To direct deliver or to not direct deliver…

As we head tentatively out of the COVID-19 pandemic, many local authorities are once more, after a year of trying to stay afloat, turning their attention to the future of key services which have been left bruised and exhausted by the past 12 months. And that has reignited the debate that has been rolling on for years: can and should more services be returned “in-house” and be delivered by directly employed staff?

There has undoubtedly been a trend in the last decade of local authorities taking a renewed interest on whether services, particularly repairs, outsourced in the 1990s should be returned back to the direct control of their officers and politicians. There is a very lengthy PHD that could be written about the various ideological undercurrents that swirl around this particular facet of the housing sector. But at its heart is the central question that politicians of all political colours and their officers end up returning to: whether an in-house team delivers a better service for residents than an outsourced service? 

In truth, there is no yes or no answer to this question. But there are common questions that local authorities, as well as registered providers, should ask themselves when reviewing the future of their services:

How would rate your procurement processes and could they be improved? This includes you tendering, preparing specifications, establishing an appropriate commercial approach and establishing a flexible contract

Are you happy to have an organisation working with your residents that may have different visions and aspirations from the organisation those residents chose to rent from? Would you prefer your organisation’s values embedded in every aspect of the service that your residents receive?

Are there some areas that need to be outside of your inside set up? Are these too specialist and technical?

What do your residents want? How does the political outlook affect your rationale?

Does having an in house team help in providing a comparator with any external contractors?

To provide some context to these questions, In-house teams certainly bring benefits and costs to a service. A clear economic benefit is that VAT is not charged, and so there is an immediate saving of 20%. Balanced against this is often the higher on-costs associated with directly employed staff, including access to pensions, organisational as well as technical training and improved employment conditions in the public and third sectors over most private sector employers.

In addition, unning any service has its ups and downs and requires expertise in strategy, leadership, finance, people  management, and an understanding of how teams can contribute to the aims and objectives of the organisation. This effort is the same whether it is the housing management team or the responsive repairs team.

If your team is in-house, you will have these problems. If your team is external you will not have the day to day concerns of absence management, training and development, communications, recruitment, payroll and termination of staff. You will instead have contract management concerns and remain responsible for how staff interact with residents, service performance and complaints, and all your landlord duty of care responsibilities.

The case could be made for either approach.

It’s really about where and how you want to exercise control. The question is whether you want to direct deliver or not to direct deliver…

Darren Smith, Just Housing