Et tu, Julius?

Wednesday, October 08, 2008

Dave Prentis, General Secretary of UNISON, criticises the limited scope of the Julius Review and calls for more input from public service workers and users

The Julius Review of the 'public services industry' was billed as a comprehensive and independent examination of the growing role of the private sector in public service delivery. Regrettably, it was nothing of the kind.

The rise of the public services industry – private and third sector businesses providing services for the public under government contract – is one of the most dramatic transformations of the economic and social policy landscape of recent years.

Since the 1990s this booming sector has grown faster than the NHS itself, absorbing an ever-expanding share of total public expenditure. Last year, it laid claim to almost £80bn of taxpayer's money – more than the entire education budget.

But this rapidly advancing privatisation is still not widely understood by the public and has been subjected to surprisingly little independent scrutiny. So it is right that we take stock and assess the consequences and implications of this quiet revolution. In this light, the Julius Review was a serious missed opportunity.

Set up by Business Secretary John Hutton at the prompting of the CBI, the review drew most of its advisors and evidence from the familiar roster of large firms lobbying for more government contracts.

DeAnne Julius herself had only a few weeks previously stood down as a director of multi-services outsourcing specialist Serco, which depends upon the public sector for more than 90% of its revenues.

Trade unions representing hundreds of thousands of staff employed in this 'industry' were only invited to submit evidence at a later date, following protests from the TUC. Organisations with a specific remit to represent users of public services didn't even get a look in.

But quite apart from the narrowly-drawn range of appointees and consultees, the review started from the problematic assumption that public services should be designed to expand commercial opportunities for the public services industry, without any reference to the broader objectives and outcomes of public services.

As the loaded call for evidence asked: 'What current government policies and practices have been most effective – and therefore should be continued or expanded – in increasing the role of the private and third sectors?'

So, it's not surprising that the final report is so one-sided.

For example, it proclaims that the private public services industry provides employment and 'adds value' to the economy. But this can only be at the expense of publicly provided services, which also create jobs and add value.

Research by the Association for Public Service Excellence and the Centre for Local Economic Strategies is revealing the significant 'economic footprint' of direct public employment. The resulting 'multiplier effect' can be critical to regenerating local and regional economies and sustaining overall levels of growth and employment.

As to the impact of privatisation on costs and service quality, the report admits that not enough is known. But it goes on to make bold claims and recommendations on the basis of a partial and selective reading of a limited evidence base.

For example, much is made of the assertion that outsourcing can lead to savings of 'between 10% and 30%'. But the evidence cited to support this dates from the early days of Compulsory Competitive Tendering, when cost was the only consideration and transferred staff had no protection.

It is well-known that early savings were made in areas such as hospital cleaning and school catering by slashing pay and staff numbers. But we have paid a high price – in rising Hospital Acquired Infections and declining nutritional standards.

The report also rehearses claims that the extra costs of private finance are offset by PFI construction projects being more likely to be delivered on time or early. But it makes no mention of the fact that the data and methodology upon which these comparisons are based have been criticised as inadequate and flawed by academics.

And Julius made prominent use of a National Consumer Council report suggesting that private providers of domiciliary care produced higher user satisfaction scores, without explaining the narrow scope of the research, which only looked at a few high performing providers.

But she seems unaware of a more thorough study of service users' views conducted at the University of Kent, which found 'lower levels of satisfaction and perceptions of quality of care among older users of independent providers' and that 'characteristics associated with positive perceptions of quality were more prevalent among in-house providers'.

UNISON's own report on the growing role and influence of the public services industry highlights other key concerns that Julius overlooks.

For example, in many key sectors industry consolidation has left local authorities, NHS trusts and other public bodies reliant on a small number of large dominant providers, making it harder to reshape services and control costs.

So behind the hype about private sector innovation, the reality is that inflexible contracts and weak incentives on providers to respond have frustrated efforts to meet new environmental standards by reducing landfill volumes, manage population ageing by moving more health and social care into the community, or realise efficiencies by developing new ways of working.

Meanwhile complex secondary markets in finance and ownership are developing, with banks and private equity funds reaping enormous profits by repackaging debt or stripping assets. This in turn has left our public services more vulnerable to global economic forces, with care homes and infrastructure projects now exposed to fall-out from the 'credit crunch'.

For these reasons UNISON will continue to oppose the promotion of market models and private companies as the solution to every problem in our public services.

But that doesn't mean we won't engage with the private sector. We have increasing numbers of members working for private employers and we work just as hard to represent their interests and find win-win solutions that can improve their working lives and the services that users receive.

We have secured learning agreements with a number of major contractors that give staff new opportunities to develop their skills. We are playing a key role in helping some companies ensure that their pay systems are non-discriminatory and in line with statutory equality duties.

And we were pleased to be involved in the development of a new joint agreement with government and employers aimed at ensuring that all staff working under public contracts have access to training, information about employment rights and trade union representation.

But we still have a long way to go. It's now several years since UNISON brought to light the anomaly and injustice of the two-tier workforce, where contractors were employing new staff on pay and conditions drastically inferior to those protected by TUPE regulations.

Now government pays lip-service to eradicating it, but still we struggle to get this implemented, with 'two-tier' codes left unmonitored and not enforced, and too many employers still dragging their heels.

Ultimately, we would like to see a Fair Wages Clause, which would bring the UK into line with ILO Conventions and ensure that outsourcing is not at the expense of good employment practice.

It's a shame the Julius Review took so little interest in these vital issues. Despite the inherently labour-intensive nature of these services, workforce matters get only a passing and dismissive mention.

Instead, most of the review's attention seems to have been devoted to finding ways of helping the private sector win more contracts – in most cases, by further weakening accountability and shifting costs onto the public sector.

For example, the report suggests that contracts should be awarded without regard for 'wider social and environmental goals' – undermining initiatives developed elsewhere in government to use public purchasing power to promote social cohesion or tackle climate change.

It also calls for a 'level playing field' for private companies bidding for contracts, but takes no account of the additional duties – such as promoting equal opportunities – that the public sector has to bear when providing services directly.

And it repeats the familiar refrain that more resources need to be diverted into employing people to build and manage relationships with the private sector – at a time when we desperately need to recruit and train more staff to deliver essential front line services.

No doubt this debate will continue – and of course, the views of the private sector should be heard and taken into account.

But a discussion that cuts out the voices and experiences of public service workers and public service users is in no-one's interest.