Last week We Own It released new polling which shows that outsourcing companies are trusted less than central government, the civil service, the police service and the NHS. 64% of the public distrust companies like Atos, Capita, G4S and Serco while only 21% trust them. Only 16% think there is currently adequate regulation of private companies running public services. Political parties ignore public reactions like these at their peril.
We Own It is an organisation that campaigns for public service users and for public ownership. Last Thursday Serco held its AGM and we took the opportunity to hold a protest, ‘Sick of Serco’, to show how much of the public feels about outsourcing.
We singled out Serco for its a track record of bad behaviour when running public services, from allegations of abuse and deaths at detention centres to falsifying NHS records. Most recently, the company has defrauded the taxpayer and is currently under criminal investigation by the Serious Fraud Office.
Our polling, carried out by Survation, shows that nearly 80% of the public think Serco should not be allowed to bid to run public services. 63% believe it should never be allowed to run public services again. This reaction goes completely against government policy – Serco has been cleared to bid for government work despite the fraud.
Liberal Democrats have an opportunity to show they are taking the public’s concerns about outsourcing seriously. In the recent Liberal Democrat paper on public services policy, transparency and accountability were two key themes. In response to the consultation on this paper, nearly 500 of our supporters wrote to Jeremy Hargreaves, the chair of the Federal Policy Committee and the manifesto working group on public services. They asked him to include a Public Service Users Bill in the Liberal Democrat manifesto. We are looking forward to his response.
The Bill has already been introduced to parliament as a Private Members Bill with cross-party support. It would promote transparency, accountability and public services that work for the people who use them. The public should be able to access data about companies like Serco, look at the contracts we’ve agreed with them and recall them when they do a bad job. Government – local and national – should always look at the public ownership option first and put forward an in-house bid if they do contract out. And they should be required to show how contracts maximise social value.
The Liberal Democrats have a real opportunity to show they are taking this issue seriously, to show they are not dogmatic, and that they want the best for the public. People are sickened not only by Serco but by the way they are left out of decision-making about their services. Our Bill is the first step towards a healthier relationship between government, outsourcing companies and the British public.
* Cat Hobbs is the Director of We Own It
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28 Comments
Thanks for the article. In my opinion this is a debate that is too focused on semantics. Anyone setting up a public service has to hire some experts to run it, so they are already practically outsourced. Privately owned companies can make a loss and be heavily regulated, whilst public sector workers can earn millions with little oversight. The emphasis should be on cash and efficiently, not whether we call surplus value profit or pay.
I have no preference that I am aware of for public services to be run by state or privately owned institutions. The key is to get them run by people who are good at them.
Regards
Excellent.
People like myself are having to turn to groups like 38 degrees to obtain information and get to the truth of what is happening to our public services.
A Public Services Users Act seems to be a liberal idea as it attempts to give some power back to the users of the public service from the government and outsourcing companies. Perhaps it could be enhanced by the tendering process having to include a bid from a user group as well.
@ Almaric,
It is not just the tendering process that is of concern. It is whether having undercut public ownership bids, the private sector having won the contract on cost grounds ( and alleged quality) then meet the obligations of the contract.
Some of what has been happening to our public services makes me think of the way some supermarkets operated with their loss leader offers and increased services. Once local small businesses went to the wall, things changed.
I agree with Eddie Salmon. This is a extremely uninformed article, and it sets itself up against an equally uninformed argument from any oppositional camp. I work for a private sector provider of outsourced services, so I have an inside view. Many of the issues stem from failures of government (local and national) as much as failures of the private sector. Any sensible party would take a balanced view. At the moment I don’t see any of them doing so – the emotive semantics are far to attractive and easy an option.
“Last week We Own It released new polling which shows that outsourcing companies are trusted less than central government, the civil service, the police service and the NHS.”
As regards the NHS wouldn’t it be true to say that 100% (or nearly 100%) of the NHS GP service is provided by “outsourcing companies”, specifically private sector partnerships of GPs? I always thought that the family doctor service was one of the most trusted parts of the NHS.
If this new poll says that, in fact, the public don’t trust GP partnerships then I must say I am very surprised.
This is an excellent article. This is a really important issue that the Liberal Democrats could make their own at the next election,. Outsourcing is a disaster which is producing more expensive, worse services and lining the pockets of the likes of Serco. It is also steadily undermining the ability of the public sector to rescue the situation. It is all based on a combination of right-wing market fallacies and corporate greed.
Tony
@ Simon Shaw,
Simon, Did you watch the Despatches programme: Getting rich on the NHS last year?
The debate about the provision of public services is often focused on ownership, but the key is the way that we contract these services, rather than the ownership of the companies providing them. Within the private sector complex relationships exist between companies based on partnership and trust. Quality is as important as price. When the public sector contracts with the private sector the contract is often short term, based on cost, and lacking in trust.
It is at this interface that things go wrong.
@ Stephen Donnelly,
I am sure that you will be better at critiquing an article than I. An article ‘NHS contracting has been a disaster’ seemed paint a devastating picture to me.
The Social Liberal Forum is inviting ideas for policy priorities for 2015 and is interested in policy views on public services. Contributors here may want to share their thoughts on the interactive site: http://slf-debate.org.uk/public-services/
I worked in the Civil Service for 25 years, and saw a lot of money wasted on consultants and projects which could have been used to really improve services. As a Trade Union negotiator I queried the shambles of an IT outsourcing contract with a Departmental Head. He said to me that “its not just that the supplier is providing a poor service – the Department is a very poor customer.” He explained that the contract had been badly drawn up and had neither covered key needs, or anticipated either the impact of the number of legacy computer systems, or the need for contact updating.
Years later as a Councillor in a Cabinet with the Resources brief, it became clear that Procurement and Contract Management skills were poor across the whole Public Sector. Once once these had been tightened we got improved performance from contractors. The Lib Dem administration also moved some services back in-house where contractors were failing.
I agree with much of this areticle and much of what both Tony Greaves and Stephen Donnelly said. As liberal Democrats we mus never forget Jo Grimond’s words about us being “the party of the governed.” If a Public Services Users Bill can enshrine the rights of citizens who use and fund public services then it may be an idea whose time has come.
Its not just the public sector that is incompetent at outsourcing, the private sector is often also poor at this.
@Jayne Mansfield
“Simon, Did you watch the Despatches programme: Getting rich on the NHS last year?”
No, I didn’t. Was it about GP practices?
I think the simple fact is that sometimes outsourcing is good and sometimes it is bad.
A few years ago my own authority, Sefton MBC, outsourced Technical Services to Capita, and Transactional Finance, IT etc to arvato.
The first contract was a disappointment and has been brought back in-house; the second has been a success and remains with arvato.
It is simplistic to characterise outsourcing as always good or always bad.
As I referred to earlier, the family doctor service element of the NHS was outsourced from the very start in 1948, and I think most people would say that has been a great success.
For those who criticise the article I suggest you click on the link to the Public Service Users Bill in the article because the proposal does not reject out sourcing (as I think the organisation ‘we own it’ does), it changes the way it is conducted by increasing consultation and transparency (and ensuring there is always a public service tender).
@ Jayne Mansfield – It also allows the public to access the performance of the provider and would set out a procedure where if enough complaints were received the contract would be ended early.
Cat
“Most recently, the company has defrauded the taxpayer and is currently under criminal investigation by the Serious Fraud Office.”
Has it actually been, convicted or pleaded guilty to fraud?
I’m not a great fan of the huge outsource companies (though no issue with the principle) but in this country we don’t consider an investigation to be proof of criminality (or what sort).
This is a really interesting model that could find significant favour with all sorts of people, and returns that key missing ingredient – transparency.
Thanks for all the comments, it’s great to see all the interest.
Amalric, Jayne Mansfield, Tony Greaves, Steve Comer, Gareth Epps – thanks for your support!
Eddie Salmon – I agree with you about efficiency being key but research shows that executive pay in the public service industry is actually much higher than public sector pay http://www.equalitytrust.org.uk/sites/default/files/A%20Third%20Of%20A%20Percent_0.pdf
A new report shows chief execs of outsourcing companies get multi million pound pay packages http://highpaycentre.org/blog/the-customer-is-always-right-how-to-reduce-executive-rewards-with-procureme
The chief exec of Scottish Water earns £240,00 compared to £1.5 million plus for the chief exec of Severn Trent
http://opinion.publicfinance.co.uk/2014/05/privatisation-there-is-an-alternative/
This suggests the private sector gets both the profits and the higher pay.
Simon Shaw – Yes, some of the NHS is run by private companies. The polling just asked people whether they trust the NHS as a whole, so it’s not fine grained enough to pick up on your question I’m afraid!
Psi – Serco was found to have overcharged the government for prisoner tagging and has agreed to pay back £68.5 million. There is still a full scale criminal investigation ongoing by the Serious Fraud Office.
I think the idea that in house provision is good, outsourced is bad, is incredibly naive and not Liberal. Not all outsourcing is bad. I have worked with a lot of charities and social enterprises that have taken public assets into community ownership and run local resources far better than the state, a commendable and Liberal thing to do. I do agree that there needs to be more scrutiny and transparency though and there is a need for people to know more about outsourcing but I think there are a number of weaknesses in the proposed Public Service Users Bill. Firstly it attempts to say that all outsourcing should go out to consultation/public vote, which would be ruinously expensive for smaller contracts and undermines representative democracy. In addition, when poor public services are kept in house, there is no right of public challenge on this. It has to work both ways. A public “right to recall” on outsourced contracts could massively undermine commissioners and breach legal responsibilities. Full transparency on contractors finances and accounts and FOI rights sounds attractive but firms do have a right to commercial confidentiality and I think this is a bit unrealistic in this respect. Glad a debate is started but the Lib Dems have never been, and never should be, a statist party.
Hi Neil, thanks for your thoughts and glad we agree about transparency and scrutiny.
Just to clarify, the Public Service Users Bill is not statist. One of the proposals in it is to promote the importance of social value in contracting to give social enterprises, cooperatives and charities a better chance of winning contracts.
We’re suggesting a £50,000 threshold for consultation about contracts/assets – above this there would be a consultation, not a vote, so this would not be too burdensome, but would add some democracy into the process.
The ‘right to recall’ would work by requiring break clauses in contracts where public opinion and performance could be taken into account – so that it would be legally workable.
It seems to me that private firms shouldn’t assume they get full commercial confidentiality when they’re receiving public money to provide public contracts – transparency should be part of the deal.
@ Simon Shaw,
Yes it is.
There is an outline of what was in the programme on the internet.
One of the frustrating aspects of trying to do scrutiny as a councillor is when a service is being contracted out to a private company or is provided through a PFI deal. If you try and ask questions of the ruling party you’re often met with the answer “we can’t tell you that because of commercial confidentiality”.
I don’t think it’s unreasonable to expect less confidentiality and more transparency about the level of service required and the way the contract is set up when it is taxpayers that are funding it. The contractors will kick and scream, but at the end of the day they aren’t going to refuse to bid for a highly lucrative contract just because they have to give up some secrecy, just as their competitors will as well.
This feels like a very Lib Dem type of issue.
I agree with Anders that we should be legislating to make the elements of outsourcing by the public sector subject to Freedom of Information.
However, I think it’s also worth saying that the problem with the large outsourcing companies lies with the process of preferred bidder selection, which inevitably gives more power to the massive outsourcing companies mentioned in the article.
A real Liberal outsourcing system, aside from being transparent, would be more like the ideal Benthamite workshop system of small-scale outsourcing which focused on excellence, rather than perpetuating the existence of sub-par large companies whose only virtue lies in hoovering up all ability to bid for the contracts in the first place.
Yes, Alisdair, you have the nub of it right there.
Cat
“Psi – Serco was found to have overcharged the government for prisoner tagging and has agreed to pay back £68.5 million. There is still a full scale criminal investigation ongoing by the Serious Fraud Office.”
Overcharging does not require fraud. It may or may not that is why you have an investigation.
Investigations don’t show guilt that is what a conviction would show.
If my neighbor is arrested for assault that does not give me the right to say he is guilty.
You may not like these companies but over reaching doesn’t do your case any good.
In 23 years as a ‘front line’ civil servant, every contact with outsourcing has shown that they are unmitgated disasters. The only way For-profit organisations show any saving is to drive down conditions of their workforce, and provide much worse service.
Computer systems don’t work- that is immediately blamed on the customer giving poor instruction. No. Any half decent systems analyst KNOWS what the customer says they want, and what they actually want, are two separate things. A company that doesn’t work this through is either useless, or morally corrupt enough to take the money for a product they know is substandard. I am sick and tired of the phrase “work around” because the computer doesn’t do what it should. All they have to do is the same training course that the staff do. Instead the system I work on know has to be double checked because it cant do basic maths if there is anything a not completely straightforward.
I was working in a prison when the ‘tagging’ scandal broke. If they are NOT guilty then they are criminally stupid – we all knew something was wrong. If a tagged person was later convicted of a crime and sent to prison, Serco would fax to ask if they were still in prison, every day. We would regularly advise “This person does not get released until [some time in the future]. Yet they faxed every day for the same information. Each fax they get to charge for.The Faxes gave a Midday deadline, but they would regularly phone up before then asking the same question (another charge to chase us up), One of the basic security rules is you do not give out a prisoner location, unless you are sure the person on the other end of the phone is who they say they are, and they are authorised for that information. The Serco person was always non-plussed when we asked for proof of identity- the idea of basic security was beyond them. The refund of £68m isn’t guilty? They were caught with fictional prisoners on their books.
PFI means we no longer own our hospitals and schools, etc, we merely rent them, and at the end of 30 years have nothing.
THE incompetence of ATOS is disability assessments is legendary. The companies providing back to work paths have been pushing people in to self-employment, even if its is the completely wrong choice, so they can claim their success bounty. Cleaners in sensitive offices have been privatised – you never see the same cleaner for more than a few weeks, and there is a stream of unvetted people walking in and out, because that’s who they can get on a minimum wage zero-hour contract that day.
‘ The old song, ‘Money is the root of all evil,’ is just about right. The reasons for all conflict are fourfold (in my humble opinion and based on my 80 years in this life). 1. Greed for possession and ownership at any price including homicide, fratricide and genocide. 2. Lust for absolute power by self seeking dictatorial individuals and regimes, again at any price as the former.
3. Religious fanaticism as a result of either true faith or as an excuse for violence in support of greed and lust for power. 4. xenophobia and racial intolerance. Take any conflict in the world, in the workplace or even in the home and one of those motives will be at the bottom of it. I have always voted Liberal having never because they have never been in power in my life time and they never join in the lead-up slogan of the other main parties prior to an election which is,
‘If you can’t beat ’em, slag ’em’ because of their simple belief in fairness.