Public Services Reform: U-Turns, Banana Skins, the March of the Neoliberals and the Demise of the Professional Interim?

This week there have been two important events for me in relation to Public Services Reform. The first was personal and the second was public news.

Firstly, I have finished reading David Harvey’s excellent book entitled “A Brief History of Neoliberalism“. I thoroughly recommend this well researched and easy to read political-economic history of the last thirty years. The book provides an excellent insight into Margaret Thatcher’s public sector reforms, largely based on privatizing vast swathes of publicly owned industries (reversing Labour’s post World War Two nationalisations).  Simply, neoliberals believe that everything should be commoditized, with a market value, including public services. Neoliberalism is closely aligned to globalism (the antithesis of localism). Neoliberalism is a “theory of political economic practices that proposes that human well-being can best be advanced by liberating individual entrepreneurial freedoms and skills within an institutional framework characterized by strong private property rights, free markets, and free trade”.

The second event was to reflect on the Public Services White paper being delayed until July, despite being originally promised by the Cabinet Office for January. Some observers believe that there are three camps within the Coalition Government. The blue camp, which includes David Cameron and Oliver Letwin is reported to favour maximum outsourcing – in essence, this is the classic neoliberal remedy. The yellow camp which includes Danny Alexander and Nick Hurd favours new delivery models and is believed opposed to outsourcing. Finally, it is argued that there is a red camp led by Nick Clegg which is cautious about reform. There is speculation that the White Paper was pulled “for reflection” following the Liberal local election results, with Local Authority reform now being in serious disarray. Also there is new evidence that the Big Society is not understood by 80% of Councils. Before the dust settled, the Cabinet Office announced that  the “Big Society Bank gets the Green Light”.

Based on a leaked paper, it is argued that the Coalition is now opposed to wholesale outsourcing and favour reform, based on social enterprises and employee owned mutuals, with private sector involvement limited to joint ventures and not for profit groups. Unfortunately, the new delivery models recently took a hit below the water line, with Suffolk County Counsel’s ambitious plans for outsourcing and virtual local government imploding. The week has also seen criticism of the Coalition Government’s twelve month record on realizing real efficiencies, with mounting evidence of real cuts in public services resulting from financial constraints from the Treasury.

Also this week, despite the Cabinet Office’s draconian controls restricting consultants and professional interims, there is increasing evidence of the Public Sector letting increased consulting contracts. Professional Interims, the natural choice for top-class transformation professionals  (based on cost-effective delivery and risk reduction) continue to be marginalized.

Personally, I think that Public Services Reform is a ticking bomb and that based on David Harvey’s history, the neoliberals will prevail. For sure, some money will go into Big Society probably via the Big Society Bank. The big money will sooner or later follow neoliberal traditions and go to outsourcing, consultants, banks, and lawyers etc. Sadly, the Coalition Government whilst being pro-business, favours big rather than small businesses like professional interims. Wholesale outsourcing may be a secondary or tertiary choice but it will continue to stalk in the long grass and will prevail. There will be many detours, U- turns and banana skins along the way and I fear that the professional interims who once supported the Public Sector will remain marginalized. The Coalition Government seems to have little appetite for genuinely transforming Big Government but I predict that Big Society will ultimately be a side-show, leaving a clear field for outsourcing (just like the privatisations in Margaret Thatcher’s era).

5 responses

  1. Pingback: Beyond Austerity? « Dr Alf's Blog

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  3. Whilst I agree with much of this post I think that a number of points have been missed.
    Neoliberalism might have been linked to globalisation once, but globalisation is proving very difficult to implement because national populations now see that it leads to job losses and are forcing things to come back home.

    For example, BT is bringing back many of it’s Indian call centres, including a 600 seater operation in Sandwell in the West Midlands and Donald Trump is getting ever more vocal about the “Chinese eating our lunch”, and finding large swathes of US public opinion behind him.

    As a result a growing proportion, albeit small, of offshored US manufacturing is coming home and would come home faster if it were not for the shortcomings of the US education system up to High School graduation level.
    In the UK we have so little manufacturing left, it is probably too late for that so we need to attract inward investment and create export growth, particularly in services, in the emerging markets, in South America and SE Asia outside China.

    Globalisation means the free movement of goods, services and people, yet we see calls for protectionism, trade wars and the curtailment of open borders in Europe as local populations grow restless at unemployment and housing shortages, particularly in this country.

    Your blog is right about the 3 factions but one of the reasons for the failure of outsourcing in places like Suffolk and Somerset was the hamstringing effect of TUPE on manning levels and on overall costs.
    It is not that John Redwood’s beliefs about possible savings, (to quote from another blog), are simplistic but that he is being simplistic in his belief that savings of scale can be achieved without dealing with TUPE and the unwillingness of the public sector trades unions to co-operate with and assist necessary change. People like Suffolk’s Andrea Hill, that County Council’s grossly overpaid CEO and head apparachik do not help the cause of cost reduction in the example they set -Taking down two on line petitions about her salary on the grounds that they were “inappropriate” was a move designed to make her look like a latter day Marie Antoinettte in the minds of the people of Suffolk and in the minds of local authority workers in that county.

    Outsourcing costs in the County of Suffolk are too high because the council has formed a joint venture with BT Global Services which is supposed to make a profit.

    Since reducing council costs would effectively reduce these profits there is no incentive, apart from Government pressure to reduce costs because the MD of that joint venture company and his management team are bonused on profitability.

    It is not that outsourcing is wrong per se, but that the model of outsourcing and the negotiation of it’s terms was not undertaken without proper rigour by this, and for that matter many other local authorities up and down the country.

    Why is this?

    I say it is because they are generally not competent negotiators, which is the same charge that Donald Trump levels at President Obama, and because many of them, wishing to preserve their jobs and absolve themselves in true Pontius Pilate like fashion, see in outsourcing, an opportunity to carry on junketing and wasting money whilst transferring blame to the Coalition for “the cuts”.

    In many cases they have succeeded due to the connivance of a left wing BBC and a UK public with a short memory about it’s initial agreement on the need for cuts but which is now bleating as the going starts to get rough.

    Some members of the public think that there is plenty of money and see no need for any cuts, citing the Libyan and soon to be Syrian military adventures as examples.

    Rights and wrongs of this aside, the new “rebel owned bank”, allows the UK to seize that country’s sovereign wealth and much of its oil, so the financial costs of military involvement will be recouped.

    Regardless of the factions within the Coalition there will need to be an across the board mandatory reduction in the pay of local authority CEO’s and service directors, because without the gap between the pay of these people and those at the bottom getting a lot closer, any attempts at reform, even via outsourcing, is going to involve facing down strikes this winter, at a time when police numbers are being reduced.

    The Coalition actually need to speed up the rate of reform rather than spend time listening to discredited people in the teaching profession, the NHS, and elsewhere who throughout my lifetime have delivered an education system that at state level is not fit for purpose and is 47th in the World (ages 5 to 18) and an NHS which through it’s ineptitude and inability to communicate has produced a reduction in efficiency despite £7 billion gbp being directed towards it by the discredited former Prime Minister Gordon Brown MP, under the Wanless Review.

    Local Authorities, the police, ambulance services, the NHS and the fire services for up to 4 counties at a time could have large service centres with self determined work teams and out of hours cover for non emergency services via automated agents who are of course not covered by TUPE.

    It is only the desire of local authority CEO’s to retain their own fiefdoms that prevents this from happening and the same applies to Chief Constables who with their friends in the judiciary have prevented change and reform on 5 occasions including taking two Home Secretaries to court and having their actions and planned actions ruled “ultra vires”.

    The Government has three choices:

    1)Do nothing.

    2)Impose reform

    3)Try to work with local authorities and Chief Constables,the NHS etc to effect reform.

    In the case of the worst run councils they should let one or two of them financially implode and help one or two more into this position by cutting down the flow of money.

    The Government could then send in hit squads, sack all the councillors, get rid of incompetent CEO’s and create a new structure where TUPE no longer applied and where trades unions were not recognised.
    Doing this a few times and imposing an overall cap on local authority CEO salaries would help to concentrate minds and force change.

    However I tend to see David Cameron as too cautious to do this, whilst Nick Clegg would be frightened.
    In the end I see a typically British fudge emerging which will not deal with the real issues,but what needs to be done is clear enough.

    • John

      Many thanks for the detailed response.

      I still believe that outsourcing will become the preferred solution (although not necessarily immediately, other options will probably be explored first). It’s hard to see localized and mutualized services being cost effective, and offering better service or quality than Big Government. We shall need to wait for the White Paper for the detail.

      Neoliberal solutions do not necessarily need to be synonimous with globalization/off-shoring etc. – the point about neoliberal solutions is that they tend be associated with reduced power for organized labour, unions and employees generally.

      The history of Margaret Thatcher’s privatizations gives us many important learning points. It has taken nearly a generation for many of the privatized industries to deliver effective customer service and quality assured processes – costs, of course, have been reduced by extensive outsourcing and off-shoring much of the non-core work.

      I agree that TUPE arrangements will be a major challenge.



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