The Newcastle Consensus
The Washington Consensus - based on privatisation and deregulation - is dead, but someone forgot to tell Peter Mandelson. Why else is he pushing ahead with the Royal Mail sell-off, egged on by no-one except the Tories and our friends at the TaxPayers' Alliance? For an antidote to the lazy assumption that private sector management equals innovation, try Simon Caulkin's excellent management column in the Observer, starting with the aptly titled "Inside every chief exec, there's a Soviet planner".
As wise commentators testify, all of the traits that groups like the TPA attribute to the public sector - waste, inefficiency, bad management practices - can also be found in the private sector. Which isn't to say you don't get good management too, but it's often the exception - and it certainly isn't intrinsic to the private sector. (I can vouch for this personally, having worked with private, public and third-sector organisations - and encountering managers ranging from outstanding to abysmal in all three.)
For a more inspiring vision, turn to Hilary Wainwright's fascinating account of how Unison workers fought off an attempt to outsource a £250m contract for back-office IT and related services at Newcastle Council, and implemented their own alternative. Admittedly, an account of "back-office IT services" doesn't sound fascinating, but as Wainwright says:
"The Newcastle experience is of national and international importance because it shows that - contrary to New Labour's criticism of and lack of confidence in local government - public sector managers and staff can drive and lead change, generating innovative ideas and successfully implementing them. Moreover, they can contract private businesses to work to their agenda on tasks and terms determined by democratically accountable public bodies."
The union-backed scheme, called City Service, achieved savings of £28m - without compulsory redundancies - and vast improvements in services as measured by CIPFA (the Chartered Institute of Public Finance and Accountancy) and in user satisfaction surveys. In contrast to so many "transformation plans", writes Wainwright, the role of people was central: "Belief in the capacities and ingenuity of staff underpinned a collaborative, problem-solving approach."
It's not that the government is oblivious to these issues. Communities Secretary Hazel Blears has talked frequently of promoting "values of co-operation and collaboration" in public services. It's just that this rhetoric is almost always trumped by a blind faith in the private sector. Wainwright's account includes this revealing footnote:
"A report by the Prime Minister's Strategy Unit admits the possibility that two factors now generally seen as important for efficiency - collaborative practices and public service ethics - might be weakened by outsourcing. It dismisses this by asserting without empirical evidence that 'the risks to collaboration posed by competition need to be weighed against the benefits of competition in terms of stimulating innovation and the diffusion of best practice'. The report does not consider the possibility of other stimuli to innovation or other means of diffusing good practice more appropriate to the public sector - such as democratic pressure from citizens' participation, more plural forms of electoral politics, more open creative styles of management and more engagement of the workforce. It draws on Motivation, Agency and Public Policy, 2003, the work of one of the main proponents of 'competition and contestability' Julian le Grand who takes the public service ethos as a static given and does no consider conditions that might enliven it or make it more effective."
While think-tank theorists and government strategists make bold proclamations about what should happen, Newcastle's City Service experience shows how successful transformation did happen, and offers a blueprint for others resisting privatisation.
And what of BT, City Service's main private sector competitor for the Newcastle contract? Check out Guardian finance editor Nils Pratley's account of the company's global services division, which supplies outsourced IT to both the private and public sectors (including the notorious NHS IT scheme):
"Here comes BT with a unique contribution to the history of crazy compensation schemes. In June last year, the company was so eager to retain the services of François Barrault, head of its global services division, that it shelled out €700,00, or £554,000, as a loyalty payment. Four months later, BT was so eager to see the back of Barrault that it paid him €1.9m, or £1.6m, to go away.
"The detail is even more gruesome. Unlike most UK executive contracts these days, Barrault wasn't simply entitled to 12 months' salary when he agreed to resign. If that had been the case, he would have received €850,000. No, Barrault, a Belgian employed under Belgian law, was also entitled to a payment equivalent to his average bonus for the previous three years.
"This clause was daft since it turns out that bonuses in past years should never have been paid in the first place. Global services, discovered Ian Livingston on his elevation to chief executive, was not the success story that had been advertised; it was a disaster zone where costs had grown out of control. The clean-up operation will see BT shoulder about £2bn of charges."
Now that really is a waste.
Rebirth of the public sector: How public services can drive innovation, efficiency and democracy - without surrendering to the private sector
The Other TaxPayers' Alliance, Red Pepper and Unison Northern Region are organising a seminar at Compass's "No Turning Back" conference in London on Saturday 13 June. The conference runs from 9-5, with our seminar taking place at 11.15am.
Speakers include: Billy Hayes, General Secretary, Communication Workers Union; Hilary Wainwright, Editor, Red Pepper; and Simon Caulkin, Management Editor, The Observer. Time will be set aside for audience contributions and we'd really like to hear your accounts of opposing privatisation or putting forward alternatives.
Posted by Other TPA at 03:06pm on 29 May 2009
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