This piece explains how the new insourcing unit and public interest test could change decisions between outsourced and directly delivered public services.
A central role for insourcing
Ministers have announced an Insourcing Unit within the Office for the Prime Minister and Cabinet, signalling a more coordinated approach to bringing public services back under direct state management. The unit will coordinate departmental insourcing activity, unblock barriers to delivery and identify opportunities across government to improve value for money and restore direct operational accountability. First secretary of state Louise Haigh said it would also help reduce spending on consultancy and professional services by building civil service talent and resources. The move is being presented as part of a wider effort to rewire the state, alongside changes to oversight of civil shipbuilding and expectations on utility companies to create British jobs and apprenticeships.
The test behind the decision
The new unit follows a public interest test announced in March. Under that approach, departments must assess whether outsourced service contracts worth upwards of £1m could be delivered more effectively in-house. This does not describe an automatic cancellation process: it creates an assessment before a department decides how a service should be delivered. The mechanism is therefore relevant to both buyers and bidders because the comparison is between continuing an external contract and developing the public body’s own workforce and capability. The unit is intended to help departments coordinate that work and identify barriers or opportunities that may extend beyond a single contract or organisation.
Building services and new civil servants
The Cabinet Office said in June that, subject to completing the public interest test, it would look to bring building management services back in-house as soon as possible. The work includes cleaning and security staff, with the process beginning when current contracts end in 2028. The PCS union expects the plans to bring around 2,000 jobs back in-house. PCS general secretary Fran Heathcote described the announcement as a significant step for the union’s members and the wider trade union movement, while saying the union would press for a broader programme. Those statements describe the union’s position and expectations; they do not establish that every proposed service change has been completed.
A live example at the DWP
Shortly after the unit was announced, the Department for Work and Pensions said it would increase its civil service headcount by onboarding 2,700 outsourced workers involved in Universal Credit checking operations. The officials will take over a service currently delivered by Teleperformance, a digital and outsourcing specialist. The company was awarded an initial £368m contract for the DWP’s targeted case review project in 2024. PCS said the decision followed frustration among civil service colleagues that the arrangements were not working. The DWP example shows how insourcing can operate in practice: an existing externally delivered function is transferred to direct departmental staffing, rather than a new service being procured from the market.
IN NUMBERS
The creation of a dedicated Insourcing Unit makes the choice between external provision and direct delivery a coordinated government concern rather than only a departmental contract decision. The public interest test provides the formal comparison, while the building management and Universal Credit examples show that timing can depend on existing contracts and the development of civil service capacity.
Reported from publictechnology.net, 2026-10-02. The Tender Wire is published by Otnox.
