Persuading local authorities to work with the private sector is proving difficult, but some councils have reaped benefits, says Paul Gosling
Wednesday 02 April 1997
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: See how much you could save by switching credit cards. Compare now
elephant appealThe first 23 lots in our charity auction have now gone. But there are 22 more still up for grabs
musicPolice chief rejects rappers' claims that his work is as dangerous as law enforcement or military service
comedy'Fresh Meat' star sees off stiff competition from Alan Carr, David Mitchell, Graham Norton, Lee Mack and Sarah Millican to win top prize
Beatles rush out 'bootleg' album to defy EU copyright law
healthJames Bond's alcohol consumption puts him at 'high risk' of cirrhosis, tremors... and impotence
Harvey Weinstein reveals his secret weapon on-set
Now that an oil trader's drinking has got him sacked, will we all have to make do with an afternoon latte?
Chiwetel Ejiofor and Idris Elba get nods for Best Actor, which no black Brit has ever won
Geoffrey Macnab reviews The Desolation of Smaug - the meat in Peter Jackson's Hobbit sandwich
peopleWhat advice would David Cameron give to his younger self?
- 1 French café starts charging extra to rude customers
- 2 Sun will 'flip upside down' within weeks, says Nasa
- 3 Australia incest case: Deformed children found in remote farming community after generations of inbreeding
- 4 Physicists discover 'clearest evidence yet' that the Universe is a hologram
- 5 Fox News presenter tells viewers it is a 'fact' that both Jesus and Santa Claus are white
- < Previous
- Next >
iJobs Money & Business
£200 - £240 per day: Harrington Starr: Client Data Management - City - Brokera...
£44999 - £60001 per annum + Benefits: Pro-Recruitment Group: A Top Tier firm i...
£30000 - £45000 per annum + Bonus + Benefits: Harrington Starr: Regulatory Man...
£50000 - £75000 per annum + benefits + bonus: Harrington Starr: Pre-Sales / Cl...
Day In a Page
A six-bedroom farm house with separate, detached cottages and 371 acres of land
A two-bedroom cottage with parquet floors, chunky beams and an open fireplace
A Grade II-listed home with six bedrooms, secluded landscaped gardens and views across Hadley Green
A Grade II-listed mansion with two apartments and a cottage, near Gretna Green
A three-bedroom Grade II-listed mews house with vaulted ceilings and roof garden
A spacious Grade II-listed family home with annexe and equestrian facilities among four acres of land in Itchingfield
A four-bedroom home with exposed brick walls and open fires in the picturesque village of Northill
A Grade II-listed property with five bedrooms and unique tower, overlooking Hastings Old Town
A charming five-bedroom detached family home, set within half an acre in Kew
A two-bedroom maisonette set on the top two floors of a period building, close to Kentish Town Tube.
Take advantage of the extra space provided by former stables and outbuildings at this five-bedroom farmhouse.
This three-bedroom Victorian terrace is near to Queen’s Road Peckham station, Nunhead station.
A five-bedroom modern house with terrace, swimming pool, Zen treehouse and large carp pond
An unexpected gem with four bedrooms, remarkable vaulted reception and a galleried study area
A five-bedroom house in one of Lymington's most sought after tree lined avenues, moments from the marinas and sailing clubs
A grand early 19th century B&B close to the historic harbour, with four en suite bedrooms
A four-bedroom, 17th century home with walled gardens, a landscaped terrace, cellar and open fires
A six-bedroom house with five bathrooms and four reception rooms spread over 4,000sq ft of luxury living space
A stunning three double-bedroom apartment with two decked terraces in the exclusive gated community, Bromyard House
A 10-bedroom period, family home amid beautiful surroundings in the centre of the Wentworth Estate in Longcross village
A stylish three-bedroom apartment with two bathrooms and private landscaped garden, moments from Fitzroy Square
A Grade II-listed Elizabethan barn with landscaped gardens, exposed elm beams and four bedrooms, all with lovely views
A six-bedroom family home, dating back to 1280 with four reception rooms, barn, swimming pool and tennis courts in Harwell
A spacious two-bedroom flat, refurbished to a very high standard with private landscaped garden, close to Kentish Town station
An exceptional two-bedroom apartment with balcony and underground parking in the centre of Richmond
A one-bedroom, luxury, duplex apartment in the grand landmark building, Imperial Hall
Run a fabulous boutique shop, live above it in a one-bedroom flat and let a second one-bedroom flat that comes part and parcel
A Grade-II listed, thatched cottage in Hundleby village, with five bedrooms, a coach house and three and a half acres
A spacious two-bedroom flat in the heart of Hoxton Square with wooden floors and roof terrace
A five-bedroom family home with stunning pool and gym complex set among two acres of land
A six-bedroom period house with heated swimming pool and a separate two-bedroom annexe cottage in Townlake, £795,000
A spacious and contemporary two-bedroom flat arranged over three floors, with garden patio close to St George Square, £600,000
A one-bedroom flat in a beautiful Regency building opposite the beach in Kemp Town, £190,000
A two-bedroom flat with London skyline views close to Surrey Quays. £395,000.
A seven-storey tower with three bedrooms and a stunning roof terrace. Guide price: £850,000.
A 16-bedroom country pile with nine reception rooms, four self-contained flats and a 13th century Peel Tower. £850,000.
A classic six-bedroom Victorian Manse house 10 miles from Edinburgh. £495,000.
John Lennon's childhood home in Liverpool to be sold at auction. Guide price: £150,000-£250,000.
A six-bedroom detached period property with secluded gardens, ample parking and a double garage in Rye, £675,000.
A large split-level property with three double-bedrooms and roof terrace, close to Crouch End Broadway, £625,000.