Tuesday, 4 December 2012

'One Barnet': There are better ways. It's not too late.

'One Barnet': There are better ways. It's not too late.

The first part of this blog consists solely of the 12-point summary of a report just published by Social Enterprise UK which provides the reasons why outsourcing has reached, if not passed, its sell-by date. It refutes the statement made by Richard Ottaway, Tory MP for Croydon South, during last week's 'Sunday Politics' feature on 'One Barnet' that "this [outsourcing on a large scale by local government] is the way of the world".

The second part of the blog is a link to an article that shows that there are alternatives to local government outsourcing schemes run from remote call centres for the profit of private companies. Barnet Council has never considered an alternative, but there is still time to choose a better way. Even in the few years in which they have been considering 'One Barnet', the practice of large-scale outsourcing has gone out of favour and is being abandoned, even by the outsourcers themselves, like BT. This is why, in an age of rapid change, their locking of Barnet into a 10-year contract the contents of which they think can be guaranteed over that period is unrealistic, if not foolhardy.  It seems some younger Tory councillors are more aware of this, and therefore more wary of going ahead. The Council has repeatedly thrown out the challenge that if another alternative can be found then they would listen. While I don't see why we should do their job for them, or for their consultants and lawyers who cost taxpayers a million pounds in October alone, they have never looked at an alternative. This article is to show the Tory champions of 'One Barnet' that there are other and better ways. Methods employed by social enterprises could well be applied in-house by the Council for the prosperity and well-being, and dare I say, happiness, of the people and businesses of the London Borough of Barnet.


Part 1: Report on outsourcing of public services by Social Enterprise UK

The whole report can be found on this website:

Our research has shown that:

1.In critically important markets, private sector oligopolies are emerging, where a small number of companies have a large share of the market. Firms with large stakes in multiple public service markets are too big or too complex to fail. Smaller providers, often the social enterprises and charities that successive governments have marked out as ideal providers, are being forced out.

2.  When choice over who to buy services from is reduced, providers can increase their costs and negotiate contracts in ways that are loaded in their favour.

3.  Complex business arrangements and a lack of information as a result of commercial confidentiality make it impossible to hold many providers properly to account.

4.  When providers do fail to deliver, they often go on to win more business. This is a symptom of market failure.

5.  An unknown amount of public money is being taken out of the social economy and redistributed to private individuals and investors through shareholder dividends, rather than being retained in areas where services are commissioned, or being reinvested in service improvements. There are many examples of contracts that include multiple layers of sub-contracting, with profit taken at each level. This turns considerable amounts of public money into private wealth when it could be reinvested in services. It also exacerbates the sort of inequalities that public services are trying to tackle.

6.  Government policy can be undermined or become irrelevant when commissioners have little choice over who they can purchase services from. For example, the drive towards localism is stopped in its tracks where local authorities can only buy from multi-nationals that funnel money out of an area and out of the country.

7.  In many cases a saving in one part of the public purse creates an equal or greater loss in another – for example bidding on price usually creates a race to the bottom on wages, fuelling low pay and inequalities. Low pay has a huge social impact, necessitating in-work benefits which taxpayers must fund, and making it impossible for large sections of the workforce to prepare financially for their old-age and retirement. This also means we are storing up further costs for future taxpayers.

8.  The drive to cut costs and maximise profit incentivises businesses to act in ways that are inconsistent with Government aims. For example, there is much evidence to show that private firms are placing vulnerable children and adults in parts of the country often many miles from home, but where care is cheapest for the firms to deliver it. This creates a strain on public services in already poorer boroughs and has a great human cost.

9.  When problems do arise in cases such as the closure of Southern Cross as a result of complex financial deals designed to maximise financial gain, taxpayers are forced to pick up the pieces. The problem of privatised gains and socialised losses that we became familiar with during the banking crisis has many parallels here.

10. Public understanding is lacking. For example, in public polling carried out for this report, only one in five people knew that the majority of children’s homes are now owned by private companies. Respondents were much more likely to think that the state is still the main provider.

11. Public support for shareholder profit being made from public services is low. In polling for this report, two-thirds (66%) of adults said it is unacceptable for shareholders to make a profit from running children’s care homes, hospitals and health services, and policing.

12. The majority of people polled forth is report have never heard of Atosor Serco, yet these firms and others like them, are receiving and are responsible for many billions of pounds of taxpayers’ money. The public are more likely to have heard of G4S, possibly due to media coverage of its failures in the run-up to the Olympics.


Part 2: A link to the article about social enterprise mentioned above. There will be legislation for this in January 2013. 

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