A toolkit for insourcing in Wales: interim report - 6. Levers to meet objectives

Throughout our consultation process, some stakeholders (particularly those who are less bought into the insourcing agenda) expressed a strong view that insourcing should not be mandated by Welsh Government. This is not, as we understand it, the current policy intention and, as discussed above, a mandate to insource could run counter to the need for strategic synergy across Programme for Government objectives. However, that is not to say that consideration of insourcing could not be mandated. Indeed, it could be argued that this consideration is already mandatory under best value. Positioning this agenda more firmly within the framing of the Wellbeing of Future Generations Act is a practical way in which this can be achieved, and one that is more likely to instil buy-in and understanding from across the Welsh public sector. The toolkit should therefore seek to normalise a proactive and routine appraisal of the potential impact of different models of delivery, (including insourcing), against the Wellbeing Goals and Ways of Working.

The toolkit and insourcing strategy should start with making a strong case for insourcing while speaking to contracting authorities and their specific contexts, opportunities, and challenges. The emphasis here may need to be different for different parts of the Welsh public sector:

For example:

• At the national level, speaking to the need for Welsh Government to be seen to lead by example and to achieve genuine cross-government synergy.
• For health, positioning this agenda more explicitly in line with the social model for health, making the links between fair work and the social determinants of health.
• For Higher Education, speaking to their more nuanced position as a quasi-public sector and their challenges regarding profit-making functions as well as the opportunities available to integrate themselves as key agents in the delivery of the Welsh government’s policy agenda.

There is a need to instil an understanding that there is no guaranteed short-term financial return from insourcing. Rather, the potential benefits of insourcing relate to longer term social and economic goals and improved population wellbeing, as well as service efficiency and quality, which can also affect costs in in the long term.

Additionally, guidance and support should reflect that developing an insourcing approach needs to be a long-term endeavour that for some public sector organisations will require shifts in their culture, skills and capacity to enable their transition from a commissioning to a delivery focus.

An insourcing toolkit cannot be seen as a standalone or a silver bullet, it needs to be framed as a component of a broader suite of guidance, such as the social value report by Cwmpas (For Economic and Social Change: Welsh Government social value review. Cwmpas, 2022), to direct the power of public bodies towards meeting Welsh government policy objectives.

This means that, as part of a suite of guidance aligned to Welsh government’s policy agenda, such a toolkit should be driven across all relevant government portfolios for strategic synergy and consistency. This will not only serve to maximise impact but will also avoid undermining and contradicting other agendas, and vice versa. For example, the Welsh government agenda around strengthening the SME sector, known as the ‘missing middle’, through strategic contracting and procurement practice can be symbiotic with insourcing policy. This confluence can only exist if the policies are framed, engineered, and mobilised toward supporting the Welsh government’s fair work, social justice and wellbeing aims rather than in isolation. Therefore, insourcing should exist as a particular tool in a public body’s inventory to achieve policy aims and not a default policy.

This should be supported by the availability of specialist advice on the national policy context to inform and give confidence to officers in contracting authorities on how decisions can be made within the current legislative space especially in the context of post-Brexit trade treaties and changes to procurement legislation.

Support may also be needed for contracting authorities when taking on responsibility for new business areas by insourcing – for example, on how to evaluate and maximise the local economic impact of new supply chains from insourced contracts and how to collate data to measure the impact.

If insourcing is a policy tool for delivering against longer-term best value through considerations of fair work, social justice and wellbeing objectives then success must be measured against those metrics rather than services being audited on short-term VFM and cost efficiency alone. There will be an ongoing need for the Welsh Government to have honest conversations with the Welsh public sector and to consider where it is possible to evolve and flex its relationships to reinforce that longer-term commitment (encompassing, for example, funding settlements, and approaches to audit and inspection).

We would also recommend that Welsh Government consider how best to monitor, promote and stimulate sharing of knowledge, data and good practice across the Welsh public sector, to encourage deeper engagement with insourcing and alternative models of service provision.

This could be via a Community of Practice (CoP), designed to ensure ongoing momentum after the launch of the toolkit, along the lines of CoP established as part of the Welsh Government’s Foundational Economy Challenge Fund (Foundational Economy Community of Practice. About. Cynnal Cymru, 2022). This could provide a model for a facilitated community of practice of contracting authorities to pool expertise, share challenges that they face and explore the art of the possible regarding insourcing practice and alternative service provision in line with Welsh Government policy objectives.