changing circumstances, the author of a major new study has warned.
Tom Entwistle of the Local and Regional Government Research Unit at
Network that 'hollowed out' councils run the risk of not being able to
deliver services in future years.
'Hollowing themselves out in terms of capacity and competence can put
councils in a dangerous position when circumstances change,' he told a
PSnet national seminar in Birmingham.
The nine month Cardiff study -- due to be published in mid-February --
included a survey of 210 direct service organisations across the UK,
followed by six detailed case studies.
Dr Entwistle said that although the majority of councils seemed acutely
nervous that best value would lead to greater externalisation, this did
not appear to be happening in practice.
The study found that in-house services have a number of advantages:
* Responsiveness -in-house services are flexible and can be re-directed
to meet needs while contracted out services lose flexibility.
* The mixed economy -in-house services work well with private
contractors. More than a third of authorities in the study spent more
than 20% of their turnover on subcontractors. Private contractors in
contrast are more interested in minimising competition.
* Delivering strategic focus - In-house services are able to respond to
the council--s local agenda more so than private contractors.
'There is a clear case for in-house services in certain circumstances.
The theory says so and our study confirms it.'
The survey found that 94% of DSOs believed compulsory competitive
tendering made services competitive and Dr Entwistle said authorities
needed to build on the competitiveness and autonomy which came out of CCT.
If the management is right, in-house services can use their advantages to
provide better and more efficient services, he said.
New models of management which don't allow service managers to contribute
to the authority--s strategic focus may pose a threat to internal
services, but Dr Entwistle said his work suggested that all local
authorities need some internal service provision - 'We would sign up to
In some cases, he believes councils will form public/public partnerships
with other authorities to offer economies of scale and develop the
expertise of the internal providers.
Prof Steve Martin, director of the Local and Regional Government Research
Unit which is carrying out a five year evaluation of best value for the
DTLR, said they hoped to extend the PSnet study further.
'We have been fascinated by the issues this research has raised and we
feel they deserve more of an outing, looking at more authorities and
tracking them over a longer period.'
The Cardiff University Business School report into In-house service
provision will be published in mid-February. Copies can be ordered from