A toolkit for insourcing in Wales: interim report - 5. Proposed criteria and practical considerations

With the lessons from our stakeholders and case studies distilled into key considerations, emerging criteria for contracting authority decision making can be proposed. With this is a core understanding that the picture painted in this interim report is not black and white. Contracting decisions cannot be boiled down to insourcing versus outsourcing, nor is all alternative non-profit-making service provision necessarily “generative” or conducive to fair work, social justice or wellbeing policy aims just by nature of their business model. There are no silver bullets and insourcing is one of many possible approaches to meet wellbeing aims within a great diversity of contexts. Consequently, insourcing should be considered as one approach alongside other generative models of service provision.

Governing these criteria is one key question designed to encourage a contracting authority’s understanding of the local economic landscape:

• In evaluating ‘best value’, does the current service provision arrangement underpin Welsh government policy objectives around fair work, social justice, and wellbeing (and specifically the 7 wellbeing goals and 5 ways of working in the Well-being of Future Generations Act)?

This governing question can be broken down into several sub-questions that relate to the broader fair work, social justice and wellbeing aims within the Welsh government policy agenda. 

• Where are current providers located?
• Who do the current providers employ?
• Do they cohere to fair work principles and encourage these principles within their supply chains?
• Do they contribute to improved and more universal access to public services?
• Are services delivered in line with existing commitments in relation to Welsh language and culture?
• Is there a local alternative supplier market that would be better suited to meet current fair work, social justice, and wellbeing objectives?

Accordingly, insourcing is more appropriate in these scenarios related to the above criteria:  

• Current providers are extractive and not conducive to Welsh government policy aims around fair work, social justice, and wellbeing.
• Options appraisals reveal that insourcing would not have a detrimental effect on more generative economic actors within the commercial economy, such as local social enterprise run café offering employment opportunities to marginalised groups on NHS estates.
• There are concerns in relation to current or future market instability.
• The necessary internal capacity exists or can be developed (e.g., auditing and regulatory regimes for catering that require operating licenses or certificates of technical competence).
• There is greater scope for flexibility and integration to transform service offers in line with Welsh government policy aims.
• Conditions for industrial relations and fair work can be improved from current arrangements.

Drawing upon the lessons from our case studies, the practical considerations for the insourcing process include:

• In addition to best value requirements, has an options appraisal been conducted to explore opportunities to support local generative suppliers and the potential for insourcing to impact the local economy?
• If current service provision is outsourced, how will the contracting authority mitigate against effects of early market exit prior to the contracting authority having in-house delivery capability? Are contracting authorities able to monitor contracts in such a way that ensures that minimum standards of fair work are being met and information on employment practices is obtained and analysed, so that the contracting authority can ensure that public funds:
  1. Do not result in labour exploitation
  2. Increase the likelihood that workers can access fair work.
• What is the scope to expand internal or local authority capacity required for insourcing particular service types (e.g., auditing and regulatory regimes for catering)?
• Have timeframes and initial costs been accurately calculated?
• How do contracting authorities engage trade unions as early as possible in the process?
• What are the metrics of success? How will they align with Welsh government policy aims and how will they be evaluated?
• To work towards the Well-being objectives and increase the likelihood that workers in all parts of Wales can access fair work, the toolkit needs to consider what options a contracting authority has to reduce the risk that a worker is in unfair work and their risk of poverty – both now and in later life.