UK government sets up unit to bring outsourced services back in-house

The UK government is setting up a new unit inside the Office for the Prime Minister and Cabinet that it says will "bring forward the biggest wave of insourcing in a generation", moving critical services away from large outsourcing suppliers.

Government outsourcing has long drawn criticism over value for money and service quality, with technology-heavy business process contracts among those under scrutiny.

What the new unit will do

According to the government, the unit will coordinate insourcing work across departments, remove barriers to delivery and identify cross-government opportunities to maximize value for money and restore direct operational accountability. It is also expected to cut spending on consultants and professional services by building capability inside the Civil Service.

One early candidate is the Cabinet Office's building management work, including cleaning and security. The government says it will consider bringing that work in-house when the existing contracts end in 2028.

A test beyond the lowest price

The unit will work alongside the recently announced Public Interest Test, which applies to most central government service contracts worth at least £1 million. Under that test, departments must weigh factors beyond short-term price, including service quality and public value.

Capita's pension scheme setback

The case for insourcing has gained urgency after the troubled start of Capita's contract to administer the Civil Service Pension Scheme (CSPS). The UK outsourcing company won the seven-year, £239 million deal in November 2023 and took over from MyCSP in December 2025. The earlier MyCSP arrangement began in 2012 and had cost £238 million since 2016.

Capita's takeover produced a glitchy website and left some former civil servants struggling to access their pensions.

In July, Nick Thomas-Symonds, Minister for the Cabinet Office, said the CSPS contract "could be a prime candidate for insourcing in the future", but warned that a change cannot happen immediately. "If I were to terminate the contract straightaway, that would clearly cause severe disruption to the payroll. I cannot replace a complex pension operation overnight," he said. Capita's initial seven-year term runs until December 2032 and includes an option for a further three years.