UNISON Scotland Strategies for opposing privatisation via outsourcing

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Strategies for opposing privatisation via outsourcing - Externalisation Briefing No. 177

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Strategies for opposing privatisation via outsourcing - Externalisation Briefing No. 177

December 2007

Introduction

This briefing aims to provide branches with information to support campaigning against privatisation of local government services. It has been produced in response to local authorities' plans to set up trusts and partnerships to deliver services. It provides an overview of the different types of externalisation, key policy points and reminders on campaigning and bargaining techniques for branches.

Privatisation in disguise

Managers and consultants knowing that privatisation is unpopular found new names like joint working, partnership and collaborative working. "Externalising” rather than privatising services is the buzz word but it still means giving public money to private companies. The main strategies have been sale of direct service organisations, establishing leisure trusts and transferring council housing. Unlike in CCT these involve a deliberate decision to end direct services provision. There is no opportunity for an "in house bid”. Different forms include

Arms Length Company: A local authority establishes a private company in which it has a stake .This includes the Limited Liability Partnerships (LLPs) which are currently popular with councils.

Management Buy Out MBO: The LA sells its services to a private company formed by managers with privately raised capital who deliver the service under contract to the council, if former employees are involved it becomes a MEBO:

Trade Sale to a private company: outright sale of a service to a private contractor Collaboration with the private sector: an informal relationship with a private company or companies exchanging expertise

Joint venture with a private company: the council service is sold to a private company which establishes a new company in which the council has a share stake.

Trust: transfer of property and staff to a charitable or not for profit organisation which delivers the service.

Policy

There are many reasons why councils externalise service:

Political dogma: councillors openly support the end of public provision. They want an "enabling council” contracting rather than delivering service.

Protecting jobs and services. Some councils claim it is the only way to protect services and jobs. UNISON's experience is that the opposite it true. Jobs and services are under threat.

Budget cuts Externalisation will not solve budget problems; the "company” will have the same financial constraints as the internal provider. The evidence is of increased costs and companies struggling to fulfil contracts.

Direct democratic control and accountability provide the best basis for efficient high quality services. As the Association for Public Service Excellence states "Direct service delivery provides the flexibility to respond to the public's requirements without the need for complex and area specific contractual arrangements”. The organisation of services is driven by the needs of users not profit. Local authorities also need to keep experienced staff including professional and technical expertise continue improving services. They cannot afford to train people and then give then to the private sector.

Equalities legislation

All public sector organisations now have a duty to be proactive in the promotion of equality. There are strict race, gender and disability equality rules. These duties apply to the employment conditions offered to staff as well as to the service provided the community.

The law sets out new rules which require a commitment to equality from both public sector organisations and private contractors. Equalities legislation therefore offers opportunities to protect jobs in the area of public sector procurement.

All public bodies must have an equality scheme which records their commitment to actions that promote equality. It would be unlawful to contract-out a public service without such a scheme in place. More specifically, the organisation is obliged to assess the impact of out-sourcing from an equality perspective. Such an assessment requires a consultation exercise with stakeholders to reveal the likely impact of out-sourcing.

An action plan is then required to ensure that equality measures are delivered by the contractor during the life time of the contract. This means equality issues must be included in the tender specification and then again in the service contract.

The public body must have the capacity to use contract compliance measures to ensure adequate performance on equality matters by the contractor. Therefore monitoring and evaluation commitments will be required from the contractor along with penalty clauses.

Any failure to follow this process may make the contracting process unlawful. Once adequate equality measures are built into a public service contract it is possible that only an experienced in-house team will have the technical ability to deliver the service in a manner compatible with equality requirements.

Finally, if the equality case is developed to its full capacity, and the service is still privatised, the equality requirements will help to ensure that the contract provides progressive employment conditions for staff and a high quality service for the local community. Combined with TUPE, the public sector equality duties are transforming the world of public sector procurement.

Impact of privatisation

There is clear evidence that public service privatisation has had a detrimental impact on jobs pay and conditions. There is also evidence that the position is worse for women than men. Research in Northern Ireland looking at competitive tendering found that the services selected for privatisation involved far more women employees than men: after competitive tendering 87% of women and 67% of men received lower wages. Another area under threat was maternity leave, some women lost all benefits and other faced tougher qualifying conditions or lower entitlements.

Prisons

All the evidence indicates that when private companies make savings it is not because they are more efficient or better at doing the job they do it by cutting jobs and the terms and conditions of staff. In PFI prisons Securicor pay £14,000 for a 44 hour week and Group 4 pay £13,000 for a 40 hour week, the average public sector prison pays £20,000 for a 39 hour week.

School meals service

Evidence of poorer conditions for workers alone is not enough to get the backing of local communities for anti-privatisation campaigns. It is important to highlight service delivery problems. The standard of school meals service has been the subject of a great deal of publicity recently. The nutritional value of meals has been roundly condemned. After decades of deregulation and privatisation 75% of English schools were spending less than 50p per meal. This was among the first services to be put to the market.

School meals are now clearly poorer and contributing to general health and behaviour problems in schools. What has been less publicised is the loss of over 50,000 jobs. People (mainly women) who used to cook fresh health nutritious meals instead of reheating cheap fatty, salty highly processed food.

Campaigning

Campaigns against externalisation have been successful. In order to win branches must be well organised and focused. It is essential to develop a branch strategy. Don't start writing press releases and designing leaflets until you have a strategy in place. Branches can apply to the General Political Fund (GPF) for extra money to fund campaigns. Application forms are available from West Campbell Street.

Act early don't wait for the issue to gather momentum Externalisation is privatisation, services sold off or transferred are unlikely to return to the public sector
Most externalisation proposals originate from managers and consultants so make sure councillors, (MSPs and MPs) know about the proposals and our case against them
Be ready, gather evidence to challenge the argument that externalisation is "inevitable” or the "only way to protect jobs and services”
Members may be divided and confused about what they believe is in their long term interest. A regular flow of information, analysis of the issues and full explanation of the implications of alternative policies is essential
Keep service users informed of the plans and our campaign against them. Privatisation is unpopular make it clear that this is what plans mean.

Developing a plan

When your employer produces plans read through the detailed proposals. Work out which service/s are affected directly and indirectly.

Gather information in order to inform and consult members.
Collate and discuss key points in proposals
Decide on the make up of your negotiating/campaigning team

Key information checklist

There will be differing issues depending on the details of the plans and your own local conditions.

What type of externalisation is being proposed?
What other organisations will be involved in delivering the services? (Private companies, the voluntary sector or new trust or partnership)
What are the proposed cost savings?
How many jobs will be cut?
What are the costs incurred, are these realistic? Are they taking into account all costs?
Have these savings been realised elsewhere?
What problems have others encountered with similar plans?

Key concerns: job losses, relocation, changes in terms and conditions, deskilling, stress de-motivation of staff. There will be others in your workplace depending on the detail of the proposal.

Organising your campaign

Branches should inform and consult with members about the proposals as soon as possible. Branches could also consider joint meetings with branches in any proposed partner organisation and other workplace unions to ensure a coordinated approach.

It is important to use a variety of communications methods to contact members: branch meetings, newsletters notice boards etc. This will be an excellent opportunity to recruit new members so ensure you inform as many staff (and not just members) as possible of concerns about any proposals and are prepared to deal with membership enquiries.

Will the local media be interested? They are valuable tool in informing members and users of our case.

Surveys of members can provide good evidence of how people are feeling about proposals for meetings with management. Do not just say no: take the opportunity to offer alternative proposals. Staff delivering services are well placed to put together proposals for genuine efficiency improvements in service delivery. Consult with members to draw up alternative proposals and research other solutions. What has happened elsewhere? E.g. can IT be used to make savings without privatising services?

Information gathering

It is important to research and collate information to inform members about how the changes will impact on them but it is also important to look for information that will help you build wider support in your communities.

People need to know that their services will not just stay the same; that they are moving out of direct democratic control. This is though an abstract idea so branches need to provide detail to make the threat real.

If there are less jobs in the area other businesses will be affected.
If the company has a poor human right record the wider community will not want them delivering their services.

The following list gives example but is not exhaustive branches should draw up a clear list of questions and then find out the answers. This can be done by questioning councils officers involved in setting up the plan, (The Freedom of Information Act means that council's must make information available, see Briefing 72) by asking the company and by using search engines such as Google or UNISON's Bargaining Information System (BIS) which branches can access via their RO. BIS provides valuable information for all collective bargaining.

Branches can also use the local media to do more digging by linking with sympathetic journalists. This is best done after you have done some basic research so you have something to point them to.

Questions on the proposal

What are the costs of the project?
What are the projected savings?
How are these being made?
How will this impact on the local economy?
What will happen to other private businesses if jobs and services are relocated to another area?
What are the wider costs the area i.e. environmental impact?
Where will the jobs be based?
What if staff can't relocate?
Is public transport available to new location, how will staff get to work?
What other jobs will be lost in-house if these teams move to private contractors i.e. les payroll staff on the companies involved Who owns the company?
What terms and condition to current staff have?
Do they recognise trade unions?
If they are a multinational company what is their record on human rights, trade unions or child labour?
What is the company pension's provision?
Why is the company interested in this business?
Do they have experience in this area are they looking to expand?
How will the public sector work fit in to their overall structure?
What is their history with other staff that have transferred under T.U.P.E. regulations?
Do they offer ongoing training and personal development of staff?