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Tue June 15 2021

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Councils prepare for step-change in outsourcing

19 Jul 12 Local authorities plan to outsource 32% of all services by 2014/15, according to research by YouGov.

The research was commissioned by construction company Interserve, which has growing interests in providing local government services.

Private contractors currently provide 26% of all council services, up from 20% twelve months ago.

Authorities report savings of 16% to date but need to achieve another 18% by 2014/15. However, with 31% of councils not expecting to achieve their target cuts in this timeframe, splits are emerging as to the best way forward.

Those councils who need to make greater than average savings (more than 25% efficiency savings) or have larger budgets (over £100m) plan to outsource up to 60% of all services. Yet other councils aim to keep resources in house or share with other public sector providers, planning to outsource just a fifth of services by 2014/15.

Interserve chief executive Adrian Ringrose said: "Forward thinking councils are aware that they need a transformational change given the severe pressure on budgets for the foreseeable future. And 38% of councils consider there to be no service area, including children's services and public protection, unsuitable for outsourcing.

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"Although the results show that a percentage of councils continue to procure more traditional service models, the challenge of meeting these current targets whilst not reducing the level and quality of services will require councils to radically rethink how they procure services. In our experience if the delivery model is focused around results and not processes, the private sector can support councils in their focus on delivering improved front line services."

The report also found that:

  • 44% of councils state local political concerns are a serious barrier to outsourcing.
  • 44% of councils still haven't implemented a strategy to deal with their budgetary challenges to 2014/15, down from 79% this time last year.
  • 81% said outsourcing to a commercial partner had been successful, and 82% believe that outsourcing has a role to play in achieving their targets.
  • Councils expect only 20% of outsourced council services to be provided by the third sector by 2015; and half to be provided by commercial providers by 2015.
  • Councils expect a 15% reduction in the size of their built estate.

This was the third annual survey by YouGov and confirms that local authorities have exhausted the 'quick win' savings and cut marginal services but are still faced with reductions that range from the ‘unpalatable to unacceptable’, according to one respondent. Another respondent summarised the situation as ‘Given the scale of the savings required, we need transformational change that delivers the same or better quality at 30% less cost - not the marginal improvements usually on offer’.

The full report, Local services - in need of transformational change, is at www.local-government.interserve.com.

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