The news
The UK government insourcing push gained a dedicated team on September 27, when the Cabinet Office announced an Insourcing Unit inside the Office for the Prime Minister and Cabinet to coordinate bringing critical public service contracts back under direct government control.
The Cabinet Office said the unit will "bring forward the biggest wave of insourcing in a generation." It will coordinate insourcing across departments, remove barriers to delivery and look for opportunities that span government. The announcement said the unit would also aim to cut spending on consultants and professional services and build up civil service skills.
The unit was one of several measures in a package titled "Measures to rewire the state," published by the Cabinet Office and Louise Haigh MP. The first named candidate is close to home: the Cabinet Office said it will look to bring its building management services, including cleaning and security staff, back in-house as soon as possible, with the process beginning when current contracts end in 2028.
The unit sits alongside a Public Interest Test set out in Procurement Policy Note 024, which the Cabinet Office issued in June. From April 1, 2027, central government departments, executive agencies and non-departmental public bodies must run the test before procuring or re-procuring a service with an estimated value above £1 million including VAT, according to Local Government Lawyer. The test asks whether a service is a suitable candidate for insourcing and whether the organization could deliver it. Bodies with annual contract spend of £100 million or more must publish a five-year insourcing strategy.
The Register, which reported the announcement on September 28, linked the policy to problems at Capita (CPI), which administers the Civil Service Pension Scheme. Capita won the seven-year, £239 million contract in November 2023 and took over from MyCSP in December 2025, after which some former civil servants struggled to access their pensions, the outlet reported. In July, Minister for the Cabinet Office Nick Thomas-Symonds said ending the contract immediately would cause severe disruption to payroll. The contract runs to December 2032, with an option to extend for three years.
The numbers
- Public Interest Test threshold
- Above £1 million including VAT
- Test becomes mandatory
- April 1, 2027
- Annual contract spend requiring an insourcing strategy
- £100 million or more
- Insourcing strategy horizon
- Five years
- Cabinet Office building contracts end
- 2028
- Capita pension contract
- £239 million over seven years
Why CEOs should care
For IT services firms and outsourcers selling into Whitehall, renewals are about to face an extra gate. Neither the announcement nor the policy note, as summarized by the sources we reviewed, singles out technology services, but the test applies to most central government service contracts above £1 million. Law firm Gowling WLG says departments will weigh factors including value for money, social value and whether suppliers have struggled to deliver quality. Account teams should map which contracts come up for renewal after April 2027 and prepare evidence on cost, quality and resilience before the department asks.
For SaaS vendors, the shift could cut both ways. If departments take work back from managed-service providers, their own staff will need tools they can run directly, which may favour software sold straight to government over bundled outsourcing. That is our inference, not something the government has said. Vendors that currently reach government only through a prime contractor should review how exposed they are if that prime's contract is brought in-house.
For CFOs and boards of suppliers, the insourcing strategies that large departments must publish from 2027 will be an early warning. Build a list of revenue tied to UK central government service contracts, with renewal dates, and track which services those strategies flag.
The bigger picture
The policy fits a wider political turn. When Andy Burnham became Prime Minister in July, he said public procurement would back British industry, The Register reported. The same outlet found that HM Revenue & Customs paid Capgemini at least £4.2 billion between 2014 and July 2026, despite HMRC's earlier stated strategy of spreading work across more suppliers. That record, like the Capita pension contract, shows that unwinding outsourcing often takes years, because the work cannot simply stop while a replacement is built.
What’s next
Key milestones are April 1, 2027, when the Public Interest Test becomes mandatory, and the publication of five-year insourcing strategies by the largest-spending bodies. Watch which contracts the Insourcing Unit names after the Cabinet Office's own building services, whether any technology or digital services appear on that list, and how the policy applies to long contracts such as Capita's pension deal.
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