Service concession (outsourced public service)
A service concession lets a council hand the running of a public service to a company paid from user income. UK and Irish rules, thresholds and SME advice.
Updated on September 5, 2026
A service concession is the contract by which a council or other public body hands the running of a public service to a company, which is paid mainly from the income the service generates and carries the operating risk. The United Kingdom has no single statutory label equivalent to the French délégation de service public: the same job is done by concession contracts under the Procurement Act 2023 and, for smaller arrangements, by ordinary outsourcing contracts.
How it works
Concessions are a distinct category in the Procurement Act 2023, and in Ireland under the European Union (Award of Concession Contracts) Regulations 2017. The defining test is risk: the operator must be exposed to the real possibility of not recovering its investment, otherwise the contract is an ordinary public contract and the full rules apply.
Above £5,193,000 including VAT in the United Kingdom, or €5,404,000 excluding VAT in Ireland, a concession must be advertised, in the UK on the central digital platform through Find a Tender and in Ireland on eTenders and in the OJEU (verified 2026-09-05). Below that level the buyer still has to run a fair and transparent process and, in England, publish a below-threshold notice once the value passes £30,000.
The decision itself is political: in England a cabinet or full council decision authorises the outsourcing, and the process is documented in a business case. Buyers usually run a competitive flexible procedure with a negotiation stage, because the financial model matters as much as the service specification. A long concession must not run beyond the time reasonably needed for the operator to recover its investment and earn a return. Operators normally report annually on performance and finances, and staff transfer rules (TUPE in the UK, the Transfer of Undertakings Regulations in Ireland) apply when the operator changes.
What it means for a bidder
Concessions and outsourcing shape whole parts of the local economy: leisure centres and swimming pools, car parks, catering, waste and recycling, school transport, harbours, holiday parks, heat networks, cemeteries, vehicle recovery. Water and urban transport stay with large groups, but plenty of local concessions are within reach of an SME, a charity or a social enterprise that knows the sector.
Expect a long timetable, often a year from notice to signature, a serious selection stage (capacity, references, financial standing) and a bid built like a business plan. Because negotiation is central, prepare alternative tariff and investment scenarios. Factor in the transfer of existing staff, which is the norm when an operator changes.
Example
Beaulieu Borough Council concessions the running of its swimming pool for six years. Income over the term is estimated at £3,600,000, below the concession threshold, so the council advertises on Contracts Finder and its own portal. Three bidders are shortlisted. After negotiation a regional leisure operator with forty staff wins, with an annual payment from the council for the public service constraints it accepts (school sessions, concessionary rates).
Frequently asked questions
Is a concession the same as a public contract?
No. In a public contract the buyer pays for the service. In a concession the operator is paid mainly by users and carries the operating risk.
Can the council still pay the operator?
Yes. A subsidy for public service obligations is allowed, provided the operator keeps a genuine share of the operating risk.
Who decides the award?
Officers run the process, but the award of a significant concession is normally approved by the council's cabinet or executive under its own scheme of delegation.