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Labour’s Insourcing Revolution

Thirty years of local government outsourcing have devastated services, undercut workers and left millions ripped off by private providers. Labour in government plans to change all that.

A decade of austerity has eroded the vital services protecting the most vulnerable in society, and created a crisis in adult social care and children’s services. One of the first things that we must do in government is urgently reverse these years of economic neglect and the hollowing out of our communities, and rebuild the local services that have been stripped away.

Since 2010, local government in England has lost more than 60p out of every £1 that the last Labour government invested in our communities. The Local Government Association estimate that the funding gap facing local government will grow to £7.8 billion by 2025. This means that we are now in a position where even if councils stopped filling in potholes, maintaining parks and open spaces, closed all children’s centres, libraries, museums and leisure centres, turned off every street light and shut all discretionary bus routes, they still would not have saved enough money to plug the funding gap.

Not only does this demand urgent action from the Tory government, which we are campaigning for now, but it means that the next Labour government will inherit a local government sector struggling to cope with its statutory duties, let alone play a role as a key partner in delivering the radical change that this country needs. So, rebuilding local government and local democracy must be at the heart of our plans as we prepare to fix the mess created by this government–and it is only right that we do this by drawing on some of the innovations of Labour councils to inform our thinking.

Thirty years of local government outsourcing–kicked off by Margaret Thatcher’s ideological fixation with privatisation–has proven to be a disaster and the need for change is urgent. Outsourcing has been shown to lead a race to the bottom as providers compete with each other to see who can cut the most corners or do the most to undermine the rights of their workers. Time and again providers overpromise and underdeliver, leaving local councils out of pocket and local people out to dry.

Luckily, many Labour councils are leading the way in bringing services back in-house, improving services and working conditions while saving taxpayers money. Labour councils in Ealing, Hackney, Islington, Newham, and Redbridge have all brought their council housing management back in-house. In Liverpool City Council, IT services have been brought back in-house resulting in an anticipated saving of £30 million over three years. Only this week Redbridge brought cleaning services back in-house. Labour in Islington did the same in 2013, allowing them to save £3 million each year.

We want to help spread this good practice. That’s why I recently announced, alongside John McDonnell, that Labour intends to lead an insourcing revolution. Our policy document, Democratising Local Public Services, lays out how and why local services can be brought back in-house, and sets out how we will achieve an insourcing-first approach in local government. Through this work, we aim to rebalance the legal playing field, so that it’s no longer tilted away from insourcing and so that councils have the powers they need to deliver public services directly.

Insourcing is the best example of community wealth-building. There is no better way to redirect wealth back into the local economy than by ensuring that our public services are delivered by councils, employing local staff, and accountable to local people.

Alongside this we announced a structured framework for councils when insourcing is not an option. We have proposed ten questions and criteria for councils to ask themselves if they want to overturn the default rule that services are delivered in-house. These include an assessment of the contract management skills of the local authority, ensuring that there is no evidence of greater cost efficiency if the service is provided in-house, and considering the impact on at-risk groups.

We will also extend the Freedom of Information Act and Human Rights Act to apply to outsourcers; ensure that wages, hours, and terms and conditions are no less favourable in outsourced work than if workers were employed directly; and we will limit contractual periods to the term of a local democratic cycle.

This is a plan to create an insourcing revolution–public services run for the many, not the private interests of the few. These ideas will not only help councils minimise the worst impacts of Tory austerity today, but will lay the foundations for a revival of local government and a new era of municipal socialism under the next Labour government.