Privatisation and bringing services back

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2018 Local Government Service Group Conference
1 January 2018

Conference notes that privatisation and outsourcing is increasingly discredited. Up and down the country, councils of different political persuasions are bringing services back in-house, to save money and to end the in-built inflexibility of private contracts where the slightest change involves extra cost. An example of this inflexibility is the waste disposal contract in the London Borough of Redbridge, where the current Amey contract is to be brought back in-house because it does not allow for food waste.

In Blackpool, the waste contract with Onyx will be brought back in-house when it runs out in 2019 because there is no flexibility to collect Christmas trees or cardboard. The council says the contract costs them £3.8m and they can deliver it better for £3.5m and pay staff the real living wage, with all the money staying in the community.

In January this year, the Smith Institute launched a new report, Out of contract: Time to move on the “love-in” with outsourcing and PFI. The report calls for an immediate “pause” in contracting out in the whole public sector, as well as a new public regulator to oversee an audit of existing contracts to be named the “Domesday Book”. The report also highlights that £100bn is contracted out but no one checks the success, failure or indeed performance of these contracts. The report states we “…have a yawning information deficit on how outsourcing and PFI impacts on employees and wider society.”

The National Audit Office has also published a report that assesses the costs of the impact of the Private Finance Initiative (PFI) named, “PFI and PF2”. The key findings state:

1) There are currently over 700 existing PFI and PF2 projects, worth £60bn with little evidence indicating any financial benefit to the public;

2) If new PFI deals cease to be signed, the current and future deals will continue for a minimum of 25 years at a cost of £199bn to the Government;

3) The cost of privately financing public projects can be 40% higher than using government money;

4) PFIs are a dereliction of public value for money.

The demise of Carillion also demonstrates the particular problems caused by the huge amount of sub-contracting that goes on after local government services have been outsourced.

Private providers seek to reduce our members’ remuneration and conditions of service so as to increase their profits. In addition, the failure of so many private contracts demonstrates that privatisation makes our members’ jobs considerably less secure.

UNISON has long-since campaigned with these realisations, but has all too often ignored by decision makers.

Outsourcing has created not only a race to the bottom in our members’ pay, terms and conditions but also has shown significant failure such as G4S and Serco being fined for dishonest electronic tagging, the G4S Olympic security embarrassment and Carillion’s collapse.

There is no wonder members shudder with alarm over Virgin Care taking over entire children’s and adult services. Often these organisations attack the pay, terms and conditions and pensions of our members in pursuit of profit and the services they provide are not of the same standard as those directly delivered by the public sector.

The collapse and bail-out of Carillion has further demonstrated that privatising public services not only undermines the fairness in workers’ pay, terms and conditions but also represents a massive waste of public resources. The collapse of these companies often results in those at the top and shareholders receiving huge pay-outs at the expense of front line workers. The failure of so many private contracts in conjunction with a politically driven austerity agenda, is breaking the neo-liberal consensus of “private good, public bad” and it is time for all outsourced services, leisure trusts, arms-length organisations and management companies to be brought back into the public sector.

Therefore, conference calls on the service group executive to oversee and:

a) Support the calls by the Smith Institute for a complete review of outsourcing, the total costs of contracts, the effects on staff, service quality and the social and economic costs to our wider society. This includes the setting-up of a “Domesday Book” for all significant contracts to evaluate the performance and effectiveness of outsourcing companies across multiple contracts;

b) Continue to actively and publicly campaign for in-house provision as the default option for council services, to make existing contracts subject to Freedom of Information requirements, involvement of trade unions and the public and resist calls to mutualise services out of public ownership;

c) Actively and publicly campaign against any attempts to outsource local government services to the third sector, mutuals, social enterprises and co-operatives;

d) Work with the sector committees to investigate and campaign for full equal pay compliance following the outsourcing of local government services;

e) Engage with decision makers in local authorities and elected members by providing guidance on how to in-source services and the appropriate questions to ask at scrutiny level;

f) Work with UNISON’s press and communications teams to publicise the value, common sense and fairness of in-house service provision as opposed to outsourcing;

g) Work with Labour Link to create a charter for Labour local government council and mayoral candidates to sign stating they will campaign for an end to privatisation and outsourcing, and to change council procurement policy to default to in-house provision. In England, this work should build on the ‘Labour Local Government Trade Union Principles’ agreed by the Local Government Association for England and UNISON, Unite and the GMB;

h) Establish a new campaign similar to “Public Works”;

i) Commission an academic study around outsourcing in all its forms;

j) Work with APSE to help make the case across local government for bringing services back in-house;

k) Provide resources/materials for all four nations to run a high-profile campaign.