assetmanagement,humanresourcesandpayrollsystemsallowedthecounciltodesignservicesarounditscoreprioritiesandallocateresourcesaccordingly.Itgivesgreaterflexibility.

Optionsappraisalswerebasedonthedeliveryofcouncilpriorities,improvementstoservicesandthegenerationofefficiencysavings.Actionsattheendofthestrategiccontactwillsavethecouncil£1.5mayearthroughtherangeofmeasuresdescribed.CumbriaCountyCouncilhastosave£44mthisyearasaresultofcutsinitsbudgetandapproximately600staffhavetakenvoluntaryredundancy.Thecouncilistryingtomaintainserviceprovisionwithdrasticallyreducedfunds,whichmeanschangingbusinessprocesses.

MrRatcliffesays:‘Ourpriorityistobeasefficientandeffectiveaspossible.Wehavetakenabusinessprocessreengineeringapproach.Systemsthinkingmanagementtoolshavebeenappliedtomakeservicesasleanandcustomerfocusedaspossible.Thisapproachalsohelpsdevolveservicedeliverytoaverylocallevelinanauthoritywithgeographicallydispersedpopulationandmeanswehavemorecontrolandflexibilitytoadaptservicestolocalneeds.’

Lessons

Havinghadanextensiverangeofservicesdeliveredexternallyfortenyears,itwasnecessarytostrengthenthecouncil’sclientside.Newarrangementshaveallowedtechnicalexpertisetobebroughtbackintothecouncil.Thiswillalso

22


enableit‘spotbuy’onframeworkcontractswhereappropriate.Asacross-partybody,theauthorityhastakenapragmatic,pluralistapproachtohowservicesareprovided.

LessonslearnedfromtheexperienceofmanagingthetransitionfromthecontractarecurrentlybeingappliedtothearrangementsbeingputinplaceforCumbria’shighwaysmaintenanceservicein2012.CllrTonyMarkley,CumbriaCountyCouncil’sCabinetmemberresponsibleforhighways,comments:‘Anycontractorwillalwaysfactorinanyunknownsintheareaofreactivemaintenance–whichmeansthepriceofthecontractcanbecomehigherthandeliveringityourself.

‘Bybringingsomeoftheservicesbackin-housewewillhavemoredirectcontrolandflexibilityovertheworkourteamsdo.Theywillhaveagreatersenseofprideandownershipintheirworkandwillbeabletoworkmorelocallythanthecurrentarrangements.Wehavebeendevelopingnewwaysofworking,knownasBetterHighways,whichaimstofixthingsrightfirsttime.Bringingtheservicein-houseisthenextlogicalstepinthisjourney.’

Trade union comment: DeborahHamiltonBranchSecretaryofUNISONCumbriaCountyBranchsaid‘WhatCumbria’scasestudyshowsisthatwhilstdecisions,forwhateverreasons,havebeenmadeinthepast,itdoesnotmeanCouncilsshouldnotreviewandconsiderchangestooutsourcedcontractsandbrancheshaveacriticalroletoplayinpointingoutwherethereareconcernsovercontracts.WhatmayhavesuitedLocalCouncillorstenyears,agoinarrivingatadecisiontooutsource,shouldnottiefutureorcurrentLocalCouncillors,intoreplicatingthosedecisions.Agenuinereviewofwhataserviceneedstolooklikeinthefutureshouldbetheforemostconsideration.

InrespectofCumbriaUNISONourprimaryconcernswastoensurefairnessforourmemberswhoweretransferredbacktothelocalauthority.Itwasfarfromabedofroses!Difficultdecisionsandnegotiationshadtotakeplaceincludingwhatthefutureworkforcewouldlooklike.Howevermyadvicetobranches,lookingatchangestothewayinwhichcontractsoperateorreturningaservice

inhouse,istomakesureyouhaveappropriatetraininginplaceforstewardsandbranchoffices.TUPEIsacomplexissueanditcertainlyhelpedourbranchinnegotiationstobearmedwithallthefacts.EquallyIwouldsaythatifacouncilmakesadecisiontooutsourceaservicethatisnottheendofthematter.Weplayedacriticalroleinalongtermcampaignaroundoutsourcedservices.Branchesshouldnotsimplythinkbecauseaserviceisoutsourceditwillneverberuninhouseagain.AswehaveproveninCumbriahavingexcellentskilledstaffcapableofrunningaservicehasgiventhelocalcouncilgenuineoptionsandforusasabranch,whilstithascertainlypresentedchallengesthecampaigningworkandthetrainingweputintoplaceensuredwewereinagoodpositiontosupportourmembers.

FIFE

Building Services – Gas Servicing and Repairs

Key points:

– Repairscostsperhousenearly7%lessthantheexternalcontractor.

– In-housewasamoreflexibleoption– Managementcapacitywasmaintainedwhich

reducedrisktothecouncilinfulfillingalegalduty

– Addedvalueisbeingprovidedthroughenhancedaccountabilityandengagementwithtenants

Quote: “Operating the service in-house has meant it can more fully integrated with other aspects of housing services and avoid duplication.”

Background

FifeisaunitarycouncilintheEastofScotland,whichserves360,000residents.TheBuildingServicesdepartmentemploys350staffandispartofthecouncil’sassetandfacilitiesmanagementdirectorate.Thedepartmentcarriesoutaround150,000repairsayearandtransformationoftherepairsandmaintenanceservicehasresulted

23

incontinuousimprovementsacrossarangeofperformanceindicatorsoverthepastdecade.

TheGasSafety(InstallationandUse)Regulations1998 meanthecouncilhasastatutorydutytoservicegasappliancesinthe27,000propertiesitownsonanannualbasis.GasservicingperformanceisakeyareaforinspectionbytheScottishHousingRegulator.

Gasservicingandrepairsworkwasoriginallydividedbetweenthreecontractorsusingsixgeographicallysplitcontractsawardedbyopentender.Thissplitwastoensurethattherewascovershouldanyonecontractorbeunabletodeliverontheirobligations.Theworkwaslatersplitbetweentwocontractors,withthein-houseBuildingServicesteamwinningapproximatelyhalfoftheworkinopencompetition.

Theoverall2009-10budgetforgasservicingandrepairswithinthecouncil’shousingstockwasjustunder£3.4m.AReviewtookplaceinearly2010.Tenants,contractors,BuildingServices,tradesunionsandotherlocalauthoritieswereconsultedandareportwaspresentedtotheHousingandCommunitiesCommitteeinApril2010.

TheReviewteamfoundtheback-officeprocessesinvolvedinsupportingamixofprivateandin-housecontractorswereprovingcomplexandresourceintensive.ItsaidthatbenefitsfromasingleFife-widecontractincludedsimplifiedmanagementarrangementsandflexibilityindelivery.Itsaidthisshouldbea‘customer-focusedcontract,withspecificperformancerequirements’.TheReviewconcludedthatdeliveringtheservicein-housewasamoreflexibleoptionandmeantthatmanagementcapacitywasmaintained;animportantfactorasfailuretohaveagascontractorinplacewouldbeasignificantrisktothecouncil.

Thein-housebiddemonstratedthatitofferedbestvalueintermsofbothcostandperformance.Whenin-housecostswerebenchmarkedagainstotherScottishcouncilsthroughAPSE’sperformancenetworks,FifeBuildingServices’costswerelowestofsevencouncilsprovidingasimilarservice.BuildingServiceshadalsodemonstratedaflexible

approachandattendedtorepairsworkintheexternalcontractor’sareawhenthatcontractordeemedtheworktolieoutsidethecontract.BuildingServicesrepairscostsperhousewerenearly7%lessthantheexternalcontractor.

ThecontractcoveringthewholeofFifewasawardedtotheauthority’sBuildingServicesdepartmentfollowingsubmissionandacceptanceofaformal‘bid’forthenewcontract.

Outcomes

Thesinglecontractwasawardedforafive-yearperiod.Deliveringonein-houseauthority-wideserviceallowedamoreseamlessapproachandmanagementcapacitytobemaintained.Theservicecamebackin-houseinOctober2010.Thisdecisionwastakeninordertodelivergreaterefficienciesandreducetheoverallcostofprovidingtheservice.

Followingthedecisiontoinsourcetheservice,20engineersandthreeadministrationstaffcameovertothecouncilwhohadpreviouslybeenemployedbyprivatecontractors.Increasedflexibilitymeantanalternativeservicedeliverymodelcouldbeimplementedwithmoreflexibleappointmenttimesfortenants.Tradesunionssuggestedusingtechnologyformobileworkingfromasingledepotintheirconsultationresponse,amovethatisbeingintroducedtoincreaseefficiency.

Thetargetforgassafetyis100%inspectionscompletedwithin12monthsofthepreviouscheck.Thisisastatutoryrequirement.Theservice‘cycle’hasthereforebeensetattenmonthstoensurecompliancewiththeannualtarget.Contractstandardsincluderesponsetobreakdownswithinfourhours,aminimum80%ofrepairstobecompletedduringthefirstvisit.Itcallsfor90%ofpartstobeavailableonthesamedayandprovisionoftemporaryheatingfortenantswhereneeded.Itrequiresanycomplaintstobedealtwithwithintenworkingdaysanda5%reductioninthenumberofcomplaintsreceivedyearonyear.Thein-houseteamismeetingallthetargetsset.

Itisalsoprovidingtheserviceinamorecost-effectivemanner.Thenewcontractmeansabetter

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serviceatrateof£4poundperpropertyless.Thein-housecontractbidsetafixedpriceforservicingandrepairswithcommitmenttomakereductionsof5%overthenextfiveyears.

Theauthorityexpectstomakethesesavingsonayear-by-yearbasisthroughefficiencies.Itwillhavehandheldtechnologyinplacebytheendoftheyearaspartofthatefficiencydrive.Managementcostshavebeenreducedbecauseextrastaffsupervisionhasbeentakenoninadditiontoexistingmanagementresponsibilities.Additionaleconomiesarebeingachievedwiththesharingofaccommodation,vehicles/fleet,IT,wastedisposalandcleaningwithexistingservices.

Addedvalueisbeingprovidedthroughenhancedaccountabilityandengagementwithtenants,servicingbyappointment,stockholdingandflexibleworking.Otherrequirementsthatarebeingmetasaresultofin-housedeliveryinclude;improvedinformationflows;qualitymanagementsystems;andaclearsetofactionswhenthingsgowrong.

Whilethenewin-housecontracthasnotbeeninoperationforafullyear,theauthorityreportsthatithasalreadyseenimprovementsinservice.Thecouncil’scontractsmanager,SteveAnderson,says,‘motivationamongthestaffwasparticularlyevidentduringspellsofbadweatherattheendof2010’.

Operatingtheservicein-househasmeantitcanmorefullyintegratewithotheraspectsofhousingservicesandavoidduplication.ForexamplehousingrepairsadministrationstaffarenowmonitoringCP12integration.MrAndersonexplainsthattheBuildingServicesdepartmenthasalargeworkforcethatwecanmovearoundtogetthebestpossibleservicewhereneededataparticulartimeandthisflexibilityprovidedbyadditionalin-housestaffbenefitsthedepartmentoverall.

Lessons

Staffingissueswerethemainfactortoconsiderduringthemovebackin-house.Theauthorityhasbroughtthetransferredstaffonboardwiththesametermsandconditionsasexistingemployees.Whilethosestaffpreviouslyemployedbyanexternal

contractorwereonslightlyhigherpay,theycangainfromthecouncil’sothertermsandconditions,suchasbetterholidays,employeebenefitschemes,sicknesspayandpensionscheme.

Itwasdifficultfortheauthoritytogainaccesstotheexternalcontractor’sstaffduringthetransferprocessandthismeantalackofinformationpriortotheactualtransfer.

Theauthorityengageddirectlywithtradeunionsandthisprovedveryvaluableinmanagingteethingtroubles.Aparticulardifficultyhasbeenthat,whileverycapable,staffwhoweretransferredoverhadnotreceivedthesameleveloftrainingasthecouncil’sexistingworkforce.Theauthorityhadtoensurestaffweretrainedandqualifiedtoitsstandardsinashortperiodoftime.

HILLINGDON

Housing Management

Key points:

– Tenantsoverwhelminglyagreedtothecounciltakingoverrunningthestockduringanindependentconsultation

– Transferringtheservicein-househasachieved£300ksavingsestimatedinthefirstyearongovernanceandthecostofserviceshasreducedbyanadditional£2.1m

– A‘leanthinking’managementmechanismhasdesignedtheservicearoundusers’needs

Quote: “We are exploiting the benefits of having services back in our control in conjunction with social care managers.”

Background

TheLondonBoroughofHillingdonhas10,300tenantedand3,500leaseholdproperties.Managementofthehousingstockwasreturnedin-houseinspring2010,havingbeenrunbyanArmsLengthManagementOrganisation(ALMO)forsevenyears.

TheALMO,HillingdonHomes,wassetupin2003tomanagethecouncil’spropertiesfollowinga

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stockoptionsappraisal.TheALMOwasawardedtwostarsforserviceperformancefromthehousinginspectorateandhadhightenantsatisfactionlevels.Astockinvestmentprogrammebackedby£60mGovernmentfundingenabledtheDecentHomesstandardtobereachedinthecouncilhomesby2008.Withthisprogrammeofpropertyupgradescompleted,thecouncilexaminedthebestwayoffurtherimprovingservicesforresidentsandalsowheremoneycouldbesaved.HillingdonCouncilestimateditwouldsaveaminimumof£300kayearbytakingtheservicebackin-house.

Tenantsoverwhelminglyagreedtothecounciltakingoverrunningthestockduringanindependentconsultation,whichmirroredtheconsultationprocesstheauthoritywentthroughwhenitsetuptheALMO.Thisincludedaseriesofeventsandmeetings,interviewswithatelephonesampleandapostalsurveysenttoeverytenant.Therandomtelephonesurvey,whichwasstatisticallyrepresentativeofalltenantsandleaseholders,managedtocontact1,300residentsofwhom610wereinfavourofreturningtothecouncil,only57wereopposedand582didnotmindeitherway.Fromthepostalsurvey,ofwhichtherewere1,249responses,942wereinfavourofreturninghousingmanagementtothecouncil.

Hillingdonwasthefirstauthorityinthecountrytodecidetomovehousingmanagementbackin-house.Theofficialtransfertookplaceon1October2010.

Outcomes

Theprincipalreasonforreturningtheservicein-housewascuttingcosts.‘Itcostsmoneytorunaseparatecompany,’saysNeilStubbings,Hillingdon’sdeputydirectorofadultsocialcare,healthandhousing.‘WeareinadifferenteconomicclimatenationallytothatwhichprevailedwhenwesetuptheALMOandeveryorganisationishavingtoreduceexpenditure.Whenyouarelookingataseparateorganisationthereisduplicationandwefeltitwasn’tfeasibletomaintainthatexternalbodyunderfinancialconstraintswewerefacing.’

Transferringtheservicebackin-househasachievedthe£300ksavingsestimatedinthefirst

yearonthecostofgovernancealone.Thecostofserviceshasreducedbyanadditional£2.1m.AspartofthereviewoftheALMO,itsmanagementfeehadreducedby£1.3mandthecouncildevelopedproposalstocutthecostfurther.

MrStubbingssays:‘Weadoptedthetypical‘leanthinking’managementmechanism.Wehavetakentheserviceuser’sneedsasthestartingpointanddesignedasensibleservicebasedaroundthem.Thecouncilwasgoingthroughitsownbusinessimprovementdeliveryprogrammeandexpectingthateachofourcostcentreswouldcomeupwithproposalsthatwouldsaveintheregionof20%,throughbettercommissioningofservicestakingleanthinkingapproachesanddesigningwasteoutofthesystem.Sothismovefitsthecouncil’swider,strategicapproach.’

Theauthorityimmediatelymovedtherepairscentreintothecouncilcontactcentre.EveryothersectioninHillingdonisgoingthroughaprocessoflookingatfrontendcontactandmovingthatintothecouncil’scontactcentrewherepossible.Thisdeliversgreaterefficienciesandeconomiesofscale.

Theauthorityreceivednocomplaintsthattheservicehadbeenaffectedinanywayasaresultoftransferringback,whichwasagoodstartingpoint.Thein-housestockmanagementserviceisinthetopquartileforarangeofperformancemeasurestodate.Dataisbeingcollatedtoexamineperformanceinthefirstyear.Theauthorityisundertakingareviewofcustomerconsultationandinvolvement.

Bringinghousingin-househasdeliveredaddedvaluebecauseithasenabledamoreholisticapproachacrosstheboroughbyintegratingitwithotherservices.Housingmanagementnowsitswithinthesocialcare,healthandhousingdirectorate,whichcoversenvironmentalhealth,homelessnessandhousingbenefit,meaningtheyallworkverycloselytogether.

‘Weareexploitingthebenefitsofhavingservicesbackinourcontrolinconjunctionwithsocialcaremanagers,’saysMrStubbings.Theauthorityhasmadesignificantsavingsasaresultofmovingolder

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andmentallyillpeopleandthosewithlearningdifficultiesfromexpensiveresidentialsocialcarefacilitiesandintosupportedhousing.Thishasthebenefitofincreasingtheirindependenceaswellascuttingcosts.

Thecouncil’stelecareservicehasnowbeenextendedsoitisavailablefreeforeveryoneintheboroughagedover85,whichkeepspeoplesafeandsupportedintheirownhomesand,again,reducescarecosts.‘Thebusinesscaseiscompellinganditalsohasatherapeuticbenefit,’accordingtoMrStubbings.Savingsonsupportservicecostswillbeusedtoenhanceservices.Thecouncilisnowworkingtomakemoreefficienciesandimprovelinkagestoothercouncilservices.

Lessons

Therewerenomajorproblemswiththetransferprocess.GoodinteractionbetweentheALMO’sboardandtheauthority’sseniormanagementmadeitasmoothtransfer.Atotalof345staffweretransferredfromtheALMO.Almost70%ofpeoplewhocameovertothecouncilhadpreviouslytransferredtotheALMO.StaffwhomovedoverfromHillingdonHomesLtdunderTUPErequiredonlyminorchangestotheirtermsandconditionstobebroughtinlinewithcouncilstaff.

Theservicewasreturnedin-houseinresponsetochangesinthepolicyandfundingcontextinwhichitoperated.GovernmentfundingforstockupgradesisnolongeravailabletoALMOsandthehousingfinancesystemisbeingreformednationallytogiveauthoritieswhoownandmanagetheirstockgreaterfreedomsandlocalcontroloverbusinessplanning.ThismeanstherationaleforestablishinganALMOnolongerprevails.WhileHillingdonHomesdidagoodjobofmanagingthecouncil’stenancies,thecouncilhadtolookathowitcouldcontinuetoprovidegoodquality,efficientservicesforresidents.Theimpactoftherecessionandseverelyrestrictedbudgetsmeansitcannotjustifyrunningaseparatecompanytomanagehousingwhenitcoulddoitin-house.

ISLINGTON

Building Cleaning

Key points:

– ThecouncilofferedcleaningstaffacontractandaguaranteedLondonLivingWageandlocalauthoritytermsandconditionsaspartofitscommitmenttomakingtheboroughafairerplace

– Bringingtheservicebackin-housesavesmoneyandleadstoanimprovedservice

– Estimatedsavingsfor2011-12areinexcessof£100k

– TherecentLondonLivingWageincreasewillbeimmediatelypaidtoallrelevantstaff

Quote: “It costs money to manage an external contract. Both sides will have a contract manager, and the council ends up paying for both. One advantage of bringing it back in-house is that the Council can save both of these costs.”

Background

Until2009,staffwhowerecleaningmorethan100IslingtonCouncilbuildingswereeitheremployedbyacontractororprovidedbyagenciesonatemporarybasis.The‘temps’didnothavecontractswithtermsandconditionsortherighttosickpay.InSeptember2010,IslingtonCouncil’sExecutivetookthedecisiontobringtheservicein-houseratherthanrenewtheexistingcontract.ThismeantthecouncilofferedcleaningstaffacontractwiththecouncilandaguaranteedLondonLivingWageandlocalauthoritytermsandconditions.Cleaningofthetownhall,shelteredhousing,earlyyear’scentresandcouncilofficesacrosstheboroughisnowmanagedin-house.

Briningthecleaningstaffbackin-houseonadecentwageispartoftheauthority’soverallthemeofmakingtheboroughafairerplace.TheIslingtonFairnessCommissionwassetuptoimprovequalityoflifeintheboroughbymakingitafairerplaceforallwholiveandworkinit.ProfessorRichardWilkinson,authorofTheSpiritLevel,whichprovidesevidencethatmoreequalsocietiesdeliverbetteroutcomesacrossalmostallindicators,wasappointedtochairtheCommission.

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Despitethepocketsofaffluenceforwhichitisknown,IslingtonistheeighthmostdeprivedlocalauthorityinEngland,with18,000childrenlivinginpovertyand73%ofthesechildrenlivinginloneparenthouseholds.Oneinsevenchildrenisinalowincomeworkinghousehold.Aswellasthecostoftheburdenofhealthandsocialproblems,whichlocalserviceshavetocopewith,wideningincomedifferencesnationallyhaveresultedinaweakeningofcommunitylife,accordingtotheCommission.TheCommissionreported:‘ThecouncilcanpayitsownstaffatleasttheLondonLivingWageandprovideleadershiptolocalemployersinboththepublicandprivatesectorstodothesame.Amongstitsownstaff,paydifferentialsbetweenthelowestandhighestpaidshouldnotexceed1:12.’

TheauthorityalsodrewuponacademicresearchbyLondonUniversity,whichshowedthebenefitsofpayingadecentwage.Whentheauthorityexaminedcostings,itfoundthatbyeliminatingthedoubledupcontractmanagementcosts,andstreamliningthemanagement,itwouldbeabletopaythestaffabetterwage,improvetheservice,andgenerateefficiencysavings.

Thepotentialforreducedcostsandimprovedservicesmeansthecouncilnowconsidersthein-houseoptionwhenexternalcontractscomeupforrenewal.

Outcomes

Cleaningstaffwerebroughtin-houseinNovember2010atorabovetheLondonLivingWageof£7.85perhourandthecouncilisundertakingaprocessofharmonisingin-houseandagencyrates.Whilethedesiretoputstaffonfairertermswasthekeydriverinthedecision,insourcingisalsohelpingdeliveramoreefficientservice.AndyNutter,thecouncil’sdirectoroffinancialgovernanceandtransformation,says:‘Theevidenceshowsthatwheretheworkforceispaidadecentwage,theircontributionsvalued,andtheirviewsaretakenintoconsideration,motivationimprovesandthereisaresultantincreaseinproductivity”.’

Thecouncilmanagedtoincreasetheemployees’wageratewhilemakingasmallsavingonthepreviouscostbyusingitsownmangersto

runtheservice.‘Itcostsmoneytomanageanexternalcontract.Theadvantageofbringingitbackin-houseisthatyoucansavealotofwastedtimebeingaclientintermsofmonitoringandperformanceindicatorsandthecontractmanagementregime.Wewillsavemoremoneyinthefutureyears,nevermindthedeeperbenefits.Thereisbothahardandasoftsaving’hesays.

HebelievesservicequalityhasimprovedbecauseacontractorfocusesonmeetingthespecificPerformanceIndicatorsregardlessoftheoverallimpactuponthequalityofservice.Thebenefitofanin-houseworkforceisthatthereisstabilityandstaffknowourbuildings.Theyarecommittedtotheorganisation,’commentsMrNutter.

‘Thecouncil’sdutytoprovidevalueformoneyisevenmoreimportantatatimewhenpublicfinancesarebeingcut.Removingthebureaucraticcostsofcontractmanagementandmonitoringthroughin-sourcingisoneoftheoptionswhichweconsiderwhencontractscomeupforrenewal.Goodpublicservicesdependonfront-linestaffwhoarewellmotivatedandthefactthatwehavesavedmoneyonthisservicewhilepayingourcleanersalivingwageshowsthatin-sourcingcansavemoneyforlocaltaxpayersaswellasbeingfairertostaff’saysCouncillorRichardGreening,executivememberforfinanceandIslington’sdeputyleader.Hesays:‘WepaytheLondonLivingWagetoallIslingtonCouncilemployees.Inreturn,weasacouncilgetabetter-motivatedworkforce,increasedproductivityandcommitment.’

ThecouncilcontinuestohonouritscommitmenttothelowpaidandisnowintheprocessofincreasingthewagesoflowpaidstafftoensuretheyallnowreceiveatleastthenewupliftedLondonLivingWage.

Thecouncilhasrolledout‘smartworking’acrossitsworkforce.Bringingthestaffin-househasenabledefficienciesthroughreconfiguringtheservicetomeetthenewworkingarrangements.Thecouncilhasmanagedtoreducethenumberofcleanersthroughnaturalwastagewithoutanyredundancies.

Asaresultofbringingtheservicein-house,thecouncilisplanningtooffertheserviceexternallyin

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duecourseoncenewarrangementshavebeddedin.Itisalsoexamininghowtosetupapooloflocalworkerswhoarepreparedtoworkwhenneededatshortnoticeandattimestheyhavespecifiedtheywillbeavailable.Thisisanewwayofprovidingworkforindividuals–especiallywomen–whoareoftenexcludedfromthejobmarketduetochildcareorothercommitmentsatcertaintimesoftheday.TherearenowsimpleITplatformswhichenablesthistohappen.

IslingtonCouncilfaces£100mofcutsinthenextfouryears–athirdofitsnettotalbudget.‘Havingin-housestaffhasenabledustorespondflexiblyandsustainanimportantfrontlineservice.Wehaveagoodrelationshipwiththetradeunions.IfwearemovingpeoplearoundthatisOKsofar,’saysheadoffacilities,JohnRoberts.

Lessons

ThecleanersinIslingtonareworkinghardersincetheycamebackin-house.Sincereturningin-house,thecouncilislookingtocreatecareerdevelopmentopportunitiesforsomecleaningstaff.MrRoberts,whomanages35buildingcontracts,saysthecouncilpayspeopletodovariouschecksandfunctionsandheistryingtocreateafewhybrid‘cleanerplus’job:‘Careerdevelopmenthelpsbuildenthusiasmwaswellassavingonthecostofthesefunctionsandbuildsmotivation.’

Thereweredetaileddiscussionswithelectedmembersandtradeunionspriortoinsourcing.Ithadtobedoneforatleastthesamepriceastheprivatesector.Thecouncilinheritedstaffinarushandisbeingverycarefultotakethingssteadily.Overhalfofthe150staffwereagencystaff.Thecontractorwasusingagencystaffatalowerrateandmakingalargerprofit.The70staffwereTUPEtransferredintoIslingtononthesameorsuperiorconditions.Theagencyworkerswereonworsetermsandconditionspreviously.Thecouncilhastransferred19ofthemintodirectemployment.Therewereproblemswithinheritedtermsandconditions,suchaspeopledoing50or60hoursaweek,toironout.Theauthorityhastakenagradualapproachtothingsinordertogetallthecleanersworkinga35hourweekatareasonablewagewithaccesstothepensionfund.Thecouncilandunions

areworkingtostandardisetermsandconditions.Theanomalyofdifferentcontractualarrangementswithindividualshastobebroughtintoline.

Payingstaffadecentwagecansavethepublicsectoroveralloncostofbenefitsinthelong-termandisbetterforthelocaleconomy.‘Atatimeofeconomicdifficulty,itisevenmoreimportantthatcouncilsrejectthefalseeconomyofpovertypay.Ourfairwageishelpingliftlocalfamiliesoutofpovertyandthebenefitisthenmultipliedthroughoutourcommunities,’MrNuttercomments.

Jane Doolan, Branch Secretary at UNISON’s Islington Local Government branch says: ‘Buildingcleaningisaservicethattendstobestaffedbylowpaid,parttimewomenworkers.ThepreviousarrangementswehadinIslingtonmeantthattheserviceswasdominatedbyeitheragencyortemporaryworkers.Employmentwasasecondaryconsiderationtoapricedrivencultureandwewantedtochangethat.Theinsourcingofthebuildingcleaningservice,tousasalocalgovernmentbranch,provesthatcouncilscanmakearealdifferenceinpullinglocaleconomiclevers.Itispossibletorespectemploymentrightsandpayadecentlivingwagetocleaningstaffandhaveacosteffectiveandhighqualityservice.ItisamatteroflocalleadershiptosaythatpovertypayshouldnotbetoleratedinthedeliveryofvaluablepublicservicesandIamproudoftheworkthatUNISONputintocampaigningonthisissue’.

NORTH TYNESIDE Recycling

Key points

– Therehasbeenan18%increaseinresidentsatisfaction,whichisnowupto92%

– Recyclinglevelsareupfrom28%to38%sincerecyclinghasbeeninsourced

– Usinganin-houseteamhelpsimprovepublicperceptionofsuchavisibleservice

Quote: “As well as improving the quality of the service, bringing it in-house means there is greater flexibility in responding to changes that are required as a result of policy or service users’ needs”

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Background

NorthTynesideisaunitaryauthorityintheNorthEastofEngland.Theauthorityisresponsibleforrefusecollectionfrom90,000households.

Collectionofmaterialsforrecyclingwasdeliveredbyanexternalcontractor,whichalsoprovidedtheservicetoneighbouringauthorities.Issuesaroundqualityofservicearosehoweverandoneneighbouringauthorityinparticularhadreceivedahighnumberofcomplaintsfrommembersofthepublic.Asaresultofproblemswithreliabilityandlittering,electedmembersinNorthTynesidewantedtointroducenewarrangementsthatreflectedamorepositiveimageofthecouncil.

Whentheinitialcontractexpiredin2008,theauthoritydecidedtoseekareplacementservicewhileextendingtheexistingcontractfortwoyearstoallowtimetoredesign,procureandimplementthenewservice.Theauthoritydecidedchangethetypeofrecyclingcontainersusedandmovefromblackboxestoa240litrewheeledbinsystemtocollectmixedrecyclableswithan‘in-bin’caddyforglass.Havingassessedarangeofoptions,itmadethedecisiontoinsourceatthesametimeaschangingthetypeofcontainerused.Bringingrecyclingin-housemeanttheservicecouldbeintegratedwithrefusecollection,whichwasdeliveredbythecouncil’sownCleanNeighbourhoodsteam.

Outcomes

TheinsourcingofNorthTyneside’skerbsidecollectionofrecyclablematerialwasrolledoutbetweenJanuaryandJune2009andwascompletedonbudgetandaheadofschedule.

Theauthoritynowprovidesdirectlydeliveredintegratedweeklyrefusecollectionandfortnightlyrecycling.Newwheeledbinsenableagreatervolumeofmaterialstoberecycledandreducedlittering.Amuchbroaderrangeofmaterialsisnowcollectedforrecyclingincluding;paper,cardcardboard,tins,cans,glass,plasticbottles,aerosols,batteriesandtextiles.Carryingoutrecyclingalongsidecollectionofresidualwasteinwheeledbinsaspartofthesameoperation

increasesefficiency.Advancedvehiclelocationdevicesarebeinginstalled,whichwillcollectdataandhelpoptimisetheefficiencyofroutes.

‘Aswellasimprovingthequalityoftheservice,bringingitin-housemeansthereisgreaterflexibilityinrespondingtochangesthatarerequiredasaresultofpolicyorserviceusers’needs,’saysCatherineLyons,thecouncil’sseniorwasteandperformancemanager,whohasoverseenthetransition.Usinganin-houseteamtointroducethenewsystemenabledprofessionalsfromanumberofdepartmentsacrossthecouncil,includingcommunications,tobeinvolvedintheimplementationandensureserviceuserengagementwasmaximised.

Atotalof22employeeswhoworkedforthecontractorweretransferredtoNorthTyneside’sCleanNeighbourhoodsteamunderTUPEregulationsandarenowpartoftheintegratedservice,whichhas100staffoverall.Anofficerwhotransferredin-houseisnowsupervisingalloftheservice,enablinggreaterflexibilityandintegrationofwasteandrecyclingcollection.

TherehavebeensignificantimprovementsintheservicesinceitcameunderNorthTynesideCouncil’sdirectcontrol.Therehasbeenan18%increaseinresidentsatisfaction,whichisnowupto92%.Recyclinglevelsareupfrom28%to38%intimesincerecyclinghasbeeninsourced.TheauthoritywasalsoawardedfivestarsintheCleanBritainEnvironmentalAwardsandtherecyclingschemecontributedtothataccoladebyreducingtheamountoflitteronthestreets.Reducinglitteringhasreducedresourcerequirementsformaintainingthestreetenvironment.Publicparticipationinrecyclinghasincreasedfrom50%to94%.Theamountofrecyclablematerialcollectedhasdoubledto1,400tonneseachmonth.

Whileinitialcapitaloutlaywasrequired,theauthorityexpectstobreakevenwhiledeliveringahigherlevelofservicequalityandperformance.Ithasinvested£0.5minthenewbins,butcollectinggreatervolumesofrecyclablematerialmeansthecostpertonnecollectedisreduced.Therearealsosavingsondivertingmaterialsfromrefusedisposal,

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whichisparticularlyimportantasthecostoflandfilltaxis£56pertonnein2011-12andsettoincreaseyearonyear.

Usinganin-houseteamhelpsimprovepublicperceptionofsuchavisibleserviceandrespondtouserdemandsandaddresstheauthority’senvironmentalpriorities.‘Intermsofourcarbonfootprintthemorematerialswerecycle,thegreaterthereductioncarbonfootprint,’saysMsLyons.AknowledgetransferprogrammeinpartnershipwithNewcastleUniversityhascalculatedthatthecarbonfootprintfromNorthTyneside’swastedisposaloperationshasreducedfrom5000tonnesofCO2to1700sincerecyclingcamein-houseandthisisexpectedtoreduceto500tonnes.

Lessons

Bringingtheservicebackin-housewasarelativelysmoothtransitionbecausethecouncilallowedalongoverlapperiodattheendoftheinitialexternalcontract,duringwhichtoimplementnewarrangements.Theauthorityalsoundertookalargeamountofconsultationwithbothserviceusersandstaff.

TherewasameetingwiththestaffwhoweretransferringasagroupinitiallyandthencouncilmanagersandhumanresourcesadvisorsmetwitheachcrewandexplainedwhatTUPEmeanttothem.Staffalloptedtochangetothecouncil’stermsandconditions.Theywerealltrainedtomakesuretheycompliedwiththeauthority’srequirements,whichincludedcustomercaretraining.Thewheeledbinsareeasierforoperativestohandlethantheblackboxes,whichhashealthandsafetybenefits.Thecouncilofferssickpay,whichtheydidnotreceivepreviously.

Acomprehensivecommunicationscampaignwaskeytosuccessinbringingtheservicein-house.Thiswasbothinternalandexternal–involvingmembersofstaffandthepublictoensureeverybodyunderstoodthechangesthatweretakingplace.Aresidentconsultationexercisewascarriedoutpriortoprocurementtoinformthedesignoftheserviceaccordingtousers’views.Aseriesof30roadshows,areaforums,presscoverageandweeklyupdateleafletsensuredregularinformation

wasprovidedtothepublicandthatfeedbackwastakenonboardinimplementingthechanges.Thishashelpeddeliverthehighuptakeandsatisfactionlevelswiththeinsourcedrecyclingservice.

Tradeunioncomment:DaveMiller,BranchSecretaryatNorthTynesideUNISONsays:‘Howwecollectanddealwithrecyclingisahighlyvisiblefrontlinepublicservice.Asaserviceitsaysalotabouthowacouncilvaluesitsownlocalenvironment,abouthowitwantstoregardandtackleclimatechangeissuesandofcoursehowmuchtheyrespecttheirlocalresidentsandlocalemployees.Thereturnoftherecyclingcollectionservicesasanin-houseservicehasprovidedemployeeswithagenuinesenseofcontributingsomethingthatisverypositivetotheresidentsofNorthTyneside.Thefactthattheserviceisnowbetterinitsperformance,ismoreflexibleandresponsiveandprovidesgoodqualitylocalemploymentshowsthatinsourcingworks.’

REDCAR AND CLEVELAND

Customer Contact Centre

Key points:

– ThetransformationofcustomerservicesinRedcarandClevelandresultedina22%improvementinresolutionofproblemswithin24hoursatwardlevel

– Theservicehasachieved95%customersatisfactionratingforqualityofcallhandling

– Theauthorityexpectstosee£500ksavingsinathree-yearperiod

Quote: “We wouldn’t have had the flexibility to achieve this within twelve months if we’d had a contract with an external body.”

Background

RedcarandClevelandBoroughCouncilisaunitaryauthorityintheNorthEastofEnglandservingapopulationof140,000residents.Thecustomerservicesdivisionsitswithintheauthority’sareamanagementdirectorate.Thecouncil’scontactcentrewasoriginallysetupaspartofastrategicpartnershiparrangementwithanexternal

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contractor,whichdidnotliveuptoambitionsfortheservice.Nearlyoneinfivecustomercallswereabandonedandonlyoneintwocallswereansweredwithin20seconds.Thishadseverelydentedtheauthority’sreputationamongresidentsandstaffmoralewasextremelylow.

Thestrategicpartnershipwasthereforedissolvedin2006.Thecouncilhadbeenthroughadifficultexperiencewiththestrategicpartnershipandwaswaryofembarkinguponalargedealwithanexternalpartneragain,makingin-housedeliveryamoreattractiveoption.Whentheservicewasbroughtin-house,itbecameclearthatradicalserviceoverhaulwasrequiredtoachievenecessaryimprovementsincustomerservice.Performancehasbeencontinuouslyimprovedsincethereturnin-house.Customercontacthasundergoneradicaltransformationandanewin-housebusinessimprovementprogrammeintroduced2009istakingthisforwardfurther.Thecouncillaunchednewcustomerservicepointsin2010,whichweremergedwithlibraries.

Outcomes

ThetransformationofcustomerservicesinRedcarandClevelandresultedina22%improvementinresolutionofproblemswithin24hoursatwardlevel.Theservicehasachieveda95%customersatisfactionratingforqualityofcallhandling.IthasbeenheldupasabestpracticemodelinstoppingavoidablecontactbytheNorthEastRegionalImprovementandEfficiencyPartnershipand90%ofcustomersconfirmedthattheirenquirieswereresolvedatthefirstpointofcontact.

Investmentinarobustcustomerrelationshipmanagementsystemhasimprovedqualityofserviceinhandling500,000contactsperannum.Customerservicerepresentativesdealwithissuesrelatingtocounciltax,businessratesandbenefitsandarangeofotherservicesfromthecontactcentre,whichisopenfrom8amuntil8pmonMondaytoFridayandfrom9amuntil4pmonSaturdays.

Theservicehasdemonstratedyearonyearperformanceimprovementthroughuseofnewtechnology,alongsidetheintroductionofacareergradedstaffingstructureandrealtimeperformancemanagementsystem.Withinthefirstyearof

insourcing,thein-houseteamgenerated£200ksavings.Thiswaslinkedtotheabilitytomonitorwhencallswerecomingandwhattypeofcontactwasrequiredandensureappropriateskillswereinplace.Productivityratesincreasedfrom40to70%asaresultofaligningstaffingtomeetbusinessdemands.

Inadditiontoupgradingtechnology,introducingmobileworkingforgreenandcleanstaffandrealtimeperformancemanagement,theauthority’sfocusonstaffdevelopmenthasboostedmorale,whichhasenhancedservicedelivery.Sicknessabsencelevelshavedroppedfrom20daysperfulltimeemployeedowntoeight.

Acareer-gradedapproachwasappliedtotheservicewhenitwasreturnedin-houseandteamleaderskillswereenhanced.Competencyassessmentandtraining,includingfrontlinemanagerdevelopment,tookplacetoidentifyandfillskillsgaps.Aninnovativecouncil–wideCustomerExcellenceprogrammehasembeddedcitizenexcellencebehavioursacrosstheworkforce.Atotalof2000employeeshavebeentrainedinCustomerExcellence.Innovativetrainingtechniquesinvolvingactorsplayingoutscenariostohighlightcustomerinteractionpitfallsandidentifyexpectedbehaviourhaveprovedparticularlyeffective.

Merginglibrariesandcustomerservicepointstogetherin2010hasgeneratedaddedvaluefortheauthority.Staffwereinvolvedindesigningwhatthenewstructurewouldlooklike.‘Wewouldn’thavehadtheflexibilitytoachievethiswithintwelvemonthsifwe’dhadacontractwithanexternalbody.Beingin-housemeanswealwayshavegoodbusinesscontinuityinplace.Wearenotshyoftryingnewideasbecausewealwayshaveacontingencyplantofallbackon.Duringbadweatherlastwinterstaffcameinandopenedthecontactcentreuntilmidnight–Idon’tthinkyouwouldhavegotthatbasedonacontractualarrangementwithoutitbeinghugelyexpensive.‘

Lookingtothefuture,theauthorityexpectstosee£500ksavingsinathree-yearperiod.

LessonsTherewerefundamentalflawsintermsofthecontractandmonitoringoutputsbeforetheservice

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wasreturnedin-house.Targetshadfocusedoninfrastructureratherthanqualityoftheinteractionandthecustomerexperience.Slippagesinperformancewerenoteffectivelycontrolledthroughgovernanceandwereverydamagingtothereputationofthecouncil.Thishighlightedaneedformorerobustgovernance,whichin-houseprovisionmadepossible.Effectiveperformancemonitoringhasbeendevelopedthroughin-sourcingthecontactcentre.

Therewasaneedtoovercomeafracturedculturein2007whenthestrategicpartnershipcametoanend,asstaffthathadbeentransferreddidn’tfeeltheybelongedtothecouncilinitially.Whenthestafffirsttransferred,therewasinequitywithintheworkplacewithupto£5kayearsalarydifferencesforpeopledoingthesamejob.‘Thetaskinhandwashuge,’accordingtoCathAdams,customerservicemanageratRedcarandClevelandCouncil.Shesays:‘Thetransformationdidnotjustrequirearestructureandharmonisingtermsandconditions,therewereculturalfactorstoconsider.’

Beforetheservicewasreturnedin-houseshiftpatternarrangementsfailedtomeetcustomerdemandsandthetelephonyandCRMsystemwerenotfitforpurpose.Staffworkingpatternshavebeenchangedfollowingconsultationwithemployeesandtheirtradeunions.Whereaspreviouslystaffhadbeenemployedondifferenttermsandconditions,alocalMemorandumofUnderstandingwasdrawnuptointroducethesametermsandconditionsforall.Thislaidoutexpectationsandshiftpatternsandensuredtheflexibilityfromstaffthatwasrequiredtoimprovetheservice.

Anaddedchallengeinbringingtheservicebackin-housewasthatwhenthestrategicpartnermovedontheymovedtheirspecialistskillswiththem.Skillsanalysisrevealedmajorgapsinskillsandtailoredtrainingwasprovided.Akeylessonfromtheprocesswastheimportanceofmaintainingskillsandcapacity.

‘Weneededanadaptableandflexibleworkforcetomeetthedemandsofourresidents.Keepingtheservicein-househasmaintainedcapacityand

skills.Ithasallowedwastetobeminimisedandresourcestobeoptimised.’

MrsAdamsadds:‘Workforcedevelopmentisessentialfortopclassresultsanddevelopinganembeddedapproachtocustomerexcellence.’

Nostaffhavebeenmaderedundantduringservicetransformation.Thetransformationhasbeenanongoingprocess,whichhasbeenlinkedverycloselywiththein-housebusinesstransformationteam,whoseskillsinprocessmappingmeantcustomerswereplacedattheheartofthatprocess.

Thecouncilconsultedwithunionsrightfromthestartoftherestructuringprocessandregularcommunicationswaskeytosuccess.

‘AlotofgoodideascamefromtheImprovingCustomerAccessGroupandsmallideasenabledbigchangestobemade,’MsAdamssays.‘Stafflivelocallyandunderstandourbusinessandhavethatinsightandknowledge.ThereisrecognitionbythepublicnowthatweareRedcarandCleveland.’

Tradeunioncomment:BranchsecretaryEveColesaid“Priortotheinsourcingarrangementswefeltasabranchthatthepublicandourmembersweregettingarawdeal.Everyonegetsfrustratedifcallsgounansweredandoftentheirfrustrationscanbetakenoutonmembersofstaff.Thenewarrangementsareworkingwellwithbettertraining,facilitiesandnewsystems.Asabranchwewanttocontinuetomaketheservicebetterandprovideasecurefutureforlocaljobs.Wethinkourmembersdeservethatandwewillcontinueourcampaignforin-houseservices”.

ROTHERHAM

Grounds Maintenance

Key points:

– Insourcingwasregardedasawayofimprovingservices

– Insourcinghasenabledintegratedservicetobestructuredsothereareteamsinzonesaroundtheboroughwhocanrespondquicklytoproblems

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– Bringingtheservicein-househasallowedgreaterflexibility

Quote: “We have taken a substantial hit in the budget this year…and in-house delivery makes it easier to manage than if we had a contracted service.”

Background

RotherhamMetropolitanBoroughCouncilisaunitaryauthorityinSouthYorkshire.Streetprideispartofthecouncil’senvironmentanddevelopmentservicesdirectorate.Ithasanetbudgetof£25mandcoversarangeofservicesincludingstreetcleansing,highwaysnetworkmanagementandbasichighwaysmaintenance,groundsmaintenance(includingtreesandwoodlands),refusecollectionanddisposalleisuremanagementandcarparking.IthaswonaseriesofAPSEperformanceawardsforstreetcleansing,highways,lightingandwintermaintenanceandhasnationalBeaconstatusformaintainingahighqualityenvironment.

Theauthority’sgroundsmaintenanceserviceswerepreviouslydeliveredbyanexternalcontractorforabudgetofapproximately£3mayear.Whileservicesprovidedexternallyweregenerallyadequate,thecouncilreceivedpubliccomplaintsthattheservicewasnotresponsiveenoughandtheauthorityitselfexperiencedalackofflexibilityindelivery.Whenthecontractcametoitsnaturalend,thecouncilreviewedoptions.Havinggonethroughachallengeprocess,itwasdecidedtobringtheservicein-houseandintegrateitwithstreetcleansing.Theservice,whichcovershighwaysverges,publicopenspaces,parks,greenspacesandworkforparishcouncilsandlocalschools,wasin-sourcedinJanuary2010andbecamepartofStreetpride’sCommunityDeliveryservice.

Results

Theauthorityhasfoundseveraladvantagesinbringingtheservicebackin-house.

Akeyreasonforin-sourcingwasbecausetheexternalcontractwasrigidandthecouncilbelievedthiswouldgiveincreasedcontrolandflexibility.Forexample,thecontractspecifiedafixedfrequencyofgrasscutting,whichmeantthatgrasswas

oftenbeingcutwhenweatherconditionsmeantthiswasn’tnecessary.Lastsummerwhensimilarweatherconditionsmeantthatgrassagaindidn’tneedcutting,theauthoritymovedstaffontootherworkswhichwouldaddvaluesuchasshrubbedreductionsandpathedginginstead.

‘Bringingtheservicein-housegaveustheabilitytomovestaffaroundalotmoreeasily.Duringsevereweatheroverthewinter,theycouldbedivertedontoclearingpathstoshelteredaccommodation.Thatwasaloteasiertodothanwithacontractor–therewasnonegotiationoradditionalcost,’Streetpride’sdirector,DavidBurton,explains.‘Weevenhavetheabilitytomovestaffontosupportingwastecollection,whichwasthecaseafterthesevereweathercreatedabacklog.’

Integratinggroundsmaintenanceandstreetcleansinghasledtoserviceimprovementswithareductioninthenumberofcontactsaboutgroundsmaintenanceofover10%duringthefirstseason.Thecouncilhasintroducedmulti-skillingforasignificantnumberofstreetcleansingstaffwhoworkalongsidegroundsmaintenanceteams.Thismeansthatthedemarcationbetweenthetwofunctionshasbeenremovedandhelpsensurethatde-litteringtakesplaceeffectivelybeforegrass-cuttingstarts,andthatstreetcleanersassistwithancillaryGMtaskssuchasstrimmingwherenecessary.Theintegratedserviceisstructuredsothereareteamsinzonesaroundtheboroughwhocanrespondquicklytoproblemsreportedbythepublic.Therehasbeenasignificantreductionincomplaintssincetheservicewasreturnedin-house.

Asanintegratedservice,Streetpridetriestoengagethepublicinasmanywaysaspossible.Some200‘StreetprideChampions’arelocalvolunteerswhogiveanythingfromafewhourstoseveraldaysamonthtooverseeingtheirlocalarea.The‘engineersonstreetcorners’initiativeinvitesresidentstotellthecouncilwhethertheythinkaschemewillworkornotsotheengineerscanadaptitaccordinglybeforeitisimplemented.Workinginintegratedteamsinspecificzonesengendersasenseofownership,localprideandjobsatisfactionforstaff.PerformanceismeasuredthroughasuiteoflocalPIs,andtheintegrated

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servicenowconsistentlyexceedsa95%successratesinmeetingitsresponseandqualitytargets.

Initiallythecouncilregardedin-sourcingasanopportunitytoimprovethequalityoftheserviceforthesamecost.Aseventshavemovedonandbudgetshavegottighter,thecouncilhashadtoreviewthebudgetwithaviewtocuttingcosts.‘Wehavetakenasubstantialhitinthebudgetthisyear–with£1.5mlessforstreetcleansingandgroundsmaintenanceandin-housedeliverymakesiteasiertomanagethanifwehadacontractedservice.Wehaveseenanadvantageinrespondingmoreeasilytochangesinresourcesasaresultofhavingtheservicein-house.Itenablesustotakeaholisticviewonhowbestwecandelivertheserviceinthosecircumstances,’saysStreetprideDirector,DavidBurton.Theauthoritywillhavetostopdoingsomethingsanddoothersinadifferentway.Forexampleintroducingwildflowersmeadowsandminimisingthenumberofhorticulturalfeatureswillreducemaintenanceandthatwouldnotbepossiblewithinacontractualarrangement.

Lessons

Bringingtheservicein-houseinvolvedtheTUPEtransferof55fulltimeequivalentpermanentstaff,whoaresupportedbysome50seasonalstaff,plusmanagement.Bringingstaffinondifferenttermsandconditionstogethermeanttherewereequalpayissuestoresolve.EverybodyisnowoncommontermsandconditionswithintheCouncil’sjobevaluationframework.Somegainedandotherslost,butonbalancethereweremorewinnersthanlosers.

TheCouncil’spreviouscontractorhadsomeverygoodarrangementsinplace,specificallytrainingandhealthandsafetyprocesses,soanumberofstaffwerequitenervousaboutbeingtransferredintothecouncil.Wehadtodemonstratewewerenotgoingtoundermineanythingthathadbeenwellmanagedwiththepreviousemployer,’saysMrBurton.

Likeallservices,Streetprideisfacingseverebudgetpressure.TheCouncilhasundertakenpublicconsultationonwhereresidentsseeprioritiesandelectedmembershaveusedthefeedbacktomakedecisionsaboutwheresavingshavetobemade.

Theauthorityisnowworkingthoughaprogrammeofre-structurestodeliverthesavingstargetsandthiswillmeanfewerresourcesontheground.Itishopefulthatwecanmanagereductionsthroughnaturalwastageandredeployment.Slimmingdownmanagementarrangementswhenthecontractwasin-sourceddidhelpstripoutsomecosts,butfurthersavingsinmanagementcostswillberequired.

‘Itwillbedifficulttocutcostswithoutimpactingonservicequalitybuthavingin-housestaffwillhelp’,accordingtoMrBurton.‘IamlookingathowwecanworkmoresmartlyandIamabsolutelyconvincedthathavingflexibilityandcontrolwillhelpminimiseimpactonservicequality.Evenwithasuccessfulexternalarrangement,withthecurrentbudgetarypressuresweface,thein-housearrangementisbetterthantryingtoworkwithacontractorwhoismotivated,atleastinpart,bytheneedtomakeaprofit.’

Aswellastheout-sourcedgroundsmaintenancecontract,thecouncilalsohasastrategicpartnershipcontractforthedeliveryoflargerhighwaysworks.ThisisnotbeingrenewedwhenitexpiresinJulythisyear,butthemajorityoftheworkwillbeprovidedin-housefortheforeseeablefutureandtheauthoritywillbuyinspecialistworksasandwhenrequiredthroughregionalpartnershipsandcall-offcontracts.However,giventhecontinuingbudgetpressures,theCouncilwillhavetocontinuetochallengethewayinwayinwhichitprovidesitsservicestoobtainthebestbalancebetweenvalueformoneyandquality;becauseofthesuccessoftheintegrationofgroundsmaintenancewithstreetcleansingitisexpectedthatin-houseteamswillcontinuetoplayasignificantroleintheprovisionofRotherham’sservices.

THURROCK

Waste Collection

Key points:

– Overallthecouncilhasmadesome£2mayearsavings

– Recyclinghasincreasedandonly25%ofwaste

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isnowgoingtolandfill,whichmeanslargesavingsonlandfilltax

– Staffmotivationishigh

Quote: “It doesn’t matter what the contactor does, the council is still legally bound to provide the service and the buck stops with us. Ultimately this is the council providing the service to the resident so let’s be recognised as such.”

Background

ThurrockisaunitarycounciltotheeastofLondonwithapopulationofaround150,000residents.Inearly2002thecouncilproducedcontractdocumentsforanintegratedwastecontract,whichgroupsallmunicipalwasteservicestogetherandputitouttotender.

Onelargecompanyoperatedthecontractfrom2003until2010.Duringthattimethewasteindustryevolvedandmovedon.Theallencompassingcontractwasnotnecessarilyappropriateasbothwastetreatmenttechnologyandpolicieshadchanged.

AnAuditCommissionreportin2006recommendedthatThurrockshouldconsidernewwaysofprocurementtoenablebettercontractmanagementandsuggestedbreakinguptheserviceintoindividuallots.Italsorecommendedputtingtogetheranin-housebid.Breakingthecontractdownintosmallerlotsopenthemuptocompetitionamongsmallerregionalplayerswhowouldbeprecludedfrombiddingforlarge-scalecontracts.AswellasprovidingamarketopportunityforSMEs,itmakesthebiddingprocessmorecompetitive.

Thecouncilgroupedtheserviceintosevenindividualcontractlots;collection,civicamenities,recycling,in-vesselcomposting,kitchenwastetreatment,wastetoenergyandlandfilldisposal.Bidderscouldcompeteforasmanyorasfewofthesevenlotsastheywished.Somelargerorganisationsbidacrosstheentireservices,butothersthatwereveryspecialisedcouldjustbidforone.Morethan50bidderswereinvolvedintheprocess,whichwascarriedoutasacompletelyco-ordinatedexercisetoensurefairevaluation.

Attheendof2009formalreportingtocabinettookplaceandcontractswereawardedduring2010.Thein-houseteamtenderedforLot1,a£34.2mcontracttooperatewasteandrecyclingcollection,whichwasthelargestportionofthewastemanagementservice.Theauthorityhadtobeverycarefulthattherewasacleardemarcationbetweentheprocurementprocessandanexternalteamwasappointedtoputthebidtogether.ThurrockCouncil’sbidemergedasthehighestscoringbid.

Outcomes

TheauthoritywasformallyappointedandtookoverthewasteandrecyclingcollectionserviceinJune2010.Atotalof87operational,supervisoryandmanualstaffweretransferredunderTUPE.Upto50%ofthosewhobecamecouncilemployeeshadbeenTUPEtransferredbefore.

‘CollectionishighlyvisibleandwewantedThurrockcounciltobeseentobethelead.Webadgeduptheentireservicewith‘aseasyas123’.Allthecrewhasadistinctiveblackuniformandalloutliteratureisdesignedthesameandthevehiclesareallinwhiteandblacklivery,’saysthecouncil’swasteandrecyclingmanager,JohnFindley.

‘Itdoesn’tmatterwhatthecontactordoes,thecouncilisstilllegallyboundtoprovidetheserviceandthebuckstopswithus.Ultimatelythisisthecouncilprovidingtheservicetotheresidentsolet’sberecognisedassuch.Allequipmentandvehicleswerewornoutbytheendofthecontractandthecouncilhadtobuyeverythingnew.Wehaveanewfleetandeverythingisco-ordinated.WewantedThurrockCounciltobethethemerunningthrougheverythingwedo.Thathelpswithownershipandperceptionoftheservice.Thecouncilhadtoownitsownserviceandrecognisethatitisprovidingafrontlineservicetoresidentsbywhichthecouncilmeasured.’

‘Thein-housebidconcentratedheavilyonhighqualitystandardswiththreetypesofbinscollectedeachweek.Binreturnswereoneofthemostcontentiousareasforthepublic,whowanttheirbinputbackwheretheyleftit.Missedcollectionissomethingresidentsgetannoyedaboutanditwasimportanttoustomakesurewegotitright.’

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Thecouncil’srecyclingratehasrisenfrom38%to50%.Thequalityofmaterialcollectedishigher.Now50%ofresidualwasteisusedforwastetoenergy,25%isrecyclinginoneformoranotherandonly25%isgoingtolandfill,whichmeanslargesavingsonlandfilltax.‘Ifit’scollectedproperlylandfilltaxcostsaredecreased.Wearecollectingwastebetterinthreeidentifiablestream,’MrGilfordsays.

OverallThurrockhasmadeabout£2mayearsavingsthroughmovingfromhighcosttolowcostdisposalandremovingthecouncil’sliabilityundertheLandfillAllowanceTradingSchemeLATs

.Thecostofcollectionhasn’tbeenreducedbutthequalityofservicehasimprovedforthesameamount.Thecouncildidnotseekfinancialsavingsaspurchasingvehicles,fuelandstaffcostsarethesamewhoeverdeliverstheservice,butthein-houseteamwasabletoofferahigherqualityofservice.

Onecivicamenitysitehasbeenclosedasaresultofbudgetcuts.Electedmembershavedecidedtoleavethewastecollectionserviceasitis,despitefinancialpressuresbecausetheyseewasteissuchakeyfront-lineservicewithwhichthepublicidentifies.

Lessons

‘Thehugecontractwasunwieldy.Weweretryingtointroducefortnightlycollectionsandgardenwastecollection,recyclingimprovement,modernizationandchange.Thecontractdocumentsweredesignedtobetreatedasawhole.It’smuchsimplernow.Wearemuchhappierwithwherewe’veendedup,’accordingtoMrGilford.‘Havingitin-housemeanswehaveflexibilityofchangeandarenotnegotiatingwithacontractor.Ifwewishtocarryoutkerbsidechangeswearenotdealingwithlossofmoneyanddon’thavetopaycompensation.Makinganychangesweneedtomakeinresponsetonewpoliciesaremucheasierbecausewearetalkingtoourselves.’

Thecontracthadchangedhandswhenthecompanywasboughtout,sotherewasarealmixtureoflengthsofserviceandformeremployers.Alotofnegotiationwenton.Buttheentire

workforcestartedondayoneonThurrockCounciltermsandconditions.‘Thatwasahugegainbecauseitmeanteverybodywasunderstandardtermsandconditionsandpay.Therewasn’tamassivedifferencebutitmeanteverybodyistreatedthesame.Wehavesinglestatussothereisnodistinction.Staffmotivationisgoodandweliketothinkofourselvesasagoodemployer,’saysMrGilford.

Tradeunioncomment:PeterSansom,ThurrockUNISONBranchSecretarysaid‘Insourcinghasprovidedamorerealisticrationaleforpayandgrading.Insteadofstaffworkingtoabonusbasedculturewhichgovernedperformancetheflexibilityofhavinganin-houseservicehasallowedustodevelopamoreconsistentpaystructure.Inthatsensepayandgradingissueshavebecomemorestabilised.Fromaservicedeliveryperspectivethereareofcoursesomerealpolicyandlegislativechangesthatlocalcouncilshavetocontendwithintheareaofrefuseandwasteservices,includingdealwithclimatechangeand‘green’issues.Byinsourcingtheservicethecouncilhasbeenabletoredirectitsworkforce,totacklethegreenpolicyissuesthatitfaces.Thesechangesinmyviewcouldnotbeeffectivelyachievedbyrelianceuponexternalcontracts.Byhavingadirectlyprovidedaccountableworkforcethecouncilhasgivenitselftheflexibility,andtheworkforcecapability,ofrisingtofuturechallenges

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Insourcing:theanalysis

THEMES

Examining the context in which insourcing is taking place and the evidence presented by insourcing authorities has enabled key drivers towards insourcing to be identified. Insourcing has been shown to be an increasingly positive option in response to current challenges.

Insourcing as a cost effective solution in response to current budget constraints

TheComprehensivePerformanceAssessmentframeworkreportedin2008thatatotalof91%ofcouncilsperformedconsistentlyorwellaboveminimumrequirementsforuseofresources,with78%performingconsistentlyorwellaboveminimumrequirementsforvalueformoney.APSE’s2009insourcingguidecasestudiessupportedmorecosteffectiveoperationalarrangements,includingreducedsicknessabsenceandmoreintegratedservicedeliveryoptions.Theinsourcedservicesalsoallowedforthelocalauthoritytoworkacrossorganisationalboundariesandreduceduplicationofprovision.Costwasidentifiedasthemostimportantfactordrivingdecisionstobringservicesbackin-houseinthisnewupdatedstudyofinsourcing.Thecosteffectivenessofinsourcinghasbeendemonstratedthroughthesurveyandcasestudies,whichpresenttangibleevidenceofitseffectivenessinrespondingtopressureonresources.Thisismoreimportantthaneverascouncilsfaceunprecedentedbudgetcuts.

Insourcing as an efficiency driver

Increasedefficiencyisafactorthatiscloselyrelatedtocostswhichwasidentifiedasakeydriverforreturningservicesin-house.Insourcingcanprovidealongtermsustainableapproachtotransformationbroughtaboutbysweatingoutefficiency.APSE’spublicationAvoiding the Road to Nowhere bringstogetherexamplesofwaysinwhichdirect

servicesaredrivingforwardefficiencyinabroadrangeoffront-lineservicesacrosstheUK(APSE,2011).In-houseteamshaveused‘leanthinking’toreengineerservicesandincreaseproductivityandreduceexpenditurewhilemaintainingservicequality.Inthecurrentclimate,insourcingcanbeameansofdrivingefficiencyonalongtermbasis,ratherthanmakingcrudecutstoservicesonwhichthepublicrelies.Contractsarebynaturecomplexandlegallybindingandoftencarrypremium‘penalties’shouldaclientwishtochangethewayinwhichaserviceisdeliveredcarryingminimumpricingarrangementswhichbindthelocalauthorityclientintoeithersetminimalfinancialarrangementsorexpensivecontractvariationclauses.Servicesprovideddirectlycanthereforebeausefulmeanstoprovidemorecohesive,responsiveandflexiblelocalservicesenablingquickerefficiencygainstobereapedfromtransformativeandinnovativeapproachestoservicedelivery.

Insourcing, flexibility and capacity

Themajorityofsurveyrespondentscitedflexibilityasakeyadvantageofreturningservicesin-house.Thiswasborneoutwithevidencefromthecasestudies.Insourcingofferslocalauthoritiestheflexibilitytorespondrapidlytochangingpoliciesandcircumstances,withoutbeingtiedintocontractsthatcanbeexpensivetoalter.Insourcingenableslocalauthoritiestomaintaincapabilityandexpertisethatallowittorespondtochangingagendas.Withfundingcutsof28%tocontendwith,theflexibilityofferedbyin-houseservicesthatcanrespondtochangingcircumstanceshasbecomeincreasinglyimportant.

Insourcing and service improvement

Aswiththe2009insourcingresearch,thedesiretoimprovequalitywasakeyfactorbehinddecisionsofauthoritiestobringservicesbackin-houseinthefreshexamplesexamined.Thecasestudiesshowhowserviceimprovementshavebeendeliveredasaresultofbringingservicesbackin-house.APSE’sperformancenetwork,thelargestvoluntarybenchmarkingdatabaseintheUK,

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hasdemonstratedyearonyearimprovementsinperformanceoffront-linecouncilservicesforthepasttwelveyears.Areassuchasrefusecollection,whicharehighlyvaluedfrontlineservices,canshowthroughperformancedatathattheyhavecontainedcostsbeloworatinflationlevels.Theyhavealsoimprovedservicesthroughreductionsinwastetolandfill,wastetoenergyschemesandincreasedrecycling.

Insourcing and local accountability

Thepublicsectorhasaresponsibilitytoitsvoterstodeliverservicesregardlessofwhethertheyareeconomicallyrewardingandwhatishappeninginmarkets.Riskcannevertrulybetransferredtoprivatecontractorsbecauselocalauthoritiesareultimatelyaccountablelegallyandattheballotbox.Ourresearchevidencehasfoundthatinsourcingcanenhanceengagementwithresidentsandensuredirectdemocraticaccountability.

Insourcing, strategy and synergy

Becauselocalgovernmentisresponsibleforthestrategicdirectionofaplaceandforthefullrangeofservicesthataredeliveredthere,directdeliverycanmeanaholisticperspectiveistaken.Departmentswithinthesameorganisationcancommunicatemoreeasilythanwithexternalbodies.Ourresearchhasshownhowinsourcingcanpromoteservicesynergyandintegration,particularlyinservicescoveringtheenvironment,wherebringingtogetherrecycling,wastecollection,educationandenforcementonalocalbasiscanenhanceneighbourhoodsandrespondtoclimatechangethreatssimultaneously.Housingexamplesshowhowtheintegrationoftheservicewithotherin-housedeliverycanleadtogreaterservicesynergy.

Insourcing delivering added value

Addedvaluecanbedeliveredinsocial,economicandenvironmentaltermsasaresultofinsourcing.Deliveringservicesin-housecanbeawayofboostingtrainingandemploymentopportunitiesandbolsteringlocaleconomies,astimesgettighter.

APSE’sstudyofthe‘localeconomicfootprint’ofpublicservices,showedthatforevery£1oftaxpayers’money,directprovisioncangenerate£1.64inthelocaleconomythroughstronglocalemploymentandsupplychains.Thisisbecauseofthelackofleakagefromthelocalarea(APSE2008).20WhenAPSEcarriedoutsimilarresearchinWestLothianitshowedthisfigurewas£1.71.Atatimeofeconomiccrisis,providingdecentjobslocallyismoreimportantthanevertolocaleconomies.

Insourcing and the workforce

Thesurveyandcasestudieshaveshownthatworkforceissuesareamajorconsiderationforcouncilsbringingservicesin-house.Lessonsthathavebeenlearnedfromthecasestudieshingearoundthewayinwhichthestaffaretreatedduringtheinsourcingprocess.Authoritiesthathavemaximisedconsultationandcommunicationhaveyieldedthebestresultsintermsofensuringseamlesstransition.

Oncetransferredover,in-housestaffhavegenerallybenefitedfromimprovedtermsandconditionsthathas,inturn,ledtoenhancedmoraleandimprovedservicedeliver.AsAPSE’sreportTowards a Future for Public Employment showed,thepublicsectorcansetabenchmarkfortermsandconditionsacrossabroadspectrumofjobsandensureemploymentpracticesdevelopthelocalworkforceandskills(APSE2007).21Thereareanumberofworkforceissuesthatareaffectedbycontractingoutandbringingservicesbackin-house.

ThereisalsoevidencethatoutsourcedcontractscanplaceincreasedpressureontheLocalGovernmentPensionSchemebothintermsoftheguaranteesrequiredofprivatecontractorsbeforeadmissiontotheschemeand,inthelongerterm,thefurtherfragmentationofthecoremembershipbaseoftheLGPS.Thiscouldseemembershiplevelsdeclineandthereforecontributionincomereducedwhichwillexacerbatepressuresonbothemployersandemployeestoincreasecontributoryrates.

RecentGovernmentannouncementsonremovingthe‘TwoTierCode’andreviewing“FairDeal”

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pensionswithinlocalgovernmentwillmeansignificantreductionsinemploymentrights,whichwillmakeoutsourcinganevenlessattractiveoptionfromaworkforceperspective.

Insourcing, simplicity and risk minimisation

Theresearchfoundthatinmanycases,localauthoritieshavebroughtservicesbackin-houseinordertosimplifyservicedeliveryandminimiserisk.Whilethenegotiation,consultancyandcontractualprocesscanbetime-consumingandcostly,deliveringservicesin-houseisalesscomplexalternativewithlessrisktothecouncil.

LESSONS

ExaminingthecontextinwhichfurtherinsourcingistakingplacesinceAPSE’s2009studyandevidenceemergingfromaquantitativesurveyhasenabledanumberofcommonlessonstobeidentified.Thoseemergingfrommorethan50examplesanddetailedcasestudiesinclude:

Thereisevidencethatcontractsthatareletexternallycanbetoorigidanddonotnecessarilyleadtoeffective,efficientservicedelivery.Councilsthathavereturnedservicesin-houseareusinginsourcingasameansofrespondingflexiblytochangingcircumstanceswithoutincurringlargecontractualfees.

Localauthoritiesfeaturedincasestudiesreportthattheyhaveusedin-housedeliveryasameansofreducingcostsbecausetimespentmonitoringandmanagingcontractsisreduced.Insourcinghasalsobeenawayofsimplifyingarrangements.

Localauthoritiesachievedthebestoutcomeswhentheydidnotrushintodecisions.Councilsthatundertookthoroughoptionsappraisalspriortoinsourcingwerecertainitwasthebestdecisiontosuitthem.

Newarrangementstaketimetointroduce.Wherestaffingissuesareconcernedinparticular,gatheringsufficientinformationpriortoinsourcing,

consultingwithstaffandtradeunionsandallowingscopeforin-housesolutionstobedinisessential.

Localauthoritiesarestillresponsiblefortheserviceseveniftheyaredeliveredbyexternalcontractorsandcouncilshavefoundthatreturningthemin-houseisawayofminimisingrisk.Insourcinghasbeenameansoftakingbackcontrolofservicesandoutcomes.

Councilsthathaveinsourcedhaveensuredthatresidentsareawaretheserviceisdeliveredbyanin-houseteamasthishelpsdemonstratewhereresourcesarebeingspentandaidsserviceuserengagement.

Large-scaleoutsourcingcanleaveacouncilweakenedontheclientsideandvulnerableasinternalexpertiseisdepleted.Insourcingauthoritieshaveensuredthatthisisbuiltupagainwhenreturningservicesin-house.

Allofthecasestudiesexaminedhaverevealedthatconsultationandengagementwithstaffandtradeunionsisavitalaspectoftheprocessofreturningservicesin-house.Theyshowthatlisteningtostaffhelpsimproveefficienciesandthatbringingemployeesovertodecentin-housetermsandconditionsandprovidingdevelopmentopportunitiesincreasesmotivationandproductivity.

Insourcingisanopportunitytointroducenew‘smarter’waysofworkingandchangestoserviceconfigurationandintegratearangeofin-houseservices.Anumberofauthoritiesfeaturedincasestudieshaveadopted‘systemsthinking’or‘leansystems’managementtools–measureslongadvocatedbyAPSE–toeliminatewasteanddesignservicesaroundtheusers’needs.

Onceaservicehasbeeninsourced,thiscanbeachanceforongoingefficienciesandserviceimprovementstobemade.

Asin-houseteamsallowdirectconnectionbetweenlocalresidentsandtheauthority,thiscanbebuiltuponasaformofgoingcustomerengagement,whichcanenhanceservicedeliveryandaccountability.

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Conclusions

ThecaseforinsourcinghasgrownstrongersinceAPSE’sfirstinsourcingguidewaspublishedin2009.Reasonsforinsourcingidentifiedinthepreviousresearchhavebecomemorepressingasaresponsetothecurrentchallengesfacedbylocalauthorities.Returningservicesbackin-houseisachievingsignificantoutcomesincludingefficiencysavings,performanceimprovementsandincreasedcustomersatisfaction.Insourcingisalsoameansofrespondingflexiblytochallengingfinancialcircumstances,minimisingriskandenhancinglocalaccountability.

OurfindingsfromthelatestresearchoninsourcingconductedbyAPSEshow:

– Councilsofallsizes,locationsandpoliticalcontrolarecontinuingtobringmoreservicesbackin-house.

– Intensebudgetarypressuresareactingasakeydriverininsourcing.

– Insourcingisviewedasaflexiblemeansofdeliveringserviceswithinthedifficultanddynamiccontextinwhichlocalgovernmentisoperating.

– Environmentalservicesarethemostlikelytobebroughtbackin-house,followedbyhousingbutabroadrangeofservicesarebeinginsourcednationally.

– Councilsarefindingthatinsourcingcontributestowards:accountability;flexibility;efficiency;costeffectiveness;serviceimprovement;strategyandsynergy;addedvalue;riskminimisation;andworkforcemorale.

– Staffingissuesareavitalconsiderationwheninsourcingandlessonslearnedfromcasestudiesshowthatconsultationandcommunicationisakeyfactorwhenreturningservicesbackin-house.

– Improved pay and conditions, access to LGPS and development helps to boost morale and performance.

Future considerations and checklist of action points

Serviceswhetherdeliveredinternallyorthroughanexternalcontractorshouldbesubjecttoregularmonitoringandreview.Beforealocalauthoritymakesadecisiontosimplyre-advertiseanoutsourcedserviceorextendacontracttermanumberofstepsshouldbetakenashighlightedinAPSE’soriginalrecentdocument‘Aguidetobringinglocalauthorityservicesbackin-house’.

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Step 1: Analyse the current situation

Localauthoritiesneedtoanalysethecurrentservicedeliverysituationwhenembarkingonthedecisionmakingprocessandinsourcingshouldformpartofanoptionsappraisalprocess.Councilsshouldbeconsideringthefollowing:

1. Whoisdeliveringtheservicecurrently?

2. Whatserviceactivitiesarebeingdeliveredandifapplicabletohowmanyserviceusers?

3. Havetherebeenanyproblemsinthedeliveryoftheservice?

4. Howistheservicecurrentlyperforming?

a. againstkeyperformanceindicatorsandcontractrequirements

b. againstcustomersatisfactionratings;

c. againstlocalagreementsortargetsandoutcomes.

d. againstlocalandsub-regionalstrategicpriorities.

5. Howmuchdoesitcosttheauthoritycurrentlytooutsourcetheservice?

a. Howmuchisitcostingthecontractortodelivertheservicecurrently?

2. Whenisthecontractdueforrenewal?

a. Isthereanoptionforrenewalwiththecurrentcontractor?

b. Howmuchwillitcostincompensationtoterminateacontractorwillacontractshortlyexpireorbedetermined?

3. Whatisstaffturnoverandpayrates?

Step 2: Benchmarking

WhiletheprocessdrivenelementsofBestValueinEnglandrequiredlocalauthoritiestodemonstratecontinuousimprovementhavingregardtoacombinationofeconomy,efficiencyandeffectiveness,recentchangeshavemade‘BestValue’amuchmorefluidandlocallydeterminedprocess.Aspartofthisprocessofensuringgoodvalueformoneyforlocaltaxpayersthereisaneedtotestthecompetitivenessofservices.Thiscanbeachievedthroughanumberofmeans,oneofwhichisthrough‘fairandopencompetition’.Butitcanalsobeaccomplishedthrougharigorousapproachtoperformancemanagement.Councilsarenotrequiredtotenderaservicecompulsorilyortore-tenderwhenacontractterminationhastakenplace.Theyshouldhoweverbeaskingthefollowingquestions:

1. Willcompetitiondeliveranimprovedqualityservice?Whatdoesbenchmarkingandcomparingserviceperformancetellthelocalauthorityaboutpotentialfutureserviceoptions?

2. Istherethemanagementstructure,capacityandskillsinplacetoprepareanddeliveranin-houseservice?

3. Istherepoliticalandcabinetlevelsupportfordeliveringtheservicein-house?

4. Whataretheotherpotentialoptionsfordeliveringtheservice?

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Step 3: Preparing the in-house bid

Onceithasbeendecidedthataserviceareawilleitherbebroughtbackin-houseorsubjecttocompetitionwithanin-housebid,localauthoritiesneedtopreparethein-houseserviceintermsofevidenceandconsultation.Theyneedtoconsider:

1. Thepotentialvalueofin-housedeliveryinperformanceterms.Thisshouldincludebenchmarkinganin-housebidagainstotherprovidersandagainstotherlocalauthorities.

2. Howtheservicewillbedeliveredinpracticalterms.

a. WillitbedirectlydeliveredbythelocalauthorityorthroughaDirectServiceOrganisation?

b. Whatserviceactivitieswillbedelivered?

c. Howmanystaffwillberequired?

d. Whatmanagementstructurewillberequired?

3. Thecostofdeliveringtheservicein-house.

a. Isthein-housebidcostefficient?

b. Doesthein-housebidoffervalueformoney?

c. Doesthein-housebidpotentiallyprovidebetterqualityservices?

4. Howbringingaserviceareain-housewillsynergiseitwithotherserviceareas.

a. Willbringingtheservicein-houseenablejoined-up,integratedandultimatelymoreeffectiveservicedelivery?

5. Throughcommunityconsultationandanalysisofserviceusersatisfactionsurveysthethoughtsoflocalresidentsandserviceusersonthemoveofaserviceareain-house?

6. Thepotentialbarrierstoandweaknessesofbringingtheservicein-house

7. Howaninsourcingoptionmayhelptoachievegreaterlocalcommunitybenefits,forexampleintegratinglocalapprenticeships,trainingandskillsandenvironmentalorclimatechangeconsiderationsinservicedelivery.

8. Howtheywillinvolveandconsultstaffandtradeunions.

Step 4: Bringing the service back in-house

Followingthecompletionofaprocess,whichcouldbeacompetitivetenderingprocessandupontheservicebeingbroughtbackin-house,thelocalauthoritywillneedtoundertakeaseriesofconsiderationsbeforeservicedeliverycommences.Theyneedtoconsider:

1. Staffing

a. HowmanystaffneedtobetransferredfromthecurrentserviceproviderunderTUPElegislation?

b. Whatconsiderationneedstobemadewithregardtotermsandconditions,equalpay,andparticularlylocalauthoritypensions?

c. Whatskillswillberequiredfromfrontlineandmanagementstaff?

2. Assets

a. Doesthereturnin-houserequirethetransferofassetsfromthecurrentprovider?Ifyes,howmuchwillthiscost?

b. Iscapitalinvestmentrequiredtopurchasenewassets?

3. ServiceTransfer

a. Whatinfrastructurearrangementsneedtobeinplaceinordertoensureasmoothtransitionoftheservice?

b. Istheretherequirementforanychangeinsupplierstotheservicearea?

4. Marketingandcommunication

a. Howarethelocalauthoritygoingtomakeserviceusersawareofthechangeinserviceprovision?

b. Whatwidermarketingorcommunicationactivityisrequired?

43

Step 5: Delivering the service in-house

Deliveringaservicein-housebringsservicedeliveryclosertolocalstrategy,localpolicyandlocaltargets.Inordertodetailtheon-goingvalueofthein-housedelivery,localauthoritiesshouldundertakeon-goingservicemonitoringandperformancemanagementconsidering:

1. Theperformanceoftheserviceagainstlocalandnationalperformanceindicators,whethercompulsoryorinformalwithpeerauthorities.

2. Thecostandefficiencysavingsofdeliveringtheservicein-house.

3. Thevalueformoneyconsiderationsandimpactuponservicequalityofdeliveringtheservicein-house.

4. Theadditionalactivitiestheserviceareahasbeenabletodeliverasaresultofbringingtheservicein-house.

5. Levelsofcustomersatisfactionwiththeservice.

Inadditiontocorporateperformancemanagementthein-houseteamshouldalsomonitorservicedeliveryfromtheperspectiveofitsemployeesthroughworkersatisfactionactivityandprofferingaddedvaluecareerdevelopmentopportunitiessuchastraining.

44


Methodology

Thisresearchhasentailedbothquantitativeandqualitativemethods.Anon-linesurveywasconductedamongdecision-makersincludingchiefexecutives,assistantchiefexecutives,servicedirectors,headsofserviceandelectedmembersinlocalauthorities.Atotalof140respondentstothissurveyhelpedidentifyfreshexamplesofinsourcingandreasonsbehindthedecisiontobringservicesbackin-house.Thesurveyandadesk-basedpolicyandliteraturereviewenabledalistof42freshexamplesofinsourcingsinceourlastreporttobeproduced.Wehavedrawnupondatagatheredandundertakensemi-structuredinterviewstodevelopcasestudiesthatconsiderreasonsforandoutcomesofinsourcingandidentifylessonslearnedfromthosewhohaveinsourcedservices.

APSEhasalsodrawnuponitsownexpertiseintermsofbusinessplanning,servicedeliveryissuesanddifferingmodelsofservicedelivery.

References

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Endnotes

1 APSE,2009

2 Julius,2008

3 CabinetOffice,2010

4 Phillips,2010

5 Cameron,2011

6 Conrad,2011

7 Dudman,2011

8 Clark,2011

9 Conrad,2011

10 Johnston,2011

11 Johnson,2011

12 Deloitte,2005

13 Deloitte,2009

14 WarnerandHefetz,2004

15 Obama,2010

16 AuditCommission,2008

17 Zurich,2009

18 APSE2011

19 SOCITM,2011

20 APSE,2008

21 APSE,2007

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