Trade Unions believe that a public service ethos is critical to delivering effective, responsive and valued public services, alongside effective leadership and management, with a well-motivated workforce.
It is important that in Somerset, “commissioning” does not automatically become synonymous with contracting out or outsourcing services.
UNITE welcomes a commissioning model that puts in-house services on an equal footing with regard to service improvement and investment when Options Appraisals are drawn up based upon sound Business Cases.
UNITE believes that any form of commissioning that is underpinned by a written contract has a number of risks and issues that are inherent in trying to predict the future in a long, fixed contract in a complex and changing world.
The contract with IBM for South West One has demonstrated a very typical set of risks and issues that often occur when contracting out services:
1. The contract was written on a service improvement basis in 2007 and when the un-forecast credit crunch came along in 2008 and put the UK into long-term austerity, the contract was unable to flex for contraction. Also, any Business Case that is based upon winning “business” from other Councils should be treated as highly speculative. In the case of South West One, out of 39 Councils who signed the Framework Agreement, not one joined!
2. The promised benefits by IBM of massive savings and local economic benefits failed to materialise and proved unenforceable legally. UNITE estimates that over £50m more has been lost to IBM for South West One in overhead costs and charges than the savings returned (to April 2013).
3. It is very difficult to strike the right balance in the client management teams between the level of resources and skills in the team, against the cost of that staffing and skilling. In the case of South West One, the team was initially configured as a “thin client” without any IT skilling, whilst attempting to manage a well-resourced IT company like IBM! Essentially, contracting out services requires some duplication of management costs and that weighs against savings in the Business Case.
4. Commissioning models that artificially divide existing in-house service delivery into “commissioner” and “provider”, can risk confusing the workforce as to where leadership and accountability lies. Who is responsible for the service culture and performance? Equally, once a service is contracted out, the Council remains legally responsible for many of the outcomes, whilst the provider is not. This dichotomy between “commissioner” and “provider” is especially sensitive in closely regulated care services.
5. Mis-match of aims between partners is inherent but often lost in “the fog of partnership declarations” . Broadly speaking, the Council wants the most services at a good level for the least cost; whilst any partner looking for a profit wants to deliver the services to the contracted level (and no more) at the least cost to maximise returns.
6. Lack of flexibility. Contractors will charge for changes and “extras”. Over the 10-year life of a fixed contract, there will be many changes. For example, Taunton Deane took the Revenues and Benefits service back in-house from South West One due to legislative changes from Government. Over a typical 10-year life there will be 2-3 changes of Government and 2-3 changes of Council administration.
7. Loss of control and accountability. Public services have a legacy and tradition of being open and accountable. Private Limited Companies are vehicles for trading and profit. Once a service is transferred to a private limited company, then there are significant losses of transparency and accountability for both elected Councillors and the service users and taxpayers. In an elected Council, citizens can:
– Vote for a change every 4 years;
– Stand as a Councillor;
– Inspect papers, agendas and minutes before committee meetings;
– Attend committee meetings and ask questions publicly (which have to be answered);
– Contact my local Councillor to act for me on an issue;
– Submit Freedom of Information (FOI) questions;
– Inspect the accounts every year and ask questions (which have to be answered);
– Exercise my statutory rights to appeal wrong doing to the District Auditor.
All of the above is lost (possibly for 10 years) when the service is contracted out to a limited company vehicle.
8. Turnout in local council elections is already very low; UNITE believes that a “commissioning” public service delivery model that extensively contracted out services would diminish public engagement further, as Councillors would have little power or direction left to them i.e. the fixed contract is for 10 years and the Councillor is elected for 4 years.
Does this Committee agree with the Society of Local Authorities Chief Executives (SOLACE) view that; “The Guide also recognises that commissioning and sourcing decisions are not simply technical choices but are inherently politically driven, as both the choices and their consequences can have a profound social and economic impact.”?
(SOLACE Statement on When the Salami’s Gone- the SOLACE Guide to Commissioning and Sourcing)