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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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UNISON insourcing update: The value of returning local authority services in-house in an era of budget constraints
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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UNISON insourcing update: The value of returning local authority services in-house in an era of budget constraints
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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UNISON insourcing update: The value of returning local authority services in-house in an era of budget constraints
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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UNISON insourcing update: The value of returning local authority services in-house in an era of budget constraints
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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UNISON insourcing update: The value of returning local authority services in-house in an era of budget constraints
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
We will save up to £250,000
per annum
We will save up to £100,000
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?
14
UNISON insourcing update: The value of returning local authority services in-house in an era of budget constraints
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.
15
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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UNISON insourcing update: The value of returning local authority services in-house in an era of budget constraints
Local authority Service area Core reasons cited for return in-house
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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Local authority Service area Core reasons cited for return in-house
HOUSINGANDBUILDINGMAINTENANCE
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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UNISON insourcing update: The value of returning local authority services in-house in an era of budget constraints
Local authority Service area Core reasons cited for return in-house
HOUSINGANDBUILDINGMAINTENANCE
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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Local authority Service area Core reasons cited for return in-house
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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UNISON insourcing update: The value of returning local authority services in-house in an era of budget constraints
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
21
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
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UNISON insourcing update: The value of returning local authority services in-house in an era of budget constraints
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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UNISON insourcing update: The value of returning local authority services in-house in an era of budget constraints
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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UNISON insourcing update: The value of returning local authority services in-house in an era of budget constraints
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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UNISON insourcing update: The value of returning local authority services in-house in an era of budget constraints
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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UNISON insourcing update: The value of returning local authority services in-house in an era of budget constraints
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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UNISON insourcing update: The value of returning local authority services in-house in an era of budget constraints
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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UNISON insourcing update: The value of returning local authority services in-house in an era of budget constraints
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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UNISON insourcing update: The value of returning local authority services in-house in an era of budget constraints
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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UNISON insourcing update: The value of returning local authority services in-house in an era of budget constraints
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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UNISON insourcing update: The value of returning local authority services in-house in an era of budget constraints
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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UNISON insourcing update: The value of returning local authority services in-house in an era of budget constraints
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?
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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.
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UNISON insourcing update: The value of returning local authority services in-house in an era of budget constraints
Methodology
Thisresearchhasentailedbothquantitativeandqualitativemethods.Anon-linesurveywasconductedamongdecision-makersincludingchiefexecutives,assistantchiefexecutives,servicedirectors,headsofserviceandelectedmembersinlocalauthorities.Atotalof140respondentstothissurveyhelpedidentifyfreshexamplesofinsourcingandreasonsbehindthedecisiontobringservicesbackin-house.Thesurveyandadesk-basedpolicyandliteraturereviewenabledalistof42freshexamplesofinsourcingsinceourlastreporttobeproduced.Wehavedrawnupondatagatheredandundertakensemi-structuredinterviewstodevelopcasestudiesthatconsiderreasonsforandoutcomesofinsourcingandidentifylessonslearnedfromthosewhohaveinsourcedservices.
APSEhasalsodrawnuponitsownexpertiseintermsofbusinessplanning,servicedeliveryissuesanddifferingmodelsofservicedelivery.
References
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comment/8337239/How-we-will-release-the-grip-of-state-control.html
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Phillips,L, Abolition of two-tier code ‘return to worst practices of CCT, PublicFinance,14thDecember2010
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UNISON insourcing update: The value of returning local authority services in-house in an era of budget constraints
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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PublishedbyUNISON,UNISONCentre,130EustonRoad,LondonNW12AY.unison.org.ukPrintedbyInprint,196OldShorehamRoadBN37EXCU/June11/20122/stockno.3016