UK government vows to reclaim services from outsourcing giants

The UK government is establishing a new unit within the Office for the Prime Minister and Cabinet to rapidly increase insourcing of services previously outsourced to private companies. This move aims to address long-standing concerns over the value for money and service quality of government outsourcing, particularly in technology-heavy business processes.

The unit, located within the Cabinet Office, will coordinate departmental insourcing efforts, remove delivery obstacles and identify opportunities to maximize value for money and restore direct operational accountability. It will also consider bringing critical service contracts back in-house and work alongside the Public Interest Test, which evaluates government service contracts worth at least £1 million.

Key factors beyond price, such as service quality and public value, will be taken into account when deciding on insourcing. The unit is expected to help reduce spending on consultants and professional services by building Civil Service capability. One early candidate for insourcing is the Cabinet Office's building management work, including cleaning and security, which is set to be brought in-house once the existing contract ends in 2028.

The push for insourcing has become more pressing following the problematic start of Capita's contract to manage the Civil Service Pension Scheme (CSPS). The UK outsourcing firm secured the seven-year, £239 million contract in November 2023, succeeding MyCSP, which had been administering the pension scheme since 2012 at a cost of £238 million since 2016.

Capita's takeover led to a glitchy website and difficulties for former civil servants in accessing their pensions, as reported exclusively by The Reg. Nick Thomas-Symonds, Minister for the Cabinet Office, acknowledged that terminating the Capita CSPS contract prematurely could cause severe disruption to the payroll, making an immediate insourcing move impractical.

Even if the government eventually brings pension administration back in-house, it is unlikely to be a near-term priority, given the complexity of the operation and the time required to replace a comprehensive pension system.