What does the new Insourcing Unit mean for how government departments decide whether services should be delivered in-house or by contractors?
A central team for insourcing decisions
The government will establish an Insourcing Unit within the Office for the Prime Minister and Cabinet to coordinate departmental activity. Its responsibilities will include removing barriers to delivery, identifying opportunities that span more than one department and seeking better value for money. Ministers also say the team is intended to restore direct operational accountability and reduce spending on consultancy and professional services by developing civil service skills and capacity. First secretary of state Louise Haigh presented the move alongside plans concerning oversight of civil shipbuilding and expectations for utility companies to create British jobs and apprenticeships as they invest.
The public interest test changes the starting point
The 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 automatically end an existing contract or require every service to return to government control. It creates a formal assessment before a department decides how delivery should be organised, giving officials a mechanism to compare outsourced and internal options. The Cabinet Office has said its building management services, including cleaning and security staff, could begin returning in-house when current contracts end in 2028, subject to completing the test.
Early changes include Universal Credit checking work
The Department for Work and Pensions has separately announced that it will bring 2,700 outsourced workers into its civil service headcount. They work on Universal Credit checking operations that are currently delivered by Teleperformance. The company was awarded an initial £368m contract for the department’s targeted case review project in 2024. The PCS union said the decision followed frustration among civil service colleagues that the arrangements were not working. That account is the union’s allegation about the service, and the source does not establish that wrongdoing occurred. The move shows how the new approach may affect live service contracts as well as future procurements.
A wider shift in the procurement mix
The government describes the programme as a way to rewire the state, while PCS has called for a broader programme of insourcing across the civil service. For suppliers, the significant change is that departments are being directed to consider internal delivery as a defined alternative when larger outsourced services are reviewed. For public bodies, the challenge will be to demonstrate which option offers the stronger combination of value, capability and accountability. The new unit is intended to coordinate that work across government, rather than leaving each department to approach insourcing in isolation. The eventual effect will depend on the assessments and decisions that follow.
IN NUMBERS
The creation of a specialist unit marks a material shift in the way government may plan service delivery: outsourcing remains an option, but in-house capacity now has a more prominent and centrally coordinated place in procurement decisions.
Reported from publictechnology.net, 2026-10-02. The Tender Wire is published by Otnox.
