outsourcing

Caught in the crossfire: local authority outsourcing and the murky world of employment law

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Ian Briggs

Given the extent of legislation affecting officers and members in local government, it can be rather misleading to see the influence of Westminster solely through the lens of direct local government legislation. Wider legislation on employment has arguably had as big an impact on the way that local government and local government services are delivered.

For councils the reshaping of delivery means, in the majority of cases, seeking partnerships with external providers. Where services are outsourced or delivered through contract, the costs associated with redundancy and passing over employment duties to others is an issue that perpetually causes debate and discussion.

The application of the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE) to transfers from the public sector, commonly known as ‘TUPE plus’, has been regarded as being more onerous on public sector employers than others. The Coalition Government has since 2010 gradually watered down these legal obligations but they are still regarded as problematic.

It is generally accepted that employment legislation is a problem area for local government and for many there is a desire to see a more flexible approach to employment. By implication, employment law is a matter that perhaps needs some review.

So, is this an issue that is shared in other places? The approach to employment practices that is enshrined in law across Europe raises some interesting issues. The media has made much of the economic problems in Greece, citing the high levels of protection afforded to civil servants and public employees there. The European Working Time directive is taken very seriously there; when the hours are worked the person stops and goes home! A similar situation exists in France and Italy, where anecdotal evidence suggests that even police officers, when they are part way through an arrest, have clocked off and gone home as their hours are worked.

The obligations of local authorities in a TUPE transfer are not entirely clear; TUPE plus has been significantly eroded but not removed altogether. In any future outsourcing situation, a local authority risks being caught in the crossfire between prospective contractors and trade unions. On the one hand, prospective contractors are likely to be reluctant to incur costs, offering generous employment benefits which go beyond the normal requirements of TUPE. On the other hand, the trade unions are likely to push for full-scale TUPE plus protection, or as close to this as they can realistically achieve. Any such situation is likely to need careful handling to minimise any potential exposure and legal advice should be taken wherever necessary.

briggs

Ian Briggs is a Senior Fellow at the Institute of Local Government Studies. He has research interests in the development and assessment of leadership, performance coaching, organisational development and change, and the establishment of shared service provision.

Budget cuts, outsourcing, council mergers: 12,000 miles travelled, but Cornwall’s ex-CE will find plenty that’s familiar

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Chris Game

Even allowing for local government’s legendary Stakhanovite working practices, the sector can’t usually manage that many hot news stories on Christmas Eve, so you do tend to notice them, especially if they contain a strand of possible personal interest. I remember well, then, the BBC’s announcement this past Christmas Eve that Cornwall Council CE, Kevin Lavery, had accepted a five-year appointment as CE of Wellington City Council and would be moving to New Zealand to take up the post in March – oh yes, at an annual salary of NZ$400,000, which converted then into £203,000, but today into £219,000 (I note irritably).

The reason (for my remembering, not for his moving) was that I happened to know that England’s cricketers would be playing the second Test Match in their series against the New Zealanders at Wellington’s charming and historic Basin Reserve ground in March – and I was planning to watch it. How brilliant, I thought, if I could do a quick interview with Lavery, just a couple of weeks into his new job, about his first impressions, contrasts with Cornwall, etc. Unfortunately, it quickly turned out that – for, I have to concede, eminently good reasons – ‘March’ in fact meant 31st March, by which time I would be well back in the UK.

More recently – like this morning – it also turned out that the final day of the said Wellington Test Match would almost certainly be rained off. So, lacking anything better to do, I thought I’d report anyway on some of the stuff that the interview might have covered.
First, the contrasts and similarities. Wellington City has a population of 200,000 and the biggest of 9 and a bit elected councils (1 regional, 8 and a bit city and district – don’t ask!) in the Wellington region. The council has an elected mayor (currently Green), 14 councillors, employs 1,500 staff, and has a budget of NZ$400 million (£220 million).

Cornwall has a population of 535,000 and a 123-member council – roughly the number of councillors plus mayors in the whole Wellington region. The council employs 19,000 staff – not far short of NZ local government’s total employment – and has a budget of about £1 billion.

In short, Lavery’s new job represents an apparently significant drop in scale, but barely a drop at all in remuneration. I quoted his salary at the outset, partly because the NZ media (and possibly public) are at least as fascinated/obsessed with executive pay, pay-offs, etc. as ours are, but mainly because so far his financial cost is one of the very few things that most Wellingtonians, including most councillors, know about their new CE. He was head-hunted in a recruitment process that cost NZ$157,000, including NZ$12,000+ to fly him out for interview; he can claim up to NZ$40,000 removal costs, and is promised a ‘golden parachute’ payment of up to NZ$200,000, if the job disappears in the regional governmental reorganisation expected over the coming couple of years. As one councillor put it: “We don’t know what we’re getting, but he’s cost us a bomb to get and he’ll cost us a bomb if he goes”.

So it’s fair to say that his relations, initially at least, with some councillors could be as touchy as they were with some of those in Cornwall, where, it may be recalled, the Conservative leader, Alec Robertson, was deposed and plans for a massive Lavery-driven shared services joint venture project had to be halted after they’d failed to win majority councillor backing.

Reportedly, Lavery was first sounded out by the Wellington headhunters immediately following the leadership change and the resulting withdrawal of one of the two bidders for the shared service joint venture, leaving only BT, one of Lavery’s former employers. But whatever the detailed sequence of events, the reputation preceding him to Wellington has been that of a ‘Marmite (or perhaps Vegemite) bureaucrat’ – you either love him or loathe him – and one with an undisguised enthusiasm for privatising and outsourcing services.

From which you might suppose that the costly new appointment was perhaps a symbolic act on the part of a council whose leadership had recently taken a shift to the right, and was looking at one and the same time to signal its political authority and a major change in policy direction. You might, but you’d be quite wrong.

If party politics in Cornish local government is, by UK standards, relatively low-key, in Wellington – and indeed in NZ local government generally – it is barely visible and almost uninterpretable to the untrained eye. In the city’s 2010 local elections, only 3 of the 14 successful candidates had stood openly under party labels (2 Labour and 1 Green), and the Mayor, elected for the first time (like councillors, for a three-year term), though a Green party member, had campaigned as an Independent.

Celia Wade-Brown’s election as Mayor seemed to surprise her almost as much as it did pretty well everyone else. Born and brought up in England, she came to NZ only in her late twenties, and, with little prior public warning, decided in 2010 not to recontest her council seat, but instead to challenge the high-profile mayoral incumbent, Kerry Prendergast, seeking her fourth term of office. In the STV election, Prendergast was a comfortable 6% ahead after the count of first preference votes, was still ahead on the second, third and fourth counts, but was overtaken by Wade-Brown on the fifth and final count by just 176 out of more than 60,000 votes cast.

The mayoral and councillor results combined were interpreted as representing at least a modest move towards the centre-left, but if voters were looking for a significant leftward policy swing, most must have been disappointed. Indeed, the CE appointment, involving as it did the personally humiliating dismissal of the former CE after 15 years and for apparently nothing very particular, was one of the few visible signs of an intended change of direction. As far as the 2013/14 Draft Annual Plan and budget is concerned, the headlines must look as familiar to Wellington electors as they do to us: large-scale savings (NZ$240 million over 10 years), necessitating service cuts, job losses, increases in fees and charges, and ongoing outsourcing.

A major reason for Lavery not taking up his post until the end of the month is that there are three important events taking place between now and then, the consequences of which will take up a sizeable chunk of his in-tray. One is the Council vote on 27th March to approve the Draft Annual Plan, detailing the Council’s work programme and proposed rate and fee increases, following which it will, as required, go out for a month’s public consultation, before coming back to the Council for final approval in June.
This year’s Draft Plan cuts council spending by NZ$9 million and proposes a rate (property tax) increase of 2.8%, and several of the detailed cuts especially are controversial: restricted library opening hours, increased parking charges, “changing the operating model” of the aquatic centre crèche (unsubtle euphemism there!), reduced grants to the Zoo Trust and ‘Positively Wellington Tourism’. All can, of course, and doubtless will be compared to the new CE’s salary.

Before that, on 21st March, another public consultation begins – on three options for local government reform across the whole Wellington region. Two of the three are alternative ‘super city’ models, as favoured by the regional reform working party. The third is a minimally modified status quo, added by the Mayor and councillors who oppose a super-city solution and argue that the public should be presented with a wider-ranging choice. Lavery will be on familiar territory here.

Also on 21st March Wellington councillors vote again on the national Transport Agency’s proposal for a 300-metre long, 9-metre high concrete flyover to ease the perpetual congestion round the huge roundabout within which is situated the Basin Reserve cricket ground (where in fact I should be sitting at this moment). We cricket fans fear the flyover would seriously blight our spectating, to say nothing of its impact on hundreds of local residents. The Mayor – for whom almost any kind of road development is anathema – and a majority of councillors argue that the congestion can be resolved by a combination of other means. However, some of the Mayor’s phraseology is worrying. She talks rather vaguely of ‘fine-tuning’ the present roundabout, and of how Basin Reserve “must not be blighted by a naked block of concrete”, as if various forms of pleasingly attired concrete were available alternatives. And now there’s talk of a couple of the eight councillors who opposed the flyover in December maybe switching sides following a two-month council staff investigation. What a pity I couldn’t have given the new CE a short personal briefing on the issue.

game

Chris is a Visiting Lecturer at INLOGOV interested in the politics of local government; local elections, electoral reform and other electoral behaviour; party politics; political leadership and management; member-officer relations; central-local relations; use of consumer and opinion research in local government; the modernisation agenda and the implementation of executive local government.

To what extent is it reasonable to profit from the public purse?

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Ian Briggs

By 1830 the East India Company had grown in size and influence to be a government in all but name. It had control over a population that was at the time ten times greater than that covered by the British Crown and amounted in economic terms to over one third of the then British economy. The power of the company was such that it has led to a deep seated suspicion of the profit motive in the private sector and individuals that has remained in national and local government ever since – whichever political party has been in control.

By the end of the first decade of the twenty first century concern over public expenditure and a fear that ‘our’ money is not being spent with our interests at heart remains. The thousands of FOI requests now received by governmental organisations from both individuals and organised groups such as the Taxpayers’ Alliance may seem like an unreasonable challenge to the primacy of those who are our elected representatives and their agents. Yet, as seemingly no stone is being unturned in the search to lift the UK economy from recession, the question remains: what is reasonable profit to make from public sector activity?

The government is increasingly convinced that contracting with commercial and voluntary providers with payment by results (PBR) is a mechanism to ensure that positive social outcomes are achieved through stimulating the motivation to succeed. This has now extended to the Probation Service where providers will increase their revenue through meeting or exceeding performance targets. While it is clear the new innovative approaches such as this needs to be tried, what is unclear in this process is the means by which we decide whether the targets have been achieved or not, who has the power to decide, and what access to information they have.

The nature of contracts between governments and commercial providers can be said to be at best murky and if history is a good teacher then we should remain sceptical of the means by which performance is judged. To evidence this we have to look at the alternative method – that is where there are penalties within contracts that limit profitability to a commercial provider. For any regular rail traveller this game is all too readily apparent. Careful management of standing time at stations – often for what are termed operational reasons – can be seen as a means of ensuring that there is conformity with published performance expectations. However, for one regular journey I take, if the train were to leave a station at its published time it would have covered the distance from its last stop in a time that would mean speeds far in excess of that permitted for the line. Such quirks in the timetable exist to ensure that this train is never late at its destination and thus distorting the annually published performance report.

So if creative methods are employed to circumvent disincentives that detract from profitability, should we be equally sceptical of achieving positive results with a profit incentive that will always work in the public interest? In the same way that disincentives could have issues within power imbalances and transparency in contracting, so might profit maximisation incentives. No matter how robust a contact is, it will always bring into conflict differing interests and have certain power imbalances built in. Undoubtedly what the East India Company achieved was as much in the interests of the British Government of the time as it was in the interests of those who invested in it, but if we are to offer increased potential profitability to commercial interests through PBR mechanisms we have to be ready to have robust and open debate as to how those payments are justified.

For the Probation Service, social outcomes are at the very centre of its purpose – reducing recidivism is crucial to society but performance contracting is complex. We should perhaps remember the experience of the East India Company, becoming such a monster power at the same time that nearly all Transportation to the Colonies was undertaken on behalf of Government by private contractors. Those very contractors were well rewarded but once out of sight of land they behaved in a fashion that was more about maximising their income than meeting the contractual need established by Government. This was exemplified by the selling off of unused victuals for the journey to increase income – for them the answer was easy – starve the convicts!

So – to what extent is it reasonable to profit from the public purse? And are we putting in place a robust enough mechanism to ensure the interests of civil society are maintained?

briggs

Ian Briggs is a Senior Fellow at the Institute of Local Government Studies.  He has research interests in the development and assessment of leadership, performance coaching, organisational development and change, and the establishment of shared service provision.