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Interserve survey of local authorities reveals outsourcing fears

An Interserve survery of local authorities has revealed that 40% do not yet have strategies in place to achieve the spending cuts required.

On average councils are expecting to make cuts of 20% by 2014, with one-third anticipating 25% or more and one in ten targeting over 30%. But an Interserve-commissioned report has found that although they acknowledge that this is likely to mean radical change in the way services are delivered, in many cases the plans for effecting the savings are either still being created or have not been approved.

Interserve commissioned YouGovStone to survey chief executives and directors in 101 local authorities to find out how well positioned they are to cope with the budget challenge.

The research revealed:

  • Councils expect to increase outsourcing levels by 70%, moving from 20% average outsourcing levels in 2011 to 34% by 2014.
  • 84% of councils believe outsourcing has been successful in achieving savings, however only 58% believe it is critical for them to achieve their targets.
  • 44% of councils stated political concerns as a barrier to outsourcing; 28% identified a lack of capacity and 27% a lack of skills for delivering change.
  • 75% of councils believe the citizen’s voice will be fundamental to future delivery models and 76% believe more local control will enhance local authorities’ ability to meet their targets.
  • 63% of councils believe that partnership is the most important factor in a public private relationship; lowest cost doesn’t make the top five.
  • 25% of councils don’t expect to meet their savings targets fully by 2014 and 40% have no approved strategy in place to achieve them.
  • Only 8% of councils look to a consultant to start their procurement process, whilst 20% look internally to local government best practice rather than wider service-specific expertise.

“This research identifies the severity of the 2014 financial challenge and highlights a reticence among local authorities to tackle some of the larger and more publicly-focused areas of spend,” said Interserve chief executive Adrian Ringrose.

“Delivering savings to the extent necessary will require more radical change than simply increasing outsourcing levels.

“Councils clearly indicate that they are interested in procuring best-value solutions rather than adopting a purely cost-based approach, yet they don’t appear willing to undertake a full review of their service delivery. The opportunity exists for them to make fundamental reforms for the benefit of their communities; ultimately, the future is going to be defined by partnerships between the public, private and third sectors working together to help redefine delivery and instigate a positive change,” he said.

Verbatim comments from the report included:

“Outsourcing is not always an efficient tool if the objective is solely to make cost savings. The greater benefits lie in a combination of cost savings, risk transfer from the public sector to the external provider, and budget certainty / budget stabilisation within the framework provided by a contract. This combination is what best rewards and protects public services provided by private or voluntary sector providers.” Chief Executive, metropolitan borough council

“The current cuts are unmanageable within the service delivery envelope in which we operate at the moment. There will have to be some fairly dramatic cuts to services, including essential services to accommodate the cuts. Government will have to get used to this concept - we have been cutting back over the years and it is impossible to keep cutting back and deliver the same level of service.” Chief Executive, borough council

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