Council outsourcing doubles under coalition

The value of outsourcing deals signed by local government almost doubled during the last parliament, according to research.

Figures by supplier Arvato showed that the size of the market rose from £53m in the five years to 2010 to £97.9m in the five years since.

The drive have been fueled by shared service arrangements and increasing budgetary pressures, according to the company.

Debra Maxwell, chief executive of CRM and public sector at Arvato UK, said:”Despite a rise, adoption of genuine shared services among local councils has been relatively low.

“We expect to see a greater number partner up to leverage significant savings, with the next Spending Review anticipated to deliver even greater cuts in funding.”

She added that councils are expected to consider revolutionary new ways of working, with outsourcing reaching into new areas.

“Whether that’s increasing the use of social media in customer services or embracing robotic automation, the private sector can help authorities drive the transformation and bring in the expertise,” she said.

Including central government, the value of shared services contracts outsourced to the private sector reached £1.3bn in the five years since the 2010 Spending Review.

Before the coalition government came to power, central government departments had only spent £58 million on outsourcing shared services to the private sector, according to the findings.

The report also identified a 27% rise in the value of revenues and benefits contracts outsourced by councils, with £239m spent since 2010.

Maxwell said: “The budgetary pressures under which local government has operated since the last Spending Review have coincided with major welfare reforms and a wider agenda for digital transformation.

This has led many authorities to seek solutions from outsourcing partners in areas like revenues and benefits services.”

Colin Marrs

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