Insourcing Consultation

<div>I am writing to respond to your ongoing consultation: Public Procurement - Growing British industry, jobs and skills. In particular, I am responding to section 15: questions on supporting national capability. I strongly agree that contracting authorities should be required to undertake a public interest test and publish it when making sourcing decisions. I am delighted that Labour has promised to deliver ‘the biggest wave of insourcing of public services in a generation’ [1] and I believe that conducting public interest tests before procurement is a positive step towards achieving this.  Insourcing is in the public interest because:<ul><li dir="ltr" aria-level="1">It is better value for money - insourcing means that taxpayers’ money is not wasted on profits.</li><li dir="ltr" aria-level="1">It gives local authorities greater control - as Angela Rayner has highlighted, empowered local government is ‘essential for growth’ and ‘can transform lives’ [2]. Insourcing gives authorities meaningful financial control, which enables them to serve their communities and meet social and environmental targets.</li><li dir="ltr" aria-level="1">It provides better public services - by increasing control, reducing fragmentation and better supporting the workforce, insourcing delivers better services for the public. </li><li dir="ltr" aria-level="1">It’s a better deal for workers - who get better pay and conditions under insourced contracts. Under outsourced contracts, these rights are sacrificed for profit. </li><li dir="ltr" aria-level="1">It keeps spending in the local economy - under insourcing, local authorities can deliver services by using local supply chains, meaning many members of the community benefit. </li><li dir="ltr" aria-level="1">It increases accountability - outsourcing enables people to have a say in how the services they depend on are run.</li></ul><div> </div>However, in order to truly make the most of public interest tests as a means of delivering the many benefits of insourcing, four key demands must be met: 1 - The government must actively create in-house capacity<ul><li dir="ltr" aria-level="1">The current proposal suggests that a public interest test is likely to include questions around ‘appropriate in-house capability’ as a means of informing sourcing decisions </li><li dir="ltr" aria-level="1">A decade of austerity has decimated local authority budgets: some councils' core budgets have shrunk by half since 2010 [3]. Councils simply don’t currently have the resources they need to insource. </li><li dir="ltr" aria-level="1">In order to make a success of the Procurement Act 2023 and truly deliver improved social value, the government needs to increase the resources that councils can use to insource. Stronger public services, run in-house, will strengthen the economy as well as our communities.</li></ul>2 - The government must lower the £5 million threshold for public interest tests <ul><li dir="ltr" aria-level="1">The current proposal suggests that only contracts worth £5 million + should be subject to a public interest test before a sourcing decision is made </li><li dir="ltr" aria-level="1">This threshold should be lowered so that smaller contracts also require public interest tests </li><li dir="ltr" aria-level="1">Doing so would enable local authorities to build their capacity for insourcing</li></ul>3- Social and environmental value should also be considered in public interest tests<ul><li dir="ltr" aria-level="1">The current questions proposed for a public interest test are limited to matters of feasibility and cost. This contradicts the National Procurement Policy Statement, which outlines the importance of social value, as well as economic value [4]. </li><li dir="ltr" aria-level="1">Insourcing delivers social value because it recycles spending into the local economy and provides opportunities for local people to have more of a say in how their services are run. It also provides workers with better terms and conditions. </li><li dir="ltr" aria-level="1">Insourcing provides local authorities with greater control over the design and delivery of services. This means that insourced services can be more aligned with local authority climate policies. As the Association for Public Service Excellent reported, ‘in-house teams are far more likely to adhere to Green Accords and local environmental strategies’ [5].</li></ul>4- Adult and child social care should be run as not-for-profit services<ul><li dir="ltr" aria-level="1">Local councils are spending two-thirds of their budgets on social care services [6].</li><li dir="ltr" aria-level="1">In 2022, 19% of the aggregate income of the 20 largest independent children’s social care providers was taken as profit. This amounted to £310 million, money which could - and should - have been in public hands [7].</li><li dir="ltr" aria-level="1">Wales passed a law in February to end private profit in children’s social care [8].  Scotland is currently creating legislation to limit profit in children’s residential care [9]. England must follow suit</li><li dir="ltr" aria-level="1">Ending the profit motive in adult social care would mean better opportunities for the most vulnerable children [10].</li></ul> By meeting these four demands, this government would demonstrate that they are serious about delivering on their ‘wave of insourcing’ promise, while putting public service users, workers and communities first. I look forward to the government’s response.  [1] ‘Labour’s Plan to Make Work Pay’ - <a href="https://labour.org.uk/wp-content/uploads/2024/06/MakeWorkPay.pdf">https://labour.org.uk/wp-content/uploads/2024/06/MakeWorkPay.pdf</a> [2] ‘English Devolution White Paper’ - <a href="https://www.gov.uk/government/publications/english-devolution-white-paper-power-and-partnership-foundations-for-growth/english-devolution-white-paper">https://www.gov.uk/government/publications/english-devolution-white-paper-power-and-partnership-foundations-for-growth/english-devolution-white-paper</a> [3] ‘How a decade of austerity has squeezed council budgets in England’ - ‘<a href="https://www.theguardian.com/uk-news/2024/jan/29/how-a-decade-of-austerity-has-squeezed-council-budgets-in-england#:~:text=Some%20councils%20have%20been%20hit,activities%20by%20more%20than%20half">https://www.theguardian.com/uk-news/2024/jan/29/how-a-decade-of-austerity-has-squeezed-council-budgets-in-england#:~:text=Some%20councils%20have%20been%20hit,activities%20by%20more%20than%20half</a>. [4] ‘National Procurement Policy Statement’ - <a href="https://assets.publishing.service.gov.uk/media/67ab330e1a116437c7ed88da/E03274856_National_Procurement_Policy_Statement_Elay.pdf">https://assets.publishing.service.gov.uk/media/67ab330e1a116437c7ed88da/E03274856_National_Procurement_Policy_Statement_Elay.pdf</a>  [5] ‘Insourcing: a guide to bringing local authority services back in-house’ - <a href="https://www.apse.org.uk/index.cfm/apse/research/current-research-programme/insourcing-a-guide-to-bringing-local-authority-services-back-in-house/insourcing-a-guide-to-bringing-local-authority-services-back-in-house/">https://www.apse.org.uk/index.cfm/apse/research/current-research-programme/insourcing-a-guide-to-bringing-local-authority-services-back-in-house/insourcing-a-guide-to-bringing-local-authority-services-back-in-house/</a> [6] ‘Councils call for ‘honest discussion’ on what they should be expected to deliver as new data reveals local authorities spend two-thirds of their budgets on care services’ - <a href="https://www.countycouncilsnetwork.org.uk/councils-call-for-honest-discussion-on-what-they-should-be-expected-to-deliver-as-new-data-reveals-local-authorities-spend-two-thirds-of-their-budgets-on-care-services/">https://www.countycouncilsnetwork.org.uk/councils-call-for-honest-discussion-on-what-they-should-be-expected-to-deliver-as-new-data-reveals-local-authorities-spend-two-thirds-of-their-budgets-on-care-services/</a> [7] ‘Profit making and Risk in Independent Children’s Social Care Placement Providers’ - <a href="https://www.revolution-consulting.org/wp-content/uploads/2023/09/Alt-Profit-Making-and-Risk-in-Independent-Childrens-Social-Care-Placement-Providers-final-2023.pdf">https://www.revolution-consulting.org/wp-content/uploads/2023/09/Alt-Profit-Making-and-Risk-in-Independent-Childrens-Social-Care-Placement-Providers-final-2023.pdf</a> [8] ‘Landmark law in Wales to end profit from children in care’ - <a href="https://www.gov.wales/landmark-law-wales-end-profit-children-care">https://www.gov.wales/landmark-law-wales-end-profit-children-care</a> [9] ‘Financial Transparency and Profit Limitation in Children's Residential Care: business and regulatory impact assessment’ - <a href="https://www.gov.scot/publications/financial-transparency-profit-limitation-childrens-residential-care-business-regulatory-impact-assessment/pages/1/">https://www.gov.scot/publications/financial-transparency-profit-limitation-childrens-residential-care-business-regulatory-impact-assessment/pages/1/</a> [10] ‘Outsourcing adult social care has contributed to England’s care crisis, argue researchers’ - <a href="https://www.ox.ac.uk/news/2024-11-14-outsourcing-adult-social-care-has-contributed-england-s-care-crisis-argue">https://www.ox.ac.uk/news/2024-11-14-outsourcing-adult-social-care-has-contributed-england-s-care-crisis-argue</a></div>

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