Every part of the country is up-for-grabs at the highest bidder. This is at the heart of the ‘Opening Public Services’ White paper. The problems concerning A4e are well-known, and the Government appears to little concerns about their widely-reported problems. Despite the national hysteria over the Gold medals in the Olympics, there has been disquiet about G4s and security.
Serco, a leading private contractor, is reported as being in line to win a multimillion-pound contract to run the National Citizen Service, proposed by the prime minister as a “big society”, non-military version of national service for youngsters aged over 16.
The company, which recently announced global revenue of more than £4646 million in 2011, has joined four charities in a controversial bid to run what has been described by the government as a key part of David Cameron’s big society vision. Serco and its partners hope to win eight of the 19 contracts currently up for tender, with an estimated value of nearly £100m over two years.
As a name, ‘National Citizen Service’, might sound like something which the State is running. For the Conservatives, the State is the overbloated, inefficient, authoritarian entity, whose size is worth dimininishing. For Labour, it affords a method of shared risk and responsibility, where infrastructure and investment can offer genuine security for all stakeholders. Differing ideological attitudes towards the State can to some extent been seen in the brand identity of the ‘National Health Service’.
If the ‘National Citizen Service’ were not a vehicle of the State, but a massive private entity, albeit in partnership with the third sector, where the private entity were to maximise shareholder dividend, would this be allowed? According to Companies House, which regulates the name of companies, the answer would be ‘yeah but…’ The current rules state that, to be called “National”, you need to demonstrate that the business is pre-eminent in its field by providing supporting evidence from an independent source such as a Government Department, trade association or other representative body. Here, there would be no problem as Cameron’s own Department would provide this evidence, presumably. It is noted in the rules that “pre-eminence is reduced if the overall name does not describe a product”, but you would still have to show that your business is substantial in its field of activity even if this was not described in the business name. It is not entirely clear what a ‘citizen service’ is, in the same way the ‘Work Programme’ is rather vague.
Martyn Hart, who is the Chairman of the UK’s National Outsourcing Association, recently described in the Guardian that: “Outsourcing is privatisation, they cry. Outsourcing is far from privatisation – done properly, the client remains in control at all times. The client’s purchasing a service, over a long period of time: as paying customer, they are perfectly entitled to specify exactly what they want. But a key facet of outsourcing is the shared bearing of risk: the partners are in it together. Not just financially, but also in terms of reputation. If things go wrong, both brands are weakened and, in the case of the supplier, future custom is jeopardised.”
Some would strongly disagree with this. Often the general public will not know the identities of the private companies to which functions have been outsourced, for example the cleaning in a state-run entity, so therefore will not know who to blame and how. Often lawyers have to ensure that there are clear clauses for the blame of third parties; such clauses are known as “third party liability” clauses, and often they turn into a legal mess when these private third parties themselves get taken over in a share acquisition. Who then is responsible? What happens if that third party goes out-of-business? Furthermore, awarding lots of outsourced contracts often leads to greater costs than if an organisation were simply able to organise the function itself. Therefore – in summary – business risks for outsourcing a large amount of work are therefore two-fold: control and cost.
The reality is that there is nothing national about these previously public services any more, other than a pre-eminence due to a rigged market only for winners. As a result of them being outsourced, foreign corporates can, and often, do control and own them, driven by their business model to make a profit. There is little accountability for them in reality, save for a small complaints department in a large multi-national company. And what happens if that company goes bust or makes a mess of the job? Well, you know the doctrine: you privatise the profit, but you let the State pick up the pieces for any disaster. That’s how ‘sharing of risk’ has always operated for the private sector in the public-private relationship.
