You are here: Home » Comment »

Outsourcing: where do you draw the line?

March 18, 2012 10:07 am

Author:

Tags:

Share this Article

Privatisation is really bad, isn’t it?! I mean you don’t have to look far to find horror stories of where the private sector has raced to the bottom and is delivering shoddy, shocking services whilst creaming off a nice fat profit. What’s not to dislike?

And so we must resist all attempts to engage in commissioning which is always the start of a slippery slope. Look at where we have now got to with the NHS: it began with GP fundholding (Major government) and then we made all ok with 57 varieties of the ‘internal market’ (Blair government) followed closely by Foundation Trusts (Brown government). And now what do we have under Clameron…? Something even worse than a dog’s breakfast – a piranha’s one perhaps.

It is crystal clear: all erosion of public not profit provision must be resisted at every quarter. The Tories from tea party blue to yellow wash believe in ‘public bad / private good’. Our response must clearly be ‘public good / private bad’.

Must it?

Or should we take a more nuanced approach? I think we should because a) we always have – the public services have always outsourced some of their service needs and b) resisting all outsourcing as a step towards privatising everything that the state does plays into the hands of the Right who can so easily label us of being unworldly, unbusinesslike and opposed to efficiency improvements.

Now there will be some reading this who will already be categorising me as some kind of bourgeois Blairist fool who has been duped into believing the marketisation agenda. I would, instead, contend I am on the pragmatic Left with a very large slice of outsourcing scepticism. (My recent article in the Guardian sets out some of the severe difficulties I see when politicians and staff who pursue commissioning with naïve enthusiasm.)

I do think there are many occasions where outsourcing or even (to use a current buzz word) ‘co-sourcing’ with the private sector can deliver better outcomes and less overall cost to the public purse. I also think there are many more occasions where such outsourcing is not only bad in the long term, it is also very bad in the short term: so called savings are nothing short of financial finagling and outcomes are not even considered.

To examine a live example in a service I know fairly well: policing. Vast amounts of resource are spent on transcription of statements from analogue cassette tapes. Indeed the whole set of procedures around the prosecution of offenders which involves the CPS, Courts and Police (among others) is riven with antiquated and highly inefficient systems.

Now if I were an incoming Police and Crime Commissioner elected on the basis of improving efficiency, getting police officers out onto the streets, bringing more offenders to justice – and generally improving community safety, I would want to look at every possibility to do this. Say my force spends £2m worth of staff and police officer time on these antiquated systems and I have no spare cash to invest in improvements. And so I examine the option of bringing in a specialist private sector partner who has a gizmo to transcribe recorded speech into text. I put out a tender and I end up spending £½m on a new piece of kit. The equivalent of a £1m in staff and officer time is saved with the new approach and this time is redeployed to other more beneficial activity. The £½m price tag comes from a variety of sources including some voluntary redundancy and reductions in payment to contractors.

OK these are simple figures and the whole system economics (taking into account all the costs and benefits) would be need to be worked out. But say they were and the overall benefit is significantly better than the current state of affairs – should we not even consider this because it is outsourcing to a private sector company?

Whenever I get the chance, I challenge outsourcing enthusiasts to say what their limit is. Would they, for example, privatise the army? How about putting the judiciary out to tender? What about outsourcing the Falkland Island’s government to a branch of the Argentinian government? Selling off GCHQ to a Russian ‘firm’? And so on. Usually I find they have a limit: Sir Digby Jones, for example, said in response to my line of questioning at a Probation Association conference some years ago that no service should be privatised if people could end up being killed. He was thinking of the armed forces but I wonder what his view now is of plans to outsource police patrol? I guess not many coppers get killed…

However, I think it is equally important for us outsourcing sceptics to know our limits too. Are we so sceptical that no form of outsourcing is ever going to be acceptable? But on the basis that such an extreme position is not tenable – then I believe we must have a closely argued case for when outsourcing is not only acceptable but a positively good thing to do – and when it is not so. What conditions have to be present? What calculations have to be made? What principles must not be infringed? What ethics must not be overlooked? And so forth.

In this way, I believe, we strengthen (not weaken) our arguments against damaging outsourcing strategies. By being clear that we are for good outsourcing, we will be better able to counter bad outsourcing.

As the debates around the Police and Crime Commissioners increase, it will be our task to explain to the electorate that the outsourcing enthusiasts from the Government parties could well end up selling their local bobby down the river to the lowest bidder.

And we must also explain how our approach will be a more considered, long term and ethical approach to the use of scarce resources.

Related posts:

  1. Is there a thin blue line for the new Police and Crime Commissioners?
  2. The right line, not the hard-line
  3. Tory council’s ‘irresponsible’ outsourcing
  4. The irresistible draw of by-elections
  5. Boris is back in the lead – but what’s below the top line?
  • scarlett_blades

    ……..Or we’d just by helping those who accuse Ed Miliband of not having a clear alternative.

  • http://www.facebook.com/profile.php?id=100001102865655 John Ruddy

    The base must be you never outsource your core activity. 

    The trouble is, that is exactly what the current Government wants to do – look at the NHS tendering for Child Care in Devon. Look at what Pickles was trying to do in Bradford.

  • treborc

    Labour the party that is morphing in to the Tories, have we not see enough damage done to jobs by out sourcing, how about asking TATA to take on benefits payments well cheaper in India.

    Companies that took on labours out sourcing cleaning  contracts to so called specialist companies like OCS saw how a company makes profits.

    To out source your saying out public sector is not as good as some bloke  in the private sector how sad.

    We saw labour abuse on IT the cost  which labour did not care about because of course it was not Browns money it was tax payers and we all know the banks were going to make more money for brown.

  • Brumanuensis

    We could distinguish between ‘supply’ and ‘service’. In-hospital functions within the NHS – nursing, cleaning, security, etc. – should be kept in-house. I’m more agnostic about IT, although I think there is a good case for retaining it. Obviously supply-chains will always be private – think who makes instruments and medical equipment. 

    I would propose five general rules, similar to the ones you outlined in your Guardian article, for commissioning:

    1). That value-for-money must never exclusively trump quality of service provision.

    2). That all commissioning arrangements must subject the private contractor to the same FOI requirements as the public sector.

    3). That private commissioning should not, as a general rule, be used for services that might seriously infringe patient confidentiality or personal data protection requirements.

    4). The general principle ‘public goods by public means’ ought to apply.

    5). That any commissioning should be done only on the basis:

    a). there is a significant commercial benefit;
    b). there is a significant clinical benefit
    c). that all efforts to improve in-house provision have already been attempted, without success.
    d). that the public have been consulted on their preferences before any arrangements are submitted for approval.
    e). that any plan ought to be subject to third-party review, i.e. in the NHS by NICE perhaps?

    Thoughts?

    • Dave Postles

       Yes, those criteria are very useful.  Basically, it’s a question of accountability for the use of public funds.  I’d like to argue for the retention of the NAO and District Auditors who would have the right to inspect the accounts of the contracting company.  The reports in the papers today are that all the current private healthcare contractors interested in NHS services have parent companies offshore so that they can write down tax liabilities.  If their accounts are just signed off by audit firms, there is no way that we can be assured of proper use of public funds.  The private businesses should also be accountable to inspections by any successor to the Quality Care Agency.  My bottom line is, however, that I am opposed to any privatization.  Public service should be by public service ethos.

      • treborc

         seems private firms will run our roads (Tolls) as well it’s getting very expensive especially to companies that use roads to get goods to  different area people like retailers, profits seem to be the ideal of this government

      • madasafish

        “ The private businesses should also be accountable to inspections by any successor to the Quality Care Agency.”
        I take it you are joking? You really can’t be serious?The Quality Care Commission – I assume this is what you mean  ? – is demonstrably grossly incompetent. Mind you it was run by someone who ran NHS West Midlands..  who somehow overlooked the Mid Staffs Hospital scandal..

        • Dave Postles

           Read with care: I said successor to the QCC.  You people really are infuriating.  You half-read stuff and jump to conclusions.

    • Jon Harvey

      They seem like reasonable rules to me. What is a criminal (and it really is sometimes) waste of public money is when private sector suppliers are given special treatment whereby they do not take the risk but do take the profit. 

    • MonkeyBot5000

       2). That all commissioning arrangements must subject the private contractor to the same FOI requirements as the public sector.

      2a). That any civil servant who fails to do this should have the letters FOI branded on to their buttocks and be frog-marched, naked, around Whitehall.

      It’s the lack of transparency that’s at the heart of every badly written contract.  You wouldn’t hire a plumber who insisted that you pay him with a blank check because his prices were commercially sensitive information.

  • http://twitter.com/dan_mccurry Dan McCurry

    They have tried outsourcing the writing up of police interviews, by the way. I can’t remember why but the firm went bust.
    Also analogue tapes are often better than digital for transcription purposes, because youo can shuttle back and forth fairly easily.

  • Amber Star

    Where to draw the line? How about drawing the line where a faulty transcription process or faulty piece of transcription ‘kit’ results in thousands of convictions being declared unsafe resulting in millions more hours – & pounds - being spent by the state on fixing the bl**dy mess caused by an unaccountable private contractor carrying out work which should be done by an accountable, public body.

    Or haven’t you read about the problem that has currently manifested itself at one of the major private forensics lab which replaced the state run ones?

    • Jon Harvey

      Hi Amber – I have not read the detail of these stories (link?) – but I agree with you – had the outsourcing been done properly – the private sector suppliers would be paying for the ensuing mess – including due compensation to all people. Broadly this is the point in my associated Guardian article – too many outsourcing enthusiasts agree deals with private sector suppliers without fully examining (and contracting for) all the scenarios. 

  • http://www.facebook.com/people/Mike-Homfray/510980099 Mike Homfray

    Get rid of the entire commissioning system and return to direct provision in all areas of public service

    No ‘nuance’ needed

    • Jon Harvey

      Have we ever had that – that a public service is delivered without any private sector support? To my knowledge the NHS (or police or…) have never made their own vehicles / paper / staplers etc. 

      • Dave Postles

         ’Private-sector support’?  There’s a difference, IMHO, between purchasing in goods and outsourcing services.  I would not define it as ‘support’, although that’s a semantic matter. 

  • MonkeyBot5000

    Now there will be some reading this who will already be categorising me
    as some kind of bourgeois Blairist fool who has been duped into
    believing the marketisation agenda. I would, instead, contend I am on
    the pragmatic Left with a very large slice of outsourcing scepticism.

    Isn’t that exactly what a “Blairist fool” would say though?

    It’s always pragmatic and reasonable when you flogging the policy to the public, but the contracts are always written by half-wits who let us get ripped off and place all the risk with us and all the profit with private companies.

    I put out a tender and I end up spending £½m on a new piece of kit. The
    equivalent of a £1m in staff and officer time is saved with the new
    approach and this time is redeployed to other more beneficial activity.
    The £½m price tag comes from a variety of sources including some
    voluntary redundancy and reductions in payment to contractors.

    And a year or so down the line, the public finds out that you could have had the same thing for £100k from a different supplier, but they didn’t take you out for dinner at a fancy restaurant so they lost out. There’ll also be another £1m in consultancy/management fees that don’t get counted in the costs and end up being hidden in the maintenance budget.

    We’ll probably find out that there was even a free open source product that’s just as good and would have allowed the police to tailor the program to their own needs. But the company that make that aren’t going to offer you a cushy directorship in a few years.

    He was thinking of the armed forces but I wonder what his view now is of plans to outsource police patrol? I guess not many coppers get killed…

    I’d be a lot more concerned about the public getting killed. It’s hard enough holding plod to account, what chance would we have with a company director?

    • Jon Harvey

      I agree there is woeful lack of commercial ‘nous’ in too many parts of the public sector. And see my comment below about the balance of risk and profit. Do you think so little of me that you think I do not realise this? Have you read my other article in Guardian? 

      I am concerned about anyone getting killed. But are you missing my point? To state in another way – does Sir Digby now think that outsourcing any part of the police service where people are at risk of serious injury or death – beyond the pale for him?

      And for the record – I have never been an advocate for marketisation – I saw what happened with GP Fundholding etc…

      • MonkeyBot5000

         Sorry, I didn’t specifically mean you in person. I meant the more general you of politicians trying to flog state property/services.

        …does Sir Digby now think…

        I’m not convinced he ever did. I’ve seen him tell someone that if you are unemployed it makes you less of a human being.

        I don’t think Digby would realise what puts lives at risk until someone actually dies. And when they do, we’d suddenly find out that the private company can’t be held accountable.

        How about maintaining police vehicles, that’s not life threatening is it? Until the brakes fail and a patrol car ploughs into a school bus stop at 50mph. The worst that will happen is that the company pays a fine which they then pass on to the taxpayer in the form of increased prices. It’s bad enough that ACPO is sticking it’s nose into policing. We don’t need any more unaccountable private companies jumping on the gravy train.

        I’m not against outsourcing in theory, but I’ve yet to see one single example of it being done properly and not just transferring more money from taxpayers to a chosen few at Crapita, Serco and so on.

        Just look at the balls-up with ALS. There are cases being lost/dropped because they don’t have the right interpreters to speak to suspects and witnesses. The interpreters are being paid less, we’re getting a reduced service and the owners of ALS are making a tidy little profit on the back of it all.

        Then we have the forensic science services which were spun off as a private business to kickstart a glorious new “market” in forensic services. Except there is no such market as the vast majority of forensic work that needs to be done is for the police service anyway. Now we have cases collapsing due to lost and contaminated samples.

        Then we have A4E whose disability assesments get overturned in 40-50% of appeals because they’re more concerned with meeting quotas than with making a proper medical assessment. They drop people into innapropriate jobs just to get their numbers up and they end up back at the job centre the next month. Emma Harrison has taken millions off the tax payer whilst her company has managed to acheive nothing of any note.

        When these companies can’t even be relied upon to perform basic administrative tasks without incompetent or fraudulent behaviour, why would we want to let them anywhere near something as vital as policing and something which has such potential to negatively affect people’s lives?

Latest

  • News Seats and Selections Vicky Foxcroft selected as Labour’s PPC for Lewisham Deptford

    Vicky Foxcroft selected as Labour’s PPC for Lewisham Deptford

    Vicky Foxcroft has been selected by Lewisham Deptford CLP as the party’s candidate for 2015 at a selection meeting this afternoon. Here’s a brief biography: Vicky grew up in the North West in a single parent household, and was the first person in her family to go to university. She has held many positions in the party including Chair of Labour Students, has sat on the National Policy Forum and is currently a local councillor and is Chair of Lewisham [...]

    Read more →
  • Comment Labour’s future schools policy: why accountability matters

    Labour’s future schools policy: why accountability matters

    By Mike Ion

    Stephen Twigg, Labour’s Shadow Education Secretary is one of the more thoughtful and pragmatic individuals to hold this vitally important brief for some time. To his credit Stephen has been out and about these past two years listening to pupils, teachers, parents and governors and finding out more about the challenges they face on a day-to-day basis. In addition Stephen has been looking closely at some local, regional, national and international programmes that have had a demonstrable impact in raising [...]

    Read more →
  • News Seats and Selections Falkirk selection process suspended by the party

    Falkirk selection process suspended by the party

    The Labour Party have this afternoon suspended the selection process for Falkirk, after concerns were raised about “membership recruitment”. We understand that Ed Miliband was “keen to act swiftly” as the selection process was due to formally begin on Sunday. An officer of the party – yet to be confirmed – will investigate. A Labour spokesperson told us this afternoon: “We have suspended the start of the selection process of the Falkirk parliamentary seat. Concerns have been raised about membership [...]

    Read more →
  • Comment Seats and Selections Unions Working Class MPs – the end of a era?

    Working Class MPs – the end of a era?

    By Paul Wheeler

    It is interesting to see that the Labour Party is returning to the vexed issue of its parliamentary selection process. The changes may be well and good.  But maybe we should be asking a bigger question – are we  witnessing the end of working class representation in Parliament? When the Labour Party was first founded it was more simple. Then the explicit  aim was to secure working class representation, and specifically organised labour, in Parliament. Inevitably it became more complicated [...]

    Read more →
  • Local Government News An absolutely classic Lib Dem bar chart

    An absolutely classic Lib Dem bar chart

    Earlier this week we brought you a decidedly dodgy bar chart from the Tories, but it seems that they’re not the only party in Camden adopting dubious use of bar charts. Step forward Camden Lib Dems, with this classic of the dodgy Lib Dem bar chart genre (courtesy of Theo Blackwell). Even by the pretty shoddy standards of the yellows, this is a corker:   Update: Haringey Lib Dems might want to work on their bar charts  maths too (via [...]

    Read more →