Realising that compulsory competitive tendering had failed to deliver enough privatised council services, Labour first looked to Best Value to achieve the same end. When union resistance ensure that did not work, they turned to a new weapon...

Performance Assessment – a stick to drive privatisation in local government

WORKERS, DEC 2005 ISSUE

A group of managers and their trainers look amazed and perplexed at the list of performance indicators local government have to comply with. The trainer, who has experience advising a wide variety of private and public organisations, agrees this list is nonsense, not the way to improve performance.

They are all missing the point. The real purpose of the new performance regime introduced in October and trumpeted as "star ratings" is not to improve local government services but to drive them into privatisation.

As in the health service and education, the modernisation and reform agenda being advocated by Blair aims to break up public services and make them available to the private sector as a direct source of profit.

The commitment and loyalty of the public towards public services in Britain is so high that their break up and privatisation cannot be done directly. So the EU provides the vehicle to disguise the attack as reform and improvement of the social model. Their key weapons are control of finance and the use of performance regimes to force change in the direction of fragmentation and privatisation.

To understand this it is useful to look how performance regimes have developed in local government. During the Thatcher period, local government was subjected to Compulsory Competitive Tender, in which the attack was direct. It forced local government to put its services out to competition through tendering.

Enthusiasm
Many local authorities under Tory control embraced the regime with enthusiasm initially. Hence the effect varied around the country. Tory councils in the shires and some city enclaves applied it enthusiastically, whereas where in the mainly metropolitan councils controlled by Labour, resistance was greater, so that a combination of union and public pressure resulted in much more limited impact. Trade union representatives used their consultation rights to ensure tender specifications did not reduce the quality of the services and made extensive checks on the financial stability and performance history of private bidders.

Union research departments played an important role investigating firms and providing information to stewards, who formed effective anti-privatisation campaign committees. The most effective mobilised the knowledge of the service at all levels of the membership from the front-line workers to the managers.

In one campaign to prevent the privatisation of leisure services in Sandwell, West Midlands, for example, close examination of the private bids and specifications revealed that the provision of swimming pool attendants was actually unsafe. This and many other facts were used in a public campaign and a series of lobbies that resulted in the Council rejecting the apparently cheaper private bid.

It was clear also that the privatisation was inefficient since it required the setting up of two managerial organisations for each service – one to provide the service and another to monitor its performance – with endless argument about compliance. The system was far from ideal for private firms, with public scrutiny of their performance and relatively short contracts, between three and five years.

From Bradford (left) to Waltham Forest in London, councils are coming under spurious pressure to perform.

TUPE
Under the regime of compulsory competitive tendering (CCT), an EU invention called Transfer of Undertakings or TUPE became commonplace. Stewards and managers began discussing the TUPE regulations, which stipulated that when a private firm won a contract, the whole workforce in a service transferred to the firm and became their employees.

Such was the resistance to the transfer that the privateers were reluctant to change pay and conditions in the short term, fearing industrial action and public backlash. Instead many adopted the policy of encouraging transferred employees to leave and replacing them with new ones on lower conditions. So was born the two-tier workforce.

At the time there were not enough private firms with capacity to bid for most local government services. This resulted in a concentration on certain services such as refuse collection, cleaning, repairs and maintenance, and school meals.

Transferred
In these areas a significant number of councils transferred their workforce to the private sector, affecting manual workers disproportionately. In some of these areas new monopolies arose such as Scholarest, offering Turkey Twizzlers and rebates to councils from money collected for school meals as inducement to gain the contracts.

But capital, accountants and management consultants turned service providers by takeover were not satisfied with CCT and started to lobby for much longer and larger contracts, which tied a lot of services together. So arose the Private Finance Initiative (PFI), later to be renamed under Labour as the nicer- sounding Public Private Partnership (PPP). This was much more attractive to capital since it allows capitalists not only to profit from the exploitation of a large number of workers for a long time, typically 25 to 30 years, but also to charge high interest on the capital used to buy some asset such as a building or computer system.

So by the time Labour got elected in 1997 the CCT regime had become obsolete and discredited. Those who had great hopes for the new government expected the disappearance of CCT and a return to local government services run by elected local councillors to fulfill their electors' needs. And when the government announced it was replacing CCT with Best Value, many smiled with relief, for it promised services based on quality as well as cost effectiveness. At last politicians must have realised the madness of CCT!

Alarm
But as the details of the Best Value regime appeared, alarm spread among union representatives. Every service had to carry out an internal review, report what they do, how they do it, why they do it that way and what it costs to do it. The review must follow the four Cs, Consult, Compare, Challenge and Compete.

The reviews were to prescribe a series of actions to achieve continuous improvement. Reports were to be audited and potentially failing services forced to go to tender for alternative providers.

The union organisations debated how to respond to this regime, with some proposing industrial action to get rid of it altogether. Most thought this was unachievable and would not receive public support. From the debate, a strategy emerged to involve union stewards in the reviews and ensure improvements were achieved while fighting any privatisation.

There was confidence that members knew how best to improve services and any productivity improvements could be made to result in the use of the spare capacity for the provision of new services rather than redundancies. There was potential, too, to retrain workers, enhancing careers and improving pay and conditions. So unions concentrated on ensuring a robust consultation regime and trained stewards for the new battle. The experience of CCT was going to serve us well. Best Value could be harnessed.

When it became clear that Best Value did not result in privatisation, it was time for the government to change course.

Out of the blue and without any reference to the results from the Best Value regime, the government announced that it was sending groups of assessors to all councils to carry out Council Performance Assessments (CPA). Councils would be rated: poor, weak, fair, good or excellent, and also with or without prospects of improvement.

Narrow criteria
But the criteria for judging the councils were going to be narrow. Only a few key services would be looked at, and those according to criteria set by the government. Most important in judging performance were education and social services, which had the scores multiplied by large factors. Controversially these services were judged not by the quality or quantity of provision but what the government calls output.

In the case of education, for example, what mattered was the position in the national league table of results of the schools in the council.

Not surprisingly metropolitan councils with large areas of deprivation did badly. It was predictable that many of the councils controlled by Labour in London, the Midlands and the North would score badly under the CPA criteria – because it was precisely those councils that had resisted privatisation most strongly.

In its latest guise the CPA has added a new criterion – use of resources – which makes it even clearer that a council is penalised for keeping a service public.In Unison's response to the government consultation on CPA, the union made the following key criticisms:

• The CPA framework is biased towards delivering weak and poor judgements;
• CPA approach is a simplistic tool, used to assess the performance of a complex multifunctional organisation;
• CPA condemns a local authority on the poor performance of a single service;
• Councils are penalised for making a democratic choice about their local priorities;
• No account is taken of social deprivation or other local factors when assessing authorities under the CPA;
• CPA's poor and weak judgment has a detrimental impact on staff morale;
• No right of appeal against a CPA judgment.

Playing the game
One council, Ealing, took the Audit Commission to court and won, forcing the commission to change its rating from weak to fair. But most have taken the view that they need to play the game, learn the rules and how best to achieve a good score. Most worryingly, it is clear that councillors have got the message: to get a really good or excellent score they must go into partnership with the private sector.

When councillors are challenged by the unions as to why – since our services have already shown the capacity to improve – we need to transfer them to outside firms, they reply: we must explore whether improvement would be faster by their investment in computer systems and special knowledge of customer centred delivery.

Why then does the council not use its borrowing powers to get the finance for capital assets and, if necessary, outside expertise, as it has done in the past? This can be shown to be cheaper, say union representatives. The reply is very revealing: the council cannot make the savings to make the payments on a loan, but outside firms can.

Reductions in conditions
In other words the outside firm will get more out of the workforce, partly by reductions in the workforce and their conditions, partly by using them to provide services not just for this council but other public sector bodies.

One council leader said, "I want us to be first in the area so as to keep the jobs here." In other words we should take over the work in other councils or other public sector bodies such as the NHS. The government has thus used the CPA to create a competition among council leaders as to who will privatise first.

Now, the private sector does have organisations to take over council services. Many are former public sector organisations like BT or parts of the power or water utilities under new names such as Vertex. Others are computer multinationals like Fujitsu. BT offers the possibility of council workers being seconded, keeping their employment with the council. This is a fallback position favoured by union members.

European twist
As a further twist, also initiated by the European Union, councils now have to make "Gershon" savings of 2.5% every year. This is a device directly linked to European Union monetary policy aimed at reducing public spending.

However ingenious the tactics used by trade unions, it is clear that to defeat privatisation we must look to the originator of the attack, the European Union and its agent Blair, both serving capital. The battle to save local government services is part of the battle to save the nation. It must be treated as such, before it is too late.

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