Think tank urges greater social responsibility in outsourcing contracts

Loss of public confidence in outsourcing could lead to a £30bn bill for councils if they feel obliged to bring services back in-house.

That claim has come from the think tank Localis, whose board comprises six present or former Conservative council leaders.

In a report, Ethical Commercialism, Localis called for greater social, environmental and economic responsibility when drawing up contracts. It also urged local authorities to make "use of greater procurement freedoms after Brexit to favour firms who act ethically".

Localis said poor behaviour and delivery by contractors could lead to a breakdown of trust between them, councils and the public.

The report said moving all local services in-house would cost at least £30bn, a sum it said was far higher than any anticipated savings.

“Greater levels of trust and standards of behaviour by private companies and greater levels of openness and transparency by local authorities will be vital to preserving public trust in a mixed market for public services – one which sustains council finances as well as local jobs and business”, the report said.

Localis chief executive Jonathan Werran said: “A diverse, flexible and open market for local public services is one worth preserving for a very pragmatic reason, that being to keep going the countless thousands of vital services which millions of residents rely upon in their daily lives.

“Local government and the wider public sector simply can’t afford the rapid collapse of a mature and complex market.”

But Mr Werran warned firms they must “walk the walk of acting with fairness and decency in delivering public services”, while local authorities should take responsibility for drawing up contracts that encourage good commercial behaviour and present their commercial dealings to residents in a transparent way.

Geoff Tucker, group director of Norse Commercial Services, which is owned by Norfolk County Council but acts commercially, said: “With public perception of outsourcing to the private sector becoming increasingly negative, it is now more important than ever that local authorities are able to demonstrate that they are considering alternative ways of delivering services.

“At Norse Group we believe that partnership working can provide cost efficiency, maintain service standards, and at the same time meet this demand for ethical commercialisation.”