Tuesday 29 May 2012
Speaking at a recent European conference on remunicipalisation of public services set me thinking about the lifecycles of markets and how they can go full circle.
I was asked to give a presentation based on APSE’s research publications into why so many UK local authorities, of all political persuasions, are insourcing services on a significant scale. This has accelerated significantly over the past five years and the main factors cited are usually value for money, poor customer satisfaction levels and a failure to deliver on promises that contractors had made.
In over 100 case studies APSE’s researchers examined, ranging from large-scale strategic partnerships to individual service contracts, members and officers tended to have been through a similar process. They started out being highly supportive of newly let contracts with new ‘partners’, continued that support even when it became clear it was failing to deliver, had serious negotiations in an attempt to remedy the situation, and then ultimately lost faith and decided the only way to deliver the service effectively was to bring it back in-house.
So what was happening in the 20 other countries represented at the conference? Well, this appeared to vary based on the stage of market development in public services. In France and Germany, like the UK, where well established markets have existed for at least 30 years, major insourcing is occurring around the creation of public sector energy companies and environmental contracts. Scandinavian countries showed similar patterns. Newer markets such as Lithuania and the Ukraine understandably had least insourcing, although they are already identifying classic public sector market characteristics of consolidation of providers and increasing prices for end users.
The significance of this for UK local government is that insourcing is a significant trend and one that is likely to continue within the existing public services market. Indeed, in the last two weeks London boroughs have begun insourcing three separate contracts. This is also something that needs to be considered and factored in to any new contracts being awarded.
With initiatives such as the Community Right to Challenge likely to create further outsourcing, either to an immature third sector market, newly formed employee mutual models or more likely to private sector providers once a procurement process is triggered, I would predict this will lead to a much greater degree of insourcing in the future, as significant problems emerge at an early stage of this new cycle.
Wednesday 16 November 2011
I recently met with colleagues from Bradford Council to discuss how they had been involved in Insourcing the City’s Education Services from Serco. 1,300 staff were transferred back to the authority in July this year from a £53m per annum contract.
Despite having written about hundreds of examples of insourcing services, in APSE's research in this area, the sheer scale of this project was so impressive and to deliver it from the Council taking an initial decision in December 2009 to being fully up and running back inhouse by 29 July 2011 was fairly incredible. Both project managers who delivered this only commenced work in late March 2010, with further secondments being added in early 2011, therefore you are really only talking about 16 months in total for a handful of people to deliver such a colossal change.
They told me about some of the key stages in the insourcing process, engaging with clients and stakeholders; negotiating with the existing contractor; communicating with staff affected who were still with the existing contractor; discussions and consultations with trade unions; putting in place IT infrastructure and back office arrangements around payroll etc; finally doing staff welcome meetings for the 1,300 staff and addressing any teething problems.
The key lesson for me is that no matter how logistically difficult something may appear if you have good quality staff in place nothing is impossible.
Monday 16 May 2011
Spoke this morning at a conference at the QE11 centre in London on Outsourcing and Shared Services - except I spoke about the failings of outsourcing over the past twenty years in England and why so many authorities are now insourcing services. I have got to say I was pleasantly surprised that the audience were very receptive to my message and the nine key lessons if still outsourcing services which I mentioned.
The event opened up with Amanda Lewis author of an outsourcing guide, followed by Jonathon Carr-West from the LGIU who suggested that local governments future role should be more about commissioning and less about delivery, I have got to say that the LGIU's position on this surprised me greatly. I then gave APSE's perspective on insourcing as an approach in terms of why so many authorities had returned services in-house following bad experiences of outsourcing. This was in the main because of a failure to deliver on the promises made and because it is a much more efficient method of service delivery whilst maintaining control of your own destiny. There is a significant body of evidence building up on this now ranging from Deloitte to the Obama administration on insourcing and from organisations such as the Audit Commission, Zurich Municipal, SOCITM and LSE who have made various criticisms of outsourcing. Some authorities will continue to have services contracts with partners and when it is kept to specific areas then in some instances this has proven to be successful, the more complexity added to the approach then the less successful it appears to be and the authority appears to run into capacity and capability problems of its own in terms of its ability to manage the relationship for their citizens benefit.
Cllr Colin Noble, who is involved in shaping Suffolk County Council's controversial New Strategic Direction, followed me. Whilst APSE may disagree on the overarching present strategy of where Suffolk are reportedly trying to go in divesting themselves of the vast majority of their services, some of Colin's ideas around community and third sector involvement are interesting and we had a good chat after the session closed. The audience were very fair and their appears to be a bit of a rethink going on amongst many at present as to whether outsourcing services is really the answer to public sector organisations funding crisis or whether it’s going to lead to further long term pain.
One of the things we were all agreed on was if there is to be greater involvement of the third and voluntary sector in public service provision then this will be best achieved on a gradual evolutionary basis by collaboration, facilitation and development. As soon as you start to make this significant in scale then European Procurement Directives will kick in, you will be forced to contractualise the process and the private sector will wipe the floor with the third sector.
Wednesday 16 March 2011
Busy couple of days in London, where I attended a couple of conferences and had several meetings.
The first event was 'The Public Sector Efficiency Expo', where I almost seen Francis Maude outline the coalition Government's policy on Public Services.
I say almost because despite turning up early at the Business Design Centre in Islington the organisers hadn't anticipated how many people would want to get into the main hall and it was overflowing with people. I ended up watching the session, chaired by Ben Page, from a balcony trying to make out what was going on through a dodgy sound system. Don't think I will be going back next year.
Had a really useful meeting in the afternoon at the Department for Transport, where we discussed the development of the Highways Maintenance Efficiency Programme. The meeting was quite stimulating as the civil servants engaged in an open diaologue as to how we could communicate the programmes aims effectively, including the use of social networking.
I then went off to discuss a research project on Insourcing services that we are undertaking for a client.
My second day allowed me to attend the Sustainable Development UK conference at the QE11 centre in Westminster, whilst their were a number of interesting speakers, Phillip Monaghan was the one who I enjoyed listening to the most as he spoke about his book 'sustainability in austerity'. In the afternoon I met up with another research client to discuss a project we are undertaking on the employment opportunities created in the green agenda.
Wednesday 18 March 2009
'Streamlining the Public Sector' is the title of the Guardian Seminar I have been asked to speak at today. They have asked me to speak in a section of the conference billed as a debate on 'insourcing versus outsourcing'.
I am asked to speak first and give my views as to why market failures have demonstrated that the private sector doesn't always deliver effectively in public sector markets. I also give a summary of the recently announced CPA results which shows that local government has improved rapidly between 2002 and 2008. I use APSE's insourcing research to show the benefits of inhouse provision and suggest that an approach built around continuous performance improvement is the only guaranteed way to deliver excellent public services more efficiently. I conclude by pointing to public sector partnerships as a strong option for allowing innovation within such a framework.
Two other speakers then give their viewpoints and we get into a debate with the audience. The audience are broadly supportive of the position I have taken, in my view this is because my case is built on the tangible rather than anecdotal evidence.
Enfield Chief Executive, Rob Leak, then gives a really thought provoking presentation on how Local Government and Public Services in London are looking at joint working. Rob says that it takes five years to get the type of changes they are proposing correct and it's definitely this type of thinking we need if we are going to deal with the issues we are facing at present, as opposed to the knee jerk reactions proposed by some.
Thursday 12 March 2009
Early start today to catch a flight to Inverness to take part in a debate on the future of local authority waste management services in Scotland at the Chartered Institute of Waste Management's conference. The question was whether they should be outsourced or stay inhouse?
Upon getting there my first move was to look at the attendance list and it appeared a bit ominous with 50 of the 75 or so delegates being from the private sector. I was first up on the debate and gave ten minutes on why all the tangible evidence demonstrates that inhouse services are more guaranteed to deliver excellent services over time. My opponent in the debate, George Neblock, the senior figure for the CIWM in Scotland and former Chief Executive of Aberdeenshire Council makes the case for outsourcing services. We then spend the next hour or so in debate with the audience before moving to the vote. Much to my surprise, given the audience make up, two thirds of them side with my argument.
Basically I pushed the numerous recent private sector failures in the public sector market, local governments proven track record of delivery, the findings of APSE's insourcing research, the lack of evidence base to support outsourcing and the case for continuous performance improvement. The audience obviously agreed that the case for outsourcing Scotland's Waste Management Services was not proven.