A toolkit for insourcing in Wales - 1. Introduction
Toolkit for insourcing in Wales by The Centre for Local Economic Strategies (CLES)
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Within the refreshed Programme for Government, under the pledge to ‘Make our cities, towns and villages even better places in which to live and work’ there is a commitment to:
“… explore where services and contracts can sustainably and affordably be brought back into a strengthened public sector.
The Centre for Local Economic Strategies (CLES) have been appointed by the Welsh Government to review the procurement landscape in Wales and to produce a toolkit to help organisations across the public sector in Wales put that commitment into practice.
The key policy driver behind the commitment of exploring insourcing is the pursuit of a socially just, fair work agenda for Wales, recognising that insourcing can result in enhanced local employment conditions.
This toolkit for insourcing in Wales highlights the importance to embed a systematic and proactive approach to consider insourcing and the impact insourcing can make to service models. Such an approach takes a rounded view of value for money, applying a Well-being of Future Generations Act lens to service design options. The toolkit will help guide organisations to put the commitment into practice, to consider insourcing at a strategic level.
This toolkit will help to ensure that insourcing is routinely considered with a clear thread from the Well-being of Future Generations Act running through the decision-making process of the service design options. However, it is important to note that the responsibility of routinely considering insourcing does not just sit with procurement; insourcing needs to be considered holistically within organisations, with ‘buy’ in from senior leaders.
Moving forward, the toolkit should be used as a proactive and routine appraisal for insourcing against the Well-being Goals and Ways of Working, with a view to achieving longer term social and economic goals and improved population well-being, as well as service efficiency and quality, which can also affect costs in in the long term.
John F Coyne
Director, Commercial & Procurement
Introduction and purpose of the toolkit
The Programme for Government contains a commitment to:
“… explore where services and contracts can sustainably and affordably be brought back into a strengthened public sector.”
The Welsh Government has commissioned the Centre for Local Economic Strategies (CLES) to produce a toolkit to help organisations across the public sector in Wales put that commitment into practice.
The toolkit has been produced by CLES with support from APSE (Association for Public Service Excellence).
It aims to provide advice, guidance, and information on:
- The policy background, rationale, and strategic case for exploring the potential to insource.
- Prompts and touchpoints in the service planning and commissioning cycle where insourcing should be considered.
- The types of services and contracts which should be considered.
- An options appraisal methodology to guide the decision-making process.
- A generalised ‘roadmap’ for the various stages of the insourcing journey.
- Key considerations and risks.
- Case studies.
What is insourcing?
There are a number of potential definitions and interpretations about what is meant by ‘insourcing’. However, a broadly accepted definition is the cessation of a previously outsourced contract and the re-establishment of the service under the direct operation and control of a public authority (Rebuilding capacity: the case for insourcing public contracts. APSE, 2019). One key factor here is the direct employment relationship between the public authority and the employees delivering the service.
Insourcing is likely to be explored as one of a range of different service model options, across a spectrum from in-house to outsourced. These vary in terms of the degree of control exercised by the public authority and not all models are available across all parts of the public sector in Wales (for example, health boards in Wales do not currently have the power to establish or have share interests in subsidiary companies or cooperatives).
|Service model||Typical characteristics|
|In-house||Where a public authority runs a service itself and has a direct employment relationship with the employees delivering the service.|
|Direct service organisation||A business unit established by a public authority to undertake specific types of work, e.g., construction or maintenance. Staff are employed by the public body.|
|Shared service organisation||A business entity established by 2 or more public bodies to provide services across them. Staff are either be employed directly by one of the parent organisations, or by the shared service organisation.|
|Wholly owned company||A separate company, which generates revenues from the public sector (and potentially the private sector). Staff are employed directly by the company. The degree of public sector control varies depending on the governance model adopted.|
|Joint venture||A commercial partnership set up by 2 or more entities, where risks and benefits are shared, typically free to trade more broadly. Joint ventures can take several forms, e.g., public-commons partnership, or public-private partnership.|
|Outsourced||Where private or third sector businesses are contracted to provide goods or services. Staff are employed by the contractor.|
Who is this toolkit for?
The toolkit is applicable for all parts of the public sector in Wales. It is intended to assist and inform anyone who has responsibility for spending public money or who has influence over service design and delivery approaches. This will include:
- Welsh Government departments and civil servants
- Chief Executives and Directors of Finance
- Directors and heads of service
- Service designers and commissioners
- Procurement leads
- Trade unions
- Local government councillors (in both cabinet and overview and scrutiny roles)
- Board and committee members
Structure of the toolkit
1. Background to public service insourcing in Wales
- Introduction and purpose
- Rationale and context
- The case for public service insourcing
2. Guide to exploring the potential for insourcing
- Prompts and touchpoints in the service planning and commissioning process
- Types of services which should be considered for insourcing
- An options appraisal methodology
- A’ roadmap for the insourcing journey’
- Key considerations and risks
3. Information and advice
- Case studies
The toolkit includes:
- Key messages – summary, headline points
- Further information – more detailed narrative and explanation
- Useful resources – such as checklists