Thursday, September 23, 2010

Outsourced by god! No, by Suffolk county council actually...

This is going to be fun to watch—and it's going to heartily piss off the unions, which will make it even more of a giggle.
Now Suffolk county council is taking an even more radical approach to public sector reform by proposing a "virtual" authority that outsources all but a handful of its services.

The Tory-controlled county's "new strategic direction", set for approval tomorrow, could see virtually every service outsourced to social enterprises or companies. The aim is to turn the authority from one which provides public services itself, to an "enabling" council, which only commissions them. The council hopes offloading services could shave 30% off its £1.1bn budget, as part of the government's drive to reduce the fiscal deficit.

Although councils have outsourced chunks of their services before, these proposals are regarded by experts as the first time a local authority has considered not directly providing any services at all.

Services would be offloaded in stages. While some "early adopter" services could be outsourced as early as this autumn, the rest would be divested in three phases from April 2011. Libraries, youth clubs, highway services, independent living centres, careers advice, children's centres, registrars, country parks and a records office are among the first services that could be divested.

Ultimately only a few hundred people could remain directly employed by the council, primarily in contract management. At present, the council employs around 27,000 people, 15,000 of whom work in education, which is set to be taken away from local authority control as the government converts schools to academies and free schools. Many of the remaining 12,000 could face either redundancy or be transferred to a social enterprise or the private sector.

As Timmy says, if we can save taxpayers 30% of £1.1 billion and provide services that are as good (or, hopefully, better) then this productivity leap is an excellent thing.
A 30% increase in efficiency, in productivity? Who wouldn’t want that?

Well, OK, maybe the people being made 30% more efficient aren’t going to be all that happy about it but then just as we don’t and shouldn’t run the market side of the economy for the benefit of companies but for consumers so we shouldn’t be running the public services for the providers but for the consumers.

And for the consumers the same or better at 30% off is a wondrous deal.

Naturally, the unions are up in arms—no doubt the leader of the local Unison branch is basically watching her revenue-target bonus melt away into the aether. But I would imagine that not having to deal with the unions—which are not only a pain in the ring but artificially inflate wages—was a definite positive factor in Suffolk county council's calculations.
The move also raises fears about the quality and extent of services in poorer areas. "There are areas in Ipswich and Lowestoft that are among the 10% most deprived areas of the country. In these areas things like libraries and children's centres will fall by the wayside because there won't be the ability to attract the voluntary help," said Martin [, a Labour councillor].

That might, of course, be an indication that libraries and children's centres are not particularly important to the people of Ipswitch and Lowestoft, although I would imagine that the colossal amounts of paperwork, administration, CRB checks, etc. that voluntary workers would require will also not help.

Anyway, as Timmy also says, we don't know if this plan is actually workable.
I don’t know whether this is going to work, you don’t, the council doesn’t and nor do the unions.

True. But we can look at roughly similar plans and see how they panned out. And, in the case of Maywood, in the US, it has gone pretty well.
Despite the public money it saved, the outsourcing project was highly controversial. When it was announced, residents feared anarchy would follow; old people thought they would be mugged in the streets; local storekeepers wondered if anyone who would stop them from being robbed; families presumed parks and libraries would close. "You have single-handedly destroyed this city," the about-to-be-sacked city treasurer told council members, during the acrimonious meeting where the outsourcing scheme was unveiled.

One month on, however, the naysayers have gone quiet. Maywood's parks are still open and greener than ever. The leisure centre is overflowing with excited children. City Hall appears to be running smoothly. And almost everyone you meet says that since the city outsourced everything, services have improved and petty crime and gang violence have – on the surface, at least – virtually disappeared.

"I don't see gangsters on the streets any more," said Maria Garciaparra, bringing her children to the library. "I don't see new graffiti. I still have a park for them to play in and this place to get books, so who cares whether the city employs anyone or not? If this works, then down the line, I'm sure plenty of other places will copy it."

Indeed.

16 comments:

Blue Eyes said...

Other councils are planning the same :-))

john in cheshire said...

The sooner it is rolled out throughout the country the better. It should apply equally to the police.

Chalcedon said...

If the unions are sceaming blue muder, then it must wbe a good course of action and basically a good thing.

Anonymous said...

The MOD has tried this for years, they call it being the 'intelligent customer'.

Unfortunately you just end up employing contract staff that haven't got a clue what it is they are buying. Equally the supplier hasn't got a clue what they need either.

The real problem is that the top management is lousy and they 'solve' the organisation's problems by blaming the staff that they failed to direct properly. They get rid of the staff and buy in the service but because they were no good at directing their own staff they haven't got a clue how to direct their contractor. By the time they have worked out that things aren't going right they then find they are locked into a contract so even if they wanted to they can't change anything.

Quality comes from competent, motivated staff, not from outsourcing.

Steven_L said...

Unions don't inflate wages, they 'equalise' them. In unionised councils crap people get paid a decent salary for doing nothing and good people get paid a medicore salary for doing a lot.

No unions and all contractors means you can sack all the skivvers and negative whingers which just hold everything back. Unions also resist just about ANY change to working arrangements.

The only major problem is public sector procurement is joke, this needs rigid ovesight from elected members and someone needs to be watching them for fraud.

Anonymous said...

Listening to the Suffolk story, my pleasure was shot through with alarm when I heard that the agencies providing services would include some from "the 3rd sector".

Can anyone enlighten me what has happened to fakecharities.org? Can anyone reassure me that zeolots and ravening psychopaths like ASH will find a way to flourish in the new culture?

Anonymous said...

Isn't the conclusion of the independent article about Maywood interesting? They use the example of the neighbouring city of Bell where a corruption scandal just erupted to imply that outsourcing might not be such a good idea!

Rob said...

This does sound good.

My only concern would be the local government contracts that the unions have managed to enforce.

Quite often the H & S and the red tape you mention is written into these contracts, some of them even go as far as including the pay and conditions of the workers under contract. That is certainly the case in Herefordshire where the whole Highways dept. (including rights of way) is now run by a spanish firm (who lobby pretty hard for these kinds of "reforms").

Just a caveat.

Anonymous said...

It would be a good thing if local councils could expel the unions by sub-contracting. I should point out, however, that public sector contractors, as corporations, have a similar motivations to individual council employees - to do the least for the greatest reward. Oversight has to come from the directly employed contract negotiators - but will they want to admit they hired a dud service provider, or go through the trouble of finding a new one? The fact remains that the external pressures on public bodies like local councils are qualitatively different to those on privately-owned business corporations.

FlipC said...

Yeah it all sounds great until you realise it's the councils sorting out the contracting.

Sign up for a 20 year park-keeping plan at £X+inflation a year with a clause that states should the council try to cancel the contract for any reason the company still gets paid and that anything not specifically mentioned in the contract is paid or provided for by the council.

Eric Cantona said...

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Of course we can't solve the problem with the tools that brought us there in the first place and we need a new ideology.


_______________________________


- Do you feel that your ideology pushed you to make decisions that you wish you had not made?

- Well, remember that what an ideology is, is a conceptual framework with the way people deal with reality. Everyone has one. You have to -- to exist, you need an ideology. The question is whether it is accurate or not. And what I'm saying to you is, yes, I found a flaw. I don't know how significant or permanent it is, but I've been very distressed by that fact.

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Ed P said...

If applied across the whole country, this approach could finish what Mrs T achieved with the private sector unions, by emasculating the public sector ones.
I work (hard, natch)in the private sector, but know many in the public - their inefficiency, complacency and indolence is staggering, so "bring it on".

FlipC said...

Oh sorry I also forgot to mention that as this deals with contracts and money it'll be classed as "company confidential" and thus all decided in closed meetings.

IOW don't use "Hey it worked in this American city" as some sort of justification unless you can transplant their political system too.

the a&e charge nurse said...

"One month on, however, the naysayers have gone quiet".

No they haven't;
http://www.bloomberg.com/news/2010-08-03/california-city-that-outsourced-everyone-is-snared-by-pay-scandal-in-bell.html

Iain said...

"The real problem is that the top management is lousy and they 'solve' the organisation's problems by blaming the staff that they failed to direct properly. They get rid of the staff and buy in the service but because they were no good at directing their own staff they haven't got a clue how to direct their contractor. By the time they have worked out that things aren't going right they then find they are locked into a contract so even if they wanted to they can't change anything."

"Unions don't inflate wages, they 'equalise' them. In unionised councils crap people get paid a decent salary for doing nothing and good people get paid a medicore salary for doing a lot."

these two comments highlight the issue in local authorities. they are top heavy orgonisations, with overpaid managers, and underpaid workers with the private sector held up as a beacon of reason, used to benchmark.
I moved from the private sector to the public sector, and although I struggle with some of the "old school" thinking at times, the culture of skiving and little for more is just as prevelant in the private sector (within civil engineering).
basically, an outsourced service is no more efficient than an in house service, unless you pay through the nose (which you undoubtally will, to satisfy shareholders)

Grimy Miner said...

Let's take this one step furter, Mr DK.

Why stop at letting the council decide who gets the contract, who supplies the service.

Let's take out the middle man in all this, let's eliminate the council too and let the consumer go direct to source for the service.
Eliminate ALL Council/local taxes, put the money back in the pockets of the local people and let businesses compete directly with the end user for the contract.
After all, when you want a haircut you go directly to the barbershop, you don't pay someone to find abarber for you and arrange an appointment and take a percentage.