The Environmental Services Association (ESA) has launched a new report today (3 May) that looks into local authority (LA) decision-making processes when choosing whether to outsource waste services or run them in-house.

‘Public Realm Services – Making the Right Choice’, which was supported by the Local Authority Recycling Advisory Committee (LARAC), was written by Ricardo Energy and Environment for the ESA, which represents companies that provide waste management services to both the public and private sectors in the UK.

The report claims that there is ‘scepticism about the true benefits of insourcing from the evidence collected’ at a time when some authorities, such as those in Bristol and Middlesbrough, are considering insourcing, transferring waste services to ‘in-house’ providers.

The main assertion of the report is that greater transparency is needed in council decision-making processes, including assessing current services and obtaining new ones.

Making the right choice

Local authorities have had their funding reduced by 40 per cent since 2010, according to Ricardo, and more budget cuts are expected. LAs are therefore having to identify areas where they can make significant savings while also performing ‘statutory duties’ including waste management services.

The report adds that, on top of this, LAs are under pressure to meet the 50 per cent recycling target by 2020, set out in the European Union’s Waste Framework Directive, with Scottish and Welsh authorities under more pressure due to higher targets set by the devolved governments.

Subsequently, there has been significant debate as to whether insourcing or outsourcing (procurement and delivery of services from private-sector organisations in a manner similar to the current service delivery or an alternative delivery model), or a combination of both, is better for obtaining ‘best value.’

The ESA report reviews available data on decision-making processes behind choosing in-house services, outsourcing to contractors, deciding what ‘best value’ is and the general transparency in decision-making.

Despite high-profile examples like Liverpool City Council taking services in house, Ricardo reports that there has been little change reported in overall approach to the delivery of recycling and residual waste services in the last decade, with figures not showing a particular trend to insourcing.

The most notable change has been observed in the delivery of household waste recycling centres (HWRCs), which are increasingly outsourced. Meanwhile, street cleansing and ground maintenance services are more likely to be delivered in-house than waste services.

Ricardo suggests that for authorities to achieve ‘best value’, they first have to decide what they want in terms of service, performance and costs. To do this, they need to establish the baseline for how their current service performs in these areas. They can then use this baseline to assess which service is best.

The sustainability consultants stress there is no right or wrong approach, but say that, due to the observed lack of data on decision-making processes to gauge best value, they would welcome new rules requiring more transparency on in-house service costs.

The company claims more transparency will ‘provide a level playing field’ and ‘may also provide a mechanism for adopting standard reporting to ensure a consistent approach to demonstrating best value’.

Report will ‘help councils to improve their ability to benchmark’

Commenting after the report’s release, ESA’s Executive Director Jacob Hayler said: “These are difficult times for local government with severe constraints on funding. It is therefore absolutely crucial that authorities are helped to secure the best possible value for their waste services. It is often too hard for authorities to benchmark accurately their services as costs are allocated to different departments, which makes like-for-like comparisons impossible.

“We hope this research will help councils to improve their ability to benchmark their services against the market and realise the best possible value for their residents.”

Adam Read, Practice Director at Ricardo Energy and Environment, added: “We hope that the report encourages authorities to at least undertake a robust service review and benchmarking exercise before making a decision on what to do. To date, this is far from the norm and this is a worry in what is after all a public service.”

LARAC CEO Lee Marshall said: "The large reduction in budgets means local authorities are having to constantly review their services and evolved how they are delivered. The private sector has a key role to play in this but to do so will need to review and evolve their offer to councils. Greater flexibility within contracts will be needed to cope with changing markets and budget cuts. This flexibility needs to come from both the councils and the private sector if it is to work properly, with councils potentially changing how they procure services and becoming more innovative in this area.

"Local authorities will need to ensure their decision making is based on robust data and criteria. This can genuinely lead to having in house service delivery, which will be appropriate in certain circumstances. There is a place for a variety of service delivery models and the one used will be dependent on local circumstances, showing as in other situations, one size does not fit all.”

The ‘Public Realm Services – Making the Right Choice’ report is available on the ESA website.