To City of Salford Cabinet Members

6 December 2000

TO CITY OF SALFORD CABINET MEMBERS

Dear Councillor,

REPORT ON MARKET TESTING OF SUPPORT SERVICES

In accordance with the protocol agreed between the Leader, the Chief Executive and the Staff Side this is UNISON’s formal addendum to the above report to Cabinet.

Introduction

This report is ostensibly about determining an approach to reviewing and assessing services. We should all be realistic enough to accept that we are talking about the possibility of voluntary privatisation.

You will not be surprised that UNISON policy, supported by this Branch, is to oppose all forms of privatisation of public services. UNISON believes that only a directly delivered in-house model provides authorities and the community with all the essentials for good public services: Direct cost and quality management, flexibility and responsiveness, open accounting and transparency, personal responsibility and first-point contact, direct control and democratic accountability. With all other service delivery models one or more of these is lost or seriously compromised. We believe that, on the whole, councils do deliver effective and value for money services. This is reflected by the Audit Commission’s summary of phase 1 Best Value Reviews and by the summer findings of the Government’s ‘People Panel’.

As a Branch we are well aware of Salford’s financial position and of the various pressures the authority faces. Precisely because of these it is vital that decisions with longer-term consequences are not made as short-term reactions. The financial stability of the authority and the sustainable delivery of social issues policy are paramount. The current experience of Hackney LBC is a sobering example of how privatisation actually destabilises budgets, and there are many other examples we could provide.

UNISON has long called for improved and strengthened local government. We support continuous improvement, modernisation and community empowerment but we have some differences with Government on what this actually means. One of the perils of neutral and generic terminology is that everything becomes all things to all people. The investment for change should come from public monies. No major private enterprise would embark on such a substantial and ambitious programme without ensuring the finance was already in place or on stream. It is not just about more money, even after a generation of cutbacks, but also the composition of funding. The split between national and local revenue raising, the increasing move from general to specific grant support and archaic borrowing restrictions are all major influences that are easily addressed, remedied and affordable to Government. It cannot be right that modernising is becoming synonymous with privatising.

Report of the Steering Group : General

UNISON welcomed the opportunity for direct representation on the Steering Group. This was on the basis that if engagement is to be constructive and meaningful it needs to be informed, and the ability to influence as well as respond must be part of the process. The Branch representatives have taken a full and active part in the discussions, on practical rather than philosophical grounds and without attempting to simply frustrate the work of the Group. Our principled and ‘political’ position is set out above; in the context of the report before you it is practicalities that we address.

The initial focus of the Group was on market testing services through a predetermined open-advert process. This would require European Community publication (OJEC) due to the value of services in relation to procurement rules. The identification of timescales, workloads, risks and resources within the report is based on this option. However, ‘market testing’ is a very generic term and there are numerous ways by which the effectiveness and competitiveness of services and the leverage of investment can be assessed. This has been recognised by the Group and is reflected in the recommendations. The primary consideration for Cabinet, and for UNISON, is which route provides the most potential benefit at the least potential risk for the authority and City.

Report of the Steering Group : Specific

The impetus for this process was budget driven in that Cabinet and Council wanted to consider any financial implications as part of the budget deliberations. This is not now possible because the work required to reach the point where such information would be available can not be completed in this timeframe. This is shown in the Action Plan appended to the report.

The Steering Group recognised that the Action Plan timescales are extremely tight and more conservative than the experience of other authorities undertaking similar work. It involves an estimated 800 staff days at a cost of £130,000 but the impact of any slippage, which is highly likely, will increase these estimates considerably because of the inter-relationship of work elements.

The major resource impact is on existing service delivery and existing programmes. The level of experience and ability required by the work will need the dedicated involvement of a large number of senior/principal officers. This will inevitably leave operational and managerial gaps and work that will not be done. Current performance levels and improved performance is unlikely to be achieved and Performance Indicator scores and rankings will suffer. This will have an adverse effect on the authority in terms of public/audit perception and potentially in financial terms if funding does become linked to performance. Adding to the already considerable strain on staff will also impact on morale and stress levels.

It will detrimentally affect current and developing initiatives that have serious operational and financial implications for the authority. Several major reviews and reorganisations are already underway, either within the Best Value programme or through efficiency drives or in response to Government direction. Personnel Directorate has substantially completed its first Best Value Review. Property Management was chosen as a corporate review and the team included a private sector consultant. The initial conclusion was to maintain and strengthen the in house service by the creation of a Strategic Property Unit and this was endorsed by Cabinet in September. Corporate property holdings have a relevance to regeneration strategies (eg Chapel Street) and the planned review of corporate accommodation is expected to identify significant savings. The centralisation of financial services and Call Centre/Customer Services initiatives underway in Corporate Services have received UNISON support despite a reduction in posts over time. These major, cross-directorate reorganisations have been structured around real service improvements and achieving Best Value targets. Importantly they will also realise savings of 20% on current costs in two years time. These savings are already built into the budget strategy. To continue with a market-based process will seriously threaten the full delivery of these benefits – through morale, resources and confusion – and UNISON believes this will result in current budget savings not being made.

Many of these issues are reflected in the Risk Assessment appended to the Report. Of the 37 summarised risks; the first 17 are assessed as very high risk at 9 (on a theoretical 1 to 10); only 11 of the 37 have control scores that match the risk; the total risk scores 273, an average of 7.3 from 10 yet the total control only scores 183, or an average of 4.9 from 10 – so the risk is 1.5 times greater than the control! If Cabinet were the board of a private company the proposal would be rejected on the risk assessment alone. With the additional responsibility for public monies this risk is simply too high.

It should be noted that this assessment only covers the period up to the potential Expressions of Interest. The risks beyond that point are clearly even greater.

Summary

Cabinet should not underestimate the impact on staff morale that the proposal has had to date. This transfers to service delivery and difficulties have already occurred in recruiting to service areas earmarked for market based testing.

UNISON believes that Salford’s priorities should be set by Elected Members to achieve strategic objectives. This involves broad principles and cross-cutting issues that demand flexibility, control and accountability. It is too complex and too risky to allow private interests to cherry pick public services through open advertising. Cabinet should be under no illusion that an OJEC advert will result in privatisation. The market dictates what will happen because the process is driven by market interests. To our knowledge there is no single example of an authority placing a notice and not subsequently privatising services. There are, however, a number of examples where authorities that have privatised services want to bring those services back in-house but are unable to do so because of legal disputes around the contract.

Purely on the practical grounds identified in the report and in this addendum we believe that continuing a process of improving in-house services provides the City Council and the community with the most potential benefit at the least potential risk. This will allow the full quality and cost realisation of current initiatives.

It will ensure that existing and current service review information is put to appropriate use. It will ensure compliance with the duty of Best Value rather than a nebulous reference to “Best Value principles” or “elements of Best Value”. And, not least, it will send an important message of value and worth to staff.

UNISON respectfully requests that Cabinet adopts the recommendation to review services in-house and without any pre-determined outcomes. It is our sincere belief that to do otherwise will place the authority and City in a position we will all come to regret.

Yours sincerely

Noel Glover

Branch Secretary

Should Cabinet require any further information please feel free to contact myself or John Lewis at the Branch Office or by e-mail:-