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Councils continue to outsource

02 August 2012

Local authorities plan to outsource 32 per cent of all services by 2014/15, according to the latest research by YouGov, for support services and construction company, Interserve.

Outsourcing currently accounts for a quarter (26 per cent) of all council services and has grown by six percentage points, from 20 per cent, in the last twelve months, as councils seek efficiencies.

Authorities report savings of 16 per cent to date but need to achieve another 18 per cent by 2014/15. However, with 31 per cent of councils not expecting to achieve their target cuts in this timeframe, splits are emerging as to the best way forward.

Those councils who need to make greater than average savings (over 25 per cent efficiency savings) or have larger budgets (over £100 million) plan to outsource up to 60 per cent of all services. Yet other councils aim to keep resources in house or share with other public sector providers, planning to outsource just a fifth of services by 2014/15.

Adrian Ringrose, chief executive at Interserve said: “Forward thinking councils are aware that they need a transformational change given the severe pressure on budgets for the foreseeable future. And thirty eight per cent of councils consider there to be no service area, including Children’s Services and Public Protection, unsuitable for outsourcing.

“Although the results show that a percentage of councils continue to procure more traditional service models, the challenge of meeting these current targets whilst not reducing the level and quality of services will require councils to radically rethink how they procure services. In our experience if the delivery model is focused around results and not processes, the private sector can support councils in their focus on delivering improved front line services.”

The report also found that:

? 44 per cent of councils state local political concerns are a serious barrier to outsourcing.
? 44 per cent of councils still haven’t implemented a strategy to deal with their budgetary challenges to 2014/15, down from 79 per cent this time last year.
? 81 per cent said outsourcing to a commercial partner had been successful, and 82 per cent believe that outsourcing has a role to play in achieving their targets.
? Councils expect only 20 per cent of outsourced council services to be provided by the third sector by 2015; and half to be provided by commercial providers by 2015.
? 16 per cent fewer councils believe that the voice of the community will affect future measurements compared with 2011’s results.
? 57 per cent believe that Community Budgets will have no effect (41 per cent) or even reduce (16 per cent) councils’ ability to meet their targets.
? Councils expect a 15 per cent reduction in the size of their built estate.

This was the third annual survey by YouGov and confirms that local authorities have exhausted the ‘quick win’ savings and cut marginal services but are still faced with reductions that range from the “unpalatable to unacceptable” according to one respondent. Whilst another respondent summarised the situation as “Given the scale of the savings required we need transformational change that delivers the same or better quality at 30 per cent less cost - not the marginal improvements usually on offer.”

The full report ‘Local services - in need of transformational change’ is available to download free of charge from www.interserve.com.

Research methodology
YouGov was commissioned by Interserve to interview top executives at one hundred British councils regarding their views on council budgets, the role of and their attitudes towards outsourcing.

100 respondents covering 100 separate councils took part, including 15 chief executives, three deputy chief executives, 26 finance directors/heads plus other directors and senior officials. They were interviewed between the 29th February and the 13th April 2012.


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