Wednesday, March 28, 2007

Southampton Strategic Services Partnership

Last Wednesday there was a very important Council Meeting in Southampton. A decision was taken to continue negotiations with the firm CAPITA about a possible deal to transfer to them the administration of a range of council services. This is a very important issue as it affects hundreds of Council staff, involves millions of pounds of public money and is about the delivery of important council services.

For the past 4 years the council has been working on a project to look outsourcing council services such as IT, customer services, HR functions, payroll, property services.

The project was initiated by the Labour Party when they ran Southampton City Council and was subsequently picked up by the Lib Dems when they formed the Administration in 2003. However all political groups have been fully involved in the discussions over the last 4 years.

A range of large companies expressed an interested in running council services and after many months CAPITA has emerged as the final company with which the council will conduct negotiations. A final decision on whether or not to sign a contract will be taken by Councillors in July and if it is decided to proceed, CAPITA will take up the running of some council services in October.

A number of articles have been written on this subject. Conservative Councillor Gavin Dick posted his observations after the meeting. Labour Councillor Matt Stevens wrote a piece before last Wednesday's meeting. Click HERE for the Daily Echo's write up.

Both the Conservatives and the Liberal Democrats voted to continue negotiations with CAPITA. Labour voted against.

I have received quite a bit of correspondence on the matter so I will set out my views on the matter.

The Business Case

The first thing to note is that outsourcing in local government is not a new thing and a number of councils have entered into these strategic partnerships and had a great deal of success. For instance Westminster and Liverpool. Southampton is fairly unique in that practically all its services are delivered in house.

Southampton City Council needs to radically improve its customer services. Years of under investment in modern technology and IT systems have meant that the council can’t deliver at the moment the sort of service to its customers that it thinks it should be providing in today’s world.

Moreover the council doesn't have a great deal of choice. The city council is not given sufficient resources by government. Council Tax increases are capped by government at 5% each year. This means it must become more efficient and effective in the way it works. The alternative is the standard of service that is provided falling.

Considerable investment is needed in IT and in process improvement. This investment should over time deliver what the customer wants and also will save money as the council works smarter and more effectively. This money can be put back into providing even better service and value for money.

A deal with CAPITA offers several things:

- Millions of pounds of up front investment
- Provides considerable service improvements which meet the council's aspirations,
- It achieves considerable cost savings and through the process of smoothing savings over the term of the contract and the council will be able to draw on these savings quite quickly.
- It transfers the risk of delivering or not delivering improvements and savings to the partner.

With these things on offer I feel that the SSP will be good for the taxpayer and for those use the council’s services. There are other ways of potentially achieving the same things but I feel that the SSP offers the best route to success.

Staff Concerns

I know that people are worried about their jobs, what the SSP means for them, their families and their futures.

The Conservative Group were certainly very conscious of this and it was very much in our minds when we debated the issues on Wednesday.

We would not support this if we felt that it was going to be a bad deal for staff and for Southampton.

The SSP does not just offer opportunities for council services within the SSP scope.

It is more than that. CAPITA’s aim is to create a regional service hub in Southampton. That means possibly bringing in other councils and other service providers in the region. If successful this will be great for the city economy and will create more jobs. The council and ultimately the local council taxpayer will share in profits from an expanding business. Staff may well have greater employment and development opportunities in such a business.

We therefore all benefit if we can make this work.

It is true that there are no guarantees for staff however that would be the case even if the council didn't pursue the partnership. Staff transferred to CAPITA would have their pensions protected and CAPITA would be granted admitted body status to the Hampshire Pension Fund. This is the fund that council staff in Southampton currently pay into and this is an important safeguard.

The Labour Position

The SSP was originally a project set up by the last Labour administration. The Lib Dems have continued with it and the Conservative Group have gone along providing constructive input but making it clear that we will support a deal only if it is good for Southampton – the taxpayer, staff and those that use council services.

UNISON have come out strongly against the outsourcing move. They have decided that they will encourage strikes and will ask staff to "work to rule" to show their protest. They have also said that they will actively work against political parties that support deal with CAPITA by providing financial assistance to their political opponents in the forthcoming local elections.

Labour have decided to pander to the UNISON position and are also saying that they will try to frustrate and block all moves to appoint CAPITA, encouraging strikes, encouraging staff not to work with the company and issuing threats. The language used by some Labour Councillors in the Council meeting on Wednesday was shocking. Threats of intimidation and strife were reminiscent of the militant left in the 1970s.

It was Labour who started the process of working with a private company with aim of outsourcing council services. However when faced with the eventual decision and hostile unions they have shown their true colours. All the things that Labour were looking for from a deal with a private company are on offer from CAPITA; investment, better services, financial savings and better job prospects for staff. However Labour have turned away from this to cosy up to their financial backers, the trade unions. They are putting themselves first and not Southampton.

The Labour Party are now arguing that the Council should try and achieve savings and service improvements in house. It is possible that the Council could achieve this. CAPITA in my view are more likely to deliver as they will be tied into a contract to deliver services at a set price. They also have the expertise in delivering organisation change and implementing new technologies which will improve services.

Why we should be very wary of the politicians

The biggest reason why I think the council would not deliver the improvements if it went at it alone is the risk posed by interfering politicians. If the Council did it alone it would have to borrow millions of pounds to invest in improvements. It would then have to deliver the savings over the next ten years to justify that investment. In Southampton we have elections every year and the political make up of the council can change annually. This means each year a different political party could be in charge and setting the council's budget. It is too tempting for politicians to change direction if things get tough. The way that Labour have behaved and the language that they have used shows that they absolutely cannot be trusted to see a long term project through.

Council officers recommended that the council proceeds with this deal with CAPITA. We were right to listen to them. By contrast council staff should be very wary of the politicians.

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