Neither model is cheaper by default. The insourcing strand is an announcement; the Public Interest Test beneath it is a published rule that starts in April 2027.
A new Insourcing Unit, based in the Office for the Prime Minister and Cabinet, is to “coordinate departmental insourcing activity, unblock barriers to delivery and identify cross-government opportunities to maximise value for money and restore direct operational accountability”. It will also support cutting consultancy spending “by building Civil Service talent and resources”. No budget, staffing or start date has been published.
The release calls this “the biggest wave of insourcing in a generation”. That describes an aim, not a measured result: no count or value of services to be brought in house has been published. The one named example is the Cabinet Office’s own building management, including cleaning and security. That is subject to a Public Interest Test, and the process would start “when current contracts end in 2028”.
The real choice: in-house, contracted out, or mixed
None of these is right for every service. Each one wins or loses on the same six tests. The table sets out what to check under each model; it is UK Facts’ summary, not an official assessment.
What to test for each delivery model, by criterion| Criterion | In-house | Contracted out | Mixed |
|---|
| Whole-life costWhat does it cost over the full life of the service, not just the first contract? | No supplier profit margin or re-tendering cost. But the public body carries pay, pensions, assets and future pay settlements. | Competition can lower prices. But the price excludes the cost of letting and managing contracts, and of paying for changes the contract did not foresee. | Can keep core control in-house and buy specialist capacity. But two sets of overheads, and the handover between them, both cost money. |
|---|
| Service qualityIs the service measurably better for the people using it? | Easier to change the service as policy changes, without renegotiating a contract. | Quality can be specified and enforced through KPIs, but only for what can be written into a contract. | Depends on the split: quality problems can fall between the two parts. |
|---|
| AccountabilityWhen it goes wrong, who answers for it, and can the public see why? | Ministers and officials answer for it directly. Freedom of information applies in full. | Accountability runs through the contract. Commercial confidentiality can limit what is published. | Both routes apply, which can blur who is responsible. |
|---|
| ResilienceWhat happens if the provider fails or the market dries up? | No risk of a supplier collapsing. But the service depends on the public body keeping enough skilled staff. | Exposed to supplier failure or a thin market. PPN 024’s guidance names “limited providers” and “excessive incumbency advantage”. | Can keep a fallback in-house, if it is actually kept warm. |
|---|
| Workforce capacityAre the people and skills available to run it? | Needs managers, specialists and systems. PPN 024’s Part Two asks whether the body can “realistically recruit, onboard and retain” them. | Draws on the supplier’s workforce. Where labour is short, both sides compete for the same people. | Needs the in-house skills to manage the supplier, a capability often lost after outsourcing. |
|---|
| Transition costWhat does switching cost, and who pays? | Staff transfers (TUPE), pensions, buying or leasing assets, and the risk of disruption during handover. | Mobilisation costs and a learning period for a new supplier. The same TUPE issues apply in reverse. | Some of both, depending on which parts move. |
|---|
The Public Interest Test (PPN 024): an assessment, not a mandate to insource
- What it is
- An “early-stage assessment to identify whether a service might be better delivered in-house”. The guidance expects it to take “at most two days”. Its result is a “Provisional Sourcing Decision” that “may be overturned” by later, fuller analysis.
- Does it require insourcing?
- It does not require insourcing. PPN 024 calls for a “case-by-case assessment”. If a service is not a good candidate under Part One, “the Provisional Sourcing Decision is to outsource”. The guidance does tell authorities to “avoid undue emphasis on risks or barriers to insourcing”, so the test leans towards considering the in-house option seriously.
- Who it applies to
- Applies “only to central government departments, their executive agencies and non-departmental public bodies”. The guidance excludes NHS trusts and foundation trusts. Other public bodies, such as councils, “may wish to adopt” it but are not required to. It does not apply to devolved Scottish or Welsh authorities, transferred Northern Ireland authorities or private utilities.
- Threshold
- Any planned service project, including re-procurements, with “an estimated value of more than £1 million (including VAT)” that may lead to a contract under the Procurement Act 2023.
- When it starts
- Public Interest Tests “should be applied from 1 April 2027”, to new projects and re-procurements only. Projects that have already passed an equivalent governance stage by that date are not caught.
- What it asks
- Part One asks whether the service is a good candidate: value for money “including wider economic and social impacts”, social value, and market health (limited providers, labour shortages, effects on small firms and charities). Part Two, reached only if Part One says yes, asks whether the body has the staff, assets, delivery vehicle and transition plan to do it.
- Insourcing Strategies
- Bodies with annual contract spend of £100 million (including VAT) or more should publish a five-year Insourcing Strategy “within 30 days of 1 April 2027”.
- Reporting
- Test outcomes go to the Government Commercial Agency each quarter. The first return covers 1 April to 30 June 2027 and is due by 30 July 2027. The guidance says results “will be published centrally”, but does not say when or in what form.
▸The ten exceptions (10)
- Direct awards under section 41 of the Act (e.g. extreme urgency, prototypes, exclusive rights), with one exception
- Direct awards under section 42 (to protect life or public safety)
- Contracts exempted under Schedule 2 of the Act
- Defence and security services delivered by the original equipment manufacturer
- Services delivered mainly outside the UK
- Regulated health-service procurement (Regulation 43 of the Procurement Regulations 2024)
- Some policy evaluation, research and technical data work
- Services already appraised in the body’s Insourcing Strategy with similar rigour
- Procurements only to set up a framework or dynamic market
- Call-offs from a framework or market where a Test has already been done for the same service
Source: Cabinet Office, Measures to rewire the state (press release), published 27 Sept 2026.
Source: Cabinet Office, PPN 024: The Public Interest Test and Insourcing Strategy, published 17 Jun 2026.
Source: Cabinet Office, Insourcing and the Public Interest Test — Guidance Note, published 17 Jun 2026.