Council cuts chief: outsourcing 'no longer cuts the mustard'
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Version 0 of 1. And so Cornwall county council's controversial £300m outsourcing plan finds itself being rolled towards some long grass, even if it has not quite bitten the dust. Today, a full meeting of council overwhelming voted to put the proposed joint venture deal on hold. As I blogged last week, the deal has caused dramatic political ructions at the Tory-controlled council, culminating last week in a vote of no confidence in the council's former leader, and his replacement by his former deputy (who had resigned in protest at the deal the previous week). A motion passed today called for a more careful consideration of the deal, and the drawing up of detailed alternatives to the joint venture, including keeping services in-house and forming a staff-owned mutual. There is now no pressure to finalise a deal by next month, (as originally planned) although its one remaining potential partner in the joint venture, BT, says it is prepared to keep its existing joint venture offer open until next March. You can read a twitter account of the debate here. Other accounts of today's events include this post on the Campaign4Change blog, and this report by Local Government Chronicle (LGC). The decision will cast further doubt on the future of large scale local government-led privatisation plans. Proponents of mega-outsourcing deals argue that in a climate of huge cuts to funding in local government there is no alternative. But here's an interesting counterblast to that orthodoxy from Stephen Hughes, the chief executive of Birmingham council, the UK's biggest local authority. He wrote in LGC last week that while "traditional outsourcing" might have had a role to play in the council funding good times, "in the current circumstances" it: <blockquote>...doesn't cut the mustard</blockquote> This observation came just days before today's announcement by Birmingham council that it expects to have had to have found £600m in savings by 2017 as a result of swinging government cuts and rising costs. The impact of cuts on this scale signalled "the end of local government as we know it," the council leader Sir Albert Bore declared. It seems unlikely, however, given Hughes's comments, that a huge outsourcing deal is regarded as the solution to Birmingham's cuts problems. As Hughes argues: <blockquote>When what is needed is a 30%+ reduction in costs in double quick time, with more to come, the traditional outsourcing model doesn't cut the mustard.<br />Local authorities find it hard to specify future operational requirements, they are worried about fixing costs too far ahead, and outsourcing doesn't address the scale of savings required or the areas where it is needed.<br />With this scale of reduction, local authorities have to change from servicing all demand they face, to finding ways to manage and reduce demand for services.<br />This probably means developing social investment models, payment for results for preventative interventions, better collaboration across public sector agencies, and radical service redesign.<br /></blockquote> In effect, he was arguing that when cuts come in on this colossal scale, merely privatising it to make it cheaper won't work; more fundamental changes are required. In a clear challenge to the big outsourcing companies, he adds: <blockquote>An offer to do better what authorities currently do and make marginal savings on that activity is just inadequate.</blockquote> All of this doesn't mean outsourcing is dead, or that local government can return to the supposed good old days. But - and I may check Serco , BT and Capita share prices over the next few days - it does suggest that attitudes in local government towards who can deliver real reform and how in the age of austerity are shifting. |