The Private Public Partnership Is A Waste Of Money
: 1 January 2003 I would be surprised if Roman tax collectors, like St. Matthew, were the first public officials to be unpopular and despised for their work. If politicians want a ready made scapegoat to help them out of trouble, they need look no further than the public servants they are responsible for and blame them for many of their own shortcomings. So, it takes some courage to defend them, particularly when people are treated badly by officials who seem to behave like "little Hitlers" at times.
The British public service is one of the best and least corrupt in th world. So the time has come to say something in defence of public servants generally.
Every year Parliament produces volumes of new laws and new regulations. These have to be enforced, and public officials are employed to do this. This usually means that either more public servants have to be employed as the volume of legislation expands, or, alternatively, a decision has to be made to prioritise the rules which are to be enforced, and the degree and extent of enforcement. As the statutes allow no room for decisions of this kind, such decisions can never be made public, and the public are given rights to make complaints.
In these circumstances, it should be no surprise if the cost of the public service continues to rise ahead of inflation. However, rather than accept responsibility for the financial consequences of the additional workload they have imposed, politicians blame their own public servants for not being cost-effective.
The last Conservative Government forced most local councils to put most of their work out to tender. They were surprised to find that the in-house bids were, in most cases, successful, and kept changing the rules to make it easier for private contractors to win their bids. The reason this policy failed was because it had two fundamental flaws. The first was that most private companies needed to borrow money to finance the bid, and most banks would have required a business plan showing at least a 10% profit margin to protect their own investment - which did not make the private bid any cheaper. The second was the difference in outlook between private enterprise which depends to a certain extent on a risk taking culture, and the public service, which is expected to put safety first - as is obvious from the messy way the railways were privatised.
This Labour government has learnt nothing from the previous government's failure. They replaced "compulsory competitive tendering" with a policy called "Best Value". This requires local politicians to consider the best way of delivering local services, and, if that means putting the work out to private contractors, to do so - without necessarily having to give the in-house team the chance to bid for their own work. So it should be no surprise that "Best Value" has not resulted in any reduction in our Council Tax bills.
At the same time, successive governments have produced "guidance" and enforcement procedures to instruct the public service on how to implement the old "Compulsory Competitive Tendering" and now "Best Value". The outcome is the creation of a new bureaucarcy for controlling public services. So now we have two kinds of officials working for the public service: firstly those who actually do the work, and secondly those who tell them how the work must be done in order to comply with the old Compulsory Competitive Tendering (this used to be called the "Client side") or now "Best Value" (which comes complete with its own special and expensive "Best Value Inspectorate" and public consultation procedures), and monitor it. Indeed, even the smallest local councils have been told by the Audit Commission to allow £100,000 per annum for the cost of administering "Best Value". And then the politicians expect us to believe that all of this should produce better and cheaper services!
In 1996, as a member of ACSES (the Association of Council Secretaries and Solicitors), I wrote a paper suggesting a simple way of making local government services more accountable. The Audit Commission already classifies all councils into "familly groups" - according to population, geographical, social and other criteria. The essence of my suggestion was that all councils should be encouraged to keep the cost of each of their services within a given percentage of the average cost of that service within the council's "familly group". Failure to do so would empower a given number of electors or councillors to invite an audit inspection, and, if the inspector were to find against the council, the council would be given a fixed period to improve, failing which the service would be put out to tender. My paper was referred upwards, and I have never found out what happened to it. I believe the "Best Value" scheme does include comparing the cost of services within council "familly groups". Unfortunately, national government can never do anything simple, and so "Best Value" has itself become a huge bureaucratic nightmare.
So, what of the PPP idea? I once heard some accountants discussing it. One was boasting about how a profit sharing scheme had been set up: the private partner's accountant had been very clever in so structuring the scheme that, after deducting his company's "costs", there would never be any profit to share with the council! Now it's no good saying that the council's officers should have detected this - they simply would not have had the necessary commercial knowledge or experience. So, should they have instructed consultant accountants? Perhaps they should, but experienced local government officers know just how difficult it often is to persuade members to incur the extra cost of instructing consultants.
So, why should we believe leading politicians like Tony Blair or Ian Duncan Smith when they tell us they are going to find new and better and cheaper ways of running public services by involving the private sector, if they are not prepared to reduce the torrent of legislation that comes from Westminster, or will not come up with the money which will enable public servants to do the job? PPP is just as much a gimic as CCT and "Best Value".
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