Is privatisation the answer to local government cuts?

moneyBrighton and Hove City Council, like many local authorities, is facing a budget reduction of over £100 million due to cuts in grant funding by the Conservative-led Coalition Government.

Other councils, almost all of them Labour or no overall control, face similar cuts. The Joseph Rowntree Foundation found that  “cuts in spending power and budgeted spend are systematically greater in more deprived local authorities than in more affluent ones, with a difference of around £100 per head” with local government spending is set to fall by nearly 30 per cent by 2015. The JRF predicts “the withdrawal of local government from the provision of a number of services and the dilution of provision in respect of others, accompanied by a transfer of responsibility for some services and client groups to other agencies, sectors and partnerships.”

Cuts to poorer areas are 16 times greater than affluent ones, and cuts to local government overall have been far greater than cuts to government departments generally. This is at a time when more responsibility for public health has been handed to councils, and the costs of providing social care are increasing dramatically, with some councils now seeing care costs outstripping their entire council tax income.

Here, the Greens pledged to “resist all cuts” and protect public services, but have brought forward proposals to put care and dependency services out to tender, and are salami-slicing most departmental budgets by up to 10% this year.

For the Conservatives, the constatnt refrain is that all council services should be “market tested”, with services contracted out to provide better “value for money”, citing Barnet as a good example. With contracts worth hundreds of millions being awarded to private sector providers like Capita, the Barnet example soon ran into problems prompting criticism even amongst Tory proponents.

Long-term contracts awarded on loss-leading bids, with no guarantee of terms and conditions, with the onus on profit not public service. Is privatisation really the way to go? The Tory aim is to look at local government, see where there is scope for profit, and strip it out, leaving the local taxpayer to fund the unprofitable parts.

The opposite should be the case. Local councils should be able to keep the profitable parts, and earn income from them to reinvest in better local services, not to contribute to shareholder profits.

Councils should not be awarding contracts, and spending millions of pounds of council money, to pay the wages of Serco, G4S or Capita staff in towns and cities miles away. Council spend should be kept local, with local taxpayer’s money funding jobs in the city’s economy. “Be Local, Buy Local” was a Tory campaign here seven years ago – but it should apply to the council as much to the high street shopper.

The private sector has had a role in providing council services for decades, and it would be impossible for any local authority to bring all services in-house. There is a role for private companies but the essential point is that services funded by the local authority and the local taxpayer must be accountable to the local authority and the local taxpayer. There is a choice about which services are essential core functions that must be fully accountable and closely managed – our refuse and recycling service is one we believe should be kept in house.

With over £100m being taken out of our budget, cuts and job losses would appear inevitable, even with a fairer settlement from the Labour Government after next May, based on need not politics. What the city council does will need a radical rethink, one that the current Green administration have avoided ahead of the election. Elsewhere Labour councils have planned and funded the transition of services to the community and voluntary sector over a number of years, but the Greens have put their heads in the sand and pretended it isn’t happening.

There are many excellent examples of how changes in local public services can be designed and managed to good effect, particularly from the Co-operative Councils Innovation Network, where opportunities to raise income, design services locally involving service providers, trades unions and others have been successful. There are opportunities to use better procurement for social gain, and for consortia of business, voluntary and public sector organisations to step up to the challenge.

Keeping contracts local gives greater flexibility over savings, and ensures that local expertise and knowledge – that essential social value of any local provider, is not lost.

Service users need stability, quality and consistency. Staff need certainty, decent pay and reasonable conditions. Change is inevitable but it should take people along with it, not happen at the whim of an accountant focussed on the bottom line. Better services and solutions should tackle issues at the earliest stage and at the local level, driving down long-term costs, with benefits to steps tackling poverty and inequality built in.

We must not allow council services to become remote, unaccountable and weak. Failings in local government particularly where social services are charged with protecting the most vulnerable, can have unimaginable awful consequences. Solutions to funding cuts lie not in wholesale outsourcing and privatisation, but in a mix of in-house, mutual/co-operative, public/private or voluntary/private partnerships, designed by local people for their communities, built in consultation with the unions, sustainable and accountable to residents. These I believe are fair, practical and realistic solutions to the funding challenge, not dogmatic and unrealistic adherence to in-house or private provision.








Author: Warren Morgan


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