Are there some moral lines that outsourcing of public services should not cross?

Summary

Should all public services and state functions be open for outsourcing or are there some lines that should not be crossed?

The difference with this blogpost compared to others I’ve covered in public policy is that it looks at an issue through the prism of principle and disposition, rather than through a pure technocratic ‘lets look at the numbers’ perspective. This is where Politics comes into play. Having a belief that the state should have minimal intervention in people’s lives other than in maintaining defence and legal functions generally is one generally of political disposition. Ditto with one of its alternatives – that the state should be the provider of all-encompassing public services from cradle to grave, and that the providers of those public services should be democratically accountable.

“Hang on Pooffles, are you saying private sector providers that can run services more efficiently, thus saving the taxpayer money, should be barred?”

There are two very separate issues here – the question above is one that can be unpicked on its own without having to fall back on arguments of principle and disposition. I’ll come back to this later in this post.

“OK Pooffles, where are your lines in the sand?”

Not so much lines in the sand as in big heavy fortification ringed with radar-guided anti-tank, anti-missile and surface-to-air missile batteries with a nuke-proof command and control centre. (Actually, militarily some may argue that such fortifications are obsolete, but you get my point).

My lines in the sand? These include (but are not strictly limited to)

• The final provision of policy advice to ministers of the crown. I don’t like outsourcing of policy functions – as my first ‘appearance’ in The Guardian shows
• The restriction of a person’s liberty due to the arrest, charging, remanding, conviction and sentencing of an individual as a result of the functioning of a lawful criminal justice system
• The use of lethal force
• The provision of services where the service users are extremely vulnerable

On the final point, I reacted in horror to the idea that G4S should be running rape-crisis centres. Zoe Stavri put things more graphically – trigger warning but do read.

For me, there’s something that makes me feel extremely uncomfortable with the idea that  someone should make a profit out of delivering such sensitive services. I also have big issues around democratic vs contractual accountability. Having worked with numerous corporate service providers, I’ve lost count of the number of times I’ve heard the phrase: “We responded within our service level agreement to your organisation”. I don’t care. I still think your service was poor. But because so many organisations are signed into these corporate services agreements, there’s nothing that can be done with them. Such complaints go unheard generally in the renegotiations because the size of the contracts and their all-encompassing nature makes them mere pinpricks.

What about charitable providers?

This is an ongoing debate for a number of us. For me, the likes of Centre33 were excellent for me. It’s just a shame for me that I’m too old to make use of their counselling facilities because they were far better than anything the NHS has in my area. Hence the incentive for politicians to want to outsource to charities and not for profit organisations that can deliver better services than a monolithic state. The problem then becomes the operational independence of those organisations – especially when their campaigning arms start giving politicians a kick. Remember that oft-quoted line from Helder?

When I give food to the poor, they call me a saint. When I ask why the poor have no food, they call me a communist.

Where and how do you draw that line?

Are all public service providers subject to the same rules – especially on transparency?

The other issue I have is that non-state public service providers is that they are not subject to things like the Freedom of Information Act. Personally I’d like to see – and take part in a wider debate on what the definition of “public services” should be, then have Parliament set it on the basis of that wide discussion, & say that anyone delivering services that falls within the definition of ‘public services’ is subject to transparency legislation.

“Yeah, but so what? They provide better value for money for the tax-payer so who cares that they make a profit?”

Well…do they? It depends on how big an overview you take. Let’s look at the outsourcing of cleaning services in the civil service that happened many years ago. The principle was that rather than having in-house cleaners, you would outsource to private companies and the cost would be lower to your organisation. Which if you are a public sector organisation is a massive false economy in the big picture.

“Why is it a false economy?”

The Living Wage campaign explains it better than I can from the perspective of the services provided. If you are a big public sector organisation, your corporate services bill might be lower, but it comes back to bite the state in terms of having to subsidise those on very low wages. Teresa Pearce MP makes the point that some tax credits subsidise bad employers. Those people on low wages – particularly in London – tend to be migrant workers. Life on the front line is not pleasant having to work extremely unsociable hours for very low pay.

Institutionalised racism too?

I remember back in 2007 being at a number of training courses at what was the National School for Government, whose catering and accommodation facilities were run by De Vere Hotels. I couldn’t help but notice how most of the catering and cleaning staff seemed to be migrant workers, and most of the delegates seemed to be White, affluent types. It was something that I noticed too at the M&S queue at lunchtime at work: The people behind the tills were nearly always from BME backgrounds (but seldom the managers in the suits), while the people who were being served where predominantly White.

Diversity of boards?

Look at the chief executives and the directors of these outsourcing companies too. Are they reflective of, and are they from the grassroots of the workforces that make their profits? Or are they from a class apart? I guess you must be if you can be rewarded with a £16m package following screwing up the Olympics or if you can be rewarded for bringing down one of the UK’s biggest banks costing the taxpayer half a billion pounds with a seat in the House of Lords.

This comes back to the point John Bird made in his speech in Cambridge. Are the people that are at the top of these organisations drawn from either the service-using community or from the frontline? How many of G4S’s board were brought up in or have worked in children’s homes? They run some of them after all. Let’s look at their board & their executive team. Do they look like a reflection of the people drawn from those that either use their services or have long experience of frontline delivery at the sharp end? But then the same criticism can be thrown at the senior civil service too.

Big data, feedback loops and decision-making processes

One of the things the state is beginning to realise is how it can improve procurement processes to persuade firms to improve things for those from less-well-off backgrounds. One area has been that of environmental sustainability. Another has been the growing requirements that contractors provide apprenticeships for young people. Both are welcome.

Yet I’m still not convinced that outsourcing is the silver-bullet it seems to be given the actions of current and previous administrations. Large outsourcing companies suffer from the same sorts of diseconomies of scale as any large organisation. The lack of democratic accountability can lead to arguments about a ‘shadow state’ – a nice earner for former politicians but lacking in openness and transparency for the rest of us. Given the problems of polarising incomes, the disparity between the highly paid executives and the minimum-wage staff on the ground makes me uneasy. If the public sector adopts proposals for salary ratios, should the same not apply to non-state providers of public services, including the public utility companies? After all, it’s not as if shareholders have been any good at holding down rampant rises in executive pay.

So…in the grand scheme of things?

My personal disposition issues remain. I don’t like the idea of G4S or profit-making firms running children’s homes or rape crisis centres. I don’t like the idea of privatised prisons where a private firm incarcerates people, let alone that someone can profit from it. I also think that far more research needs to be done – using big data and unpicking feedback loops to see just where outsourcing either works or is actually a false economy.

Courtesy of Puffles at A dragon’s best friend