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The UK outsourcing experiment: playing with vulnerable lives

By any measure, the allegations of abuse by women imprisoned in Yarl’s Wood  detention centre should be a public scandal, but despite a stream of reports  prompting the Chief Inspector of Prisons to brand the centre “a place of national concern”, sustained
campaigns and protests, there has not yet been a collective public outcry.

Research  into the plight of women at the centre is hampered by a lack of access to  official information. In June 2016, the Independent reported that a Freedom of information  request to the Home Office asking for further information about sexual violence  against detainees was denied on the grounds that “disclosure would, or would be  likely to, prejudice the commercial interests” of the company running it,  Serco.

The  lack of transparency by both the government and Serco, and the obstacle this  presents to those seeking accountability for crimes against the women held  there, are twin themes at the heart of Alan White’s book on Britain’s  outsourcing industry, Who Really Runs Britain?.

Yarl’s  Wood is just one of many case studies detailed in the book which illustrate  both the vast scale of the outsourcing project and the devastating human cost  when things go wrong and the lines of accountability are muddied. White  examines key areas of the state where services are outsourced, including the  NHS, Ministry of Justice, asylum services, social care, disabilities and unemployment  — all arms of the state with which some of the most vulnerable people in  society interact.

The  book opens with a memorable case study and one of the few outsourcing stories  to permeate the national consciousness, the mismanagement of the security  project for the 2012 London Olympics by G4S, which resulted in the army  standing in at the last minute. It’s one of the few stories that made a national impact, as the country and the world were focused on London in 2012. However, White notes that “while the implications of the scandal seemed severe  for G4S at the time, they actually made little impression on it or the  industry”.

White  goes on to reveal an industry enjoys lack of competition and oversight, meaning  that companies like G4S will have multiple contracts and be constantly bidding  for more, despite sometimes high-profile failures. Counter intuitively, some contracts are not particularly profitable for the companies  involved. However, they are low-risk, as the state provides a safety net in the  event of failure, and there are guaranteed inflows of cash.

White  returns repeatedly to the human cost of failure. As a society, we have to ask  ourselves, what is an acceptable level of risk when lives are on the line? The  major incentive for the state is supposed to be savings, but interestingly, sometimes outsourcing costs more. White  underscores repeatedly that finding data on the details, merits and outcomes of  the outsourcing projects is difficult, partly due to the confidential nature of  some of the contracts but also because there is no one place that all the  information is systematically retained. This is exacerbated by the fact that  corresponding figures for comparison don’t really exist for the period when the  state ran the services. In essence the British outsourcing project is an
experiment with no systematic method of evaluation.

The  sheer scale of the outsourcing project is facilitated by settled political  ideology on its merits.

Labour firmly adopted the Tory idea of Private Finance  Initiatives (PFIs) while in power. White notes that in the political context of  New Labour’s compromise between social democracy and neoliberalism,
“outsourcing was considered a natural development in a corporate-led world”. The  pace has increased markedly since the coalition government in 2010. Although  outsourcing itself is not an ideology, White notes that it is borne of one, and  this consensus hampers cross-party criticism and oversight.

Despite  the challenges in scoping the industry, White is at pains to point out that  rather than a sinister plot, very often the problem is miscommunication or lack  of communication between government departments. This book is not a polemic but  a forensic and even-handed inquiry.

It  becomes clear that four companies dominate the sector: G4S, Atos, Serco and  Capita. The biggest spenders are the Department of Work and Pensions and the  Ministry of Justice, funnelling hundreds of millions of pounds to these firms,  which are too big to fail. They cover everything from security, transport or  waste collection to “human services” such as welfare, prisons and probation  services to transport, waste collection.

White’s book was first published last year with the title Shadow State, Inside the Secret Companies that Run Britain. This new edition carries an afterword given over to voices from these  companies, who, perhaps understandably, are often reluctant to engage with a  critical media. Nevertheless, there is an acknowledgment from some in the  industry of the “accountability vacuum” that White so eloquently unpacks in  this book — and which is apparent  in the case of asylum seekers housed in a “fire trap” G4S-run hostel in  Halifax, recently exposed on Shine A Light. Multiple actors including a private landlord, G4S, the Home Office and Calderdale  Council all have some responsibilities  towards the tenants in the hostel. Activist John Grayson found that “one  dangerous consequence of the privatisation of asylum housing, apparent in this  case, is the fog around who is responsible for what”.

Companies  like G4S are quick to point out that when things go wrong, they are often  gagged from talking publicly about their contracts by the government on grounds  of “commercial confidentiality”, while also being blamed for failures — adding  to the confusion around accountability. They are also not allowed to trumpet  their successes. There are quite a few points of agreement between White and the outsourcers who have  spoken to him both on and off the record: “they want many of the same things  campaigners do: more transparency, more innovation, a more competitive market.”

But  when it comes to figuring out why that hasn’t happened yet, we find ourselves  in yet another fog of confusion with contractors and the government pointing  fingers at each other.

Another  point of agreement is that White does not believe outsourcing is inherently  wrong, but he does suggest that it can be done better, perhaps by social  enterprises, which have different aims and focus to large for-profit companies.  Currently, small providers are squeezed out of the broken market. White points
to places where outsourcing has worked, using local knowledge, smaller scale  and an emphasis on putting the humanity back into human services.

A  physicist friend of mine once asked incredulously, how the company running the  physics laboratory where he worked could be expert at this and also in  everything from leisure services to traffic lights and still maintain  standards?

White  points to larger questions: is the for-profit incentive for private companies  compatible with improving lives — a qualitative measure which does not sit in  the neat margins of a profit/loss worksheet? Following lengthy interviews with  advocates of outsourcing, he concludes: “Outsourcers will tell you how they can  save money. But few can promise to make things better.”

Although  the chief executive of Serco makes an impassioned argument that for-profit  companies can still work for the public good,  a multitude of cases in the book illustrate  that standards can fall in pursuit of profit, prompting White to explore  whether the profit incentive encourages the contractor to do a good job or  encourages them to game the system. For example, how does the need for repeat  business square with targets of reducing reoffending rates in the prison  system?

And  surely, this should be the point. How should we, as a society, be caring for  those among us who are most in need of it and maintain their human dignity?

There  are clearly problems in the way that some projects are administered in that  they do not take account of the complex needs of disabled or vulnerable people.  White points out time and again that the human toll of failure is visited on  groups that the public is least likely to care about, like asylum seekers, who  are often out of sight and out of mind.

But,  given that profits are not currently ploughed back into the services (or  necessarily staying in the UK), this concerns all of us a matter of social  value and the potential effect on society’s social fabric.

The outsourcing  of public services without effective means of evaluation and rigorous oversight
and accountability mechanisms is an experiment with very high stakes indeed.

Who Really Runs Britain? The private companies taking control of benefits, prisons, asylum, deportation, security, social care and the NHS, by Alan White, is published by Oneworld on 6 July.

 

 

 

 

 

Available from Amazon: Who really runs Britain

Article source: https://www.opendemocracy.net/shinealight/kiri-kankhwende/uk-outsourcing-alan-white-serco-G4S

California Union Bill Looks to Ban Outsourcing Public Services

Municipal governments exist to provide essential services, such as law enforcement, firefighting, parks and recreation, street repairs and programs for the poor and homeless. But as pension, health-care and other compensation costs soar for workers and retirees alike, local governments are struggling to fulfill these basic functions.

There’s even a term to describe that situation. “Service insolvency” is when localities have enough money to pay their bills, but not enough left over to provide adequate public service. These governments are not insolvent per se, but there’s little they can afford beyond paying the salaries and benefits of their workers.

As a city manager quoted in a newspaper article once quipped, California cities have become pension providers that offer a few public services on the side. It’s a sad state of affairs when local governments exist to do little more than pay the people who work for them.

Not surprisingly, the union-dominated California state legislature has been of little help to local officials dealing with such fiscal troubles. The state pension systems have run up unfunded liabilities, or debts, ranging from $374 billion to $1 trillion (depending on the financial assumptions one makes). But legislators have ignored meaningful pension reform. This has forced local governments to cut back services or raise taxes to meet their ever-increasing payments to California’s pension funds.

It’s one thing to ignore the plight of hard-pressed cities and counties, but now legislators are trying to make the problem a lot worse. Assembly Bill 1250 would essentially stop county governments from outsourcing personal services (financial, economic, accounting, engineering, legal, etc.), which is a prime way counties make ends meet these days.

The legislation originally also applied to cities, but recently was scaled back. It now applies to all 58 counties except for San Francisco (which is exempt because it also is a city) and the authors plan to exempt Santa Clara County also because of its hospital contract.

The bill is sponsored by the Service Employees International Union and authored by Assemblyman Reginald Byron Jones-Sawyer, a Los Angeles Democrat who previously was an SEIU vice president. It’s a shameless effort to force county governments to beef up the size of their full-time, unionized workforce. Ultimately, the bill views county governments as employment agencies rather than service providers.

It’s what one would expect from a public-sector union that exists to protect jobs (even duplicative ones) and the public employees who fill them. But this bill passed the full Assembly in June and cleared a Senate committee this month. Legislators are supposed to balance the demands of special interests with the broader needs of all Californians.

The legislation “would make it costlier and in many cases nearly impossible for counties to contract out for vital services,” opined a July 24 editorial in the East Bay Times. As a result, counties would “have to stop providing the services or, as union leaders hope, hire permanent county workers, replete with their costly retirement benefits.”

The bill’s supporters gussy up this atrocity by claiming it would save money and improve services in the long term. “While cheaper services and employee layoffs may appear to save dollars in the short term, the savings are often illusory with hidden costs that are not accounted for and diminished services or contractor failures that require cities and counties to ultimately re-hire and/or re-train staff to provide the outsourced service,” Jones-Sawyer explained in the bill analysis.

Of course, not every instance of outsourcing is successful, but the idea that this is about helping taxpayers is laughable. Elected county boards of supervisors are best able to decide how to handle their own resources. They often find that contracting-out improves the provision of services because contractors—unlike permanent employees—can be held to higher standards and even fired. Private contracts can be terminated.

These contracts save money because they are put out to bid for the lowest price. Moreover, contract employees aren’t paid lifetime pensions that drive up long-term municipal debt. If the legislation really were about savings, then why does the bill rig the way savings are analyzed?

The bill “would bar counties from contracting for services when they could be more cheaply provided in-house,” the East Bay Times explains, but “the cost-savings comparisons are designed to skew the results against using private and non-profit firms.” For instance, “the comparison would exclude a county’s overhead costs, but include the overhead of the outside firm.”

An analysis for the counties by the Oakland law firm Jarvis Fay Doporto Gibson concluded, the latest version of the bill “will substantially increase the cost for delivery of county services and substantially decrease delivery of county services—including critical public health and safety services.” Counties will be forced to pare back services “to offset increased pension and benefit costs.” Small and rural communities in particular will face service reductions.

The California State Association of Counties, which opposes the bill, points out that it includes all sorts of cumbersome disclosure and auditing rules. Even though later versions of the bill “places that burden on contractors instead,” it “doesn’t really change the impact. Many service providers will simply choose not to do business with public agencies if they know they are going to be required to comply with a new, complex and costly process.”

Counties can still technically outsource certain services, but the bill makes it so difficult and costly that it won’t be worth the trouble of trying. The legislation also mandates “public disclosure of otherwise private information—an intrusive requirement that may violate constitutional privacy rights, without providing any public benefit,” according to the law firm’s analysis.

This surely is just the latest effort to shut down outsourcing, which is used less frequently in California than in most other states. One should expect unions later will revive the effort to expand it to cities and other governments. They’ll likely also try to limit outsourcing of other types of public services beyond these listed personal services.

As usual, the costs of union feather-bedding strategies fall disproportionately on the poor. Teachers’ unions are constantly trying to limit charters and other school-choice options that help people from poor neighborhoods get their kids enrolled in better schools. Unfunded pension liabilities cause service cutbacks, especially in the state’s poorest cities.

And now the Legislature may force counties to cut back on funding for homeless shelters, domestic-violence centers, health-care programs and other programs that benefit low-income people, all in order to help unions protect jobs for their highly paid members. But local government doesn’t exist to provide cushy jobs, but to provide cost-effective services for the public. It’s about time the Legislature was reminded of that fact.

This column was first published by the California Policy Center.

Article source: http://reason.com/archives/2017/07/28/california-union-bill-will-drive-up-coun