Outsourcing - a time to pause and reconsider

As many readers will know, I have very grave concerns about the outsourcing programme in Barnet. To my mind there are very real financial risks to this programme which is supported by virtually no evidence. Today, a number of the Barnet Bloggers have sent an open letter to councillors asking them to pause and review this policy before we go any further. The letter is set out below:

Time to pull back from the One Barnet Programme

Dear Councillor,

Next Tuesday 17 May is the council’s AGM. As residents we see this as an opportunity for the Council to do some stocktaking and signal a change of direction.

The One Barnet Programme (OBP) was initially presented as the new and innovative approach to the future of Council services. However, as soon as the first reports were published it became clear that there was little evidence behind many of the exaggerated claims being made by the consultants paid to advise on the programme.

We are aware that many councillors doubt whether OBP can deliver the savings and improved services Barnet residents expect. We share those anxieties.

Last week saw the publication of a number of articles in the mainstream press supporting the view that mass outsourcing does not save money, is high risk, and has a negative impact on staff morale. We hope you will take the time to read the extracts from some of those articles which follow.

The fate of Suffolk County Council
Suffolk County Council last September declared its intention to become the first “virtual council”. The Chief Executive pushing this programme, under the name New Strategic Direction (NSD), was being supported by Max Wide, on secondment from BT. As you know, Wide was one of the architects of Future Shape/One Barnet.

Since announcing their intention to outsource most services, Suffolk has been dogged by controversy. In December they were accused of ignoring a £100 million overspend on a deal with BT. (See article.)

In the last few days there have been big changes in the Conservative Party in Suffolk as a result of concerns about NSD, and the scheme has been halted. The Guardian newspaper reports:

The previous council leader, Jeremy Pembroke, who helped oversee the plans... stepped down in April amid concern about the deeply unpopular changes.

An inquiry was begun into morale at the council's legal department after an anonymous whistleblowing letter, sent to councillors, and believed to be from an employee, alleged staff there had been put under "unbearable pressure". The letter refers to "the poisonous atmosphere that exists at present" in the council.

(Full article here)

The BBC has reported on its website:

MPs were concerned that Suffolk County Council chief executive's policies threatened to "rip the heart out" of local communities. Negotiations are reported to be going on between the council and its chief executive Andrea Hill who has not returned to work after a holiday and is now reported to be on "extended leave".

Suffolk Central Conservative MP Dr Dan Poulter said he and fellow MPs had been worried about the direction the council was taking under Ms Hill.
(See the BBC interview with Poulter visit.)

Outsourcing should not be the automatic response to austerity

The public sector IT managers’ association SOCITM has published a research briefing called Costs of outsourcing: uncovering the real risks. The report’s author, Martin Greenwood, warns:

Outsourcing should not be considered an inevitable response to austerity. Even smaller organisations that need to gain economies of scale, and struggle to keep up with technological development, should consider collaboration and sharing with other local public services as a genuine alternative. If they do take the plunge into outsourcing, they should make sure they are aware of the pitfalls and know how to avoid them.

...It is a myth that outsourcing is cheaper, across most areas it is more expensive and people outsource for a range of reasons other than cost.
The report reveals that “when comparing the costs for any service, most elements will be more expensive if outsourced. The risks associated with benchmarking begin at the tender stage when suppliers will benefit from being experts at the process of negotiating contract terms, in contrast with the local authority that will go to market only rarely for a major outsourcing.” (More details)

The government is rowing back on mass outsourcing of public services

The BBC reported a recent meeting between the CBI and the minister for the Cabinet Office, Francis Maude, where the minister explained:

...the government is committed to transforming services, but this would not be a return to the 1990s with wholesale outsourcing to the private sector – this would be unpalatable to the present administration.

The government was not prepared to run the political risk of fully transferring services to the private sector with the result that they could be accused of being naive or allowing excess profitmaking by private sector firms. [Note of meeting by CBI]
(Read more here)

The articles above point to the folly of schemes such as the One Barnet Programme.

In the last two months the Council’s poor procurement and contract monitoring capacity has been demonstrated by the MetPro, Catalyst (legionella bacterium) and SAP cases. These have all harmed the Council’s reputation. Yet these are small contracts when compared to what OBP is proposing. With OBP the risks will be much higher.

We are asking the Conservative administration to bring OBP to a close before it is too late. Millions of pounds of public money has already been spent on consultants, with no discernible savings achieved, and the losses could well be multiplied many fold going forward. Residents and Barnet council staff are increasingly anxious about the future of Barnet council services. Councillors should be too.

Last September the Leader said “I would always listen to the community” when she reversed the decision to increase councillors’ allowances. We are asking you to listen now.

There is still time to put the brakes on the One Barnet Programme. We urge you to do so.

Yours sincerely,

Derek Dishman
John Dix
Vicki Morris
Theresa Musgrove
Roger Tichborne

I urge all Barnet residents to ask their councillors to think again, to consider if the evidence in place supports such a huge financial gamble, and to be brave enough to stop this scheme now before even more money is wasted.