The increase comes after Rachel Reeves in 2021 pledged to slash spending on outsourcers by ushering in the “biggest wave of insourcing of public services for a generation” with the aim of saving money and improving public services.
Council workforces are so known to be more efficient, right?
When I was but a callow youth I used to think like this. That a supposed economist and the actual Chancellor stills thinks like this is almost beyond comprehension.
Wrong classification! More like the economics version of Jesus turning water into water.
The reason for outsourcing in the first place was to improve public services and reduce costs (most often it was to reduce costs but they had to promise to improve public services at the same time to avoid public protests). So Rachel Reeves is deliberately talking through her hat.
Why? Unite and Unison are (or are among) Labour’s biggest paymasters.
The real problem is that amateur sleuths have gone viral now that anyone with a device can have a blog or a podcast. It’s not so easy anymore to outsource to relatives. But you can give a relative a high-paid high-status in-house job without a lot of eyebrows being raised.
Insourcing *could* save money under the right circumstances.
Your company has to already be competent enough at doing the thing to be insourced that you won’t spend more learning to do it than you pay the other company to do it (over and above what it costs them).
Oh, and you should never outsource your value-add aka your “core competency”. If you do that, people will start to wonder why they pay you.
I’m not sure what core competency government is supposed to have. Other than military and police (ideally). Pretty sure you don’t want to outsource those; history is full of places that tried and the results speak for themselves.
Note the “ideally” in the above. I don’t think the UK government does those functions well right now.
What the British public sector needs is “unsourcing”.
@ M
Yes *under certain circumstances*
(i) You have, or can hire, competent staff
(ii) the jobs can be done by an integral number of employees (or the fractional employee can do some useful work in the time left over)
(iii) it doesn’t involve significant capital expenditure on equipment that will only be used a small/smallish fraction of the working week
(iv) it provides no opportunity for empire-building within the council/government department
(v) you have read *and understood* equal pay regulations
M,
“Your company has to already be competent enough at doing the thing to be insourced that you won’t spend more learning to do it than you pay the other company to do it (over and above what it costs them).
Oh, and you should never outsource your value-add aka your “core competency”. If you do that, people will start to wonder why they pay you.”
The thing I realised from looking at good companies is that they generally have one core competency, one particular skill that they are really hot at. That skill might be applicable to many different areas. Like Dyson are nice consumer products with fans. That’s the connection between hairdryers, vacuum cleaners and fans. Apple are computing with great user experience for rich non-technies. Their hardware isn’t that great, they don’t sell to nerds, but you open up an iPod box, you touch the device, it’s all very nice. The shops are nice, the tech support is good. Nintendo are a game company. 130 years ago, card games, today, mostly computer games.
Apple and Amazon doing TV just makes no sense at all. Google run YouTube, but YouTube isn’t about commissioning work. It’s about data processing and analysis, like the Google search is. It fits with Google’s core competency.
And the thing with good companies is that they outsource everything that isn’t their bit of magic. Apple hardware is made by the likes of Foxconn and Asus. Apple figured out how they wanted their M series to work, but would have almost certainly handed over the chip design to some other company who already do custom ASICS based on ARM cores, and someone like Samsung did the manufacturing of it. The operating system is BSD UNIX. The cloud services are run on Google Cloud and AWS.
M,
“I’m not sure what core competency government is supposed to have. ”
It should be defence, crime, regulation and setting incentives. That’s all it needs to do. Like deciding what meets the standard of “school” for vouchers and giving parents vouchers. Or Pigou for the environment.
Government decides what it wants to do. It should then pay for it and check quality of it. Not do it. They’re fucking up the bus system right now, which was a system that works fine. The market for most purposes, but for things we consider as “socially good” we offer Stagecoach a subsidy.
You could apply this to HS2. We consider £x of benefits of business passengers being carried, so offer someone who wants to build HS2 £x per passenger. No-one takes up the offer, it’s a shit thing to do.
You could deal with the whole newts and bats thing by just setting a price for killing/relocating each newt and bat. Spend some of the money on nature reserves far from where people want to live to have some well-looked after bats and newts so that we still have some.