Thursday, 23 September 2010

Why an 'enabling council' is simply an enabler of profit

It was reported in yesterday's Guardian that Suffolk Council is planning to become an 'enabling council' - one that provides none of its own services but which outsources everything to private companies and voluntary organisations or social enterprises.

With potential budget cuts of up to 30%, it is certainly an attractive option to look at outsourcing services as the companies that bid for them almost always claim they can save money.

But I worry that Suffolk, and others who choose to follow them, may well be going too far.

It is certainly possible for a council to handover some services to private contractors or the third sector. This is easiest in the case of simple bulk operations where the contract specifications are unlikely to change. Waste collection is one such. There is a set contract to collect particular types of waste from residential properties (a clause can be added to cover new builds) at a set frequency. Private companies and the council's own in-house providers can bid for the contract and the cheapest will win. Penalty clauses ensure that the service is up to scratch and if the external contractor wins then TUPE rules ensure that staff are transferred to the new service at their existing rates of pay and conditions. So far, so good.

But this is a far more difficult operation in cases where the service changes on a regular basis or where it is subjective. Take building control, for example. The peaks and troughs of the housing market means that at some points there will be many new homes being built whilst at other points there will be virtually none. If the service is in house then the council can meet demand and shift budgets to cope. A contractor has no incentive to do so.

The advent of new technologies will also cause problems. The cheapest contracts will be the longest, but these will also be the least flexible. If a new pattern of working or new Government legislation emerges then the local authority will either not be able to alter the contract or will have to pay vast sums to do so.

There are clearly services that can and should be subject to tender. There are also layers of bureaucracy within many local authorities which should be stripped away. But I question whether a totally out-sourced council will deliver the high quality front-line services with the flexibility that local residents have come to expect.

1 comment:

John said...

Will Cornwall Council follow Suffolk's path? Cornwall Council's business plan says " We will become a commissioning Council, specifying the services we want and finding the most effective means of providing them for our communities. Services could be delivered by arms length management companies, trusts, joint ventures, partnerships and commercial arrangements as well as by in-house teams?" It makes clear there will be many less people directly employed by the Council.The LEP bid document talks about reducing the percentage of people working in the public sector, and “re-balancing the economy” towards the private sector. Kevin Lavery's background is with private sector providers of public services. Has there yet been a proper debate in the Council about what these statements really mean? Or is there a major privatisation plan lurking quietly in the background ready to be bounced through in the wake of the "financial crisis?"

On a different tack a Suffolk Lib Dem Councillor Graig Dearden-Phillips wrote an article in the Society Guardian on Wednesday 22 September "Time to cull a mammoth pension problem" suggesting that workers transferred from the public sector to the third sector or social enterprises should not have their current pension provision protected and should be moved into money purchase schemes. Also that the new employers should only pay 6% employers' contribution (many councils pay around 20%). If his ideas are followed you could see where a 14% saving on salary costs may come from. This would require Government to change existing Treasury rules on safeguarding pension provision when outsourcing. Is this where the Lib Dems wish to go?