Key Takeaways:
- London councils paid private consultancy and outsourcing firms over £555m in 2024, with some companies receiving over £1bn in contracts between 2010 and 2024.
- The reliance on private firms has grown significantly since 2010, with a 76% rise in average annual consultancy spending per London council.
- The outsourcing of core council functions has raised concerns about the sustainability and resilience of local government.
- Some councils, such as Barnet, have begun to bring services back in-house, while others, like Lambeth, have disputed the findings of the report.
- The use of private consultancy and outsourcing firms has been linked to issues such as fraud, financial mismanagement, and poor value for money.
Introduction to the Issue
The scale of London councils’ reliance on private consultancy and outsourcing firms has been revealed in a recent report, which shows that these firms were paid over £555m in 2024 alone. This figure has been steadily increasing since 2010, with some companies receiving over £1bn in contracts between 2010 and 2024. The report, published by the Autonomy Institute and the CADA Network, has raised concerns about the sustainability and resilience of local government, with critics arguing that the outsourcing of core council functions has led to a "sustained reliance" on private firms.
The Rise of Consultancy Spending
The report highlights a significant increase in consultancy spending by London councils, with a 76% rise in average annual spending per council between 2013 and 2023. This increase has been driven by cuts to council budgets, which have forced local authorities to seek external support to deliver basic services. The companies providing these services offer a wide range of support, including leasing out software and IT systems, bringing in temporary workers, and providing advice on budgets and planning decisions. However, critics argue that this reliance on private firms has led to a lack of public capability and a loss of democratic control over local services.
Case Studies: Barnet and Lambeth
The report highlights the experiences of two London councils, Barnet and Lambeth, which have both relied heavily on private consultancy and outsourcing firms. Barnet council, which was once dubbed the country’s first "easyCouncil," outsourced many of its frontline services to Capita in the early 2010s. However, this decision was reversed in 2022, and the council has since begun to bring services back in-house. Lambeth council, on the other hand, has disputed the findings of the report, arguing that some costs were misattributed and that the majority of its spending on private firms is related to public services such as waste collection and housing homeless families.
Concerns and Controversies
The use of private consultancy and outsourcing firms has been linked to several concerns and controversies, including fraud, financial mismanagement, and poor value for money. In 2018, a Capita employee working for Barnet council was jailed for 62 instances of fraud worth a total of £2m, while in 2020, a man working at Capita’s offices in Darlington was found to have stolen £70,000 from Barnet council’s pension fund. Additionally, a review of invoices submitted by Capita found that the company was charging Barnet council £8 per call for a parent to check if a Harry Potter book was in stock at the library.
Conclusion and Future Directions
The report’s findings have significant implications for the future of local government in London and beyond. Critics argue that the reliance on private consultancy and outsourcing firms has led to a lack of public capability and a loss of democratic control over local services. To address these concerns, some councils, such as Barnet, are beginning to bring services back in-house, while others, like Lambeth, are disputing the findings of the report. Ultimately, the report highlights the need for a more sustainable and resilient approach to local government, one that prioritizes public capability and democratic control over the use of private consultancy and outsourcing firms.