Labour pledges to end the scandal of outsourcing services involving contact with people 'at risk'
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After a string of outsourcing disasters across whole swathes of
Britain’s public services, Labour today outlines new guidelines for
central and local government managing contracts for services which
come into contact with 'at risk' people and exercise coercive state
powers. These kinds of services include assessments for sick
and disabled people claiming social security, NHS care, the
treatment of people in detention centres and prisons, and failures
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After a string of outsourcing disasters across whole swathes of Britain’s public services, Labour today outlines new guidelines for central and local government managing contracts for services which come into contact with 'at risk' people and exercise coercive state powers.
These kinds of services include assessments for sick and disabled people claiming social security, NHS care, the treatment of people in detention centres and prisons, and failures over recruitment and substandard housing for our Armed Forces.
Under Labour’s plans, whenever a relevant contract expires or is terminated, central or local government will be required to assess whether a service involves significant contact with ‘at risk’ groups, exercise of coercive powers, or risk of infringement of people’s rights. If the answer is “yes,” statutory guidance will be to bring the service back in house - except in the following cases:
- The contract does not fall under a statutory definition of 'relevant contract'.
- The value of the contract is below a certain threshold.
- The contract is between local authorities (or between a local authority and another public authority).
- The public authority can demonstrate that it has ‘good reason’ to override statutory guidance, where ‘good reason’ is defined to include the following:
o The risks involved with significant contact with 'at risk' people, exercise of coercive powers, or infringement of people’s rights are best mitigated by retaining outsourced provision.
o A council or department does not yet have sufficient capacity to insource a service, even after taking into consideration new measures, introduced as part of the Labour Party’s insourcing policy, to support the expansion of council capacity (these will include: the provision of a model contract (which will save contracts and departments time and resources in drafting contracts); access to the Government Legal Department for contract management, modification, and review; and greater support for collaboration amongst councillors across the country.
Andrew Gwynne MP, Labour's Shadow Communities and Local Government Secretary, said:
"For too long the British public have paid the price for outsourcing.
"The Tories’ dogmatic commitment to markets at all costs has delivered sub-standard services at inflated prices. And when they fail, as they often do, it’s the taxpayer that picks up the bill.
"Labour is proposing a radical new settlement that gives people the power to end outsourcing and decide for themselves how best to deliver the services they need.
"For too long this county has been run by and in the interests of a small few who are all in it together. It’s time to shift the scales and bring democracy and accountability back to government, and put power in the hands of the many”.
Ends
Notes to editors
· This proposal is drawn from criteria used in Barcelona, and in particular Ajuntament de Barcelona (the Manager’s Office for Human Resources and Organisation within the Barcelona City Council).
· The criterion outlined above is one of a number of recommendations in a forthcoming report setting out a new framework for insourcing local services.. Each question will be accompanied by statutory guidance elaborating on the intended meaning of the questions. The exact wording of the questions can still be adjusted or refined following further consultation once Labour is in Government.
· Where public authorities continue to outsource, contracting will be subject to the following additional conditions:
o Mandatory, meaningful public consultation before services are outsourced;
o Contracted providers will be subject to the Freedom of Information Act and the Human Rights Act;
o A fair wages clause, preventing contractors from paying workers less (and offering worse conditions) than those doing equivalent work and directly employed by the public sector;
o The duration of the contract does not last longer than the democratic cycle;
o The contracted provider is required to pursue social value objectives, including: use of local supply chains, gender pay audits, paying their taxes, recognising trade unions, respecting workers’ rights and equal opportunities, protecting the environment, providing training, and paying suppliers on time.
· This framework is the product of a series of conversations with unions, academics, outsourcing experts, and representatives of outsourced workforces. It is set out in a 50-page paper, which contains excerpts of draft legislation, to be published shortly.
· The framework is workable and ambitious, and could achieve the democratisation of local public service delivery alongside democratic public ownership of key assets at the national level.
Outsourcing disasters involving ‘at risk’ services
PIP and ESA assessments
· The outsourcing of assessments for Personal Independent Payments (PIP) and Employment and Support Allowance (ESA) has led to:
o Nearly 300,000 claimants, six per cent of all those assessed, only receiving the correct award after challenging the decision.
o A breakdown in trust among disabled people, many of whom are concerned assessments are not being delivered fairly.
o Contractors failing to meet any key target on levels of unacceptable reports in any single period, with almost a third of PIP assessments considered not up to scratch.
· The Work and Pensions Select Committee said that the Government continues to support outsourcing despite quality targets being “universally missed”. The same report urged the Government to question whether assessments should now be “delivered in house”.
NHS
· Privatisation is rampant with billions wasted on poor quality private heathcare including £8.7 billion spent on private providers in the NHS in 2017/18. · A report by the National Audit Office, released in May, has severely criticised NHS England’s decision to outsource primary care support services to Capita. · The report says Capita’s failure to deliver the services properly had “put patients at risk of serious harm.” · NHS England may have to pay up to £3 million in compensation to primary care providers as a result of Capita’s poor performance. · The privatisation of cancer services in Oxford https://www.banburyguardian.co.uk/news/uproar-over-secret-privatisation-of-oxfordshire-s-major-cancer-service-1-8826950,https://www.theguardian.com/society/2019/mar/13/halt-privatisation-of-cancer-screening-or-risk-patient-harm-mps-tell-nhs-england
The decision to privatise this service was attacked by Jeremy Corbyn: https://twitter.com/jeremycorbyn/status/1103571699897942017?lang=en-gb
G4S and Detention Centres · What I saw when I went undercover. The 21-year-old whistleblower at the immigration removal centre https://www.bbc.co.uk/news/resources/idt-sh/g4s_brook_house_immigration_removal_centre_undercover Prisons
· Birmingham Prison has been taken over by the government from the private firm G4S, after inspectors said it had fallen into a "state of crisis". · Chief Inspector of Prisons Peter Clarke described it as the worst prison he had ever been to. G4S was awarded a 15-year contract in 2011 to operate Birmingham Prison. Mr Clarke said there had been an "abject failure" of contract management and delivery. · Extra staff are being brought in and the jail's capacity cut by 300. · It is believed to be the first time the government has taken over a privately-run UK prison in such a way, midway through a contract, since the first one opened in 1992. · There were 1,147 assaults, including fights, recorded at Birmingham in 2017. This was the highest figure for any prison in England and Wales that year, or on record under modern reporting standards. It represented a fivefold increase since 2012, the first full year that it was run by G4S. · Of the 16 privately run jails in the UK, G4S has contracts to operate five of them, including Birmingham. Ministers believe the others the company runs - Altcourse, Oakwood, Parc and Rye Hill - are performing well.
Defence
· The Ministry of Defence has outsourced Army recruitment to Capita. The contract is failing on every measure, as it is not making the promised savings, and Army numbers continue to fall. · According to the latest figures, as of 1 April 2018 the number of fully trained personnel in the Army was 77,120, down from 78,480 at 1 April 2017, and well-below the target of 82,000. · For the last six years of its contract, Capita has delivered just £2.73m of savings against a Ministry of Defence target of £104.3m. · Capita is also providing ICT for the Royal Navy and the Royal Air Force. Its new IT system has been plagued with defects leading to difficulties for those trying to join the Armed Forces. · Despite all this, the MoD has announced it will be privatising the Defence Fire and Rescue Service, estimated to be worth £500m over 10 years. · Labour has been highly critical of the outsourcing of military housing to CarillionAmey, which has received a high number of complaints about the poor quality of housing and lack of repairs. The most recent survey shows that only 51 per cent of the armed forces are satisfied with service accommodation. · Prior to its collapse, Carillion operated across a portfolio of contracts, worth about £1 billion, supporting more than 360 UK defence sites and establishments. · In the Times on Thursday: Army boss Lieutenant-General Sir Mark Mans joined company after it won ‘disastrous’ deal https://www.thetimes.co.uk/article/army-boss-lieutenant-general-sir-mark-mans-joined-company-after-it-won-disastrous-deal-fzczktdg0 Carillion
· Carillion was formally the UK’s second largest construction company and a strategic supplier to the Government. · In total, 2,787 people have been made redundant as a result of liquidation. This constitutes 15 per cent of the pre-liquidation workforce. 13,945 employees have now found secure ongoing employment. · Channel 4’s Dispatches looked into the collapse of Carillion and found that “From late 2015, around a quarter of Carillion’s shares were used by hedge funds in bets the company’s value was going to collapse. That was more than for any other company on the London Stock Exchange.” · Furthermore, Stephen Rawlinson, an Independent Analyst and Consultant that worked with Carillion, criticised the Finance Director, Richard Adams stating: “…when the numbers didn’t come to what he wanted them to be, he would simply say to the management, go back and do the numbers again.” · KPMG partner Peter Meehan and three other staff have been suspended over Carillion audit information provided to the Financial Reporting Council. KPMG found evidence that suggested that the data handed to the FRC was manipulated.
Construction Procurement
· Total debt for the top ten contractors increased to £3.92bn, up 24 per cent compared to the last financial year. Debt among construction companies is concentrated in the top 10, which accounts for 81 per cent of the £4.87bn in total borrowing across the top 100. · There was a 13 per cent rise in the number of construction companies going insolvent in 2018. 2,954 companies went bust last year, the highest figure since 2015.
Midlands Metropolitan Hospital
· Work on the Midlands Metropolitan was suspended following the collapse of Carillion in January 2018. Whilst Balfour Beatty has been hired to complete remedial work on the hospital the selection of the main contractor will not take place until the summer of 2019. · The Government has confirmed that it will directly fund the completion of the hospital. Sandwell and West Birmingham hospital trust had initially considered a new PF2 deal however this was abandoned due to the higher costs and risks involved. · It is reported that Deloitte has carried out financial estimates on the costs of finishing the project – and the hospitals total construction cost will be £524m, a 50 per cent increases on the original £350m budget. · The hospital had due to open next year however it is not expected to be completed until 2022. The board of the local NHS Trust has warned that any delay beyond this point will lead to “unsustainable” service in the region.
The ‘Big Four’ Accounting Firms
· The Parliamentary joint inquiry was highly critical of ‘The Big Four’ accountancy firms who are believed to have recouped more than £65m for Carillion-related work over the last decade. · KPMG audited Carillion’s accounts for 19 years, charging £29m in fees and it is claimed that they failed to exercise professional scepticism towards Carillion’s accounting judgements. · The Commons report emphasises that this is not an isolated incident“but symptomatic of a market which works for the Big Four firms but fails the wider economy.” · Just three days before Carillion was declared insolvent, it managed to pay EY £2.5m and other City firms a further £3.9m. · Business Secretary Greg Clark has appointed Donald Brydon to lead another review into the auditing profession following concerns raised by the joint inquiry into Carillion. · Three of the four ‘Big Four’ accounting firms (KPMG, Deloitte and PwC) are Government Strategic Suppliers. Only EY is not a listed – although it did win 45 government contracts last year. |