Attempts to introduce a new managerialism into local authorities have taken place consistently and continuously over the last 20 years in an effort to secure lower costs as well as performance improvements. Most of this activity has involved the use of private sector providers. This paper reviews the development of a partnership between the housing department of a London borough and a large, private sector contractor that took over the running of this service several years ago. Drawing upon data collected over an 18-month period, three aspects of the relationship between the two parties are examined: performance levels, opportunities for inter-organisational learning, and the experience of work. The conclusion is that there have been few gains for any of the stakeholders from this process, largely due to the complexities involved in managing contractual relations in this area.