Might I ask a question about this outsourcing of public services?

We\’ve got Polly going nuclear here:

This is it, the last veil ripped away. In the Daily Telegraph today, David Cameron penned his preview of the long-delayed white paper on public services. The paper\’s editorial saw the light: \”For the first time he explains the full scope of his ambition to roll back the boundaries of an overweening state.\” This is indeed the eureka moment for the country. Nothing like this was ever breathed before the election.

Every single public service will be put out to tender. Everything. Well, not MI5 or the judiciary – but everything else, including schools and the NHS. Forget the camouflage of localism and choice: however much local people like local services that work well, they will have no choice in the matter. A private company – or in theory a very large charity – can challenge any service they would like to run and bid to take it over. If Serco or Capita think they can turn a reasonable profit from cherry-picking anything the council or the government runs, they will have the right to demand it is put out to tender. If they bid below the current cost and claim that quality will not fall, it\’s theirs for the asking. Not the people, not their elected representatives, nor the users of those services will be able to refuse. It will be taken out of their hands because competition law will decide. If local people want their council to hold on to a much-loved service, a company can take the council to court – at huge and wasteful expense – and almost certainly win the right to tender and win the contract.

The end of the world, eh?

So, here\’s the question. Why is outsourcing such things so bad? For example, it\’s a private company in Denmark that provides the majority of fire and ambulance services:

In Denmark, Falck is currently in charge of 65 percent of munipacility fire brigades and 85 percent of ambulance services.

We can see that it can at least potentially work. Yes, Falck is a profit making company, 402 million DKK.

And no, service isn\’t bad and no, prices aren\’t higher:

The idea: private rescue services

In Denmark, while still publicly funded, most rescue services have always been provided by one private company: the Group 4 Falck, formerly the Falck Corporation. And, with the growth of outsourcing, international surveys consistently point to Falck as the model for reorganizing rescue services the world over.

Example: fire and ambulance

Established in 1906, Falck has provided firefighting and (from 1908) ambulance services for nearly a century. Originally a family business founded in Copenhagen by Sophus Falck, the group is now a limited company, with the main Danish insurance companies among its shareholders. Since its establishment, Falck has expanded into other fields, such as home care, maintenance, meter-reading for utilities, cleaning, safety, and security; and it now works internationally in Sweden (where it has worked since 1934), as well as Norway, Finland, Germany, Poland, France, Hungary, Austria, the United Kingdom, the Czech Republic, Estonia, Belgium, and even South Africa.

Even the guard services at the Danish royal palaces and government buildings are now provided by Falck. But domestic rescue services remain the group\’s dominant sector, employing 65% of its 20,000 employees, and delivered from 132 Falck stations, co-ordinated by 16 operation control centres, administering all emergency calls.

Fire-fighting in Denmark was effectively contracted out by the country\’s first Social Democratic government in 1926, when the Fire Act was passed, allowing municipalities to hire private fire-fighting companies.

More than half of the 275 municipalities today, fire-fighting is provided by Falck, the rest being provided by municipal or voluntary fire brigades. Falck\’s provision of the service is based on an agreement between Falck and Denmark\’s association of local authorities, within which Falck and individual municipalities can draw up contracts comprising fire-fighting and related services.

For decades Denmark has enjoyed one of the lowest-cost fire-fighting services in the world (three times cheaper than in the United Kingdom, measured as a proportion of GDP). At the same time, however, Denmark has the most rigorous fire legislation in Europe, covering the size of fire brigades, training, equipment, response time, and other standards, backed up by rigorous control by public authorities.

Falck provides 85 % of the ambulance services in Denmark through a similar contractual scheme. A standard agreement between Falck and the Association of County Councils lays down Falck\’s emergency service obligations, among which is the obligation to dispatch the closest available ambulance, irrespective of where it is stationed.

The payment for ambulance services is dependent on response time and activity, so that individual counties must pay more if they demand an increase in either, and if Falck fails to honour its part of the agreement they must pay a refund. The guidelines for medical training etc are developed by Falck, but approved by the national health board.

Ooooh! Lookie!

Cheaper, better, services being provided by a profit making company.

Could someone explain to me why this is a bad thing?

20 comments on “Might I ask a question about this outsourcing of public services?

  1. Does ‘Public Service Broadcasting’ come under this?
    I’d love to see Sky undercut the Beeb for the TV Tax money

  2. Intentions Tim, intentions. In the lefty world, the state always has good intentions but private companies looking to make a profit always have bad intentions (except for when they are run by people the leftists like) and surely they are also “squeezing” their staff which is yet another sign off bad intentions (you know actually demanding that people work)

  3. Emil – I assume an example of that can be found in The Land Reform Act (Scotland) introduced by Labour and supported by all left parties in the Scottish parliament. It has provisions to enable crofting communities to apply to purchase land even if it is not up for sale (usually backed by huge dollops of public cash) and this is usually justified on the grounds that local residents will make a better fist of running the place than a single landlord.

    It’s not an exact comparison but seems to suggest that these things are evil and wicked depending on who is saying they could do a better job than the incumbent and who is receiving public cash to do it.

  4. It’s the can’t get there from here problem.

    Something tells me that the govt will f*ck up the outsourcing process.

    Whether it f*cks it up to the extent that the outcomes are worse than now, I guess we’ll see.

  5. Falck seems to lack the wonder ingredient: competition.If you had two fire companies competing you could recreate the Utopian scenario of (19th American cities where two fire engines would turn up to a fire, engage in prolonged fight for access to the publicly provided hydrant and then deploy just at the moment the building burnt down.Even better with competitive fire insurance ,as in the UK, where uninsured buildings were allowed to burn merrily, eventually taking the whole distict with them, insured buildings included.
    If you are going to allow a private company a local monopoly there’s not much point is there.Natural monoplies are better in public hands. Look at the railways for God’s sake !The subsidies given to private companies are bigger than those spent on the nationalised carriers and the fares are extortionate.. What about the Dutch privatised mail delivery eh?

  6. It’s simply a by product of accountability – or the lack thereof.

    State services are shit – the employees don’t care, the management have no stick or carrot to apply or have applied to them and the unions are selfish bastards.

    The only way to deal with this is to open up these single source markets.

    And as for Polly, she’s a batshit, bigoted hypocritical twat and thus only worthy of your scorn anyway….

  7. DBC Reed

    “If you are going to allow a private company a local monopoly there’s not much point is there.Natural monoplies are better in public hands. ”

    Which is obviously the reason for the crappy performance of Falck … Or phrased in another way: “when the facts don’t fit the theory, change the facts” (attributed to Albert Einstein if I’m not mistaken)

  8. The coming market utopia must something like The Rapture. Whilst believers gaze upon the sunlit uplands, I see only Crapita writ very fcuking large.

    Oh, to be in the spirit!

  9. Tim – I’m sure you’re right, however the likes of Crapita do not have a fantastic track record… people are right to be nervous, and the government has made a very poor fist of selling the idea.

    Some good quick wins required early on.

    La Toynbee of course is a ghastly idiot on that I think we are all agreed.

  10. Outsourcing fails when it takes the work further away from the customers and establishes targets and measures that are less aligned with customer need than they were before. The waste this causes in dealing with demand caused by failure to deliver what customers wanted, can swamp the saving expected by reducing costs by outsourcing.

  11. Och, Tim, no offence, mate, but this is just shite.

    Seven days ago, I had to pack my wife and 10 month old son into the street at 21.00 hours because the old lady downstairs had left her microwave on, and the flat was filling with smoke.

    When that happens, and I certainly hope it doesn’t ever happen again, I am not interested in any shitey ideological argument about the merits of private – v – public ownership, I want the fucking Fire Brigade to turn up and stop my house from burning down. Enough already with this shite. The Fire Brigade is public, end of. If you want to change that, fine, but be ready for Cairo and Tripoli to land on your doorstep.

  12. “I am not interested in any shitey ideological argument about the merits of private – v – public ownership, I want the fucking Fire Brigade to turn up and stop my house from burning down. ”

    Right. And Tim has produced the numbers to show that the most effiecient fire brigade to show up when you need it is the one run by a private company

  13. Martin, fond as I am of arguing, when I’ve had to evacuate a building because of visible smoke, I’ve not been interested in even an intelligent well-informed argument about the merits of private-public ownership.
    But, presumably you are not posting here while hurriedly evacuating a burning building, so what’s your objection to argument now?

  14. Was it not Crassus who became fabulously wealthy in ancient Rome by running a fire brigade? I understand that his men would turn up and negotiate the price for service on the spot, when they were in an outstandingly strong position, of course. Still, better than nothing, I guess.

  15. ‘what’s your objection to argument now?’ –

    None. Tim, as ever, my apologies. I hope you believe they are sincere. There are times when Tourette’s makes one grossly unpleasant, and this has been one of them. Your forebearance shames me. Everyone else, please remember that that is the rather splintered prism through which everything I write is filtered. I leave it to you to determine whether its value should be judged through it as well.

    If you wish an argument, Tracy, I will merely update H’s argument for the modern era. Anecdotal evidence is never the best, but while holidaying on Tenerife three years ago, I learned that one of the worst forest fires in the island’s history was set by a volunteer fireman looking for work.

    Fires being set in order to earn pay would therefore seem to be a possible outcome of fire services being privatised. Now, the UK does, of course, have thousands of volunteer firemen, and the newspapers are not full of stories telling of how they set fire to things in order to be called out on a shout. I have absolutely no idea how these folks are paid for what they do, or if they are paid at all, however they would seem to be in the same class of people as volunteer lifeboatmen. If you read Bella Bathurst’s ‘The Wreckers’, you may see that the ancestors of the lifeboatmen were those who lured ships on to the rocks for the salvage value. That is an interesting example of work that was originally considered private sector, indeed wholly non-union, being spurned in favour of its polar opposite. It would therefore appear that having people who are willing to tackle fires for pay, as long as the public is paying them, is infinitely preferable to them having to go out and trying to do the same work in the name of profit.

    Although some of us might spurn risk, and laugh in the face of the Health & Safety at Work Act 1974, the risks to everyong else might just be too great. Certainly, I don’t want to face them again.

    Tim adds: Martin: these “private fire services” are not charging a householder to offer fire protection (although that is something which occasionally happens in the US). It’s a private company which makes a contract with the municipality to provide fire protection cover for the whole municipality.

    In effect, we’re replacing council or fire brigade management with private sector management, that’s all.

  16. Tim,

    I see no advantage to the public in such an arrangement. A service which was run on the basis of service would be run instead for profit. This alone is insufficient cause to justify such an enormous operational change. Someone, somewhere might believes this this would cut costs, when the experiences we’ve had with any number of PFI projects all the way through to defence procurement should tell us otherwise. We can complain as much as we like about the FBU, but if I were going into burning buildings I’d want to be in a union as well. Having, er, noted our own recent experience of calling the Fire Brigade, I cannot see how having private sector management would make it any more efficient. However, in any transfer to private sector management there would be debt to serve, and consultancy fees, possibly bankers’ fees and certainly lawyers’ fees to be paid, and the servicing of these obligations would become the operators’ principal goal.

    The making of any notional savings to the public would be further wiped out by the public cost of appointing and funding the regulator without whom such a transfer would be politically impossible – OFFER (Office of the Fire and Emergency Regulator), perhaps? Or is that one taken already?

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