Risk Reward Partners

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2013 Local Government Service Group Conference
14 February 2013

Conference notes with concern the actions of the Labour controlled council of Newport City in maintaining the previous Tory/Lib-Dem council’s arrangement for contracting with a range of private sector consultants to conduct service reviews across most services.

This initiative is part of Newport city Council’s stated corporate efficiency programme, and is supposedly designed to deliver efficiency savings, improved customer service, and to ensure that the council gets a return on investments in new IT.

For each service review, the council can run a mini-competition between the consultants, to see who get the job.

The overall value of the contract is in the region of £8m over 4 years, but if other authorities start to use it this could rise to £50m.

The contract allows other local authorities in Wales to ‘opt in’ at any time until 2015, and use the consultants themselves.

The current contract has been awarded to 10 companies – Atkins, Atos Origin IT, Capita, KPMG, Mott MacDonald, Newton, Northgate IT, PWC, Turner & Townsend, and Vertex.

The financial model they are using is to “link 100% of fees to identified outcomes” and allows the contracted companies to cream off upwards of 40% of any council savings in their fees.

Conference notes that this approach raises a large number of concerns for our members:

1)Consultants get paid for efficiency gains which were not necessarily of their making.

2)Large amounts of money are siphoned off from any efficiency savings that are then lost to the council i.e. the public purse.

3)The council runs down its own internal reviewing capacity by relying on external advice.

4)If the consultants make recommendations which do not work the council still retains the risk of implementing them. The consultants can simply walk away.

5)The use of external consultants alienates the existing workforce, and does not utilise their skills and experience in improving the service.

6)Consultants typically have a ‘model’ which they believe provides the most efficient services. They simply implement this model without properly assessing other options. It is a very ‘top down’ approach.

7)This approach disempowering users and staff to improve services.

8)The scale and pace of the resultant changes means it is hard to support members, look at options for relocation and retraining when jobs are going.

Conference therefore agrees to instruct the SGE to:

a)Continue to monitor the extent of the use of Risk Reward Partners by councils across the UK and the impact of this approach, in terms of staff jobs losses and council budgets, to challenge the spurious claims of these consultants

b)Advise branches on how they can oppose these types of arrangements being brought into their councils; and provide material to be used locally to lobby local Councillors, Welsh Assembly Members, Members of the Scottish Parliament and Westminster MPs.