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John Medhurst [email protected] “Britain is in the biggest wave of Government outsourcing since the 1980s” Alan White, New Statesman, September 2012

Dec 16, 2015




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  • John Medhurst [email protected]
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  • Britain is in the biggest wave of Government outsourcing since the 1980s Alan White, New Statesman, September 2012
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  • Biggest public spending cuts since 1930s July 2011 - White Paper on Open Public Services signals massive outsourcing of public services Services to be delivered by any willing provider Process disguised but traditional privatisation continues
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  • Since 2010 5bn of cuts and 230,000 jobs lost Spending now falling on adult social care, childrens services, planning, culture & leisure By 2015 local councils will have lost a third of their budgets If cuts not reversed, by 2020 budgets could be cut by 80%
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  • The future cuts fill me with horror. Weve been through hell already in Newcastle. The impact of another three years of cuts will bring local government to its knees Nick Forbes, Leader, Newcastle City Council.
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  • Birmingham Council will cut 600m by 2016/17 - half the Councils budget March 2013 - Leader of Birmingham Council announces that city was preparing to start a dialogue about decommissioning services The end of local government as we know it Sir Albert Bore, Leader, Birmingham City Council.
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  • G4S Olympics security A4E DWP Work Programme ATOS - Disabled unemployed Thames Water - Leaks and tax avoidance
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  • 2009: National Express abandoned East Coast rail franchise mid-contract because insufficient profits East Coast rail renationalised as a Directly Operated Railway (DOR) East Coast DOR has been big success increased punctuality, customer satisfaction, and 600m to Treasury in 3 years East Coast to be re-privatised in 2014
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  • G4S Security Services - largest security solutions company in UK with turnover of 1.2 billion and 40,000 employees 759m per year from taxpayer Contracts with 10 central govt departments and agencies, and 14 Police Forces G4S Immigration Removal Centres one death; treatment of 10 year old asylum seeker led to attempted suicide; handcuffs and racist language GH4S NHS non-emergency drivers paid below Minimum wage.
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  • Home Secretary, Secretary of Defence, Health Secretary 2008: became Consultant to G4S whilst still an MP - 45,000 - 50,000 Three months later G4S win contract for private security at 200 MoD sites in UK 2009 : 10,000 for 2 days attendance and address at 'Public-Private Partnership in Healthcare Conference in Portugal sponsored by Portuguese Association of Private Hospitals 2010: Becomes Director of G4S
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  • National Benefit Fraud hotline Vertex. Crisis Loans & Community Care Grants abolish April 2013. Local authorities to provide alternatives. Likely outsourced. Transforming Labour Market Services Monster Worldwide Ltd. Web based service replace the work of 250 staff on Employer Direct and Jobseeker Direct telephony service. JSA Online (telephony) service outsourced to Capita in September 2012. DWP staff in JSA Online start at 16,080. Capita pay 13,893 for same service.
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  • Budget of EHRC cut in half Regional offices closed - new HQ opened in London to be close to our key stakeholders EHRC Helpline outsourced to Sitel Experienced EHRC Helpline staff made redundant Sitel does not recognise trade unions
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  • Treasury Review of PFI concedes that some of the commonly identified concerns about PFI are valid Review driven by drying up of bank credit and long-term PFI debt Aim of review to help bring forward proposals for a new approach to using the private sector in the delivery of public assets and services
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  • The changes will allow the government to forge ahead with our ambitious plans for public sector reforms, since the new pension arrangements will be substantially more affordable to alternative providers in the private and voluntary sector bidding for public sector contracts Danny Alexander, December 2011
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  • Hinchinbrook Hospital - massive PFI debts Now run by Circle Healthcare - a mutual with 49% employee share ownership, so not labelled privatisation Circle = a joint venture between Circle Partnerships and hedge fund Circle Holdings registered in British Virgins Islands and Jersey No previous experience in running an entire hospital with emergency and A&E facilities
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  • We will not dictate the precise form of these mutuals; rather, this should be driven by what is best for the users of services and by employees as co-owners of the business. Options include wholly employee-led, multi- stakeholder and mutual joint ventures Open Public Services White Paper, 2011
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  • A Mutual Joint Venture (MJV) Decision imposed by Maude- dictated by Govt Staff given no choice Staff lost civil service status and access to PCSPS
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  • As a market develops, the newly established mutual joint ventures will have to bid for contracts along with other potential contractors Francis Maude, 2011
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  • MyCSP Ltd has contract for Civil Service pensions for next 7 years 40% owned by the Equiniti Group Equiniti Chair Kevin Beeston, ex Serco Equiniti CEO Wayne Story, ex Capita
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  • Lord Hutton (John Hutton) - ex Labour Defence and Business Secretary Now on Board of US nuclear power company Hyperion Power Hutton Report recommended reform of public sector pensions His MyCSP salary - 1,000 a day Employee owners given no say in appointment
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  • Thatcherism disguised as mutualism Michael Stephenson, General Secretary Co-operative Party, 2012
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  • Five ISSCs ISSC1 (DfT + DCLG, DID, ONS) outsourced to Arvato June 2013 Cabinet Office confirmed that ISSC2 (DWP + DEFRA, DfE, BIS, DECC) was to be a Public Sector Mutual in public sector. PSM option dropped after Minister imposed a Joint Venture model (over 50% private ownership). Now no Mutual element at all!
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  • Government Owned Contractor Operated
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  • Forensic Science Service - from Executive Agency to GOCO (2005) GOGO not successful commercial entity 2012 - FSS GOCO wound up, work to be contracted out. No consultation with legal experts, DPP or police. Atomic Weapons Establishment (AWE) GOCO set up but not open to public scrutiny
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  • Proposal to turn DE&S into a GOCO No other country runs defence procurement in this way Would require primary legislation Raises questions about sharing of technologies with a commercial body conflicts of interest etc USA GOCO example Lead Systems Integrated. Failed, brought back to Dept of Defence
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  • At present we cannot easily see how the DE&S as a GOCO would even work in practice, let alone why it would be less expensive and a better alternative to what is in place today Royal United Services Institutes - Acquisition Focus Group
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  • A GOCO would not be restricted by civil service and military terms and conditions of employment Colin Cram, Managing Director Marc 1 Ltd Public
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  • Govt will legislate for owner-employee contracts of employment Employees given shares in exchange for waiving employment rights protection unfair dismissal, statutory redundancy pay, right to flexible working Employee Owners have to give 16 weeks notice of return from Maternity Leave. First 2,000 of shares exempt from NI and Income Tax Would cost Treasury 200m over 5 years.
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  • Fosters divisions amongst workers armies of little Thatcherites competing with each other for shares in place of trade union and employment rights Not even supported by business: What would the population at large think of businesses that want to trade employment rights for money? Justin King, CEO, Sainsburys
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  • JL does not recognise trade unions Usual management hierarchies. Relationship to sub- contractors same as other businesses Many JL staff on near Minimum Wage. Bonus not a luxury but a necessity Some JL worker-partners concerned that 3,000 more would dilute value of bonuses for existing 70,000 staff
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