Outsourcing and cost saving in local government

Today’s report by the Audit Commission and the LGA on the future of the local government workforce re-states some stark statistics.

“Government funding for local government will fall by 26 per cent, or £5.5 billion, over the period covered by the Spending Review (2011/12 to 2014/15), and councils must find most of the savings in the first two years. Because staff account for nearly half of all spending by councils, workforce costs have to come down.”

In England, the report adds, local government has already lost at least 145,000 jobs.

The study suggests fairly bullish attitudes to transformation, as you would expect, and outlines some concrete examples of future outsourcing. But the report also says that councils intend to “extend competition to cooperatives, social enterprises and mutuals” (Work in Progress, par 69). This is interesting, but does competition exist between cooperatives and mutuals? is there really a competitive market? Are there any examples of this already?

Of course, it is part of councils’ role to make markets to meet their needs, but how far down this road are we and is this a credible strategy for major cost saving in the short to medium term? If it is, where is this happening? And if it is not, are some councils still unwilling to talk about traditional outsourcing.

Incidentally, the Guardian has an interesting piece on the outsourcing of Islington’s education service by Mark Taylor director of schools, Cambridge Education. This is written by the outsourcer, any other perspectives?

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