Category Archives: Outsourcing

MoD outsourcing could sink the shipbuilding industry

 

All those with an interest in Italy’s Fincantieri, Spain’s Navantia, Japan Marine United Corporation, and Daewoo Shipbuilding and Marine Engineering of South Korea – and their British shareholders – will rejoice as the Ministry of Defence decided to put the £1bn contract for the building of fleet solid support ships out to international tender in February.

France and Italy build their own solid support ships, ensuring that the work remains within national borders. Rodney Reid (Financial Times) responds to the news by describing Britain’s approach as ‘muddled’. He recommends that vessels required for use by the Royal Navy should be built in Britain, preserving jobs and skills in this country. A month later Mr Reid reported that Fincantieri and Daewoo Shipbuilding and Marine Engineering had withdrawn due to the ‘significant’ advance funding required.

Unions and shipbuilders have urged that the vessels to be built under this contract with flight decks, advanced weapons systems and extensive dry storage, to carry supplies needed by the carrier fleet when on mission, should – as in France and Italy – be classed as complex warships. This would enable them to be built in the UK, exempted from EU laws preventing protectionism.

Reid asks: “With the Appledore shipyard in Devon, which has built ships for the Royal Navy for well over a century, likely to close at the end of March without any new orders, is it too much to expect joined-up thinking at the MoD to keep valued jobs in the UK and save a valuable shipbuilding asset?”

Admiral Lord West of Spithead points out a few of the advantages of building these ships in Britain:

  • the benefits to the exchequer of tax receipts from the firms involved and their workers,
  • the lack of exchange rate problems,
  • maintenance of highly skilled workers
  • versus redundancy and retraining to be shelf-stackers or something similar.

A false economy?

In an earlier FT article, co-authors David Bond, Henry Mance and Peggy Hollinger assert that the MoD wants to cut costs by using the subsidised shipyards of other countries but defence experts say that might be a false economy. Francis Tusa of Defence Analysis said a report commissioned by the unions will show next week that 25% of the spending on the vessels would return to the government in direct taxes.

Admiral West agrees: “The Treasury is deluding itself if it thinks it is cheaper building them abroad. The fleet solid support ships should be built in the UK.”

 

 

 

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Broken Britain 22: 2014 tax law – lowest income households lose, bailiffs gain

 

Britain’s lowest-income households were exempt from council tax until 2014, when the law changed, bringing 1.4m households into the council tax net, with some jobseekers and the disabled required to pay bills amounting to 10% of their benefits income, according to the National Audit Office report, Financial sustainability of local authorities 2018, (Money Advice Trust note 67)

The Money Advice Trust charity points out that between 2011/12 and 2017/18, central government funding for local authorities fell by an estimated 49% in real terms – leaving councils increasingly reliant on council tax and business rates to fund local services, according to data obtained through its Freedom of Information requests. Its 2018 report A Decade in Debt gives detailed analysis of many kinds of private debt, with a chapter on council tax arrears.

Council tax collection privatised

With most councils lacking the staff to collect arrears the money themselves, more than 2.3m debts were referred to companies like Dukes bailiffs, a “provider of ethical and efficient enforcement services across the UK”, who sponsored the 2019 Local Authority Civil Enforcement Forum’s conference.

According to the Financial Times, the Institute for Fiscal Studies reports that almost a fifth of single parents who would formerly have paid no council tax are now in debt. No link was given and a search led to the IFS 2004 report which made seven references to the deot problenms of single parents.

Hansard, the official government record, in answering questions on ‘rogue bailiffs’ refers to a September 2018 YouGov poll which found that more than one in three people contacted by bailiffs in the last two years had been subject to harmful behaviour, such as threatening to break into homes.

Money UK gives information on debt collection

An article on the subject in the Mirror reports that the Commons Treasury Com­­mittee says bailiffs work­ing for nat­­ional and local government are “worst in class” for aggressive tactics.

Those with physical or mental health problems are less likely to engage with their local authority, according to research by the Money and Mental Health Institute last May. which found that people with poor mental health were three times more likely than the general public to be behind with their council tax payments. A visit from a bailiff can exacerbate psychological distress and cause stress, the MMHPI said, particularly when enforcement agents did not act with care.

Barrie Minney chair of the Local Authority Civil Enforcement Forum (LACEF), explained that bailiffs are sometimes wrongly sent out to people who are financially or mentally vulnerable because of a lack of data sharing between council departments.

Many bailiffs are paid on commission based on the repayments they recover; if they don’t collect, they don’t earn

One of the FT’s case studies is summarised here. When Charley Finlay was recovering from the death of her premature baby she missed her first council tax payment of the year and did not open reminder letters from the council. Because she missed her first payment she became liable for her entire annual tax bill of £300.

Enforcement agents are allowed to charge £75 for sending a letter and £235 for a home visit, further inflating people’s debts.

Her debt increased to over £1,000 once the costs of the bailiff’s letters and visits were added to her debt. She said that the bailiff was at her door constantly, shouting through her letterbox, ringing her all the time and telling her that her children would go into care as she would be imprisoned.

Various efforts are being made to improve practice. These include:

  • LACEF is working with debt charities to build models for early intervention and developing software to help flag up people’s potential vulnerabilities to revenue collection departments. “Otherwise, we can spend a lot of time and money chasing people who cannot afford to pay us,” Mr Minney said. “That is really not ideal.”
  • More than half of the councils are examining new methods of dealing with people on benefits who are in arrears, LACEF’s polling indicates.
  • Local government minister Rishi Sunak vowed in April to engage with charities and debt advice bodies to create a “fairer” collection system.
  • The Ministry of Housing, Communities and Local Government highlighted the need to protect people against “aggressive debt enforcement”, announcing that reforms could include taking individual circumstances into account to give people the necessary time to pay off arrears, improving links between councils and the debt advice sector, and supporting fairer debt intervention
  • CIVEA – the principal trade association representing civil enforcement agencies – is hosting a one-day conference in September to present the industry’s take on the Ministry of Justice report following their recent call for evidence. This will include: the treatment of debtors, the complaints processes and whether further regulation is needed.

Comment from Peter Jennett (Private Eye letter, Jul/Aug 2018):

“Those in power not only tolerate but actively create conditions of increasing poverty, lack of access to education and life chances for large numbers of our population, then blame those affected for their own plight”.

 

 

 

 

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Criminal justice system on its knees – ’transformed’ by outsourced IT system

 

Lucy Frazer, the justice minister, faces warnings that the criminal justice system is reaching crisis point. Thousands of cases have been disrupted, with trials adjourned and delayed, after the main computer system in England and Wales went down at hundreds of courts. The Times reports that one senior figure said the system was “on its knees”.

Problems include:

  • Prison visits and meetings cancelled.
  • Lawyers and clerks unable to access documents such as witness statements.
  • Defendants being asked to check their own driver records for potential disqualifications on the DVLA website.
  • Problems in the probation service surfaced eight weeks ago; probation workers are being told to take annual leave as they could not carry out their work.
  • 75,000 judges and lawyers who use the criminal justice secure email system were locked out last week.
  • The Criminal Bar Association (CBA) said it estimated that about 30 trials had already been adjourned.

Chris Grayling, during his term as lord chancellor, introduced the present IT system as “a several hundred million-pound investment in the Courts and Tribunal Service . . . fully supported by the judiciary and a really important initiative of Conservatives and Liberal Democrats working together in coalition to modernise the working of our courts”.

Comment by Jonathan Black, a partner at BSB Solicitors and former president of the London Criminal Courts Solicitors’ Association:

“Since 2013, when Grayling was brought in to manage transformation of our justice system, we saw a plethora of projects prefixed with the word transforming, which was window-dressing for selling off.”

Comment by Chris Henley, QC, chairman of the Criminal Bar Association, which represents about 4,000 lawyers:

“The unrealistic planning has all the hallmarks of a Grayling project. He has repeated the trick everywhere he has been. We’ve seen it with the probation contract, private prisons and more recently the railways. We are living with his destructive, nihilistic legacy in all areas of legal aid and the courts . . .

“The closure of so many buildings, the ‘rationalisation’ of staff etc are all premised on the basis that the modernisation programme will create a cheaper digitised replacement system. Lawyers and many judges have no confidence in this planned overhaul of the courts and have serious reservations from a public policy point of view.”

He warned that trials could collapse. “Trials are being adjourned, the IT infrastructure is inaccessible in many places, electronic recording systems aren’t working and barristers can’t access vital documents because court wifi and secure emails aren’t working,” he said. “The system is on its knees.”

Lucy Frazer, the justice minister said that all judges would receive a personal letter from Sir Richard Heaton, the permanent secretary at the MoJ, who would also meet the chief executive of Atos, one of the network suppliers. She added that the department was exploring whether the suppliers’ contracts included “penalty clauses” to try to retrieve some of the costs incurred by the IT failures.

A spokesman said that the secure email system, supplied by Egress, had been restored. The desktops using wired connections to the main MoJ network, provided by Microsoft and Atos, were still down. Microsoft and Egress referred inquiries to the Ministry of Justice.  Atos declined to comment.

Sources

https://www.thetimes.co.uk/edition/news/destructive-chris-grayling-blamed-for-computer-chaos-in-courts-lsqkzd68z

https://www.thetimes.co.uk/edition/news/courts-in-chaos-as-trials-halted-by-it-breakdown-f9lkqmm20

 

 

 

 

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Can Britain afford to offshore ship building?

Cammell Laird, working to full capacity in 2012

Though Cammell Laird’s Birkenhead shipyard won two contracts this month, worth a total of £619 million, to provide spares, repairs and do maintenance work for the Royal Fleet Auxiliary over10 years, news of plans to axe about 40% of the workforce (290 jobs) by the end of March 2019, was given to union representatives and workers today (11th October).

The Unite union is demanding that Cammell Laird sets out the business case for cuts which will see the loss of vital skills and ‘backdoor casualisation’ of the workforce. It fears that the proposed job losses will undermine the shipyard’s ability to fulfil new contracts.

Unite’s assistant general secretary for shipbuilding, Steve Turner, said: “The loss of jobs at Cammell Laird would see skills gone for a generation and be a further blow to the UK’s shipbuilding industry . . . it is clear that the government must and can do more to support UK shipbuilding jobs. This must include the government stepping in and supporting the retention of skills and jobs while shipyards like Cammell Laird wait for new contracts to come on stream”.

Instead of ‘offshoring’, the government should be handing contracts to build the Royal Navy’s new fleet solid support vessels and a £1.25bn contract for Type 31e frigates (maritime security-focused platforms) to UK shipyards, using British made steel as part of an industrial strategy that supports jobs and communities across our four nations.

https://www.savetheroyalnavy.org/fleet-solid-support-ships-an-important-part-of-the-naval-logistic-chain/

Yesterday it was reported that MPs had urged civil servants (defence officials) to pick a UK company for the £1billion contract for three Fleet Solid Support vessels for the Royal Fleet Auxiliary. Commons Defence Committee chairman and senior Tory MP Julian Lewis feared that foreign firms subsidised by their governments could undercut British rivals.

Penny-wise, pound foolish?

The MoD’s director general for finance told MPs the department’s biggest concern was “what will deliver the greatest value for money”- meaning the lowest bid – a narrow perspective. But as Labour MP John Spellar pointed out, the Treasury would benefit from tax revenue ploughed into public coffers if the work was carried out in the UK  –  “a significant return” – which would be multiplied by work given to British steel and component manufacturers.

Steve Turner said that a failure to have these ships made in Britain would be ‘a gross betrayal of UK ship workers and regional economies, putting at risk manufacturing skills vital to our country’.

 

 

 

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New Fleet Solid Support ships: cash-strapped MoD should look at the total cost-benefit of building in Britain

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Jeremy Corbyn is in Glasgow today, where – reversing New Labour policy – he will call for Navy shipbuilding contracts to stay in the UK.

The contract could lead to over 6,500 jobs in the UK, 1,800 of those in shipyards: “Our proposal would both sustain existing shipbuilding and supply chain jobs and create new ones – right here in Scotland and also across the UK.”

The MOD, which is alleged to have ‘lost controls of costs’, hopes for a cheaper option. Its spokesman added: “We are launching a competition for three new Fleet Solid Support ships this year and strongly encourage British yards to take part”.

“Until the new Fleet Solid Support Ships (FSS) arrive, these hardy veterans must stagger on into the mid-2020s” 

STRN points out that the need for these important ships was first stated in 2015 – and it is feared that the first ship will probably not be ready for sea until around 2025.

The three currently supporting ships supply ammunition, food and spares are “antiques built in the late 1970s and saw action in the Falklands War”. Corbyn warns:

“By refusing to help our industry thrive, the Conservatives are continuing their historic trend of hollowing out and closing down British industry. Over the course of the 1980s under the Tories, 75,000 jobs were lost in UK shipyards, leaving just 32,000 remaining.

“Our shipyards used to produce half of all new ships worldwide. Our current market share is now less than half a per cent. The Tories seem hell-bent on accelerating and deepening this industrial decline.”

SNP MSP for Glasgow Anniesland, Bill Kidd, is sceptical, saying: “Workers on the Clyde and people across Scotland haven’t forgotten Labour’s betrayal of the industry in 2014.

 

 

 

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Accountable Care Organisations in the NHS: a privatising mechanism?

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On 1 April 2018 the government will introduce the first Accountable Care Organisations (ACOs), which are to act as partnership bodies incorporating hospitals, community services and councils into the NHS in England. 

The Health Service Journal reports that ACOs organisation, a corporate joint venture with GPs, will bring together most of a local area’s NHS services under a single budget, run directly by one big organisation – the ACO. which are to act as partnership bodies incorporating hospitals, community services and councils

Government intends to pass laws allowing ACOs to be set up (see above) without an automatic vote in Parliament.

The Accountable Care Organisations Briefing may be downloaded here

A BBC website reports that campaigners has been given permission to challenge a government health policy in the High Court. They will pursue a judicial review against Health Secretary Jeremy Hunt and NHS England over plans to create ACOs. Campaigners say it risks privatisation, but this is denied by ministers. The group bringing the case to court says an act of Parliament would be needed for the changes.

The DHSS said the claims would be resisted and it is irresponsible scaremongering to say ACOs were supporting privatisation. A spokesman said: “The NHS will remain a taxpayer-funded system free at the point of use; ACOs are simply about making care more joined-up between different health and care organisations. “Our consultation on changes to support ACOs is entirely appropriate and lawful”.

Dr Kailash Chand, an honorary Vice President of the British Medical Association, claimed ACOs could be a “Trojan horse for privatisation” adding:

“At worst, they are the end game for the NHS.”

The British Medical Association union warned: “Combining multiple services into one contract risks the potential for non-NHS providers taking over the provision of care for entire health economies.”

And the Commons Health Committee chair Dr Sarah Wollaston (Conservative) said: “There is a great deal of anxiety out there that this is going to be a mechanism for privatising the NHS.”

 

 

 

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Carillion provokes MP’s broadside: “taxpayer-funded services should be conducted in an ethos of public service rather than for private advantage”

Major banks and credit insurers are calling on the government to ‘step in’, as Carillion’s debts soar and ‘huge write-downs’ are announced on the value of several old contracts.

Some – according to the Financial Times – are seeking a taxpayer guarantee for the company’s debt and assurances that Carillion will be allowed to compete for future contracts, despite the company’s troubled state. Oliver Dowden, newly promoted to the frontbench, says that the government is making contingency plans for Carillion folding.

If Carillion goes under, writes MP Jon Trickett, “We would effectively be paying for these services twice. This government has socialised the risk but privatised years’ worth of profit for shareholders . . . it is allowing firms with public contracts to pay millions to private shareholders as the public suffers from cuts to disability benefits, schools and the NHS”. He adds:

“They are in debt to the tune of £1.5bn, while being valued at less than £100m and are being investigated by the Financial Conduct Authority over financial statements issued in the run-up to July’s profit warning . . .and if they fold, Britain could face a huge bailout so that our schools, hospitals and train lines keep running”.

Will the 99% bail Carillion out?

The government now relies on this contractor for a wide range of services. The Financial Times lists Carillion’s major contracts in the transport, defence/security and health sectors and points out that Labour’s Shadow Business Secretary has asked why ministers continued to sign off major contracts with the company even after it issued a profit warning in July 2017.

Theresa May’s new Cabinet ministers have – nevertheless – confirmed that they still intend to continue with the privatisation and outsourcing of public services to private firms which then make a profit at the expense of the taxpayer.

Some politicians and party members have, through directorships, shareholdings or the employment of family and friends, a vested interest in these companies, many of which donate to Conservative party funds, hoping to ensure another Conservative government.

MP Jon Trickett, shadow minister for the cabinet office, whose principled political life is outlined here, presents the view of ‘Corbyn Labour’, that taxpayer-funded services should be conducted in an ethos of public service rather than for private advantage: “Whether that’s to run welfare payments to those receiving universal credit, running hospitals or administrating schools in huge academy chains . . . “

He points out that when these firms cannot make good on their obligations under these contracts the British public picks up the bill, citing the termination of Virgin’s contracts on the East Coast main line.

The MP adds: “I represent a former mining area, which hasn’t seen meaningful private investment in decades, and little public investment since the 2010 election. Some of the poorest people in the country, with some of the worst prospects due to years of Tory government, live there. They have seen private firms make profit out of their benefits, their schools and crisis-stricken NHS services”. He ends by giving an assurance:

“Labour would reverse the presumption in favour of outsourcing and provide more cost-effective services, treating workers better by running many services in-house”.

Jon Trickett’s article: https://labourlist.org/2018/01/jon-trickett-crisis-at-carillion-reveals-the-risks-in-tory-outsourcing-dogma/

 

 

 

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National Rail Ticket Office 1 – National Express 0

As more people are pressured to operate online in order to increase corporate profits we report:

Gloucestershire reader’s verdict on grappling with online National Express Coach booking: appalling!. Her experience:

  1. Website refuses to accept three destinations listed on their map: Preston, Charnock Richard and Chorley.
  2. Phoneline kept her waiting for 15 minutes (so busy) and then cut her off.
  3. Local Post Office attempted a booking. Destination accepted but
  4. would not accept any proposed departure time.
  5. Customer decided to travel by train – involving three changes and at three times the cost.

 

 

If only . . .

Time for change?

 

 

 

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Ms May undermines her hero’s work as cuts to council funding reduce the powers of local government

The presenter of this BBC radio programme, Adrian Goldberg, grew up on the Druids Heath council estate in Birmingham, the home of the ‘municipalism’ pioneered by Joseph Chamberlain when he was Mayor of Birmingham – summarised by Walsall MP John McShane in the Commons in 1930:

“A young person today lives in a municipal house, and he washes himself … in municipal water. He rides on a municipal tram or omnibus, and I have no doubt that before long he will be riding in a municipal aeroplane. He walks on a municipal road; he is educated in a municipal school. He reads in a municipal library and he has his sport on a municipal recreation ground. When he is ill he is doctored and nursed in a municipal hospital and when he dies he is buried in a municipal cemetery.”

Adrian is described as being an ideal candidate to judge the changing nature of the local council, because when he and his family moved there the local authority:

  • built properties and
  • collected the rent.
  • Adrian took a council-subsidised bus service to
  • the secondary school run by his local education authority.
  • On the way home he’d drop into his council-run library to pick up some books
  • or take a swim in the council run pool.

He comments, “Today the situation is much more complex”

Adrian considered the effect of austerity on the role of councils today. Birmingham council has almost halved its staff since 2008, from around 24,000 to 12,500. Last year another £28m was cut from Birmingham’s adult care budget of £230m. 2017/18 – the seventh year of cuts – is predicted to be the toughest year yet with expected reductions of £113m to the council’s overall budget, on top of £650m already cut since 2010.

Local government grants and powers have been greatly reduced in several areas, including education and housing. Read more about the following cases here.

  • The fate of the formerly successful council-run Baverstock Secondary School in Druids Heath
  • The group of residents who set up the Friends of Walkers Heath Park in November 2011
  • The volunteers who are helping to run the library
  • Druids Heath’s handsome and historic Bells Farm community centre (below), with its food bank and other services, also kept going by local volunteers.

The link also leads to news of high-rise tower blocks in the area; dilapidation, damp and fire hazards go unremedied, the splendid concierge system was abandoned and full time neighbourhood office advice centres, closed in 2006, were replaced by a private call service which was expensive, often not answering, with staff unable to supply the information needed.

In Birmingham there was a move under John Clancy’s leadership to take back ‘in-house’ the services currently undertaken by profit-making private companies, deciding not to renew one Capita contract and considering the future of refuse collection in the city. This, because the ‘market place’ economy which has developed, privatising refuse collection, road maintenance and ‘back office’ functions in Birmingham, has proved to be more expensive and often less efficient. This hope is fading as Richard Hatcher reports on the new regime: Birmingham Council Children’s Services contracted out, Children’s Centres closed.

The health and safety of council tenants is evidently not a government priority

Inside Housing reports the housing minister’s description of sprinkler systems for high rise blocks as “additional rather than essential” and refusing a council’s request for funding promised after the Grenfell Tower tragedy.

Strangely, the conservative Prime Minister expresses admiration for Joseph Chamberlain

Mayor of Birmingham in 1873, city MP in 1876, Joseph Chamberlain directed the construction of good housing for the poorest, libraries, municipal swimming pools and schools. Unlike Ms May and colleagues, he was not in favour of a market economy, arguing for tariffs on goods from countries outside the British Empire. He was also an ‘economic interventionist’ (see Lewis Goodall, Newsnight), described as a “gas and water socialist”. He took profit-making private enterprises into public hands, declaring that “profit was irrelevant”.

In no way is she following the example of her hero.

Ms May’s government continues to implement a series of cuts affecting the lives of the country’s poorest and most disabled with might and main.

Ironically the contemporary politician sharing Chamberlain’s principles is the opposition leader, Jeremy Corbyn, whose policies she echoes but does not implement.

 

 

 

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“In-housing” for financial, operational, social and national security reasons

Seven years ago, the Stirrer’s correspondent (The Spook) predicted that one day the powers that be will realise that services should be designed and managed by the ‘undoubted experts’ that exist within the council.

S/he explained that they would be more practical and less expensive than those designed by “by cavalier consultants and back room HR boffins who have no conception of delivering a service and are only concerned that “procedures” are followed and “statistics” are recorded, irrespective of how impractical and resource wasting this might be.

Yesterday the Financial Times predicted that Learndirect, a company owned by the private equity arm of Lloyds Bank, is at risk of collapse, following a report by Ofsted. This prompted a data search which revealed 2013-4 as vintage years for complaints about the performance and cost of outsourcing companies.

Last year a survey of 36 strategic public-private partnerships signed between 2000 and 2007 found that 13 of the contracts – ranging from 7 to 15 years and covering IT, back-office functions, property management and highways – have gone back in-house at the end of contract or as a result of early terminations. In more than a third of cases, councils found that delivering services in-house could save more than outsourcing to commercial companies in long-term, multi-service partnerships. A return to designing, staffing and over-seeing services in-house can improve performance, reduce costs and provide stable employment for local people at all levels, with money circulating in the area, instead of going to distant shareholders.

The New Statesman noted that many companies featured on their list of nine spectacular’ council outsourcing failures were said to be looking “excitedly” at the NHS – hoping for “heaps of public money, ditching service the second the contract is framed and delivering huge returns to their shareholders”. Its 2014 article opened:

“One of the many concepts that free marketeers refuse to abandon in the face of all evidence is the idea that the private sector is better at providing public services than the public sector. Private companies have been cashing in on this fable for years at council and government level. As we file this report, another glorious outsourcing triumph is breaking: the Ministry of Justice has asked police to investigate alleged fraudulent behaviour by Serco staff in its Prisoner Escort and Custodial Services contract”. An online search will reveal that this is one of many problems reported in different countries. 

Punitive contract ‘get out’ clauses – real or imagined 

The article also listed the amount councils have had to spend to get out of private sector contracts and/or to deal with contract disputes and cost overruns. Note Javelin Park – the Gloucester incinerator contract revelation.

Despite these concerns, four years ago Swindon council brought basic ‘commercial’ services such as waste collection, recycling, highways maintenance and grass cutting, back in-house in order to save an estimated £1.8m. Last year, because of performance problems, financial pressures and NHS policy shifts, Swindon also decided not to renew contract with social work provider SEQOL.

Birmingham City Council recently ended the Service Birmingham Joint Venture with Capita which provided the Council’s information technology, ran the council tax and business rates administration service. The process continues with its move to bring waste and recycling collection in-house.

With reference to Serco, G4S and others – Simon Chesterton goes deeper, beyond issues of cost and efficiency:

 

He asks (left) whether there should be any limits on government capacity to outsource traditionally “public” functions:

 

“Can and should a government put out to private tender the fulfilment of military, intelligence, and prison services?

 

Can and should it transfer control of utilities essential to life, such as the supply of water?”

 

 

 

 

 

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