Bury council is considering a transformation programme that would involve transferring the delivery of most services to private or third sector organisations. It has published a consultation document on it future that includes a number of commitments within the programme. These begin with the key point that it "will start with …
If everything is outsourced, why have a council at all?
Somehow I suspect the highly paid seat polishers at the apex of the triangle won't be outsourcing themselves.
They think that a private company, that has to make a profit for its shareholders, can do a job more cheaply than an effectively run council, which hasn't got to make a profit.
All they're doing is holding up a white flag that says, "We haven't got a grip on the situation, we can't manage and we're about to spend a shed load of money on consultants." Hoping above hope that the residents don't actually realise that the process of outsourcing actually costs a lot of money to actually achieve in the first place; not that this figure will make it on to the tabulated report of savings that the council will make.
At the same time, they'll hapily sign themsleves to a contrace which, if they later want to change, will also cost more money.
Long story short, it will cost them loads of money to achieve an outsourcing solution which will cost them flexibility in the long term; and at the same stroke admits that their top management can't, actually, manage the proverbial outing in a manufacturing plant that makes noxious substances.
This is all fine, but...
Much as local authorities are known as organisations who are expensive at the direct delivery of services they are not known as effective and efficient commisioners of services either. I hope Bury are going to buck the trend but a lot of local authority outsourcing is good only for the contract holder and bad for the service user and the tax payer...
I dont get it
Service cost + profit margin > service cost except where profit = 0
The council is outsourcing either for idealogical reasons, or they're too incompetent to manage correctly
Who thinks of these ideas?
Purpose of a council - to provide services
Purpose of a business - to make profit
Time and again it has been proven that if you put services in the hands of business the great outsourcing idea falls down. Costs go up while things like maintenance and staff numbers get reduced all in the name of making more money. End result is we all end up paying more for a worse service than we have now*
*I know this seems hard to believe given the track record of some councils but it is true.
If companies can do it for less, what is the council doing wrong?
Unless it is union busting in disguise, the question that begs an answer is how can a for profit business do the same work, at a like standard for less?
If so the first should go is the city manager followed quickly by other supervisory staff.
And in the case of a business failure of a council supplier where is the insurance, financial guarantees to make good the breached contract?
Or is the public supposed to pick that up, too?
You want to know?
From the POV of a former NHS junior manager who worked in the private sector before and after a stint in the public sector.
1) It's virtually impossible to discipline staff for anything with any effect in the workers paradise.
2) It's virtually impossible to sack people for anything, including gross incompetence that results in people dying.
3) Staff can't be rewarded for anything beyond their basic salary. No bonuses, and no pay rises for good performance. It might play badly in the newspapers.
So, you have a number of people who know they more or less have a job for life, regardless of their productivity. There is no personal benefit to working your ass off, because you won't get any extra cash from it. Therefore, many people work at 1% more than the minimum level of productivity acceptable, and this level is appallingly low. If you work hard anyway, you embarrass everybody else because you show up exactly how ineffective they are, and you'll get subtly stabbed in the back at every possible opportunity.
I would happily have lost a third of my department and i'm not convinced that I would have been worse off losing their productivity versus removing the requirement for competent staff to fix their fuckups.
In other words, parts of the civil service work as hard as people in communist Russia. Ie; they put in the absolute minimum amount of effort possible and still do a crap job. You can get the job done cheaper by the private sector with them still making a profit because their staff are for the most part 3x more productive and have incentives for doing work properly and disincentives for sitting around doing nothing or worse, creating work for other people.
That's how a for profit business can outperform the civil service. Please note that team productivity is also higher than individual productivity in the private sector due to having a far smaller proportion of people that are outright liabilities.
"work as hard as people in communist Russia"
"We pretend to work, and they pretend to pay us."
It's what they have done in Barnet for some time.
Total and utter failure.
Constant turnover of external comanies, upheaval for residents and (what's left of) council employees,new contracts to be sorted - it's a complete dog's dinner under the guise of 'efficiency'.
Also, projected savings are slashed from budgets well before any actual savings(if any) are realised, this leads to shortages all round except for the council leaders and thier cronies.
It doesn't affect the councillors - they really don't give a shit.
As an ex-Civil Servant
who's IT function was privatised by the last lot of Tories, I never truly started to piss away taxpayer's money until I was in the private sector. Failed project just chucked away? No worries, it was all chargeable. Customer is asking for the undeliverable? Keep charging them for your failed efforts to deliver until they tell you to stop. Customer is asking for something outside the ill-defined contract? FIll your boots!
I realise that the public service ethos has little value these days, I know that I've been thoroughoy disabused of any such notion, but when you try to replace it with a commercial relationship intead then you'd better be prepared to pay.
I'm the other side of the coin - a consultant who provides the services that got outsourced.
The problem with councils/other public sector who outsource is they expect a complete "magic bullet" solution. They don't realise that they're going to have to keep at least some tech and PM skills on board to keep a project spiralling out of control. Anyone who's done any sort of project management will tell you that the client of a project has to work every bit as hard as the supplier - this has never happened on any public sector project I've worked on.
Result: Weak, rudderless project management, woolly deliverables, time and budget slippage and companies like mine going "Ker-ching!". A senior consultant here once told me in all seriousness: "We charge them to do it the way they want, then we charge them again to fix it."
Want a cheaper service...
FIne, we'll do less, and that applies to IT, FM and just about anything else.
Francis Maud take note, when we cut our rates we will also cut our commitment, the quality of our staff and so on because our shareholders still want their profits, and our CEO still wants to meet his profit and growth target.
BTW. Public sector staff could earn bonus payments for meeting and exceeding targets, but they have in the main been withdrawn because the Sun says tax payers are horrified that public servants should receive a bonus for such poor service. Missing the fact that actually the ones who received, what in the private sector would be considered derisory, bonuses, worked their butts off to get them, far harder in fact than private sector employees do.
I for one am taking a closer look at the policies of the Monster Raving Loony Party as they seem to be the most sane at the moment.
People need to learn to stop voting Conservative. Their ideals only represent a small fraction of the nations aspirations.
Private companies *can* do it cheaper
Councils are already talking about sharing services to cut costs, but a couple of councils joining forces to share IT or something isn't going to save much.
One company, providing the same service to every council in the country, can provide the service at a much lower cost. Economies of scale, massive buying power, etc.
Now the question is, will that company pass its cost savings on to the councils, or just keep them as extra profit?
2 different things.
But if we take out the private company and have the councils share services direct we can save even more as suddenly the profit margin is eliminated and rolled into providing more services.
Centralisation is great - but government run means it can run break even, not make someone else rich at our expense.
Just some factors ...
1 - when outsourcing Councils usually do so as a means to save money. Therefore the contracted service tends to run for a lot less than if the Council did it directly.
This has two wins (or two loses depending upon point of view)
(a) The first is that the Council can say in a few years time: look we outsourced and just look at the complaints. We never had complaints like this when we provided the service inhouse. We really need to take this inhouse again but will fail to mention the cost differences between inhouse and outsource.
(b) The second is that it saves money in short term so gives impression of doing the right things and that will probably be the spin on formal documents and public accountability (but the Council will probably wish to get that service inhouse, at increased budget as soon as doable).
2 - Councils primarily have powers (it is after all a local government and local authority) and there is no need for it to bring services inhouse at all. In fact the further Council's remove themselves from direct inhouse service provisioning the better.
For why you ask?
Well, being a service provider as well as service authority as well as local government standards upholder means that one of these compromises the other two.
For example, a commissioned outsourced provider can be sued, held to account or other punitive and contracted action. However, Councils will not (and go to lengths to avoid) take action upon themselves or their colleagues in another office, in another street in the same Council area. Besides that their trade union would probably have a fit.
In summary: Council's as service providers compromise Councils as bodies of local governance and local authority.
Seemplz - tseetch!
On the other hand
Councils privatising things means my taxes are being redirected to line someone elses pocket
It's corporate welfare!
As a follow up to my 12:35 GMT
As an example:
Council government and Council authority arms get involved in discussions about mega cash boost.
Council direct servicing provision gets wind of it and makes sure it does not go out to public tender.
Council direct servicing provisioning arm reassures that costs will be saved as they (the other two arms that is) can specify standards that the direct servicing provisioning arm has no intention to uphold.
"if accepted by the executive, a four-year work programme will begin in the next financial year."
- they'll outsource that surely?
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