Can't Someone Else Do It?

Not long ago, Suffolk County Council announced their intention to outsource everything that they do. I have a personal interest in this as much of my family live in Suffolk, but also find it an interesting idea conceptually. For the sake of argument, why not outsource all services and just leave a few council employees in a commissioning role? There are a number of implications:

• Cost.
  
  The tacit assumption here is that the private sector can provide services more cheaply than the public sector. This may or may not be true. Yes, the private sector is profit motivated and therefore supposedly more efficient. But companies will not provide a service if they can't make a profit. If local services are privatised, council tax revenues will pay for private sector profits. Is that something people are ready to face up to?
  
  
• Quality of service.
  
  This will be entirely dependent on contractual negotiations. I mean no disrespect to local government procurement, but the private sector have better lawyers and fewer scruples. I've undertaken procurement before, and it is a tricky business even when the contract is relatively small and short-lived. For a recent example of what happens when contractual negotiations go wrong, see the saga of the Cambridgeshire Guided Busway.
  
  
• Local Enterprise.
  
  The outsourcing debate involves frequent reference to social enterprises and community groups doing things for themselves. But let's not kid ourselves. A multi-million pound road maintenance contract is going to go to the lowest bidder, and that's going to be a big company with economies of scale. Outsourcing will not necessarily cause a flowering of local enterprise. Local authorities are not legally allowed to favour local companies over others when undertaking procurement, and in the current financial situation the lowest bidder is going to win. The lowest bidder is unlikely to employ a lot of local people, or indeed a lot of people period.
  
  
• Partnership.
  
  County councils don't work in a vacuum. They have a constant need to talk to district councils, police, health services, and local residents, to name but a few. Indeed, they have legal duties to do so. Although working in partnership is time-consuming and can often seem very unwieldy, when it doesn't happen the results are often disastrous. Witness the recent cases of vulnerable children slipping through the cracks as social services failed to communicate with police and healthcare colleagues. When two (possibly competing) private companies are involved, can a reasonable level of partnership working happen? Can co-operation be secured contractually, or will the private sector just pay it lip-service?
  
  
• Accountability.
  
  This is by far the biggest issue. If all local services are contracted out, accountability will be entirely contractual in nature. The private sector is not democratically answerable to local people, except through the media. Where does this leave local councillors? They will in effect be entirely useless, and might as well not exist. Their constituents will come to them with the usual complaints about bin collection, potholes, and leisure centres, which they will have absolutely no way of addressing (beyond suggesting that they call the relevant company's helpline).
  

When thinking this through, you start to wonder why have a county council in the first place. The two-tier local council system in much of England is very unwieldy and creates a lot of duplication and wasteful political manuvering. Not that many people are aware of how local services are carved up between district and county councils, because it's arbitrary and not particularly interesting. For reference, Suffolk County Council and its peers have the following responsibilities:

• Building & maintaining schools
  
• Caring for vulnerable children (fostering, adoption & children’s homes)
  
• Caring for vulnerable adults (the elderly, disabled, & seriously ill)
  
• Building & maintaining roads & cycleways
  
• Collecting rubbish from homes & businesses, recycling it, & managing waste sites
  
• Building & running libraries & community centres
  
• Registering births, deaths, & marriages
  
• Managing (some) green open spaces
  
• CCTV & community safety
  
• Electoral services
  
• Implementing trading standards & investigating fraud
  
• Providing advice on planning policy & planning applications
  
• Archaeology & conservation of the historic environment
  
• Prevention & response to surface water flooding
  
• Pest control & animal welfare
  
• Management of public rights of way
  
• Planning the future need for all the services listed above

Many county councils also do the following:

• Support economic development in the local area
  
• Encourage more sustainable living by promoting recycling, non-car travel, etc
  
• Regeneration projects

The variety and complexity of these services, and their interdependencies with services provided at district level, have resulted in county councils employing many thousands of people. Suffolk's decision to divide all these services up into packages and outsource them in three phases is (to borrow a phrase from Sir Humphery Appleby) brave. Given the overriding need for 30% budget cuts, some outsourcing is inevitable. There are areas of duplication that could be cut, nice-to-have projects that are no longer affordable, and great potential for pooling resources with other public sector organisations (sharing HR and admin functions with other councils, for example).

What Suffolk is proposing is an order of magnitude more ambitious than that. It has decided to entirely divest itself of all services within the next two years. It would be amazing if that timeframe is even legally possible. I strongly feel that the council should proceed more slowly, first piloting the outsourcing scheme with smaller and less risky services. Contracts will need to be negotiated very thoroughly, be open to public view (this is definitely not current practise), and include clear penalties for inadequate quality of service.

Suffolk's report into their 'New Strategic Direction' suggests that outsourcing everything will strengthen local democracy, make services more responsive, and give communities more capacity to take control of their lives. All three claims look dubious to me. The report talks of councillors providing strategic direction, but in reality once contracts with companies are signed, they will have no further influence. Unless the intention is continual contractual review and renegotiation (time-consuming, inefficient, & wouldn't address the public-private legal expertise imbalance), for years at a time local councillors would have no grounds to interfere with the way services are managed. I've never met a local councillor who would be satisfied with that. In fact, I think most would be apoplectic.

Moreover, there are some services that I'd be uncomfortable with outsourcing as a matter of principle. The protection of abused children and vulnerable adults should not be something that companies profit from, there is too much of a moral hazard at stake. Company law states that private companies have a duty to maximise returns for their shareholders; this duty is not overriden by the moral imperative to protect children and adults at risk.

Suffolk County Council are to be commended for taking the Big Society to its logical conclusion, and thus focussing the debate about what local authority cuts will really mean. Reading their report, though, makes it clear that the full implications of outsourcing have not been considered. Local Councillors don't seem to get that they are making themselves impotent and irrelevant, as well as ridding themselves of the people who set up their meetings, write papers, type up minutes, and make them coffee. I presume that in the fullness of time they will start doing these tasks themselves, before eventually realising that their jobs have become pointless. Whereupon they will outsource themselves to a local newspaper columnist, and the privatisation of Suffolk County Council will be complete. According to their timetable, this can be expected in September 2012.

For further comment on the Suffolk experiment try the Guardian, BBC and East Anglian Daily Times.

EDITED TO ADD I've just found a very interesting blog post on this by Flip Chart Fairy Tales.

I Used to Care But Now Things Have Changed

This post has a soundtrack from the wonderful Mr. Bob Dylan: Things Have Changed.

I've recently been giving some thought to how my views on cutting the budget deficit have changed over the past year.

In 2009 my bugbear was the Labour government's 'deficit-what-deficit?' policy. At the time, it seemed entirely irresponsible to ignore the budget cuts and tax rises that would clearly need to happen. Moreover, both opposition parties seemed to be colluding to cover this up. Prior to and during the election this year, none of the three parties put forward proposals for how exactly they would tackle the deficit. All of them said that it would be tackled, then waved away the details of how. The principle point of argument then turned out into when the deficit should be dealt with.

During this pre-election period, I was enthusiastically pro-cuts, as well as pro-restructuring taxation. During the time I've worked in the public sector, I've witnessed a lot of what felt like wasteful and pointless expenditure of time and resources. I found it deeply frustrating at times that public sector structures evolve so slowly, and are never quite suitable for the current challenge. So I thought that tackling the deficit could prove to be a great opportunity to restructure institutions in order to tackle climate change, inequality and social deprivation. To identify wasteful areas of spending and duplication, to reconnect public institutions with the public they serve, and to demonstrate that a low carbon future is actually cheaper than business as usual. What I hoped for was a long-term plan for reducing public spending whilst kick-starting a low carbon economy.

Naturally, many of the phrases I've used in the above paragraph were also featured in the manifestos of all three political parties. The coalition document probably included most of them too. But I've become a lot more cynical in the past few months, and the government's deficit reuction plans are not what I had in mind.

The most critical difference is that I thought the public sector should be restructured in a considered way, with a view to the long term. Specifically, with a view to 2050, when we will be emitting 80% less carbon dioxide. So says the Climate Change Act. In contrast, the coalition have made a point of doing everything very fast. They threw together an emergency budget, abolished all manner of institutions, and proposed almighty upheavals of every government department in their first month of government. In fact, they claimed proudly to be turning the entire concept of government upside down.

What has changed my view on cuts is that the public sector and population at large have been entirely absent from this decision making. I don't call a couple of websites inviting bright ideas sufficient consultation for turning government upside down. Indeed, even the usual impact assessments seem to have been skipped for many changes. Until October's spending review, it won't be clear exactly how much pain each agency, scheme, and fund will carry over the next few years. This uncertainty and feeling of utter helplessness results in a public sector full of very jumpy, disillusioned employees with a penchant for black humour.

I am no longer the enthusiast that I was because the suddenness and depth of the coalition's cuts scare me. I simply don't see how they can possibly help the economy to recover. The government's message seems to be that reducing the deficit, whatever the effect on the public sector, will miraculously fix the weak economy.

This ignores basic economic theory - government spending is part of GDP. Reduce spending and GDP falls. Cut jobs and unemployment rises. There is no automatic rebalancing whereby the private sector grows as the public sector shrinks; the two are interdependent. To illustrate, ministers often rail about the public sector wasting money on consultants. Well if that money wasn't wasted, those private sector consultants wouldn't have jobs. Wasteful it may be, but it's also a job subsidy. Likewise, infrastructure investment required private sector firms to actually build the bridges, roads, and railways, which they make a tidy profit on. Public sector support for education and research is absolutely vital to the private sector; if the UK doesn't offer the skills and innovation companies need, they will go elsewhere.

Reducing the size of the public sector will therefore reduce the size of the private sector, at least initially. A significant, possibly record-breaking, rise in unemployment next year looks inevitable. There's nothing like high unemployment to knock confidence amongst banks (mortgage arrears!), retailers (saving not spending!), and markets (recession!). Rising unemployment also has huge social impacts, reduces tax revenues, and, without significant intervention, perpetuates itself to the next generation.

In 2009 I thought that sensible cuts could bring about economic recovery, and feared that the government would just ignore the deficit and lumber on regardless. In 2010, I no longer have to worry about the deficit being ignored, quite the opposite. Perhaps this is a case of be careful what you wish for? The problem is that the cuts we're getting look like they will damage both the economy and our ability to tackle climate change and social problems.

Ironically, over the past year not that much has changed in relation to my job. In 2009 I didn't think that it would last beyond 2011. Now I'm nearly certain that it won't. Which brings me neatly to an elegantly written new blog that I found through Society Guardian, documenting how it feels to be a redundant public servant. The author writes from a much more level-headed perspective than me, as befits someone with 20 years in the public sector to my 4. I recommend that you take a look.