Labour's council insourcing proposal sparks fears among charities

Voluntary sector providers of local authority services say ideology must not hamper effective service provision

The voluntary sector has reacted with concern to a Labour Party pledge to stop councils outsourcing services.

Labour said on Saturday that it would legislate to create a presumption that local authority contracts would be brought back in-house and delivered by the public sector unless certain conditions and exemptions were met.

John McDonnell, the shadow chancellor, said it was time to end the "scandal" of taxpayers being "ripped off" by private companies.

"The government’s ideological pursuit of privatisation and outsourcing has seen the public pay the price as fat-cat bosses count their profits," he said.

Media coverage of the announcement has focused on the likely effect on large private outsourcing companies. But 11,000 charities also have contracts with local authorities, according to the UK Civil Society Almanac 2019.

Lord Adebowale, chief executive of the social care charity Turning Point, which derives 98 per cent of its income from statutory sector sources, said ideology must not get in the way of outcomes.

"We need to know more about how this policy would work in practice," said Adebowale, who is also the chairman of Social Enterprise UK.

"Research shows that the general public prefer services delivered by social enterprises.

"However public sector services are commissioned and managed, the crucial thing is that they are providing the best possible outcomes for people. Ideology must not get in the way of that."

A spokesman for the National Council for Voluntary Organisations told Third Sector that local authorities should be free to make their own decisions on service provision.

"Charities are not for profit and they work to achieve public benefit, so they’re a natural partner for local authorities," the spokesman said.

"With the right partnerships, charities run pioneering and good-value services that put the needs of local people first.

"We'd certainly benefit from reviewing current practices in outsourcing, but it wouldn't be in the best interests of the public to create more barriers for charities that want to deliver services."

Labour's insourcing proposal is included in its document Democratising Local Public Services: A Plan for Twenty-First Century Insourcing.

The document also supports allowing citizens and community groups to request information from councils about outsourcing decisions, as well as enabling them to challenge decisions by judicial review.

"This provides backstop recourse for citizens and community groups to ensure that outsourcing does not happen by a sidewind, and encourages outsourcing councils to maintain evidence of their decision-making," the document says.

Tom Watson, business and communications lead at the local infrastructure group Navca, said Labour's support for local groups appeared positive but its insourcing plans were concerning and his organisation would seek more detail from Labour.

"The impact on our members and the voluntary sector could be massive, but it seems to be aimed more at profit-making organisations than the third sector," said Watson.

No one from the Labour Party was able to respond to request for comment in time for Third Sector's deadline.

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