In-house versus Outsourcing: What is the future of partnerships between the public and private sectors?

November 22, 2018   By Trinley Walker, Senior Policy Researcher

Billed as a juicy political debate pitting the Labour Party’s preference for in-housing against the Conservative Party’s continued commitment to the role of the private sector on outsourcing, the discussions at NLGN’s event to launch our reportFrom Transactions to Changemaking: rethinking partnerships between the public and private sectors – were perhaps a little more consensual than expected.

Labour’s position was presented by Jo Platt MP, who holds the brief for public procurement in her party, as Shadow Minister for the Cabinet Office. Labour’s approach is to overturn what they view as a presumption in favour of outsourcing. Instead, a pragmatic approach would be adopted, that would ensure procurement is a ‘good deal for the tax payer’ yet would also result in decent working conditions for all, crucially a living wage for employees. Jo lamented the consolidation of the outsourcing market by a ‘clique’ of large firms, a development that she described as a ‘race to the bottom’. Labour’s outsourcing agenda would include a greater focus on ensuring social value is embedded into procurement decisions.

GLA member for West Central and Westminster City Councillor, Tony Devenish, provided the Conservative Party viewpoint. He emphasised the need to encourage SMEs, to ensure that suppliers within the supply chain were paid punctually, and that a living wage was paid to all staff engaged through a contract were emphasised in his address.

The need for councils to be free to drive innovative practice in this space was emphasised by Charles Walker, Conservative MP for Broxbourne. Often, he stated, local government leads the way in finding solutions to numerous challenges. The notion that central government should dictate how councils should procure and partner was, in his view, improper. Charles drew attention to the approach to procurement Preston City Council have adopted, raised by Jo in her opening statement, and while recognising this innovative practice and the results it has generated, he warned against what he detected as Labour’s intent to impose this model on all local authorities.

So far then, a reasonable degree of agreement between the speakers, and arguments very much in line with NLGN’s report From Transactions to Changemaking. The report called for partnerships between the public and private sectors to drive social impact – where necessary going beyond the ‘tick box’ culture that can surround the way in which the Social Value Act has been used.

Adam Lent, NLGN’s Director, built on but went further than these two political perspectives, setting out an argument in favour of a more fundamental rethink of partnerships between the public and private sectors. This should be framed by two major current imperatives for the public sector. Firstly, the juggernaut of rising demand. While it is obvious that relentless increases in demand for public services require a reorientation to preventative approaches, there has been stubborn resistance to such a shift taking place in the public sector. Indeed, partnerships can be ill-equipped to meet this challenge, being as they are too often configured on a transactional basis and not attuned to current trends.

Secondly, partnerships between the public and private sectors need to orientate themselves to meaningful community and citizen engagement. Again, transactional models of partnership are not well positioned to achieve this. With people now demanding much more meaningful input to the key strategic decisions that will impact them, partnerships must shift to provide genuine and meaningful engagement for the residents and communities affected by partnerships – which should operate on far more transparent terms. Adam drew attention to a case study contained in From Transactions to Changemaking to make this point, in which an urban regeneration project undertaken in Copenhagen brought the local community centrally into its various phases of operation: planning, implementation and evaluation.

In summary, Adam emphasised the need for a shift to mission-focussed, open forms of partnership that genuinely build in opportunities for public engagement.

Diverse questions were raised by the audience, such the local voluntary sector’s experience of procurement, and the voice afforded to residents’ in partnerships – in relation to the Haringey Development Vehicle matter. The latter point shows that beyond the two immediate partners themselves, partnerships between the public and private sectors are most obligated to the people they affect. A polarised debate that champions outsourcing or in-house therefore misses the point – locally led pragmatism is more likely to deliver good outcomes across communities.

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