Andrew Gwynne’s speech at Launch of Democratising Local Public Services
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Thanks Councillor Asima Shaikh for hosting us today and thanks John for outlining the history and harms of outsourcing, and why insourcing makes economic sense.
We went into the last general election with an ambitious manifesto that would bring an end to the current politics – that understands the cost of everything but the value of nothing.
But many of our communities cannot wait for the next Labour Government which is why the work of the Community Wealth Building Unit, and the work of Labour Councillors, is so important.
Councillors like you are already showing that it doesn’t have to be this way – innovating and making a real difference to people’s lives, despite the funding pressures pushed onto you from Whitehall.
Labour councils are already challenging the misplaced and unjustified belief that the private contractors are cheaper and more efficient than the public sector.
Labour councils in Ealing, Hackney, Islington, Newham, and Redbridge have all brought their council housing management back in-house.
In Liverpool City Council, IT services have been brought back in house resulting in an anticipated saving of £30 million over three years.
Labour Councils in North Tyneside, Islington, Stockport, and many others, have shown that local services can be delivered better and more efficiently in-house.
Only this week Redbridge brought cleaning services back in-house. Labour in Islington did the same in 2013, allowing them to save £3 million each year.
One of the first things that we must do in Government is urgently develop a strategy to reverse years of economic neglect, unequal development and the hollowing out of our local communities.
Rebuilding local government and local democracy will be central to that strategy – and it is only right that we draw on the best practice of Labour Councils to inform our policy.
So today, as John said, we’re publishing a report that explains how we’ll achieve an insourcing-first approach in local government.
This is the start of an insourcing revolution.
Key to this is a new “Local Public Services Act’ that the next Labour Government will pass to make in-house the new normal.
Not only is insourcing value for money – but it means that residents’ money will go directly to local services for local people rather than into the profits of private companies.
Labour will end this racket and ensure that our vital public services are delivered in the interests of the people our local authorities are here to serve, not in the interest of outsourcing firms’ profit margins and wealthy shareholders.
People are more important than profit, and our public services belong to local people. Labour will set out in law that inhouse delivery of public services delivered by the public sector will be the default option for councils.
We’ve been quite detailed in the report about how this will work. When contracts reach the end of their expiry period, or when they are lawfully terminated, contracts will generally come back inhouse.
We’ve bracketed social care contracts out of this legislation, since that is the subject of separate policy work.
We’ve also said that where significant capacity barriers exist, or community providers can best manage risks of interacting with at-risk groups, that general presumption will not apply.
This is not disruptive or inflexible.
Instead, we are creating a new partnership between local government and central government.
We are rebalancing the legal playing field, so that it’s no longer tilted away from insourcing and so that councils have the powers they need to deliver public services directly.
We are enabling councils to plan for this, for example through a rolling calendar review, which is a proposal developed by Mo Baines from APSE.
The second part of our legislation, aside from insourcing-first, is a framework for councils to go through if they want to keep contracting out.
We’ve looked at how others have done this – in Barcelona, for example – and we’ve reviewed work by the Institute for Government. We’re proposing that councils ask themselves ten questions if they want to overturn the default rule that services will come inhouse.
These include councils asking themselves whether there are good contract management skills, whether there are high-quality providers, and whether at-risk groups will be affected.
The feedback we’ve had from councils is that it’s helpful to have a structured framework to go through – and this framework can be used now, even ahead of a Labour Government.
The third part of our legislation establishes minimum standards for contracts where contracting-out continues.
We’ve said the Freedom of Information Act and Human Rights Act will apply to outsourcers: we’ll close those loopholes in the law.
We’ve said that wages, hours of work, and terms and conditions (including union recognition) should be no less favourable in outsourcing work than if workers were employed directly.
We’ve said local supply chains should be used and gender pay audits conducted.
In government, Labour will boost local economies by spending taxpayers’ money on local suppliers and local workers, and we will support councils as they deliver radical change and give power back to our communities.
We’ll limit contractual periods to the term of a local democratic cycle.
We’ll require community benefit, as has been done in Scotland.
And we’ll set up structures to monitor performance.
All of this goes far beyond the weak measures that the Government itself has proposed, through its so-called Outsourcing Playbook.
This is a rigorous regime for contracting-out, which is within procurement law but will also ensure a lifting of standards across the board.
So these are the three parts of the legislation.
A framework for deciding when services should be kept inhouse.
And a lifting of standards for contracting-out.
Through this work, we’ve built a new model contract that councils will be able to use. That eases burdens on councils and saves councils from having to employ expensive lawyers for drafting.
And that’s not the only support we’re offering. The Government Legal Department will be given a greater role to support insourcing, and we will support greater collaboration and sharing of best practice. We have also provided in this paper a series of rebuttals to common legal arguments used against insourcing. All of this is alongside our commitment to end austerity – and to provide proper funding for local government.
Finally, we will empower citizens and community groups by giving them the right to request information and scrutinise how services are commissioned and delivered.
This is a plan for insourcing in the twenty-first century. Our plan is a plan for public services run for the many, not the private interests of the few. This is what it means to democratise local public services.
We know that many Labour councils are already leading the way on insourcing and community wealth building, harnessing public and private wealth and using it for public good.
Rolling out these techniques will not only help councils to minimise the impact of Tory cuts today. It will also lay the foundations for a revival of local government and a new era of municipal socialism under the next Labour government.