This is a fascinating article, albeit one that comes from a specific political perspective. There are for me a number of key issues we need to consider that play out in a local government context.
Firstly, and this is a really important point, we only hear about failing outsourcers and failing councils. The majority of councils are very well run. The majority of outsourcing contracts deliver what the contract says it should.
Secondly, this should all be considered through the lens of austerity. Councils facing the impact of austerity have had to pass those costs onto all their contractors. Contractors will make lesser returns as their income is down and their costs are up. This means that newly outsourced contracts have been subject to a new normal in price reduction.
Thirdly, outsourced services tend to be subject to higher staff turnover. This is a mixed blessing but its downside is that continuity and the commitment to public service could be lost.
Finally, the public sector's much fabled "poor contract management" is very much a doubled edged sword. If executed in a adversarial, contract compliance sort of way, it allows outsourcers to make excess profits in poorly written contracts, but also means that where the relationship is solely based on contract compliance, it can push contractors to the wall.
The 2018 political narrative suggests that large scale outsourcing in local government has had its day and politicians want more controls over the levers of state. It's wrong to demonise all outsourcing but any future processes need to be carefully thought through and focus on the full panoply of risks and rewards rather than short term savings.
There is not much more to be said in the short term about Carillion: and there is not much more to be said in the short term about Northamptonshire CC. It’s only when we start putting the two together that it becomes more interesting. These two phenomena illustrate two facets of a particular idea of local government which has been prevalent for at least eight years, indeed since austerity took hold. It is that local government was so inefficient and bloated that it was possible to build a model which both responded to increased demand, and at the same time kept council taxes low; and the mechanism for doing so was a combination of business rate growth and outsourcing to the private sector which would squeeze out the inefficiencies and square the circle