Public Services

Reading the political runes for local outsourcers

Jessica Figueras Published 23 February 2018

Alan Mo looks at what the likely political fortunes in May's local elections means for outsourcing specialists


As the Carillion fallout continues, public sector contractors may justifiably feel under fire from all directions. Whilst Shadow Chancellor John McDonnell made menacing noises about PFI , Defence Secretary Gavin Williamson took time out from leadership manoeuvres to criticise the Capita-run Army recruitment service. In the meantime, the spoils of Carillion have begun to be distributed with Serco picking up its NHS facilities management contracts at a knock-down price. We should expect to see some Capita disposals further down the track, too.

With the polls predicting a sweeping Labour victory in the 3rd May London local elections, some local government outsourcing specialists may also be anticipating the chill wind of politics. They might have noted Jeremy Corbyn's recent speech about the rebirth of municipal socialism, and also the party executive's decision to intervene to halt a private-public partnership in Haringey, resulting in council leader Claire Kober's resignation.

So would a big Labour win in London change anything for outsourcers?

We should first recognise that many of the London councils with a significant IT outsourcing arrangement are already under Labour control - the likes of Barking and Dagenham, Harrow and Tower Hamlets. Still, with deselection of Labour councillors happening in some areas, it's possible that Labour councils may gradually move leftwards in line with the national party. Political changes have certainly resulted in some major contract reviews in the past, and this could happen if Labour seizes control in traditional Conservative strongholds, such as 'EasyCouncil' Barnet.

But most importantly, we should be clear that insourcing is not new. We've been talking about this for some time now: while local political changes may add impetus, it's the general direction of travel. The old outsourcing model is clearly out of kilter with current needs, and with one sixth of local government still currently channelled through some form of outsourced or managed service agreement, there's a huge amount to play for if this all opens up.

Our advice to suppliers is to stay close to contracts nearing the end of their term: watch out for those performance reports, and search for signs of negotiation. Insourcing is not an easy journey, so stay close to those advisors being brought in to guide clients on their next steps.



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