Millmead Views: Outsourcing, Should We?

Published on: 21 Nov, 2012
Updated on: 21 Nov, 2012

By Caroline Reeves

Liberal Democrat Guildford Borough councillor for Friary & St Nicolas ward

The definition of outsourcing is “the contracting out of a business, which an organisation may have previously performed internally or has a new need for, to an independent organisation from which the process is purchased back as a service.”

There are still residents around me who used to work for the borough council as part of a team, maintaining the roads. They recount how they had “their patch” and what great pride they took in making sure it was well maintained.

‘A suggestion was made sometime ago that Guildford Borough Council should employ someone to re-lay the setts in the High Street, and they would be responsible for their maintenance.’

Much has changed since then, as we all know from the constant call for improved road maintenance across the borough, a service that seems to worsen but cost more and is provided as a purchased service. So was it better when work was done by local people, why is there such a desire to “out source” services?

The answer we are always given is money, everyone needs to get the best value for their pound. But we have seen through chaotic government contracts that what might start as “more service for less money” often doesn’t stay that way.

Is it badly written contracts? Is it companies winning a bid with a low price that they know they will have to increase next year? Sometimes it must be better to work with small, local units and have people taking pride in work that their neighbours can see.

Nationally this year we saw the debacle of G4S and Olympic Games security, and with the collapse of formerly private-equity backed Southern Cross Healthcare it would seem that the private franchise holder had been providing a worse service at a higher cost.

Sometimes a contract will ensures that the company, while failing to provide the service, still gets paid or in some cases is on a long-term contract which costs a huge amount to break.

Residents in Barnet have put up a strong resistence to a radical plan by Barnet’s “easyCouncil” local authority to outsource most of its functions under the motto of One Barnet. Many of the residents have never been involved in politics or activism but are concerned at the drastic plans to reorganise. Does this show that essentially the feeling is that local is best?

In Guildford we have yet to see the G Live figures from their first year, have we made the right decision to outsource the management to an experienced organisation? And ditto the situation with Spectrum and the lido.

Only time will tell if the decision was right, but how much further should we go with outsourcing? I strongly believe that we should keep our refuse and recycling “in house”, as well as our parks and countryside team. Local knowledge in these services is invaluable. But we used to have all sorts of in-house professionals, our own architects, a whole team of engineers as well as our road gangs – was this a better way?

A suggestion was made sometime ago that Guildford Borough Council should employ someone to re-lay the setts in the High Street, and they would be responsible for their maintenance – and could even have an apprentice. To me this seems immensely sensible, we would have our High Street restored to its true glory by someone who could take real, on-going pride in their work. But our roads are managed by the county council, who outsource the service, and the charge comes back to us. Somehow, I don’t think our own “sett layer” will happen…

Responses to Millmead Views: Outsourcing, Should We?

Peter Brayne Reply

November 21, 2012 at 9:16 pm

Thank you for these thoughts. As a long standing, Council Tax paying resident of Guildford I am very concerned that we get good value for money; whether that be a service provided by Council employees or by another party. It seems to me that a key reason to ‘outsource’ is not just to save money but to shift the responsibility of managing employees, and the encombant responsibilities of being an employer, to a third party. It seems to be very difficult for statutory authorites to have a flexible work force who will respond quickly to changing funding streams.

But we must ‘value’ services in a social context and not just in monetary terms. We must consider the social, environmental and fiscal issues to assess the true value. Speaking as charity who receives around £500,000 pa from statutory sources, I hope that we not only provide a good service at a good price but also add value by utilising volunteers, raising additional funds from within the community as well as helping young people into adulthood and becoming responsible citizens.
Jim Allen Reply

November 25, 2012 at 7:35 pm

If a commercial profit making company can do the job for £100.00 surely a “not for profit” organisation can do it for £100 less the profit it is not making.

So it has got to be cheaper to do it ‘in house’, unless in house is charging for a box of paper-clips when only one is being used or the accountant is adding things in which have already been charged for.
Bibhas Neogi Reply

November 26, 2012 at 12:35 pm

Work carried out by in-house teams needs to be a fairly uniform workload throughout the year and year on year. Dedicated teams who take pride in their work ensure good value for money for quality work. However, there are items or packets of work that are intermittently required and cannot be planned well in advance.

Such work can be carried out by out-sourcing. But outsourcing always costs more simply because the contractor has to make a profit. It is hardly the case of them being so efficient that the savings are more than their profit. If the work could be carried out in-house it is likely to save money but it cannot be done if the in-house capacity is already being fully utilised.

All this points to the need for a robust business plan and assured funding. Unfortunately, funding mechanisms employed by both the local and the central governments is anything but conducive to better planning, although in recent years there has been some recognition of this by the politicians and a rolling programme is allowed in some cases.

We have seen how changes in governments affect planning and funding. For example, funding of £29m for improvements to ameliorate Guildford’s traffic congestion were withdrawn and the improvement scheme for the A3 through Guildford has been suspended. Financial difficulties has forced the cuts but during more stable periods, continuity and advance planning and development of schemes are essential for efficient execution of projects. Sadly that even does not happen due to short-sightedness of the policy makers and funding authorities. It is a fact that long term planning beyond the current tenure is not always on the list of ‘must do’ of most politicians.