Odd from Polly

Since Margaret Thatcher forced compulsory competitive tendering on councils, there has been, astonishingly, no evidence and no research to prove whether outsourcing is value for money. There are no controlled trials, no measuring long-term effects or knock-on costs to the state of lowering pay, finds the Smith Institute.

Hmm.

Outside the gates of the British Museum last week 60 outsourced cleaners, porters, technicians, plumbers and electricians petitioned to be taken back in-house. They were handed over to Carillion five years ago. Now the company’s bankruptcy leaves them in limbo, and they want to return as the museum colleagues they once were.

But where are the rest of them? Carillion crowed to Facilities Management World that it was taking over 138 museum staff in a “hugely prestigious contract”. But those 138 have dwindled to just 60, for the same volume of work. That’s how outsourcing operates, cutting more brutally than public employers dare.

That is a trial right there isn’t it?

23 comments on “Odd from Polly

  1. “But those 138 have dwindled to just 60…”

    And is the British Museum a dirty, dangerous, unsanitary place as a result? No?

    QED.

  2. The original report from the Smith Institute is not very good. There is lots of evidence about outsourcing in the literature.

    https://search.proquest.com/docview/236838469?pq-origsite=gscholar

    A data-set on refuse collection costs and services for the 365 English local authorities over the period 1984-1994 is used in a study of compulsory competitive tendering. … As far as refuse collection is concerned, it seems indisputable that there has been a significant reduction in cost following the introduction of compulsory competitive tendering. There is some evidence that the reductions are not fully sustained over time.

    http://journals.sagepub.com/doi/pdf/10.1080/00420989020080641

    Generally, there appears to be ample evidence to support the Government’s claim that competitive tendering produces appreciable cost savings .

    https://www.tandfonline.com/doi/abs/10.1080/758536232
    Competitive tendering and contracting in the public sector: A survey.
    A broad sweep of the empirical findings suggests that CTC generates substantial cost savings.

    COMPETITIVE TENDERING IN LOCAL GOVERNMENT: A REVIEW OF THEORY AND EVIDENCE.

    Is a bit more sceptical while admitting:
    . The evidence includes four analyses of VCT (voluntary competitive tendering) and five of CCT. All the results suggest that competition is associated with a reduction in expenditure. Furthermore, five studies find that competitive tendering had no effect on service quality, and one finds that quality improved.

    Thus the empirical evidence appears to provide strong support for classical public choice hypotheses on the effect of competition on public services. Furthermore, taken at face value, the results offer a resounding endorsement of the Conservatives’ imposition of CCT on local government.

    Negative claims are based on various issues –

    First, four of the six studies which find higher efficiency deal exclusively with refuse collection. The only study which covers all eight of the CCT services specified in the 1988 Local Government Act is Walsh and Davis (1993). Their results show that the expenditure reduction in refuse collection is higher than the average for other services. Indeed, CCT appears to lead to additional spending in street cleaning and some aspects of catering. Furthermore, in each service area there are examples of substantial cost increases as well as decreases (see table 2). Thus figures for average savings from CCT seem to be biased upwards by the emphasis on refuse collection, and disguise the fact that, in some councils, competition has imposed extra financial burdens on local taxpayers.

    Classical public choice theory suggests that the selfish motives and monopoly powers of bureaucrats lead to oversupply and inefficiency in the public sector. A remedy for these problems, it is argued, is the introduction of competition into public services. … Moreover, competitive tendering may impose new burdens on public services, for example transaction costs, trust costs and rent-seeking costs

  3. Compulsive competetive tendering for public sector procurements above a certain value is an EU law and nothing to do with Maggie – hence the French blue passport business, incidentally.

  4. TMB, don’t you come putting facts on ‘ere when the likes of Polly want to blame the Sainted Margaret for all the ills of modern Britain.

  5. It’s my recollection that compulsory competitive tendering was introduced by Maggie prior to the EU insisting on it. Again from memory the change the EU made was to insist that bidders be invited from across the EU rather than just from within member states.
    However, if Polly dislikes CCT so much, why did she want to stay in the EU?

  6. ‘Armies of public servants.’

    Carrying signs from Public and Commercial Services Union. Union activists aren’t servants.

  7. I think originally the EU requirement was for CCT for supply of Goods.
    The Services Directive came later, and was far more awkward to implement. Shipping trucks in from Munich or Milan is somewhat different from arranging street cleansing in Manchester from an office in Maastricht.
    Tendering was eventually done under the “restricted” procedure, which allowed filtering of the bidders by assessing their competence. this might have been the one used for the passports.
    I had someone apply for a very technical contract from an office with an address “Behind the Post Office, Mumbai”. I was able to reject him because he couldn’t demonstrate the ability to do the work.

  8. I thought the Blessed Margaret brought in compulsory competitive tendering in the UK before it was an EU thing?

    The EU then buggered it up by imposing TUPE on us, so that the bidders had to take on the same local council staff at the same rates.

  9. RichardT – I understood that TUPE only lasted as long as it took the company to write new employment contracts . . . .

  10. When we lived in Oz people were astonished to hear that British rubbish bins were emptied by council employees. It seemed mad to them.

    Similarly when we lived in NZ people bridled at the idea that domestic water supply should be metered.

    Conclusion: unreflective people assume that what they are used to is the natural order of things: virtually God-given.

  11. Initially competitive tendering for rubbish collection and street cleaning made a huge improvement in Derby.

    Previously it was thought that the bin men deliberately spilt a quantity of rubbish to make overtime for the street cleaners. Whether that was true I don’t know but the combination of wheelie bins and private tendering made a huge difference and we were no longer habitually ankle deep in rubbish in the town centre ( only a slight exaggeration).

    A little later I was a school governor and the school meals contract was up for tender. The Labour Councillor who was a governor was very pleased to tell us that they had drawn the contract in such a way that only the existing direct labour organisation could possibly comply with the terms.

    A friend offered this apocryphal insight into how tendering sometimes works. There were three potential suppliers for a small job of fencing. After careful calculations, the first firm put in a quote of £900, the second firm did similarly and quoted £700. The third firm made no calculations but came up with an instant price of £2,700 . The official asked how he had arrived so quickly at such a high price. ” £1,000 for you a £1,000 for me and we give the job to the second bloke” . Guess who got the contract? It was suggested that this was the business method of a recently insolvent large contractor.

  12. Edward, that story is lifted from Only Fools and Horses – “Who’s a pretty boy”:
    Del: I might be able to offer you a much better deal my son. I could get this pub decorated to the exact same standard as Brendan, and it would cost your brewery a mere £2000.

    Rodney: £2000?

    Grandad: That must be a tempting offer, eh Rodney?

    Rodney: Well he’s a born businessman isn’t he?

    Mike: Hang about, hang about. Why should I turn down an offer of £1000 and accept one of £2000?

    Del: Cos of all the advantages it has to offer, like my specialised profit sharing scheme. Let me explain how it works. The £2000 would be disbursed thus: there would be £500 for vous. £500 for vee.

    Mike: What you mean I get 500 quid?

    Del: Oh yes.

    Mike: And what happens to the £1000 that’s left over?

    Del: We give that to the Irishman and let him do the job.

    Mike: (grinning) We got a deal, Mr. Trotter.

  13. @ Colin Indge “Edward, that story is lifted from Only Fools and Horses…”

    Perhaps in the same way that Plutarch (cAD100) lifted his “ship of Theseus” paradox from the 1996 Only Fools and Horses episode which featured “Trigger’s Broom”?

  14. Maritime Barbarian – TUPE lasts as long as the contract is kept. Its common enough for an employer to end up with dozens of different contracts and seek to harmonise them.
    Including offering different pay rises to different contract holders, refusing any pay rise unless sign new contract (risky that one) or forcing staff out of jobs and replacing them with of course new people with new standard contracts.
    Pay cannot be messed with, pay rises can. Pension provision as I recall also doesn’t transfer across – new employer doesn’t have to offer same pension scheme, can have its own (usually worse) scheme.

    As for binmen – I’m a couple of miles from Birmingham. They recently had a binmen strike (slowdown but effective impact of a strike). Its one of several they’ve had in the past decade. In my area the bin emptying was put out to tender and a company won it. Since they took over I cannot recall any strikes.
    We used to have a strike every year or two when I was younger in a different area – these days they do the job and don’t strike.

  15. I’m not entirely sure that for some things, they wouldn’t be better in-house, but there’s one thing you should always outsource, public or private, and that’s where there’s a pre-existing market for a product or service. No-one runs their own cleaners or car pools as there’s a load of companies out there with an offering and you can just hire them.

  16. And of course, there’s the old gag about the recently cremated dustman, who’d asked for his ashes to be scattered all along the garden path…..

  17. Anon – indeed, and if someone is off sick, on holiday, not doing the work properly etc its someone else’s problem not yours.

    Per hour using an outside company can be more expensive, overall it can work out a lot cheaper.
    No recruitment, no pensions, no sick pay, no equipment (unless part of the contract), no supplies (unless part of the contract), no redundancy, no training etc.

  18. “Pat
    March 26, 2018 at 11:16 am

    However, if Polly dislikes CCT so much, why did she want to stay in the EU?”

    Indeed, see also nationalisation and State aid for favoured national companies.

  19. “unreflective people assume that what they are used to is the natural order of things: virtually God-given.”

    This should be tattooed on some people.

  20. @Rob,

    Brings to mind a cost cutting exercise I participated in.

    The (rather dim) director of housing, when faced with a budget challenge of 5% reduction in staffing cost, announced she’d found a way forward that didnt require her to compromise, and delivered the savings.

    We waited, interested to hear what she’d come up with.

    She announced (like Chamberlain returning from Berlin) that she’d persuaded her staff to accept an extension in their working week, to 39 hours, 37 and a half minutes at no extra pay.

    She’d just multiplied the 37 .5 hours working week by 5%, assumed that the resulting 39.375 was in hours and minutes, and that this would reduce her staffing cost by 5%.

    I can still see the face of the FD as she struggled to articulate quite how dumb this was.

  21. JS

    That’s extraordinary! Love it.

    Anon

    “No-one runs their own cleaners or car pools as there’s a load of companies out there with an offering and you can just hire them.”

    Wish I could say that were true but I can confirm the answer is not “no-one”.

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