Biggest council shake-up since 1980s to dovetail with renationalisation of railways, Royal Mail and utilities

This article is more than 1 year old

This article is more than 1 year old

Councils will be expected to take rubbish collection, cleaning and school dinner provision back in-house under plans to reverse four decades of outsourcing to be announced by the Labour party today .

In the biggest shake-up of local government since the Margaret Thatcher-inspired reforms of the 1980s, a future Jeremy Corbyn-led government would legislate to ensure that the default option was for the public sector to deliver its own services.

Councils spend £80bn on outsourced contracts but Labour’s shadow chancellor, John McDonnell, will say it is time to end the “scandal” of the taxpayer being “ripped off” by private companies.

Why councils are bringing millions of pounds worth of services back in-house Read more

Under the proposals, councils would be allowed to employ private contractors under tightly controlled conditions, but the presumption would be that they take responsibility for their own services when existing deals expire.

The party says it would support councils by providing them with a model contract to save time and resources, access to the government’s legal department to help with contract management, and greater support for collaboration among councillors.

The drive to outsource the delivery of local services began in 1980, and the list of services expanded over the next decade to include construction and maintenance, refuse collections, cleaning, school and welfare catering, ground maintenance, and the provision of sports and leisure services.

Labour has accepted it would not be possible to eliminate all outsourcing but companies bidding to deliver public services would have to prove they pay fair wages, recognise trade unions and support local labour and supply chains.

Details of the scheme will be announced at an event in London by McDonnell and the shadow communities and local government secretary, Andrew Gwynne. The planned reforms are intended to dovetail with Labour’s plans to renationalise the railways, the Royal Mail and the public utilities.

Gwynne will say: “Our plan will be the largest set of reforms of local government in generations, rebuilding local government capacity and giving power back to communities – because public services belong to local people, and people are more important than profit.”

Labour will argue that the original justification for outsourcing – that private companies offer better value for money to taxpayers – has proved incorrect. It says the collapse of Carillion – the construction and facilities management company – in 2018 highlighted the risk of private provision, but that poor service quality and standards go beyond one-off cases. Local councils – including those in the north London borough of Islington, in Nottingham, Sefton, Halton and Stoke-on-Trent – have already been bringing services back in-house.

Labour is braced for widespread opposition to its local government blueprint. But it says claims that insourcing will place unsustainable cost burdens on councils, will lead to skimping on performance, or will contravene EU law, can be answered.

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A policy document to be presented at the launch will list seven key attractions of insourcing:

Lower costs

A public sector ethos

Longer time horizons

Greater scope for the co-ordination and integration of services

Economies of scale

Greater accountability and transparency

Better management of risk.

Labour says its new framework for insourcing won’t require compensation to contractors because councils will wait until contracts are up or lawfully terminated before bringing services back in-house.

McDonnell will say: “After year upon year of failures the public has rightly lost confidence in the privatisation of our public services and the carve-up of the public realm for private profit. The government’s ideological pursuit of privatisation and outsourcing has seen the public pay the price as fat cat bosses count their profits.

“It’s time to end the outsourcing scandal which has seen private companies rip off the taxpayer, degrade our public services and put people at risk whilst remaining wholly unaccountable to the people who rely on and fund these services.”