Peterborough City Council 'ends headlong rush to outsource' as key services brought in house

Peterborough City Council (PCC) is ending its “headlong rush to outsource everything”, as Cllr Dennis Jones (Labour) put it, bringing several key services back in house.

PCC’s asset management, economic development and procurement teams are among those severing ties with the private companies that previously helped run them as part of an overhaul of the council's internal governance.

The first to go will be NPS Peterborough, a joint venture between the council and property management company Norse Group.

From January 31, PCC will value its own properties where previously there was "limited oversight", according to PCC’s finance chief Cecilie Booth.

In fact, “the whole service was outsourced to NPS”, she said, with just “one person on the council side to oversee it without necessarily the expertise to look after the sizeable portfolio we have”.

Also in the process of being brought in house is Opportunity Peterborough, a private not-for-profit company wholly owned by the council aimed at helping the city grow its economy.

There won’t be much change there, though, cabinet member for finance Cllr Andy Coles (Conservatives) says, and the name and branding will remain the same.

His comments followed a request for assurance from Cllr Jones that Opportunity Peterborough won’t “become a burden to the taxpayer” once it’s in house.

'How have we got so far away from standard business practice?'

Speaking at a meeting called to discuss PCC’s budget proposals, Cllr Jones added: “How in the name of all that’s holy, when we look at some of the things we’re doing there, how have we got so far away from what I would call standard business practice?”

To this, Cllr Coles said: “We need to have an arm of the council that assists in growth and development and Opportunity Peterborough provides that.

"It’s in the process of coming into council where it’s going to be of net benefit, so there isn’t a huge amount of change there.”

But he added that there’s “always a premium for every outsourcing contract you have”, with Ms Booth agreeing that external companies can't always be relied on to prioritise effeciency.

She continued that the council’s procurement team, which essentially sources the goods and services it uses, will move from being reactive to proactive as it comes in house while “the profit element that Serco would have applied to that contract” will be removed.

“Instead of just going out and buying everything we need to buy, we will have a forward plan where we can make some hard choices as well,” she said.

“Going forward, we can look at the contracts we have that are due either for expiry or renewal in the coming year and make decisions - can we really afford these contracts any more?

Council will stop 'just going out buying stuff'

“We’re moving from a very reactive service, just going out buying stuff, to being proactive in the next financial year.”

But while Serco will no longer operate PCC’s procurement services, the council will work with the multinational to “negotiate the contract and transform services” at least in the short-term, it says in budget papers, despite the recommendation to cut ties.

The papers note that the Chartered Institute of Public Finance and Accountancy (CIPFA) - which began a review of PCC’s finances last summer after it requested exceptional financial support during the pandemic - gave recommendations including “giving notice to NPS who run our property services and to Serco who run our Procurement Service”.

More services could follow, such as Aragon – also wholly owned by the council – which provides waste and environmental services.

Cllr Fitzgerald said that this “will get looked at” although he added he believes it’s “fit for purpose as it is today”.

New housing plan to rely on third party

But others may still be added to the roster.

PCC is in the process of submitting an application to the Secretary of State to implement a new scheme which would mean all privately-rented accommodation in parts of the city must be licenced, which they hope will “raise poor housing standards” and lead to “better outcomes for tenants”.

Council papers say that the scheme and associated compliance checks is planned to be undertaken by a third-party.

When this was discussed at full Council, Cllr Imtiaz Ali (Greens) asked: “have we not learnt our lessons from the outsourcing of property valuations to NPs; have we not learnt our lessons from the outsourcing of procurement to Serco?”

To this, Cllr Fitzgerald responded that “we have learnt lessons” and that “all outsourcing is not bad”.

“We will be working in partnership with a provider who have a proven track record elsewhere and I have to tell you our previous attempt at this was not very good, so that’s the lesson learnt,” he said.

PCC will also try to improve its finances by avoiding any more borrowing (which totalled £441m at the end of last year) unless there is a “sound business case” as Ms Booth put it, as well as raising council tax, reviewing all its contracts and expenditure budgets, creating an inflation reserve and digitising adult social care.

It will also consider selling surplus assets and stopping non-vital services or charging more.

Decreasing the frequency of council elections is also “still on the agenda” according to Cllr Fitzgerald, while redundancies haven’t been ruled out.

Budget papers say that “it is the aim of the council to try and minimise any compulsory redundancies” and redeployment will be considered first but there may be times when it is “unavoidable”.

The budget will be considered by PCC’s cabinet on 13 February, when a final decision will be taken on its adoption.