Abandoned plans to privatise back-office staff at Kent County Council highlighted its ongoing struggle to provide services for less money – and an uneasiness about transferring work to the private sector.

These are tough times for local councils. They are trying to square a particularly awkward circle: despite rising demand for some key services, they are getting less money to do so from central government.

Kent County Council revealed in its latest budget it is to slash spending by £80 million.

It aims to raise council tax by just under 2% – raising an extra £11m – to help cushion the blow, but has admitted its latest figures will lead to cuts in services.

For many councils, a solution has been to transform themselves into “commissioning” authorities, in which they re-invent themselves as organisations that no longer automatically provide services but get others to do so.

Getting the private sector – or possibly a charitable trust – to do the work is nothing new, of course. The revolution started back in the 1980s under Margaret Thatcher, who was determined to take on the entrenched ideological view that the public sector should be kept separate from the private sector.

But the difference today is the commissioning model is not being driven by ideology.

It is simply considered by many to be the only way of dealing with the enormous financial challenges local government faces.

In Kent County Council’s case, the commissioning programme began two years ago.

Under the slightly clunky title Facing The Challenge – Whole Council Transformation, the council outlined how it intended to “actively engage the market for solutions” and would be “embedding commissioning authority arrangements”.

In other words, the council would review every single service to see how it should be provided and, more importantly, who should do it.

While it did not rule out keeping services in-house, the underlying theme was KCC would act with a more explicit commercial edge: if some company or organisation could do it for less money, without compromising standards, KCC would do so.

Two years on and the council leader Paul Carter insists the programme is working and its procurement strategy had produced significant savings in the region of £30m to £40m.

“I think our track record is a good one. We are generally on target,” he said.

But he acknowledged in some areas, the scope for saving money through commissioning was becoming less. “In adult social care, it is getting harder and harder.”

Recently, there was some surprise when it emerged that KCC was abandoning talks with a private company to outsource its back office functions.

Staff were told the plan has been dropped and the departments – HR, finance and IT – would stay in-house.

“Saving money in adult social care, it is getting harder and harder...” - KCC leader Paul Carter

Sources told Kent Business the council had reservations about aspects of the bid and decided that in the circumstances, it should stop the negotiations.

KCC hoped it could help bring down costs, saying “significant financial and non-financial benefits could be delivered” through back office outsourcing.

But it is telling that there are no plans to try and find another partner and
re-tender.

It is not the only hiccup KCC has had. A plan to hand over the running of Kent’s libraries to a charitable trust was put in limbo earlier this year, while a plan for the authority’s well-regarded legal services department to become an Alternative Business Structure has also stalled. That was intended to allow legal services to target clients outside the public sector.

Cllr Carter told Kent Business procurement had been “very effective over the last three years”.

The outsourcing process had also spurred back office managers to save 15% of their costs or, as he put it, “it has forced them to sharpen their pencils”.

His remarks suggest the council may be taking consolation in the fact that where plans to outsource fail, the process has had an indirect but beneficial impact on the way they are run in-house – crucially, at less cost.

Labour’s finance spokesman at KCC Cllr Derek Smyth says the authority could be exposed without proper scrutiny.

In the case of commercial trading companies, he believes the council should retain a majority holding on its services.

“Once you go down to below 49%, you have lost control,” he said.

Has the bubble burst? “That is more than a possibility.”

Liberal Democrat spokesman Cllr Rob Bird says KCC’s track record on commissioning is “a mixed bag” and believes there should be greater public scrutiny.

“Some have been very successful, others haven’t. If we are to make judgements about service quality, then it is important that there is a proper debate and elected councillors are at the heart of that debate.”