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Labour plans to end outsourcing of council contracts to private firms

The shadow chancellor insisted councils were ‘demanding’ the change.

John McDonnell said there were ‘multiple failures’ at local government level when contracts were brought in house (Kirsty O’Connor/PA)
John McDonnell said there were ‘multiple failures’ at local government level when contracts were brought in house (Kirsty O’Connor/PA)

Labour will seek to largely end the outsourcing of council contracts to private firms if it enters government, John McDonnell has said.

Rubbish collection, cleaning and school dinners could be taken back in-house when private contracts expire under new plans unveiled by the shadow chancellor on Saturday.

The proposed radical shake-up of local government is being “demanded” by councils, Mr McDonnell said.

Announcing the policies, he called the collapse of Carillion “catastrophic” and said there were “multiple failures” at local government level when contracts were brought in house.

“We all know the results of the forced outsourcing policy. One of the best examples is the catastrophic collapse of Carillion and that highlighted the problems with the actual business model itself,” he said.

“We have seen multiple failures at the local government level, where contracts have been brought back in-house because of actual failures.”

The shadow chancellor acknowledged the “creativity and courage” of councillors who kept services in-house at an event in central London on Saturday morning.

He said: “We believe it’s time to end the outsourcing scandal, which has seen private companies rip off the taxpayer, degrade our public services and put people at risk whilst remaining wholly unaccountable to the people who rely upon and fund the services.”

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Andrew Gwynne joined John McDonnell at the event in London on Saturday (Gareth Fuller/PA)

Mr McDonnell added that the party was drafting legislation so it was “on the shelf” in preparation for a general election.

But Matthew Fell, chief UK policy director for the Confederation of British Industry, called the policies an “extreme move devoid of evidence”.

“Rejecting the innovation, investment and cost savings suppliers can bring to vital public services and infrastructure is an extreme move devoid of evidence yet dripping in dogma,” he said.

“The vast majority of public-private partnerships are successful, delivering investment and high quality services.”

Shadow communities secretary Andrew Gwynne, who launched the plan alongside Mr McDonnell, told the event that contracts will come back in-house when they reach the end of their expiry period or when they are lawfully terminated.

The framework lists conditions for outsourcing, with standards relating to the Human Rights Act and fair wages and employment standards.

“We are creating a new partnership between local government and central government,” Mr Gwynne said.

“We are rebalancing the legal playing field, so that it’s no longer tilted away from insourcing and so that councils have the powers they need to deliver public services directly.”

Unison general secretary Dave Prentis said: “This report is a welcome first step on the road to ending the scourge of public service privatisation.

“For the first time in 20 years we’re seeing positive signs that Labour understands the damage that outsourcing has caused – and is developing a plan to reverse it.”

A spokesman for Communities Secretary James Brokenshire told PA: “It should be for local councils and local communities to decide which services to outsource not John McDonnell.

“This is a dogma driven plan to increase central control and reverse local decision making. It is nakedly anti-free market and crucially won’t provide best value for money for hard-working council tax payers.

“Rather than undermining local councils as Labour propose we should be looking at what further powers we can give to local communities to deliver the services they need.”

PA

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