Reluctant partners

Persuading local authorities to work with the private sector is proving difficult, but some councils have reaped benefits, says Paul Gosling

In the dying days of the old parliament, regulations were approved to force local authorities to subject more of their finance work to private- sector competition. Whether those rules will be implemented depends on which party wins the election - Labour is unlikely to proceed with them. But whoever forms the government, the private sector seems bound to be increasingly involved in running councils' revenue, collection and accountancy services.

The experience of the London Borough of Croydon is a likely pointer. Just before the local government elections of 1994, the then majority Conservative group pushed through the farming out of its finance functions to a private contractor, CSL. The council, now controlled by Labour, shows no sign of ending this arrangement, because of the savings achieved and the obvious improvements in the service.

Mike Stammers, of Croydon's procurement division, says: "The current administration has been concerned about the contract, but extended it to April 2004 because of the opportunity to realise financial benefits. Members would take it back in-house if there was any gain to be had, but the contract has worked well enough for them to see that ending it would mean losing many of the benefits."

Croydon's is the largest individual finance contract agreed in local government, worth an annual pounds 9.3m. The council calculates that it saves pounds 1m a year, while improving the authority's performance in collecting money and the speed in sending out bills.

David Bowles, a director of CSL, says that his company has invested pounds 3m in IT equipment in Croydon, which the authority was unlikely to have been able to afford. He believes that with the speed of change in IT, public bodies are unable to keep pace unless they attract private investment. Big savings can be achieved by partnerships with outside contractors.

"The major benefits revolve around off-loading the risk of change, particularly with new IT systems for council tax and housing benefit," Mr Bowles says. "With accounting services we can also provide strength in depth, so that accounts departments are not dependent on just a few individuals." He says that 20 per cent cost savings are common.

A rival contractor, EDS, boasts big productivity gains in the contracts it has won from councils in Wandsworth, Kingston and Brent, all in London.

"In Brent we have streamlined their operations, re-engineered the way revenue and benefits are handled, employing work-flow technology on a case management basis," David Courtley, head of EDS's public sector division, says. "When a case arrives at the front of the system it is entered on to a database, and is managed from start to finish electronically, providing a streamlined operation with much less paperwork."

Claim forms are scanned into the system to eliminate the need for manual data inputting. That increases productivity and saves money, and speeds up the handling of benefit claims.

EDS dismisses suggestions that central government contracts, notably that with the Inland Revenue, are causing problems. "EDS is entirely pleased with our record there," Mr Courtley says. "Our government business is going very well." He points out that EDS has also won contracts with the DSS, the Ministry of Defence and the Lord Chancellor's Department.

The Chartered Institute of Public Finance and Accountancy (Cipfa) says that contracting out has not only achieved savings and efficiency gains but has also helped councils to clarify priorities and set targets. However, Cipfa says, there has also been an unfortunate increase in bureaucracy. Private-sector contractors say they want to operate on a partnership basis, with councils committed to making contracts work, rather than seeking excuses to cancel them.

Sir Paul Beresford, the environment minister and a former leader of Wandsworth council, believes that the first white-collar compulsory competitive tendering regulations (CCT), covering legal services, have been widely avoided, allowing councils to keep too much work. The DoE has accordingly increased the amount of finance and other professional work that is subject to CCT. For finance activities, at least 50 per cent will have to be subject to outside tendering, except for county councils, where it will be 40 per cent.

But it is far from certain that the extension of CCT in professional services will go ahead. The new regulations are not due to come into effect until 1998, and the Labour party will not continue CCT.

Labour wants to see the compulsion element removed, and instead a duty imposed on local authorities to provide "best value" in implementing services. But there is a widespread view within local government that this concept is too vague to be easily put into legislation.

Labour says it would consult widely before bringing forward legislative proposals, and that it could be 18 months before CCT was replaced. The CCT regime is unlikely to be extended during this period.

As with much of Labour policy on public services, the key is achieving a public and private partnership. The private sector says that this is precisely what it wants. The problem, as the current government has found, is that persuading some local authorities is not so easy.

Independent Partners; request a free guide on NISAs from Hargreaves Lansdown

News
Jacqueline Bisset has claimed that young women today are obsessed with being 'hot', rather than 'charming', 'romantic' or 'beautiful'
people
Arts and Entertainment
Lena Dunham
booksLena Dunham's memoirs - written at the age of 28 - are honest to the point of making you squirm
Arts and Entertainment
A bit rich: Maggie Smith in Downton Abbey
tvDownton Abbey review: It's six months since we last caught up with the Crawley clan
Sport
Frank Lampard and his non-celebration
premier leagueManchester City vs Chelsea match report from the Etihad Stadium
PROMOTED VIDEO
News
people
Life and Style
A new app has been launched that enables people to have a cuddle from a stranger
techNew app offers 'PG alternative' to dating services like Tinder
Sport
Greg Dyke insists he will not resign as Football Association chairman after receiving a watch worth more than £16,000 but has called for an end to the culture of gifts being given to football officials
football
Arts and Entertainment
Jake Quickenden sings his heart out in his second audition
tvX Factor: How did the Jakes - and Charlie Martinez - fare?
Sport
premier league
Arts and Entertainment
'New Tricks' star Dennis Waterman is departing from the show after he completes filming on two more episodes
tvOnly remaining original cast-member to leave crime series
Sport
Mario Balotelli celebrates his first Liverpool goal
premier leagueLiverpool striker expressed his opinion about the 5-3 thriller with Leicester - then this happened
News
Britain's shadow chancellor Ed Balls (L) challenges reporter Rob Merrick for the ball during the Labour Party versus the media soccer match,
peopleReporter left bleeding after tackle from shadow Chancellor in annual political football match
Arts and Entertainment
Female fans want more explicit male sex in Game of Thrones, George R R Martin says
tvSpoiler warning: Star of George RR Martin's hit series says viewers have 'not seen the last' of him/her
News
i100
News
i100
Sport
Plenty to ponder: Amir Khan has had repeated problems with US immigration because of his Muslim faith and now American television may shun him
boxing
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Senior BA - Motor and Home Insurance

    £400 - £450 Per Day: Clearwater People Solutions Ltd: **URGENT CONTRACT ROLE**...

    Market Risk & Control Manager

    Up to £100k or £450p/d: Saxton Leigh: My client is a leading commodities tradi...

    SQL Developer - Watford/NW London - £320 - £330 p/d - 6 months

    £320 - £330 per day: Ashdown Group: The Ashdown Group have been engaged by a l...

    Head of Audit

    To £75,000 + Pension + Benefits + Bonus: Saxton Leigh: My client is looking f...

    Day In a Page

    A roller-coaster tale from the 'voice of a generation'

    Not That Kind of Girl:

    A roller-coaster tale from 'voice of a generation' Lena Dunham
    London is not bedlam or a cradle of vice. In fact it, as much as anywhere, deserves independence

    London is not bedlam or a cradle of vice

    In fact it, as much as anywhere, deserves independence
    Vivienne Westwood 'didn’t want' relationship with Malcolm McLaren

    Vivienne Westwood 'didn’t want' relationship with McLaren

    Designer 'felt pressured' into going out with Sex Pistols manager
    Jourdan Dunn: Model mother

    Model mother

    Jordan Dunn became one of the best-paid models in the world
    Apple still coolest brand – despite U2 PR disaster

    Apple still the coolest brand

    Despite PR disaster of free U2 album
    Scottish referendum: The Yes vote was the love that dared speak its name, but it was not to be

    Despite the result, this is the end of the status quo

    Boyd Tonkin on the fall-out from the Scottish referendum
    Manolo Blahnik: The high priest of heels talks flats, Englishness, and why he loves Mary Beard

    Manolo Blahnik: Flats, Englishness, and Mary Beard

    The shoe designer who has been dubbed 'the patron saint of the stiletto'
    The Beatles biographer reveals exclusive original manuscripts of some of the best pop songs ever written

    Scrambled eggs and LSD

    Behind The Beatles' lyrics - thanks to Hunter Davis's original manuscript copies
    'Normcore' fashion: Blending in is the new standing out in latest catwalk non-trend

    'Normcore': Blending in is the new standing out

    Just when fashion was in grave danger of running out of trends, it only went and invented the non-trend. Rebecca Gonsalves investigates
    Dance’s new leading ladies fight back: How female vocalists are now writing their own hits

    New leading ladies of dance fight back

    How female vocalists are now writing their own hits
    Mystery of the Ground Zero wedding photo

    A shot in the dark

    Mystery of the wedding photo from Ground Zero
    His life, the universe and everything

    His life, the universe and everything

    New biography sheds light on comic genius of Douglas Adams
    Save us from small screen superheroes

    Save us from small screen superheroes

    Shows like Agents of S.H.I.E.L.D are little more than marketing tools
    Reach for the skies

    Reach for the skies

    From pools to football pitches, rooftop living is looking up
    These are the 12 best hotel spas in the UK

    12 best hotel spas in the UK

    Some hotels go all out on facilities; others stand out for the sheer quality of treatments