Alyson Macdonald is an opinionated wee nyaff who lives, works and agitates in Edinburgh. She’s a regular guest contributor at Bright Green, and has recently found herself involved in a campaign against the privatisation of local public services.
Sources inside the City of Edinburgh Council have warned that the Council plans to hold a crucial vote on 27th October to decide whether to privatise services such as waste and recycling, council tax collection, parks, building maintenance, cleaning, and school catering. Under a project known as the Alternative Business Models Programme (ABM), the Lib-Dem/SNP-led Council have been investigating whether to put vital services out for tender since December 2009.
If you live in Edinburgh, you may be wondering why you haven’t heard about any of this. The simple answer is that the Council don’t want to advertise what will most likely be a very unpopular policy. Neither the Lib-Dems nor SNP mentioned it in their manifesto during the last local elections, and there has been almost no public consultation. In fact, it’s been rather difficult for anyone to get a definite idea of exactly which services were under threat of privatisation until quite recently, because much of the information was classed as “commercially sensitive” and wasn’t available to the public. Over the last few months, details have started to trickle out, including the fact that council officials have already been in negotiations with possible contractors, and that some of the companies have previous convictions for price-fixing, or have been found responsible for fatal accidents.
We are being told that these services need to be privatised in order to save money, but, in practice, for-profit companies rarely provide better value for money. The initial bid might seem like good deal, but the hidden extras stack up quicker than on a Ryanair ticket, whether it’s for additional services, or the costs associated with managing and auditing contractors. The experiences of councils in England, where privatisation is more common, stand as a warning of what can happen when services are run by private companies who measure their success by their profit margin, rather than the amount of public money they’ve saved. Liverpool Council awarded the contract for their IT and customer services to BT in 2001 in the hope of reducing costs, but they’re being overcharged by around £10M per year, and, on top of that, they’ve run up six-figure bills investigating BT’s practises – only to discover that it would be cheaper to run the services in-house.
Even if privatisation does save money, the savings would come at the expense of local jobs. Under the ABM proposals, up to 4000 jobs would be transferred from the public to the private sector, which could mean lower wages and fewer benefits for staff. It could also lead to redundancies as the companies try to cut costs by shedding jobs or relocating back-office functions to their headquarters in another part of the country.
Then there is the question of accountability: if services are run by external companies, how much control will the council have, and how will local residents be able to influence service provision? At the moment, if you have a problem with any council services, you can take it up with your elected representatives, or use public pressure to encourage change, but it’s more difficult to use that pressure on a company, especially when they’ve signed a long-term contract. The contracts that the Council are negotiating now are likely to last for several years, and with local elections due to be held next spring, that means the contracts will probably outlast the current administration. Even if the politicians responsible are voted out in 2012, it we wouldn’t be able to get out of the deals they’d made without paying millions in cancellation fees.
If we leave it until the elections, it’s too late; which is why there have been neighbourhood campaign groups springing up across in the city in the past few months. So far the aim has been to confront the secrecy around the Alternative Business Models Programme by getting information out to as many people as possible. Volunteers have delivered leaflets, or knocked on doors and talked to their neighbours about the proposals. Some people have even arranged public meetings where residents can ask their councillors about ABM; I attended one such meeting at Meadowbank back in July, and found it quite worrying that the councillors who had been sent along to defend the proposals had knew so little about them, and could only offer a few platitudes about austerity and competition to their constituents, who were overwhelmingly opposed to the idea of privatisation.
Now that the date of the vote is only a few weeks away, the campaign is picking up pace, and although we are still trying to get information about ABM to as many people as possible, we’re also putting pressure on councillors to vote against the proposals by making group visits to councillors’ surgeries. Labour and Green councillors have already stated their opposition to privatisation (although it’s worth remembering that the previous Labour administration of the Council were hardly reluctant to sign us up to expensive PFI contracts), but they don’t have sufficient numbers to block the proposals while the Lib Dem, SNP and Conservative groups are all in favour. We know that we won’t get anywhere with the Tories, so efforts are being focussed on the SNP and Lib Dems, to persuade them to reconsider. The proximity of the elections works in our favour here, because a councillor who wants to be re-elected can’t afford to support policies that their constituents don’t want. We need to remind them that it is their job to represent the people who elected them; not to force their ideas on us.
I’m under no illusions about the state of our public services: many of them could be better, and they
should be improved wherever possible, but privatisation will not deliver improvements, and it won’t – as David Cameron suggests – give residents more control over services. The only people who will benefit from privatisation are the private companies, and they’ll do it at the expense of service users and taxpayers. It’s time for us to remind our councillors who they work for.
#1 by Doug Daniel on September 29, 2011 - 10:28 am
As an SNP voter, I’m disappointed with this news. I can’t think of a single private service which functions better and cheaper now that it has been privatised. You can understand why the Tories and New Labour did it, and nothing surprises about the Lib Dems any more, but for the SNP to have anything to do with this is sad.
#2 by Aidan on September 29, 2011 - 10:37 am
The Lib Dems have always been keen on privatising council services, Lib Dem at the time Richmond sold off parking inspectors with predictable results…
#3 by Alyson Macdonald on September 29, 2011 - 3:49 pm
Is there any chance you could be persuaded to copy and paste that into an e-mail to your local SNP councillor? If you live in Edinburgh, you can use this website to find your councillors’ contact details: http://www.edinburgh.gov.uk/councillors/search
If you’re not in Edinburgh, there’s a good chance that the council in your area are either considering privatisation now, or will do so in the near future, so a pre-emptive e-mail probably wouldn’t hurt.
#4 by Doug Daniel on September 30, 2011 - 8:46 am
Aberdeen council are a perfect example of money doing the talking.
#5 by Indy on September 29, 2011 - 11:14 am
It’s not black and white. Glasgow City Council for example has hived off the old Building & Works Dept, Parking, care services, the Property section, plus Culture & Leisure and a couple of other things I can’t remember to arms length companies.
In some cases they would have been better staying in-house but in others it has worked quite well – “Glasgow Life” for example, which came out of the Council’s Culture & Leisure Dept, works pretty well and is a definite improvement.
Reading this article, it looks to me as if council officers rather than councillors may be pushing it. Either way I don’t think any council should be making those kinds of decisions when we are just 7 months away from an election. People deserve the chance to vote on specific proposals put forward by each party before decisions are taken..
#6 by Aidan on September 29, 2011 - 2:25 pm
The ALEOs are rather different from what’s being proposed in Edinburgh, they’re still owned by the council.
#7 by Stuart on September 29, 2011 - 2:44 pm
But even the ALEOs have a real issue with democratic accountability. Apart from the Elected Members on Boards, the rest of the members are appointed.
When it comes to budget time, Council is just told what will be cut from an ALEO, rather than being able to engage in what should be cut.
But your right, it is very different from privatisation.
#8 by Indy on September 30, 2011 - 7:54 am
They are owned by the Council but that in itself causes problems – for example, when the Council contracts work to City Building, which it owns, after tendering the work. You can imagine the conspiracy theories which result from that. I don’t believe there is anything wrong with it but the situation almost creates suspicion just because it exists if you see what I mean.
And there is still the problem of accountability. To me that is one of the major problems with outsourcing services or functions, however it is done. Although, as I have said, there are ways in which it has improved services in Glasgow so it’s not totally black and white.
#9 by Observer on September 29, 2011 - 12:14 pm
There is no necessity to privatise services in order to introduce service improvement. The very act of privatisation introduces the profit motive into services which are provided collectively. The SNP Group on Edinburgh Council should be ashamed of themselves having anything to do with this. This is a black & white issue to me, I have always criticised the Labour Party for privatisation policies, which have never delivered the promised improvements, so the SNP are fair game too.
People should simply not vote for Councillors who support privatisation of services they are entrusted to care for.
#10 by Iain on September 29, 2011 - 1:59 pm
Simple solution: Cancel the Trams.
The need to make cuts elsewhere will continue as the Council must find another £15 million a year and whatever is required to subsidise the weak business case for the Trams.
#11 by Alyson Macdonald on September 29, 2011 - 5:17 pm
The way that the trams project has been run is an argument against privatisation all on its own. The Council couldn’t do anything to control private contractors and prevent the increasing costs or frequent delays, so why would we want to manage other services in the same way?
#12 by Iain on September 29, 2011 - 10:03 pm
Equally, the way the Council runs the Statutory Notice systems is an argument against CEC control of anything all on it’s own.
#13 by Barbarian on September 29, 2011 - 11:15 pm
They cannot cancel the trams now. What they should have done was cancelled them after the last fiasco, but the SG stepped in, which in my view was a big mistake, since any problems now will be blamed on the SNP rather than Labour who started the whole mess.
The SNP at council level are proving that they are no different to anyone else unfortunately.
#14 by FormerChampagneSocialist on September 29, 2011 - 11:42 pm
Let’s consider some of CEC’s greatest hits….
Failed housing stock transfer
Failed congestion charging scheme
Many failed versions of the City Centre traffic management system
Incompetent and allegedly corrupt statutory notice system
Rocketing Council Tax, thankfully halted by Eck
And, of course, the Tram.
Serious question – how, exactly, could the private sector do any worse?
#15 by Aidan on September 30, 2011 - 9:25 am
the statutory notice problem, AFAIK, and the trams were the private sector doing worse. 😉
#16 by James Morton on September 30, 2011 - 10:52 am
Simply put: They can be worse because you will be paying for their costs & their profits. When the service is run properly by the public sector (don’t laugh at the back) then all you should be paying for is costs. When you engage the private sector to do the same job, then somewhere down the line you have to factor in that companies profit margins. The company itself can do a lot to increase it’s take of the money, by cutting back on staff, thereby cutting back on the service being provided. They can outsource themselves to other companies to handle certain aspects of the job, but with a reduced slice of the pie leading to a certain level of slackness when it comes to service.
The government itself may award a subsidy to said firm. it may also enter into a long term contract, say 10 years and put an initial lump sum of lets say 20million with a slush fund of 80 million. The companies who enter these contracts then will pull out all the stops to get their hands on that additional sum of money with the least amount of effort. Incidentally that last one, is an arrangement that lead to you being saddled with a worthless tram system. (that exists only on a map somewhere in a council planning office) The company then renegotiates the contract for additional fees to be made available to put right the mess they have left you with – be it a shonky IT system or a as I said earlier a non-existent tram service. In essence they behave exactly like cowboy builders and your hapless councillors and politicians will keep writing the cheques hoping the project will get finished.
And lastly there is also the PFI system, were you (and by you, I do mean you and everyone else in the UK) pay for something to be built, this “something” is then leased to us by the firm we paid to build it; usually a long term lease, say 25 years or so, and at the end of that we then get to buy what we were leasing that we had actually paid to be built.
So a serious answer to you question: The Private sector can do a lot worse.
#17 by Indy on September 30, 2011 - 11:34 am
That’s the issue for me.
I think sometimes we get confused about what privatisation means. It’s sometimes used as a way of describing the situation where a council or other body contracts out a public service to be provided by a private sector or third sector body.
But if we go back to the Thacher days of privatisation it actually meant that the service actually stopped being provided as a public service. So our taxes do not go to BT or Britush Gas any more for example, because the telephone system and the gas company is no longer a public enterprise or service.
In some ways I actually think that is a better kind of privatisation. You know, if a council thinks it really can’t afford to provide a service any more then, provided that service is not statutory, they should just stop doing it. I really believe that would be preferable to them using our money to pay the private sector to provide a public service over which we, the public who are paying for it, have no democratic control.
I would vote against any councillor or any local party which supported that position because it is just creating a kind of private monopoly, which is the worst possible outcome.
I am not against outsourcing the provision of services – sometimes they can be better provided by the third sector or a social enterprise or some kind of arms length body. But we need to be clear where to draw the line.
#18 by James Morton on September 30, 2011 - 5:25 pm
It’s a nice idea in principle but people forget that the provision of services costs. It can only be done in one of three ways. Directly in the form of fees, indirectly in the form of taxation. Or the method our politicians and the private sector seem to favour a mix of the first two.
They could be run as a non-profit trading fund, similar to the Registers of Scotland, were they charge up front for the use of the service – but it’s not always appropriate. They could outsource certain services (I really hate the term third sector by the way) but there has to be oversight to ensure that the service these companies are contracted to do are carried out. Sadly this is not the case, and getting rid of a sub standard provider can prove problematic.
The complete privatisation of public services as envisaged by yourself would not be doable for every aspect of the public sector. For the private sector to step in and take over completely with no government subsidy, then it would have to be profitable for them. But without oversight, it can lead to abuses and gouging of customers – and I hold up as a perfect example of predatory practices the very first services to transferred wholly to the private sector – telecom and energy firms.
#19 by Indy on October 1, 2011 - 7:57 am
I am not arguing for complete privatisation of public services.
Obviously there are a whole range of services which local authorities are bound to provide and I wouldn’t change that.
But what I really object to is public money being used to pay private sector companies to provide services when the public – who pay for the services – have no say over that and there is no direct accountability.
If, for example, the city of Edinburgh Council really decides to hand over waste collection services to a private contractor will the people of Edinburgh have any say in who gets the job? No. Instead it would be given to a private company who would run the service for a profit and the customers would have absolutely no say and no control. It’s private monopoly. The whole poimt about the private sector is surely that it is competitive and people have choices. If I want to buy a new pair of shoes or a new mattress I can choose from a wide variety of options provided by the private sector and find the option that suits me best. That works pretty well when it comes to buying shoes and mattresses which is why I don’t have a down on the private sector or indeed the profit motive, in many areas it works pretty well and gives us all a choice in the things we want to buy.
And the success of the private sector in proviiding choice and value to customers is often cited as a reason to involve the private sector in the provision of services. Except that’s just crap because there is no choice involved. The Council chooses which company will get the work – we, he customers, don’t. We have no choice and very little redress when things go wrong.
That’s why I said it would really be better if councils just stopped doing things instead of just handing our money over to private companies who we then have no control over.
#20 by James Morton on October 1, 2011 - 11:36 am
ah I see – you want certain services privatised and then the market gives you the choice to pick the one that suits you. Again, nice in principle but not when it comes to providing public services. Choice is something you have when you want a pair of shoes or a mattress or a special topping on your pizza – you may even choose to do without or shop down because of cost. This is not something you want happening when it comes down to public services. What exactly would a cut price bin collection service look like as opposed to a platinum plan pick up service? What would a cut down respite care service for the elderly look like – would they have a coupon day or a loyalty card for certain services? Would you even want to be put in that position? What happens when these firms try to lock us into 18 month contracts before we can switch provider or raise prices constantly leading to rubbish poverty or care poverty along with fuel poverty?
I am not trying to mock you, but draw your attention to a simple truth. A public service is provided for the good of the community. It’s benefits are rarely financial and mostly designed to improve quality of life. If you introduce a profit motive you radically change the relationships involved. It would like going round to dinner with you friends and being given a bill at the end of evening.
The private sector gets involved because they think they can make money out of it, they won’t just take over a service and run it themselves if they think they can get a government subsidy on top it. They’ll go where the money is, because that’s were the profits are.
And lastly – even if a service, say bin collections was privatised and you had all sorts of firms running along you road all day everyday – the council will keep taking your tax money. That’s the one thing we can be sure of.
#21 by Observer on September 30, 2011 - 12:11 pm
The housing stock transfer in Glasgow has been one of the biggest wastes of public money I have witnessed. It is a near perfect example of why you should not take public services out of the public sector. The only reason that the GHA is now working is because it is being managed as a Housing Department, which it could have been in the first place as soon as the debt was written off, without wasting loads of money on nonsense.
#22 by Shave on September 30, 2011 - 3:26 pm
Those who took a financial hit through the alleged corruption in the Statutory Notice system are currently seeking redress. Their most powerful tool for that is the Freedom of Information Act.
FoI requests to private companies will not work (as I understand it). There is no accountability.
#23 by Iain on September 30, 2011 - 5:18 pm
Freedom of Information didn’t bring the incompetence and corruption of the council’s Statutory Notice officials to light. Neither did intervention by countless councillors and MSPs. It is taking an external auditor and L&B’s Fraud Squad to bring the crimes to light.
After all, how can you FOI records that the council has failed to keep? (£1.3 million that cannot be accounted for at the moment)
Throughout the trams project, the council has hidden behind commercial sensitivity clauses. It’s only through external reports and leaks to the Evening News that we know it wasn’t the contractors who underestimated the volume of utilities by half, ordered trams long before any tracks or the depot would be ready and produced multiple dodgy business plans that do not stand up to any reasonable scrutiny.
Where is the accountability in Edinburgh Leisure?
What about Section 5 of the FOI (Scotland) Act that permits Scottish Ministers to extend FOI to any private company a) exercising functions of a public nature; or
(b) are providing, under a contract made with a Scottish public authority, any service whose provision is a function of that authority.
Indeed, the whole idea of “democratic accountability” is a joke. Five years between elections? That’s really going to let residents stop the trams disaster and wholesale closures of schools and nurseries across the city. We all know that next year’s election will be dominated by the same old 4/5 parties and that they’re all as bad as each other.
Edinburgh Council is neither democratic nor accountable and we should not pretend otherwise.