Strategies for opposing privatisation
via outsourcing - Externalisation
Briefing No. 177
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
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
There are many reasons why councils externalise
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
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.
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
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.
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.
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
- 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
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
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?
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
- 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
The following briefings have useful information and links to
Briefing 109 Lobbying Guide http://www.unison-scotland.org.uk/briefings/pensions109.html
Briefing 72 Freedom of Information Act http://www.unison-scotland.org.uk/briefings/foibrief.html
Briefing 148 Leisure Trusts http://www.unison-scotland.org.uk/briefings/leisuretrusts.html
The following publications may be in your branch: Externalisation
by Privatisation and Trade Union Strategies for Opposing Externalisation.
For further information please contact Kay Sillars in
the P and I team. firstname.lastname@example.org
Dave Watson -
@ The P&I Team
14 West Campbell St
Tel 0845 355 0845
Fax 0141-307 2572
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