Branch guide to securing in-house services - Supporting members
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Supporting members
Defending services
Branch guide to
securing in-house servicesBranch guide to securing in-house services
Introduction
Large areas of local government services This requires branches to give early thought
have already been privatised. The to pushing for service improvement plans for
privatisation band wagon continues to gather their in-house services. Sometimes this can
pace, despite high profile contractor failures be enough to see off an active procurement
and scant evidence that privatisation process. But where the council does trigger
improves services or saves money. However a procurement process, branches need to
there are signs that some councils are secure agreement to the inclusion of an
reviewing their privatised contracts and in-house option with the council providing
uncovering substantial waste and over- the resources needed to develop and
charging. present it properly. In this guide we argue
that the council cannot fully comply with the
UNISON believes that services are best duty of Best Value unless an in-house service
provided in-house in order to ensure value improvement option is considered.
for money, accountability and the flexibility to
respond to changing needs and priorities. This guide covers:
We want to work with councils to ensure that
the workforce are fully involved in designing 1 Fending off procurement
and delivering improved services. 2 When privatisation is under
consideration:
As well as campaigning against privatisation
• How to cast doubt on privatisation
branches need to be equipped to campaign
• How to rally support for in-house
for in-house services – both to prevent
services
privatisation and to bring services back
• How to argue for the inclusion of an
in-house.
in-house option
Councils, and those who support 3 Acting when an active procurement
privatisation, will often seek to falsely paint process has been triggered
UNISON as simply defenders of the status 4 If privatisation goes ahead
quo. But our campaigns are most successful
when we are able to present in-house 5 Bringing services back in-house
services as dynamic, flexible and better- 6 Additional information
equipped than the private sector to deliver
7 Privatisation failures case studies
service improvements and value for money.
8 In-house successes case studies
Photo top right: Marcus Rose.
21 No need to go to market –
fending off procurement
Some councils come up with outsourcing power that comes with jumping to privatise.
proposals on purely ideological grounds – These include charging and trading; sharing
many Tory councils in particular are keen on of services and the ability to borrow money
the ‘commissioning council’ model where the for capital investment much more cheaply
council is no longer an employer or a than the private sector. (See Branch guide to
provider of services, but simply a shared services; and Branch guide to local
commissioner of contracts. authority trading companies).
Many more councils embark on outsourcing Contractors will often make great claims to
of key services because they believe it is the councils about the additional ventures they
only way to cut costs – often seduced by the could set up, and the jobs they could create.
promises of private contractors who look A key message that you should be taking to
upon public services as rich pickings. councillors is that ‘Anything the private sector
can do in return for extracting a profit, a
Even when outsourcing is not actively on the council can do for itself while keeping ALL
agenda, councils will be continually reviewing the money within services.’
the cost and efficiency of their in-house
“We were saying to the council: ‘Give us the
services. If you can engage with these
chance to do it. You’re prepared to pay them
reviews you can be prepared for any issues
[private contractor] an awful lot of money on
which may sprout privatisation proposals.
it – are you saying that we aren’t capable or
competent?”
Best value Tony Carr, IT administrator and UNISON
Councils are bound by the duty of Best Value steward – facing outsourcing of Newcastle
(see Branch guide to Best Value) which City Council IT system1
means that outsourcing cannot simply be the
automatic option. The commissioning council No obligation to go out to tender
model is risky electorally as it will lead
There is no obligation to put services out to
residents to question the value of electing
tender. The most recent guidance on EU
councillors when they have handed over all
procurement rules confirms that:
their responsibilities to private companies.
“It is entirely up to the public authorities to
So for branches this means trying to ensure decide whether to provide a service
that in-house services are well-placed to themselves or to entrust it to a third party
respond to the continuing challenges of the (externalisation). The public procurement
austerity era. You will want to engage and rules only apply if the public authority decides
organise members so that you are ready with to externalise the service provision...”2
facts and figures which help you demonstrate
the considerable advantages they have over
1 Hilary Wainwright, Mathew Little, Public service reform...but
privatised provision. not as we know it
2 European Commission, Guide to the application of the
It is important to remind councils that they European Union rules on state aid, public procurement and
the internal market to services of general economic interest,
have a wide range of powers and means of and in particular to social services of general interest http://
raising cash, as alternatives to the loss of ec.europa.eu/competition/state_aid/overview/new_guide_eu_
rules_procurement_en.pdf
3Branch guide to securing in-house services
So your council should never take a desire to where services sit in a directorate and
privatise as their starting point. Instead they operate within a budget to a set of
should ask themselves, ‘what do we want to agreed performance targets – but there
achieve?’ This gives you the chance to have is no split between managers providing
the debate about how the in-house service services and those setting out how the
can improve and change in order to achieve service should be provided. This can
that goal – without the need for costly, lead to a more collaborative delivery
complex and time-consuming procurement model, greater innovation and more
processes. efficient services.
Be prepared – key branch actions: 1.6 Rather than use expensive consultants,
1.1 Ensure that service delivery issues are encourage the council to engage
regularly discussed within your joint ‘critical friend’ service reviews from
consultative arrangements and that organisations like APSE who have the
there is good regular dialogue between expertise to look in-depth at how
your shop stewards and service in-house service delivery can be
managers. developed and savings realised – see
APSE case-studies.3
1.2 Cultivate your contacts among elected
members – plan ahead for elections 1.7 Talk to your council about new pre-
and work to get pledges from party procurement obligations to consider
groups about keeping in-house services social, economic, and environmental
and scrutinising any privatised contracts benefits (England and Wales). They may
on performance and costs. see this as a means of outsourcing
more work to voluntary sector
1.3 Involve members in regular discussions providers. But you will want to show
about how they think services can be how in-house services are better placed
improved, savings generated, and to deliver social value through things like
whether there are opportunities to employment of local people,
charge other organisations for their commitment to apprenticeships,
services and generate business from equality policies and council-wide green
elsewhere. policies and working practices (see
Branch guide to social value).
1.4 Get agreement for a UNISON steward
to have a place on all service review 1.8 Collect and highlight examples of how
teams or steering groups. in-house services are able to
demonstrate flexibility to changing
1.5 If your in-house services are still needs and how they are able to join up
organised according to a purchaser- with other council services to help
provider (also known as client- people.
contractor) split ask your council to
consider the case for moving away from
this. ‘Integrated service delivery’ is 3 http://www.apse.org.uk/briefings/10/10-56%20%20
In-House%20service%20improvement%20plans.pdf
41.9 Familiarise yourself with examples from
elsewhere of how in-house services
have been able to restructure to
improve efficiency and save money (see
UNISON report: The case for in-house
services)4
4 http://www.unison.org.uk/file/The%20case%20for%20
in-house%20services%20-%20a%20branch%20guide.pdf
5Branch guide to securing in-house services
2 When privatisation is under consideration
As soon as you get wind that your council Key branch actions
may be considering privatisation you will
2.1 Consider what expertise you will need
need to start planning for a campaign with a
to bring in – your regional organiser or
view to preventing the council from moving
regional education officer can advise
into active procurement (see Branch guide to
about the UNISON/APSE procurement
council decision-making). The chart overleaf
training workshop which helps
shows the main stages of the standard
branches to ‘deconstruct’ what the
procurement process.
council is proposing and draw up a
branch strategy. The branch may also
“We used our technical knowledge to
consider a GPF or regional pool bid to
intervene on key strategic issues and set
commission an independent report to
the scene for the unfolding privatisation
scrutinise the case for privatisation
story. Key themes we highlighted
and/or to contribute to a service
included: failed procurement elsewhere,
improvement plan for the in-house
track record of bidders, secret processes,
service.
weak scrutiny, absence of community
consultation, poor legal compliance and
2.2 Seek an agreement with the council
financial risk. If you predict these features
about how UNISON will be involved
from the start then the credibility of the
and engaged in procurement (see
union campaign will grow as the
Branch guide to negotiating a
procurement unfolds with its inevitable
procurement agreement).
problems and crises.”
2.3 Ask for disclosure of all relevant
Defeating privatisation – the Edinburgh
reports and documents to date.
Campaign, UNISON, GMB, Unite –
‘Our city’s not for sale’5 2.4 Seek additional facility time to enable
UNISON representatives to fully
contribute and represent staff interests
in the process.
2.5 Establish what the timescale will be for
the council’s deliberations.
2.6 Organise meetings for members in
affected areas and elect stewards
where these are not in place – form
the stewards into a working group
across affected services. Staff working
in the services are the experts in their
services.
2.7 Ask for an immediate commitment
from the council to including an
5 www.unison-edingburgh.org.uk/citynotforsale/
6OUTLINE OF THE PROCUREMENT PROCESS
SERVICE/EFFICIENCY
REVIEW
OPTIONS APPRAISAL
OUTLINE BUSINESS CASE
Keep service
in-house with DECISION ON SERVICE Go to market
a Service DELIVERY with/without
Improvement in-house ‘bid’
Plan
NOTICE IN OJEU
PRE QUALIFICATION
QUESTIONNAIRE
SHORTLIST POTENTIAL
SUPPLIERS
INVITATION TO TENDER OR
DIALOGUE
TENDER EVALUATION
CONTRACT AWARD
CONTRACT MANAGEMENT
AND MONITORING
7Branch guide to securing in-house services
in-house service improvement option campaigning, workplace strength,
in any options appraisal. political lobbying, technical knowledge,
and press work. Fighting on all these
2.8 Begin discussions with the council fronts can be demanding and
about what resources will be provided complicated, so early planning is
for staff and managers in the in-house essential. After an activists workshop
service to help them work on a service we wrote a campaign strategy and
improvement plan. reviewed it regularly as the campaign
grew. Procurement is laden with bluff,
2.9 Find out what plans the council has for hype and jargon. You need to
consulting service users, local penetrate these defences if you are to
businesses and other stakeholders – expose the risk of contract failure and
plan how you will communicate and escalating costs. Some activists fear
work with them to get your messages giving creditability to privatisation by
across and help them raise their participating in the process, but you
concerns. must have a message which says
more than ‘privatisation is bad’. You
2.10 Map out which councillors will be need specific evidence of the impact
influential and make contact with them. on service users. To expose the truth
you need to get behind the façade and
2.11 Map out who else will be your you only do that by engaging.”
potential allies.
Edinburgh campaign ‘Our city’s not
“The Edinburgh campaign was very strategic for sale’
about the identification of community allies.
Councillors are indifferent to the views of
How to cast doubt on the case for
hardened community campaigners. Power
lies in the “unusual suspects” - local people
privatisation:
who get animated on this issue for the first a) Query the council’s financial case for
time. That’s when councillors listen.” privatisation – despite the scale of local
Edinburgh campaign government funding cuts we still do find
‘Our city’s not for sale’ some councils which exaggerate the
spending cuts they must make in order
2.12 Brush up your local media contacts. to support their case that privatisation is
the only option. (See Branch guide to
2.13 Start on a strategy and action plan for council finances and privatisation)
how you can cast doubt on the
outsourcing option and promote the b) Question the claims about how much
in-house service – use the checklists money privatisation will save and
below and gather information to back highlight examples from elsewhere of
them up failure to deliver on savings or
overcharging (see Appendix 1)
“Successful campaigning on
procurement is a blend of community
8c) Expose the private sector’s poor track g) Highlight the likely profit margins of
record on efficiency on other contracts contractors – and the money that will
– both in local government and other be lost to service delivery
services, for example G4S and the
Olympics fiasco. A key moment in h) Emphasise the fact that risk is never
Edinburgh UNISON’s successful fully transferred - contractor failure will
campaign came when the council cited always rebound on the council. When a
examples of successful privatisation homecare contractor8 or IT supplier
ventures by other councils which goes bust9 the council will have to step
included Liverpool Direct and South in. Profits are privatised but losses are
West One. The union was able to show socialised. Privatisation means loss of
that many of these had encountered in-house expertise which means higher
major problems and some had been costs when failures happen.
terminated early!
“Often, a lawyer will indicate that the
d) Get expert advice on the options contract wording imposes all the risk on
appraisal and business case – speak to the counterparty. However, if the
your regional organiser and the national counterparty is delivering a critical and
service group. If you can discredit the urgent service, the failure of that
finances you can start to unpick the counterparty will itself create a potential
case for privatisation. Most councils failure of the authority’s own
bringing services back in-house do so responsibilities.10”
for pragmatic reasons – the realisation
that they are paying over the odds for Zurich risk assessment consultancy
things they can do better themselves6
i) Warn that private contractors can and
e) Ask questions about the likely impact often do still demand compensation when a
on the local economy – is the contract has to be cancelled – even when
contractor likely to use local suppliers or they themselves have failed to deliver.
bring in its own? Cuts to pay and jobs
mean workers spending less in the local
economy which has a multiplier effect
restricting growth and reducing local tax
income to the council – see CLES
report on Suffolk7
f) Query claims from contractors that they
8 Surrey pensioner dies after homecare provider shut down by
can bring inward investment and create UKBA http://www.bbc.co.uk/news/uk-england-21361631
jobs – use examples of where these 9 Barnet emergency ICT procurement as provider goes into
administration http://betterbarnet.nationbuilder.com/barnet_
have failed to materialise initiates_emergency_procurement_of_critical_ict_
infrastructure_as_private_contractor_goes_into_administration
6 APSE, Insourcing update; the value of returning local authority 10 Public sector supply chain: risks, myths and opportunities -
services in-house in an era of budget constraints, June 2011 A New World of Risk: http://www.zurich.co.uk/NR/
7 CLES, The implications of Suffolk County Council’s new rdonlyres/82A58CDF-D38F-414F-AC43-CB0C4CBB7CBF/0/
strategic direction, 2010 thebriefingpaperfullversion.pdf
9Branch guide to securing in-house services
Bedfordshire Council Cost of procurement
A business services contractor won a In the UK £4.6bn is spent every year by
12-year £267 million contract with central and local government on
Bedfordshire County Council in 2001 to procurement exercises to award privatised
modernise support services. After a contracts. The EU has calculated that the
number of changes in the ownership of average transaction costs for a
the contractor, service performance procurement exercise were 28,000, on an
declined. The final straw was an average procurement period of 108 days12.
accounting problem that prevented the A quarter of this cost falls directly on the
council from filing its accounts for client – and even then the rest will be
2003/4. In September 2005 Bedfordshire clawed back in contractor’s pricing. For
County Council paid £7.7m to terminate many councils in the UK procurement
its 12 year contract, after just four years, processes last longer and cost more than
bringing 546 staff back in house. this average.
j) Highlight anti-competitive behaviour by l) Highlight the fact that councils have
contractors – the amount of genuine found it very difficult to secure quality
competition is low with many tenders and value through contractual penalties
receiving very few bidders. The large as they often prove to be weak and
contractors tend to dominate the difficult to enforce. Privatised contracts
market as they have the margins to be require standardisation of processes so
able to absorb the non-recoverable they can be parcelled up and priced –
costs of tendering. £1.3bn of public this takes away responsiveness,
money is lost every year as a result of professional judgement and discretion.
fraud in procurement processes (eg Outcomes-based bids which leave the
cartel pricing, fraudulent invoicing)11. detail of how the service will be
provided up to suppliers are inherently
k) Show that the council can’t afford risky – if the contractor gets their sums
privatisation – ask the council to wrong there is inevitably a knock-on
estimate all the additional transaction effect on the client (see the G4S
costs of procurement for example legal Olympics debacle).
fees, consultants’ fees, staff time spent
on negotiation and contract monitoring. m) Remind the council that changing one
Where your council has privatised contractor for another is often disruptive
previously you could also ask for the and just swaps one weak set of
final totals of transaction costs using the contractual levers for another.
Freedom of Information Act if
necessary. n) Stress that no matter how much
resource councils put into inspection,
11 UNISON, Factsheet #36 the costs of privatisation http://www. 12 APSE, The case for direct service delivery http://watford.
unison.org.uk/acrobat/20633.pdf moderngov.co.uk/documents/s3979/Appendix%206.1.pdf
10monitoring and use of contractual tax purposes13. Recent outcries over
procedures this will not substitute for Amazon and Starbucks show how
having direct control over quality and much local citizens care about such
delivery. And as councils cut back their practices and councillors should be
contract monitoring staff, more aware of the strength of public feeling
problems will go undetected. on this issue. Central government has
recently announced that for larger
o) Ask the council how much it knows contracts, suppliers will have to declare
about potential contractors’ tax affairs – and verify that they have not
many contractors (some owned by participated in certain failed tax
private equity) have a business model avoidance schemes or other dodges.14
based on tax avoidance with large parts
13 Paul Gosling, The rise of the public service industry, a report
of the business registered offshore for for UNISON, June 20w
14 https://www.gov.uk/government/publications/promoting-tax-
compliance-and-procurement-procurement-policy-
information-note
Paying over the odds The price of failure
●● £137,000 was overpaid by Calderdale When services fail, it’s the public that usually
Council to one provider of home care and has to pick up the tab. For example:
meals on wheels last year – auditors fear
●● £25m is now the estimated loss to the
much more has been wasted15
taxpayer as a result of the collapse of private
●● £75m over the odds was paid over care home operator Southern Cross
twelve years by schools to Capita for IT
●● £265m had to be paid by the Home
services, according to analysis by rival firm
Office to Siemens on top of the £100m
Bromcom16
originally budgeted for when its passport IT
●● £300m is thought to have been overpaid system went way over budget
for schools, hospitals and other projects as a
●● £300m lost by Royal Bank of Scotland
result of bid-fixing by construction
on a private equity buy-out of care home
companies17
operator Four Seasons was ultimately borne
●● £9bn was paid in total cost overruns on by the taxpayer
105 outsourced IT contracts in central and
●● £410m was lost to the taxpayer as a
local government, the NHS and other public
result of the collapse of the Metronet ‘public
bodies since the 1980s18
private partnership’ for the London
Underground, according to the NAO
15 http://www.halifaxcourier.co.uk/news/local/what_a_rip_off_
scandal_of_care_home_that_overcharged_by_ ●● £10.4bn has had to be committed to the
thousands_1_3547360
NHS IT project on top of its original budget –
16 http://www.guardian.co.uk/business/2009/dec/06/capita-
schools-technology-competition and still results have yet to be delivered
17 http://www.oft.gov.uk/news-and-updates/press/2008/52-08;
http://www.telegraph.co.uk/finance/newsbysector/
constructionandproperty/2788332/Construction-cartel-may-
have-cost-taxpayer-300-million.html
18 http://www.european-services-strategy.org.uk/news/2007/ict-
contract-chaos/105-ict-contracts.pdf
11Branch guide to securing in-house services
How to rally support for in-house i. look at the council’s manifestos,
services: political objectives, health and well-
being strategies and develop a
a) Map and mobilise members in the
case for how in-house service
services under consideration – ensure
delivery is best placed to achieve
they are motivated and ready to feed in
them – look at things like joining
their views. Get non-members to join
up services, local jobs, skills and
UNISON
training
b) Build up a broad base of allies in
ii. argue that income generation can
support of an in-house service – talk to
be retained, and innovation and
a representative range of service users,
technology harnessed to the
tenants groups and local businesses.
council’s sole benefit
As well as service users with a direct
interest in service outcomes, local
iii. highlight the importance of
businesses can be a key ally because
democratic control – councillors
they stand to lose out if big contractors
can more readily secure a direct
win contracts and bring in their own
response to constituents’ concerns
supply chains, or ‘offshore’ their
without having to jump through
workforce
contractors’ hoops
Barnet branch has been involved in
iv. the private sector has higher
major community campaigning against
borrowing costs than the council
the council’s ‘One Barnet’ privatisation
would have – and these are
proposals – forging a broad coalition
passed back to the council
of resistance encompassing all
sections of the community and local
e) Remind councils that in-house services
businesses19
mean flexible services. We are in an era
c) Check whether the service has had any of rapid changes to needs, demands
recent favourable inspection reports – or and available budgets. Multi-year
there have been positive findings from contracts with external providers lock
user satisfaction surveys. Also check councils into a certain way of delivering
whether the service has been awarded – and contractors are adept at charging
any charter marks or quality badges extra for any changes a council
such as Investors in people. Assemble subsequently wants to make. Extensive
these reports as supporting evidence of staff time is also required to negotiate
the good quality of the in-house service changes. In-house services offer the
which could be put at risk. flexibility to respond to changing needs,
priorities, emergencies and policy
d) Look for evidence to convince decision- contexts without having to pay a
makers that in-house services can best premium.
deliver on their objectives:
19 http://www.unison.org.uk/news/news_view.asp?did=8157
12safeguard in terms of value for money and
In Newcastle City Council, City Service, risk transfer in a time of budgetary
the in-house bid offered more than double uncertainty. It acts as a benchmark and price
the savings promised by BT, the preferred regulator to guard against price fixing and
bidder at the time. This was based on the restrictive practices by contractors. The
use of prudential borrowing to generate in-house service often acts as the standard
£20 million investment in new systems. setter for local employment and training,
allowing the council to directly influence local
f) Make the point that in-house services working practices and community
mean management objectives can be development.
long-term and focus on service
development and effective citizen Inclusion by default
involvement not the profit margin Ideally you want a procurement agreement
between unions and the council which
g) Highlight community benefit and the contains a commitment to having an
equality duty – in-house services can in-house comparator in all procurement
offer apprenticeships and take measures exercises. This should be on the basis of the
to promote equality and address best possible delivery by an improved
disadvantage through employment of in-house service. This is essential to be sure
local citizens with no danger that jobs will of complying with the duty of Best Value.
be relocated elsewhere within the
Get agreement from your council to commit
contractor’s business
resources to developing an in-house
comparator.
h) Cite public opinion and electoral
consequences – about 2/3 of the public Watch out for councils which try to include a
think it is unacceptable for shareholders to ‘do nothing’ or ‘status quo’ option which
profit from running key public services.20 assumes that no savings can be made by
the in-house service. This is a distortion
How to argue for the inclusion of which will help the case for privatisation but
an in-house option: will not ensure decisions are made on the
It is vital that any options appraisal includes basis of Best Value.
an in-house option with a service As the Audit Commission warned:
improvement plan (SIP). You want the council
to agree that they will only proceed to incur “Many have compared the annual charge
all the expense and risk of going out to paid to the contractor to the previous cost of
market if the SIP objectively cannot deliver providing the same service. However this
the outcomes necessary. approach does not account for additional
efficiencies that may have been achieved
from in-house provision.”21
Vital safeguard
Inclusion of an in-house option is a vital 21 For better, for worse: value for money in strategic service-
delivery contracts www.audit-commission.gov.uk/
20 Social Enterprise UK, The shadow state, a report about SiteCollectionDocuments/AuditCommissionReports/
outsourcing of public services NationalStudies/ForBetterOrWorseJan08REP.pd
13Branch guide to securing in-house services
Where the council is claiming that the private Checklist for service
sector is promising to generate revenue or improvement planning:
create jobs – talk to members in the service ●● Establish a joint working group with trade
about their ideas for how an in-house service union involvement and commitment to
could generate income through charging, or securing change through negotiation and
through carrying out work for other councils agreement.
and public bodies (see Branch guide to: local
●● Get agreement on whether and which
authority trading companies.)
consultants will be used but ensure that
the real experts – the staff delivering the
Service improvement planning services and the people using them – are
(SIP) fully involved.
Service improvement planning (SIP) is part of
●● Staff need to be reassured by trade union
a continuous improvement approach which
involvement and negotiation in order to
should be ongoing. However when a council
participate freely in workshops and
is looking to make changes/deliver savings
exercises to map current processes and
and considering going out to the market –
where inefficiencies may lie.
this needs to step up a gear. If the outcome
of the options appraisal is that in-house ●● Don’t be restricted by traditional service
provision is the preferred option, a good SIP boundaries – are there opportunities to
will be needed to convince the council not to integrate better with related services?
go out to tender. But even if the council ●● Are there equipment or plant purchases
does decide to go out to tender, the SIP or leases that can be reviewed?
needs to be as good as it can be so it can
outshine bids from contractors. ●● You will need an accurate baseline
service profile with effective management
APSE says: information. With cuts to performance
monitoring many councils no longer
“The SIP must convey to local authority
collect detailed performance data so this
elected members, service users, staff and
will need to be resourced. Comparative
inspection bodies that an in-house option
performance data from other authorities
has clarity and is sustainable. A SIP is in
will be vital (see APSE www.apse.org.uk/
effect a commitment to improve the quality
performance-network.html).
and cost of the service and sets out the
activities and action required to achieve ●● Benchmarking data should not just look
improvement.”22 at cost it should also measure things like
quality, satisfaction levels, contribution to
environmental sustainability and
community cohesion.
●● SIPs need to cover at least a three-year
improvement programme
Service improvement planning is not an easy
22 In-house Service Improvement Plans, APSE http://www.apse. option. Managers are likely to come forward
org.uk/briefings/10/10-56%20%20In-House%20service%20
improvement%20plans.pdf with proposals for new working practices
14which may not be popular with members
such as reduced staffing, flatter
management, self-service options,
rationalisation of premises, merging services,
changed working hours, multi-skilling. A
‘management of change agreement’ may be
needed with a commitment to no compulsory
redundancies and redeployment, new skills
and training needs etc.
15Branch guide to securing in-house services
3 Acting when an active procurement
process has been triggered
The inclusion of an in-house option in the would be advised to get an independent
options appraisal may not have been enough critique, for example through APSE.
to stop the council deciding it needs to go
out to tender. This is where the twin track approach really
kicks in – keeping up your campaign around
All is not lost. You still have the opportunity the dubious value of the private sector
to push for development of a SIP and options, while also preparing and negotiating
ensuring that all the bids received from around a possible transfer.
contractors are considered alongside the
improved in-house option. Many branches Involvement in active procurement
have successfully done this and having the Get hold of the council’s general
developed in-house option to benchmark procurement policy document and any
against contractor bids has helped many agreement you may have. If you don’t have
councils realise that the bids received would one, seek agreement that there will be
not deliver the best value for money. As a proper involvement and consultation of
branch you also have a big role to play in UNISON throughout the tendering process
ensuring that any external bids are properly including in the drawing up of tender
assessed and all relevant value for money documents, service specifications, pre-
and equalities issues are scrutinised. qualification questionnaires, key performance
indicators, and interviewing short-listed
After the options appraisal the council should bidders (see UNISON procurement guide for
normally produce an outline business case full details).
(OBC) setting out why it believes the best
option is to go out to tender. This should Keep the campaign going – councils can
contain details of the service proposals, the and do decide not to award a contract at all
benefits, the options appraisal and a if they judge that none of the bids meet their
feasibility study – setting out the key risks needs and that the in-house option
and financial analysis. It should also describe represents Best Value. Some councils may
the consultation and engagement of be fearful of challenge by unsuccessful
stakeholders and what consideration there bidders but as long as they have followed
has been of the equality impact and the procurement rules and can justify their
employment implications – transfer, TUPE, decision to keep services in-house in terms
secondment, pensions, route for of Best Value then there is nothing to worry
procurement etc. about, and no obligation to make a contract
award.
If your council has not done an OBC then
you will need to work with the options In parallel with this activity, you will need to
appraisal report and ask questions to try to keep up the pressure to ensure that a proper
obtain the missing information. SIP is being developed for the in-house
option so that the final bids received are held
This is a key document and must be up to a proper benchmark.
carefully examined and challenged. This is
where, if you haven’t already done so, you
16‘Invitation to tender’ document
This document is critical. What goes in it Case study: Taunton Dene –
determines how the council must deal with in-house innovation wins the
the bids it receives – if something is not in day
this document, it cannot be used to assess
In 2010 Taunton Deane Borough Council
the contractors or the in-house comparator.
commissioned a firm of consultants called
You must ensure that you get consulted on
Turner and Townsend to review the Direct
the contents of this document in good time.
Labour Organisation – a development
which looked to the branch like a done
●● The key section is the tender evaluation
deal for putting the service out to tender.
criteria which outlines how the council will
The report recommended that savings of
decide what is the most economically
£278k per annum could be made through
advantageous tender (MEAT)
privatisation. The council decided to
●● To ensure that the in-house option can embark on a path which would begin with
show its worth, quality criteria need to a ‘root and branch’ review of the service,
include service standards, community with a view to subsequently undertaking a
well-being, local economy, environmental procurement process.
impact, retention of skilled and
experienced staff, equalities and diversity The DLO covers housing repairs, grounds
impact on staff and service users, and maintenance, street cleansing and public
two tier workforce matters toilets, parks, nursery and trees. The
service was traditionally organised with a
●● Make sure the document states that there
costly and inefficient structure leading to
is an in-house option under consideration
potentially poor customer outcomes. At
If there are fewer than three bidders you the heart of the review was an aim to
should lobby the council to abandon the improve the service and ensure a ‘fix first
process on grounds of lack of competition time’ approach, which would ensure
and go with improving the in-house service. better productivity and improved
customer satisfaction.
If however the council does pick a contractor
as preferred bidder, it will then move to The UNISON branch submitted a bid to
produce a final business case. This is your the General Political Fund for funds to
last chance to stop the privatisation through engage APSE to produce a critique of the
whatever action – political, industrial and proposals and suggestions for an
community – that you can muster. But your alternative. The Branch Secretary
chances will be much greater if you can presented the APSE report at the key
convince decision-makers that the bids from council decision meeting and succeeded
contractors they have received are not as in getting the council to follow a twin
favourable as the in-house option. track approach. The council agreed to
build up a service improvement business
case which soon began to show that the
service could be transformed internally.
17Branch guide to securing in-house services
Case study: Taunton Dene continued
Nonetheless they still proceeded with The DLO is now seen as best practice in
undertaking the procurement process. the eyes of the LGA. The LGA’s peer
review report commended what it called a
UNISON engaged in the procurement ‘notable service transformation’,
process and while opposing the proposed commenting that it ‘should serve as a
privatisation the branch took part in the model for service transformation in other
short-listing of potential bidders, while service areas’.
informing members on the ground what
was going on. This has the effect of Improvements in the service are clear – in
increasing overall membership across the 2010 the DLO was awarded
DLO with UNISON reps talking to approximately two-thirds of all minor work
managers and members each day. There voids, with all major voids going to the
was a specific consultation forum set up private sector. The average turnaround
for staff and UNISON where they could time was 32 days. By September 2012
contribute vital information to build the both minor and major works voids were
case for internal transformation. undertaken by the DLO and the average
turnaround time had decreased to just 18
As the review progressed, it transpired days. Projected savings to 2015 now
that the projected savings from stand at £5.1M.
improvements to the in-house service
would save £3.2m. This was way beyond Without intervention from the branch the
what the consultants’ report suggested DLO would have almost certainly been
could be saved through privatisation. On privatised. Instead, the service is now
the basis of this the branch was in a competing for business across the sector,
strong position to lobby for the in-house has recently won contracts in the private
option to be pursued by the council – and sector and has transferred staff in, a rarity
they succeeded. in the current climate.
184 If privatisation goes ahead
If, despite your best efforts, privatisation Councils often find out some disturbing facts
can’t be stopped, you will be into trying to when they start delving below what key
protect your members’ interests through the performance indicators (KPIs) are showing
transfer of work – see UNISON’s guides to and really examine the costs and quality of
procurement and TUPE. what they are getting. In some cases they
find out that some KPIs are not being
However, the fight against privatisation monitored at all, or that there is a mismatch
doesn’t stop there. Recruiting and organising between performance on paper and in reality
members pre- and post-transfer is vital to (see Branch guide to key performance
the union’s future and to protecting indicators).
workforce interests.
Being able to track what happens on a
privatised contract is vital for the branch’s
ability to a) challenge other privatisation
proposals and b) argue for the work to come
back in-house.
If UNISON doesn’t have active members
working on privatised contracts, then
employers will get away with cutting pay and
conditions and we won’t hear about the
problems and concerns that may be
emerging behind closed doors.
Monitoring privatised contracts
If you get reports of problems on a contract,
this can give you ammunition to seek further
scrutiny of the contractor’s performance.
●● Talk to councillors who are involved in
scrutiny about your evidence and ask
them to consider conducting a scrutiny
inquiry on how the contract is performing.
●● If you have council elections coming up
talk to key councillors about what you
know about the contract – see if you can
make it an election issue and get pledges
from them to review the contract
19Branch guide to securing in-house services
5 Bringing services back in-house
When you know about, and can evidence, paid to contractors and what promises
poor performance on a contract you may be have been kept. Offer to work with the
able to mount a campaign for returning the council on commissioning expert advice
service in-house. Severe problems may lead to help you cost out how an in-house
a council to terminate a contract early but service might compare with what they are
failing that you can target the time when paying the contractor.
contracts come up for renewal and get in
●● Show the council that the tide is turning
with an argument that instead of re-tendering
and many councils are bringing services
a return in-house would be a better option.
in-house for pragmatic reasons. Give the
council copies of the APSE research and
●● Study the contract you have been looking
case studies on insourcing23 (Insourcing a
at and see what it says about early
guide to bringing local authority services
termination for non-performance – there
back in-house; Insourcing update: The
may be trigger clauses or review points
value of returning local authority services
which you can seek to exploit.
in-house in an era of budget constraints).
●● Monitor when contracts are coming up
“The council’s contract with Cambridge
for renewal – ask your council for a
Education as the borough’s provider of
schedule of major contracts and dates. In
education services will come to an end
England a Code of Practice issued by the
in April, a move that will save the
Department of Communities and Local
council around £500,000 per year...The
Government (DCLG) states that local
council has decided the time is right to
authorities should be publishing copies of
bring the management of education
all their contracts and tenders with
services back in-house...”
businesses and the voluntary and social
enterprise sector – for public access. Ask
Islington Council, March 2013
your council where they publish this and if
they do not, remind them of the Code
●● www.communities.gov.uk/documents/
localgovernment/pdf/1997468.pdf.
If necessary, Freedom of Information
requests can also be used.
●● Draw up a schedule of key contracts up
for re-tender that you can target a year in
advance.
●● Plan how you can intervene in good time
to push for returning services in-house
rather than letting the council retender
them. Use information you have been
able to gather from members and key
23 APSE, Insourcing a guide to bringing local authority services
questions about how much has been back in-house; Insourcing update: the value of returning local
authority services in-house in an era of budget constraints
206 Additional information
UNISON Local government Guides series – Insourcing: a guide to bringing local authority
see UNISON website or stock orders for services back in-house, APSE, 2009:
series including: http://www.apse.org.uk/page-flips/2011/
●● Community right to challenge insourcing/index.html
●● Co-ops and mutuals Insourcing update: The value of returning
●● Negotiating a procurement agreement local authority services in-house in an era of
budget constraints – Report by APSE for
●● Social impact bonds
UNISON, June 2011 http://www.unison.org.
●● Sustainable Communities Acts
uk/acrobat/20122.pdf
●● Shared services
Fighting privatisation in local government, a
●● Key performance indicators
UNISON guide http://www.unison.org.uk/
●● Equalities in procurement acrobat/19989.pdf
●● Local authority trading companies
The value of trade union involvement to
●● Social value service delivery, a UNISON report by APSE
●● Best Value http://www.unison.org.uk/acrobat/19226.pdf
●● Privatisation and council finances Think twice: the role of elected members in
●● Council decision-making commissioning, UNISON, APSE, LGIU:
http://www.unison.org.uk/acrobat/B5150.pdf
Public service reform… But not as we know
it, by Hilary Wainwright with Mathew Little,
published by Compass, 2009
UNISON Factsheet #36: The costs of
privatisation:
http://www.unison.org.uk/acrobat/20633.pdf
21Branch guide to securing in-house services
Appendix 1 Privatisation failures
Capita in Sefton transferred to it. It claimed it could not afford
to continue to employ the staff for the nine
In 2008 Capita Symonds were awarded a
months left until the return of the contract to
10-year contract to deliver technical services
the council. Capita proposed to handle the
such as road maintenance, engineering,
redundancies and the council would get a
property management and regeneration. In
reduced workforce and paybill transferring
November 2011 Sefton Council decided to
back in September 2013. Redeployment
terminate its £65m technical services
opportunities are within Capita, not the
contract with Capita Symonds.
company. The branch continues to fight on
this issue.
What was promised?
Capita had promised savings of 5.5% over IBM in Somerset – South
the in-house option and investment in staff West One ends in tears
and new technology which would create new
Southwest One was set up in 2007 as a joint
jobs.
venture company between Somerset County
Council, Taunton Deane Borough Council,
What was the reality? Avon and Somerset Police and US
Three years in the council could see that the computing giant IBM – in which IBM own
contract was not delivering the savings that 75% of shares. The £400m contract involves
had been promised and fortunately there a whole range of back office support service
was a break clause which allowed it to give functions.
notice of termination and bring the service
back in-house – with staff due to transfer
What was promised?
back in September 2013.
When Southwest One was established, both
councils and the police claimed it was
Value for money? intended to ‘deliver a range of support and
There were serious concerns about value for customer services, currently being provided
money with reports of an £18,000 charge to in-house, and will enable the delivery of
fill a hole in the road which would have cost efficiency savings for both councils, which
the council itself only £3,000 to do. A council will allow better investment in front-line
spokesman said: “After significant reduction services’.
in funding and activity as a result of
The contract was advertised as a ‘framework
government savings targets, the contract, in
agreement’, with many of the projected
the opinion of the council, is no longer the
savings based on the assumption that
appropriate vehicle to address the future
around thirty other public authorities would
challenges.”
join the venture. In the end no other authority
However, the story comes with a sting in the joined.
tail. In October 2012 Capita sought and
The local UNISON branches campaigned
received permission to make compulsory
together to oppose the joint venture, strongly
redundancies among the staff who had
22advocating an alternative in-house strategy in negotiate a ‘realignment’ of the contract.
negotiations. Coming up against numerous Both Taunton Deane Borough Council and
barriers, the contract was eventually signed Avon and Somerset Police remain with their
and all staff seconded, despite a lack of original contracts.
public engagement or scrutiny of what was a
very secretive deal. UNISON engaged in negotiations with the
council on the Staffing Agreement (drawn up
back in 2007) as part of the ‘realignment’.
What was the reality? The council’s view was that making
Southwest One was mired in controversy Southwest One more ‘flexible’ would enable
from day one – even the local Conservative it to meet its savings targets – by creating a
MP was one of many voices campaigning for more ‘flexible workforce’. Under review were
greater transparency of the contract and for key workforce issues around location, terms
the original business case to be made and conditions and assured employment.
public. Despite talk of creating a new ‘culture’
amongst employees, the branch reported
In 2010 it was reported that the company that staff morale had been damaged by the
had made losses of £16m in its second year, move, with many secondees feeling stuck
dwarfing the £2m loss recorded in the between the public and private.
previous year. It also emerged that the two
councils would be fined £15,000 each In October 2011 it was revealed that
because of the extra checks that the Audit Somerset County Council had decided to
Commission had to make on the accounts take a number of services back in-house
prepared by Southwest One. The Internal following contract renegotiations, including
Auditors report commented that it was ‘also HR and finance, with staff on secondment
notable that these errors are not closely going back to their Council employment.
related to SAP24 functionality or expertise but
they are basic accountancy treatment A protracted legal dispute between IBM and
issues’.25 Somerset Council was finally settled in March
2013. The dispute centred on service
Following this, a Somerset County Council standards and non-payment of fees – in
review into the contract concluded that only particular the council’s wish to end a bonus
£2m out of a promised £45m of savings payment to the company for finding
from procurement had been delivered in the procurement savings. The Tory
first two years of the joint venture, and that administration has blamed its Lib Dem
there was no clear plan in place to identify predecessors, saying they had effectively
future savings. However the council was written the company ‘a blank cheque’.
reluctant to pull out of the deal because of
likely costs involved – instead they sought to
Value for money?
24 The software system bought in by IBM to SouthWest One. The European Services Strategy Unit (ESSU)
25 Somerset County Council Audit Committee report, September provided expert advice for UNISON on
2010 http://www1.somerset.gov.uk/council/board9/2010%20
September%2023%20Item%207%20Approval%20of%20 SouthWest One. They stated at the time that
Revised%20Accounts.pdf
23Branch guide to securing in-house services
the contract with IBM was ‘a classic example example of a successful service delivery
of ideologically driven outsourcing’. partnership. The report uncovered a very
Commenting on the declining level of savings different story however, outlining a shocking
and higher contract management costs, they record including:
went on to assert that ‘the increasing annual
losses of the joint venture company serve to ●● Historical overcharging amounting to
illustrate the high risks involved in these £19m
contracts’. ●● A ‘complete lack of transparency’ around
promised BT investment into the
Liverpool Direct company
Liverpool Direct Limited was set up in 2001 ●● Excessive mark up on the cost of
as a joint venture company between BT and equipment (93%-139%)
the council, with BT owning 80% of the
●● Some activities which were within the
company. As well as providing services to
scope of the contract charged as ‘extras’
the council it also trades in its own right.
●● Concerns about the transparency and
effectiveness of governance arrangements
What was promised?
The contract saw the company providing the
Value for money?
council’s IT service, contact centre, one stop
The report went on to state that the cost of
shops, human resources, payroll, revenues
services could be reduced by some £10m
and benefits, as well as the Careline social
per year, and that £23m could be saved per
care service.
year by taking services back in-house. As a
result of the report and the controversy it
The original contract was extended in 2006
caused within the city, the Labour leader
and again in 2010, just after Labour took
undertook to review the findings before
over from the Liberal Democrats. At the time
considering whether to continue with the
of renewal BT gave a number of assurances
contract or seek to renegotiate it. UNISON
to the council about their commitment to
played a key role in calling for the report to
invest in IT infrastructure as well as job
be scrutinised.
creation, housing and social care schemes in
the city.
What was the reality?
Just months after the renewal in 2010, a
report commissioned by the council was
leaked to the press in which it was claimed
that BT were overcharging the council by
£10m a year on the contract.
Until this time many had viewed Liverpool
Direct as a ‘flagship’ for privatisation and an
24Appendix 2 Better off in-house
Edinburgh – ‘Our city’s Mid Devon Council –
not for sale!’ leisure services
UNISON’s Edinburgh branch defeated “the In 2001 the council decided to explore the
biggest privatisation of council services in possibility of transferring its leisure centres,
Scottish history”. The council’s ‘alternative sports courts, and swimming pools to a
business models’ project would have handed leisure trust, mainly to take advantage of
three major areas of council service over to possible savings from VAT and business rate
private contractors: environment services, relief. While UNISON members had
integrated facilities management and reservations they understood the council’s
corporate and transactional services. Faced reasons for considering the change, and
with a challenge of this size, UNISON got were reassured that staff would remain
together with Unite and the GMB, plus under council control and that their pay and
community groups, to launch a broad conditions would not be affected.
campaign under the slogan ‘Our city’s not
for sale’. As well as public campaigning, the
Edinburgh branch worked hard on creating What was proposed?
in-house bids as alternatives to the However, despite all the talk, the idea was
privatisation proposals and producing never seriously pursued. Unknown to the
briefings to back them up. When the facilities union the council ruled out the trust option,
management contract came up for but in 2005 decided instead to put leisure
discussion at the council in November, services out to tender, with no in-house bid.
UNISON reminded councillors of their Worried staff flocked to join UNISON. Initially
responsibilities under Best Value to look at the UNISON branch strategy was to
services holistically. persuade the council to allow an in-house
bid. At the same time the union sought to
The branch pointed out that plans in the sell- show that savings from outsourcing the
off tender “to downgrade recycling efforts, service were unlikely and that local leisure
dismiss workers and close the pension services, particularly for disadvantaged
scheme will have a damaging social, groups, would be at risk if a private
economic and environmental impact and contractor took over.
may be unlawful.” On the other hand, when
the private and public-service options were Tender documents were not sent out to
compared on a like-for-like basis, said the potential bidders until 2007. UNISON tried to
union, the in-house bid would save £20.5m engage with the council to influence the
– and deliver a better service. The council procurement process but unfortunately the
agreed and voted to keep the service council kept important tender documents
in-house. Then in January it made the same secret, arguing that they were ‘commercially
decision over the other two privatisation confidential’. Despite this obstacle, the
contracts, for integrated facilities branch campaigned successfully to have its
management and corporate and concerns heard. Eventually two private
transactional services. companies were shortlisted and invited to
tender by the council. UNISON branch
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