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After 40 years of awarding contracts to the private sector, insourcing is now the way for local authorities to cut costs and improve quality. 78% of local authorities believe insourcing gives them more flexibility, two-thirds say it also saves money, and more than half say it has improved the quality of the service while simplifying how it is managed.

Outsourcing began under Margaret Thatcher with compulsory competitive tendering back in the 1980s and was embraced wholeheartely by New Labour. Now attitudes seem to be hardening against contracting out. “What we are seeing is a 40-year experiment in public service delivery being put under the microscope,” says Tom Sasse, a senior researcher at the Institute for Government.

The Labour party has pledged that under a Labour government all frontline services would be provided by the public sector, from railways to social care.

Even the Conservative government has been forced to look again at outsourcing, renationalising probation services after outsourcing them disastrously failed. And in the NHS, the cervical cancer screening programme for England will be brought back into the health service later this year, after Capita failed to send more than 40,000 women screening invitations and reminder letters to have a smear test.

“A catalogue of failure has shown that private providers have struggled to generate profit and deliver services of the standards that the community expects,” says Paul Evans, director of NHS Support Federation.
“The rise in insourcing shows that commissioners are being forced to recognise this. Not all contracts display problems, but experience now shows that the risk is high.'

For many public sector bodies, bringing services back in-house is increasingly a pragmatic way to cut costs and improve quality. “On its own, it is not an absolute panacea, but there are significant advantages to bringing services back in-house,” says John Tizard, a former Capita executive and now a strategic adviser on public services.

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