Though Cowards Flinch

1.  The local

The other day I wrote (at my local blog, the Bickerstaffe Record) about the failure of my local Conservative council, in West Lancashire, even to approach Serco Operating Leisure Ltd, to which it has contracted out the management of its leisure facilities, about a reduction of the contract price to help the council through what it considers a difficult financial climate.

In brief, the council has tied itself into a 15 year contract involving a £1million subsidy a year to Serco.   Now it says it needs to make savings of around £1.5million per year, is cutting 57 jobs and a load of services, and while all other divisions of the council suffer, Serco’s contract price remains unaffected.

Of course legally the council can do nothing, because a contract is a contract, however badly negotiated it is – and this one’s really badly negotiated by the council – but a refusal by the council even to approach Serco to see if they can ‘do the right thing’ reveals a lot about both partners in the contract.

Now comes the news that the Serco share price has risen some 27% and revenues are uo 31% (hat tip: Flipchart Faiy Tales and Vino).   As the Daily Telegraph reports it:

‘Holes in public finances mean governments are seeking to outsource services in order to lower costs while maintain the quality of services and this has helped Serco to secure a record number of contracts so far this year, £4bn, and revenues of £1.95bn.’

2.  The logic

In the way the Telegraph sets this out, of course, lies the assumption that the private sector can magically maintain service quality at a lower cost – an assumption which is  symptomatic of a wider ‘private good/public good’  kneejerk reaction amongst Conservatives.

This  is a convenient rightwing fiction, and one which has been accepted without critical examination by the Labour government in its drive for ‘modernisation’ of public services, but which conceals an obvious truth – a truth ackowledged in an unguarded moment of clarity by Shadow Minister for Education Nick Gibb:

‘The trouble with allowing companies to make a profit from providing schools is that it take money out of the education system, significant sums of money out.’ (hat tip: Angela, offline)

In the case of my own council’s transfer of services to Serco, the claim that services have been unaffected or even improved has been proved palpably false (by me), as usage of leisure facilities has plummeted, prices have soared (though Serco has tried to conceal this through mathematically flawed ‘average’ price rise figures), and deliberate efforts to starve poorer areas of investment in favour of richer areas have taken place.

Such is the cost of the profit margins, the payments to shareholders, which drive private sector firms like Serco to expand their business with the public sector in the way they now do (hat tip: Duncan, offline).

None of this is rocket science.  What comes out as profit must necessarily go in as cost somewhere.

Of course private operators can reduce costs by seeking to lower the terms and conditions of staff, following their transfer from the local authority (or offer reduced terms to new staff joining), although the Transfer of Undertakings (Protection of Employment) Regulations (1981) (TUPE) (revised in 2006) still offer a level of protection.

However,  such cost reductions take time to work through and there are operational difficulties in developing two tier payment structures, and many private operators will prefer in the shorter term to combine such measures (e.g. pension changes) with the running down of services, and alongside contract negotiations which exploit local government middle management without the expertise to develop contracts that guarantee long term service quality standards for service users, let alone guarantee anything ressembling equity of provision.

Such niceties of quality and equity of service provision matter little to Conservative councils like mine, of course, and many have developed ruthlessly efficient PR machines (and the effective corruption of scrutiny processes) to ensure that real cuts, and real developing inequities, go unnoticed by the media, and are difficult to pin down as such by information-poor residents.

Residents  may complain singly and even occasionally loudly about price rises and reduced services, but lack the power to do anything substantial in the absence of  solidaristic support from councillors and local parties, whose roles have been moved away from this area of real political  involvement by compliant New Labour diktat (not a subject of this post, but an important dimension).

Increasingly, also, Conservative councils such as mine are seeking to use these PR machines to jockey for position as the most ‘innovative’ players in the service reduction and privatisation game, in expectation of the credit and the baubles their political masters may receive from an incoming Conservative government.

Leading the Conservative pack on this at the moment is Barnet EasyCouncil,  but many others aspire to this position of Conservative cutting edge profile.

3. The legalities

Lurking behind this new rhetoric of ‘service redesign’ and ‘refocusing on priorties’ lies the full, dark  agenda of a prospective Conservative government – an agenda revealed by the quiet but determined work now going on, largely behind the media scenes, to change the whole legal framework within which local government operates, and to do ‘within weeks’ if they come to power.

This change comes in the form of the Conservative-dominated Local Government Association’s campaign, explicitly backed with the ‘in weeks’ timetable by David Cameron at its annual conference in July, to introduce a new ‘General Power of Competence’ to local government.

Such legislation is being proposed, say the Conservatives, because the current Local Government Act of 2000, which gives councils the power to act in the interests’ of their citizens’ well-being (and a duty to develop a community strategy to that end), does not go far enough.

As evidence of this, they cite the recent ruling by the Court of Appeal that the Local Government Act does not empower a number of local authorities to form London Authorities Mutual Limited to provide its mutual insurance and risk management.

That’s pretty dull stuff, and the precise reasons for the Appeals court judgment need not detain us here, since in any event it is clear enough that other powers already exist which could carry forward the mutual insurance idea without the need for new legislation.   As the Local Government Chronicle report I link to above, and written by a specialist lawyer in the area, says:

‘Councils do not have to wait for Parliament or the courts to revisit the wellbeing power’s breadth. Parliament has already provided a wide range of other powers which allow complex and pro-active endeavours. These include: Best Value (section 3 Local Government Act 1999), which enables councils to improve efficiency and participate in joint venture companies; Section 12 of the Local Government Act 2003, which enables councils to invest in any purpose relevant to their functions; Sections 93 and 95 of the 2003 Act, which enable councils to respectively charge and trade……’

What should concern us instead is that this technical issue (of the relationship between UK legislated well-being powers and EU procurement legislation) is being used as a pretext by the Conservatives to introduce brand new legislation, and that this legislation – in an area of government which is a closed book to much of the media –  is being earmarked as top priority by Conservative HQ.

It should concern us because, under the guise of a general power of competence for local councils to do what they want to do for their populations, we will get legislation which allows councils like Barnet, and West Lancashire, to get away without doing much less for them, and doing it much more inequitably.

Of course, we haven’t seen a draft of the bill they propose to rush through yet, and of course what will appear if the Conservatives come to power will be a very short bill with an awful lot of Statutory Instrument detail to follow - trickery the Conservatives worked out how how to use with the NHS legislation in the late 1980s.

But you can bet your bottom dollar that what will appear in time, if the Conservatives come to power, will be the green light for councils to stop doing many of the things they have to do at the moment, and to palm off as many of their responsibilties to the private secotr as they can, with even less imposition of uncomfortable things like democratic scrutiny (i.e. the stuff I try to do) than there is of ‘outsourcing’ arrangements right now.

In the shorter term, you might, then ,expect to see Tory councils use this new freedom to do as little as they can and to, for example, abandon their current statutory duty to provide emergency housing for the homeless, or to undertake proper food premises inspection, or even bother to make any kind of plan for the wellbeing of their residents at all.   All they’ll need to do is give a reasons why such things are not needed, and bob’s your uncle – that’s that service cut.

Of course, the PR machinery of Conservative councils will not be cut, and a compliant media will lap up stories of how these ‘progressive’ Tory councils are suddenly able to slash costs and council taxes, and the race to the council tax/service provision bottom will being in earnest.

Soon enough, the hard won really progressive gains won by generations of local government activists, from the Poplar councillors onwards, will be eroded in the name of new efficiencies and, quite perversely, the name of ‘general competence’.

While the Thatcher government couldn’t achieve its total demolition of the local government function, Cameron’s cuddlies will achieve it by the back door, and Nicolas Ridley’s wish, set out in his 1988 pamphlet ‘Local Right’, that local councils should ‘meet just once a year to award all the council service contracts to private firms’, will come much, much closer to reality.

Democratic overview? Equality of provision? Who would need that in this brave new world of local government?

4.  The Left

And if that sounds a bit scary and out of leftfield for the left, that’s because it is.

Our compassionate Conservative HQ has done a very efficient job to date at keeping the reality of this agenda under wraps, even as its favourite Tory councils scrabble for position to deliver that reality for them.

And of course if what I set out here gains wider coverage, the Conservative will say that they intend nothing of the sort, and that I am some kind of wild-eyed conspiracy theorist leftie.  That’s only to be expected.

Where does that leave the left, and especially the left that understands this kind of thing?

Well, it leaves us with a challenge, and it’s the same kind of challenge I set out here in relation to the little-known, less understood, but far-reaching corrpution in the international credit rating agency industry.

The challenge is to draw together the various types of activism within the left – from direct to indirect – and raise the profile of what is being planned so that effective action can be taken to combat it.  It is rising to this challenge, incidentally, which will be a key theme in parts 4 and 5 of my current ‘in development’ 6 parter on the future of the left of Labour party.

This obscure area of local government legislation should be one of the (Labour) left’s tactical areas of engagement, because if we get it right we stand a chance of winning, and sticking it to the right in a way which also develops our credentials as a force of socialism to be reckoned with.

If we don’t bother, or if we get it wrong, the consequences for those who actually depend on the services of EasyCouncils, up and down the land, will be large.