Government run services will be expected to open up to private sector competition with payment-by-results contracts giving providers incentives to improve service quality, the Prime Minister has said in the Daily Telegraph. Downing Street has said the plans will go further than previous similar reforms in specific areas of the public sector because they will be generic, introducing a general presumption for being open with specific exemptions for areas such as defence and the judiciary. The state, David Cameron said,
“Should be open to real diversity, open to everyone who gets and values the importance of our public sector ethos. This is a transformation: it ends the state’s monopoly over public services.
“Instead of having to justify why it makes sense to introduce competition in individual public services – as we are now doing with schools and in the NHS – the state will have to justify why it should ever operate a monopoly.”
If Mr Cameron’s strong rhetoric is matched by suitable legislation, this proposal should be hugely beneficial to users of public services and taxpayers alike. Allowing private operators to reformulate service provision, motivated either by charitable zeal or profit-seeking efficiency to strip out waste and tempt the public to use their offering has obvious advantages. The pressure to cut elements of spending that people simply do not value will certainly be greater on charitable organisations or private sector companies than on state officials, whether the money saved will be redeployed into spending on something new managers think is more worthwhile (in the case of the charity) or possibly for private profit (in the case of a private sector provider.)
An important detail the Government must get right is the question of for whose custom the operators will be competing. Introducing external competition so government agencies can ‘outsource’ their operations is certainly a step in the right direction but will not always be the appropriate design. It would still leave an official standing between the public service user and the service provider. To reap the full reward of competitive forces, drive up quality and give the public what they want from public services the Government must pay attention to when it should allow new operators to compete directly for end users rather than for contracts with commissioning officials.
Taxpayers will not be happy about private companies making excess profits from cushy contracts or charities using taxpayers’ money to advance their own agenda. But as long as there is open competition taxpayers should benefit. Private companies must remain nervous that they will lose their contracts and customers to more efficient competitors and go out of business unless they keep the service quality they deliver high and their charges low. As long as the government keeps operators on their toes, it may just be able to inject some much-needed private and voluntary sector efficiency and vigour into our public services.
A couple of weeks ago, we blogged about councils looking to pass the buck for necessary spending reductions. Lambeth council put posters up carrying the slogan “The Government has cut our money, so we are forced to cut services”. Today, Communities Secretary Eric Pickles came out strongly against such overtly political ads, calling them a “blatant misuse of public funds”. And they absolutely are; Lambeth’s poster cost them £600, plus lost revenue of not renting the advertising space.
DCLG also announced crackdowns on council newspapers and lobbyists. This is more good news – council newspapers provide direct competition to local media, affecting genuine scrutiny and accountability of the local authority. Plus they cost taxpayers money; they’re easy fat to trim.
Taxpayer funded lobbying is a particularly egregious practice, and we would like to see a complete end to this practice. Taxpayers pay for government to lobby government for more money, and pay handsomely too, as our research paper last year showed.
On today’s news, TPA Director Matthew Sinclair said:
“Councils claiming that they need to cut frontline service would have more credibility if they weren’t wasting money so extravagantly. Council newspapers that are an exercise in propaganda rather than honest journalism are a particularly awful example of town hall waste. The posters in Lambeth are a disgrace, and reflect a local authority that is more interested in making political excuses than working to deliver greater value for taxpayers’ money, which other London boroughs have shown is very possible. Councils should work to cut spending on bloated bureaucracies, not lazily try to throw blame around as a decade of profligacy comes to a painful end.”
Councils across England had until midnight last night to publish online, details of all their spending over £500. The Communities and Local Government Secretary told councils last June to declare details of spending over £500 and gave them the deadline of 31st January 2011 to do so. Thereby enabling local taxpayers’ to see exactly how councils spend their money. It’s vital that residents have the opportunity to scrutinise every area of spending to ensure proper accountability.
Last week Public Service reported that up to 39 councils would fail to meet the deadline; however a cursory glance on the DCLG website this morning reveals that in fact 299 out of the 354 councils have now fulfilled their responsibility, meaning more than 50 haven’t. Councils have had since June to publish their spending, an eight month period which the majority of councils saw as sufficient time to get the information online. The councils have not only failed to meet the standards set out by the Communities Secretary, they have failed their residents, who have a right to see this information.
Last Friday, anticipating that many councils would not meet the necessary standard, David Sparks from the Local Government Association said:
“Local government is the most directly accountable part of the public sector and councils work hard to stay in close touch with residents to ensure they provide the best, most efficient services possible. With local authority budgets being cut by 28 per cent over the next four years, councils are aware that they have to demonstrate that the money they spend is going on the things their residents want and need the most. The vast majority of councils have invested considerable time and staff resource to make their spending information available to their residents. This is an excellent effort by the sector at a time when councils are having to find efficiencies and savings in all areas.”
As the council trade association their defence is not surprising, but councils should be more up front – if they are going to be late publishing the data, say so and say when it will be ready. The attitude of councillors like David Lee, the Leader of Wokingham Borough Council, is contrary to this. Last month he was quoted as saying:
“Publishing the historic information is not a number one priority but it will be done. But I have a fear it will give fuel to people who have nothing better to do.”
This outlook is seemingly not that rare. As our National Grassroots Coordinator Andrew Allison wrote last week, the leader of Bradford Council Ian Greenwood has a similar lackadaisical attitude to publishing his councils spending. He claimed:
“There’s an obligation been put on us by the Communities Secretary to disclose all bills of £500 or above. We won’t be doing that until all the invoices have been purged of commercially-sensitive information that could enable Bradford suppliers to be undercut by firms elsewhere once the details are published.”
While he has to “purge” the data for commercially sensitive information, he fails to mention he has had the same eight months all councils have had to meet this deadline.
You can check if your council has published their spending here. If they have not yet done so then write to your Councillor here and ask them why. Accountability and transparency are vital and the sooner councils get on board with this the better
In a post on Tuesday Chris Daniel pointed out that public spending cuts are vital. Which they are. And that councils should try to run leaner operations instead of passing cuts in central government grants straight to taxpayers. Which they should. You can’t run a £100 billion structural deficit indefinitely and, after a decade in which tax rates have gone up not down you aren’t going to fill that hole with more revenue.
He then made the simple point that it wouldn’t be possible to make substantial cuts without some effect on employment. Again, very realistic. To support that point he provided a graph showing that under the last Government there was a substantial increase in public sector employment.
For making those simple points he is castigated on Liberal Conspiracy. Essentially, Tim Fenton uses the term “clear inference” to set up a complete straw man. Fenton claims that the graph was really a claim about local government employment, which it wasn’t – it was an attempt to provide the broader context in a post about local government, and that actually the recent increase was due to the banks and earlier increases driven by expansion in services like the NHS.
Yes, the nationalisation of the banks did create a significant recent increase in public sector employment. That doesn’t mean the graph and trend Chris presented was misleading though.
Over the decade before the bank bailout there was a far more significant increase that came just from the public sector hiring a lot more people. While all that hiring was often in services like the NHS, there is good reason to think that it has not translated into results. There has been no discernable improvement in the pattern of the NHS slowly closing the gap with other European healthcare systems since the early eighties, for example. The number of managers in the NHS has been increasing at a much faster rate than the number of qualified clinical staff. Cost pressures, particularly on the staffing side, absorbed a lot of the additional money. We can definitely get better value.
On the other hand, if you want to look at the numbers for well-paid staff in local government, then fine. TPA research in 2009 looked at records in local authority accounts and found that:
- Over the past eleven years, the average local authority has increased the number of people on £50,000-plus packages dramatically; an average of 7 people in 1996-97 has increased to an average of 81 people in 2007-08. This means, the number of staff earning more than £50,000 is more than eleven times higher than it was in 1996-97.
- By contrast, in the economy as a whole, the number of people earning more than £50,000 has increased by only 3.2 times over the past ten years.
It was a shame Fenton wrote his rather smug post, instead of actually trying to get to grips with the data.
Cuts in central funding will affect councils’ budgeting decisions over the coming years. But taxpayers will have to be wary of councils conjuring up new ways to raise money to plug the gap. We’ve seen stories of councils hiking the cost of burial plots and allotments for example, with taxpayers already paying record levels of council tax. It would be wholly wrong for councils to offset the reduction in their central grant with increases in such charges when there are so many areas of waste remaining. What’s happened over the last ten years is akin to what many people go through at Christmas – we eat and drink too much and put on weight. How do we lose it again? We exercise and eat well; we do the hard work. Councils that have gorged on taxpayers’ money are ducking the responsibility of making vital cuts. They’d rather keep feasting by ramping up charges on other services, buying a new belt instead of shedding the pounds.
It is worth keeping a close eye on your own council for similar schemes. There are ways for councils to reduce their spending sensibly, it just requires more imaginative thinking.
Equally pernicious is the attempt by some councils to blame others instead of working at improving their efficiency. For example, Lambeth council have an advertising campaign with the slogan “The Government has cut our money so we are forced to cut services.” This highly provocative and shamelessly political advert is a pathetic attempt to divert the blame towards central government, deflecting attention away from years of unsustainable growth in the public sector and misspending by councils. Rather than making proper cuts in bloated areas – many of which the TPA has repeatedly highlighted – Lambeth have chosen to use taxpayers money for a political ad trying to blame someone else. Indeed, the government is complaining to a financial watchdog about the posters, which cost £600 to produce. While they had free use of advertising space they missed out on private revenue for ads that could have taken it otherwise. Other nearby councils have shown it possible to deliver greater value for money, like neighbouring Wandsworth.
And some are using front-line workers as political pawns too. National newspapers and major broadcasters covered the news last week that Manchester City Council was being “forced” to cut 2,000 jobs as a result of their latest financial settlement, reducing their enormous 23,340 headcount. In response Harry Phibbs posted numerous other ways the council can adapt to lower central government funding. He suggests that, rather than letting go of front-line workers, maybe Manchester City Council could begin with the 383 middle managers on over £50,000.
We need to remember that spending cuts have to be made. The public sector grew by over 0.9 million between 1997 and 2010, a staggering 17 per cent, so it would be irresponsible to suggest that there will not be job losses, there has to be. Paying staff is the main cost for many public sector organisations and this has increased to an untenable amount. And some services will have to be pared back, too. Cuts and a reduction in staff numbers will be uncomfortable so we need strong economic growth so there are jobs for people to go to in theprivate sector and to ensure that the cuts are focused to minimise the impact on the services people rely on most.
Local authorities have to work hard to cut the genuine waste. From April all ring fencing around all revenue grants except for schools will be removed. That will give councils more freedom to make financial decisions, meaning they have even less of an excuse to pass the buck when making savings.
Tony Blair said in his autobiography that the Freedom of Information (FOI) Act was one of his greatest mistakes. It wasn’t. It was his biggest legislative achievement. It has allowed taxpayers to get information on how their money is spent, and how their public services are run. Before the election last year, the TaxPayers’ Alliance produced a manifesto which called for the strengthening of the FOI Act within the first year of a new Government taking office.
So it was extremely welcome news this morning that the coalition is planning to extend the UK’s Freedom of Information laws. Nick Clegg has announced plans to make bodies such as the Association of Chief Police Officers, the Advertising Standards Agency, Network Rail and the Local Government Association subject to the legislation. The Act has provided ordinary members of the public with unprecedented access to data that they have always deserved to see, without obfuscation. In this long overdue move, the coalition will extend it so taxpayers can delve into the books of many more organisations that receive vast sums of their money, and are really extensions of government. According to Mr Clegg the scope of the act will be extended to include “potentially hundreds more bodies.”
When we’ve carried out our quangos surveys we’ve seen that some bodies are nearly completely funded by the public purse but are not subject to the FOI act. For example, the Carbon Trust receives over £100 million a year from taxpayers who currently have no right to find out how they spend it, it should clearly be among the bodies the Act is extended to. And when we completed our report on where Regional Development Agencies’ (RDA) grants were going, we uncovered a whole pseudo public sector: bodies set up and nearly entirely funded by the RDA and the local council but completely closed off to scrutiny by taxpayers, or seemingly even the relevant government department. Our report on Taxpayer funded lobbying and political campaigning found that many organisations like Alcohol Concern were dependent on the Department of Health for the vast majority of their funding. Nick Clegg should be commended for this move but it’s crucial that bodies such as these are included in the broadened scope of the Act if taxpayers are to be given full information on public spending.
Along with the scope of the Act it’s just as important it can function effectively. Changes are also required to make it easier for the public to submit requests and making it more difficult for public bodies to refuse or delay the provision of information. From our experience, the 20 day statutory time limit organisations have to respond is not always adhered to, with no consequences for a delay some organisations put requests off almost indefinitely. The current ICO procedures for not replying to a request can carry an unlimited fine, however with investigations often taking in excess of 12 months, they rarely materialise because a prosecution must be made within a six month limit as outlined in the Act. The most notorious example being the ‘Climate-gate’ scandal. On top of this, it would be a good idea to directly fund the Information Commissioner’s Office – the gatekeepers of the legislation – from Parliament, as currently happens with the National Audit Office.
In time more proactive transparency from Government, both local and national, should mean that the public will not have to submit FOI requests for certain pieces of information. For example, we won’t need to submit FOIs to compile the Town Hall Rich List in England and Wales this year (though it will still be necessary in Scotland and Northern Ireland). I’ve heard arguments to the contrary – transparency will pose more questions than it answers. This may be true in the infancy of transparent government, but once the system is more open, clear and sophisticated – and a culture of transparency is properly engendered – we should start to see the need for submitting FOI requests drop off. Robust FOI legislation should be maintained, improved and work alongside this, of course.
Nick Clegg has said that if an organisation’s behaviour and decisions had “clear consequences for the public good, people must be able to see right into the heart of them.” He’s right, and he should be applauded. And Tony Blair was right too. Back in 2000, that is.
Matthew Sinclair, Director of the TaxPayers’ Alliance, said:
“It is great news that the coalition are planning to extend the greatest legislative achievement of the last Government. There are a range of organisations – from the Carbon Trust founded and funded by government to Alcohol Concern, who are also overwhelmingly dependent on public money – where taxpayers have a right to find out how their cash is being spent. The Government should also look at introducing sanctions for unwarranted delays, an unacceptable tactic used to evade FOI requests, and getting rid of the bizarrely short statute of limitations that means most offences under FOI law are exempt because it takes longer for the offence to become apparent and be processed by the Information Commissioners’ Office. Another sensible reform would be to fund the ICO directly from Parliament like the National Audit Office, so ministers who resent FOI requests can’t block up the system by starving it of resources. Finally, some exemptions need to be clarified so that, for example, there can be proper democratic scrutiny and debate before treaties are signed. Nick Clegg deserves huge credit for launching this move towards fresh transparency, hopefully the Government will follow through with an ambitious extension of FOI sooner rather than later.”
The government’s Localism Bill was published this week and is packed with measures which will change the nature of local government. But for all the sensible changes in the Bill, they have dodged the big issue: money. As we noted in the TaxPayers’ Alliance localism research note, the case for devolving both tax-raising powers and spending responsibilities is overwhelming. British local authorities raise less than 20 per cent of their revenues themselves compared to the G7 average of over 60 per cent. If we could match public sector efficiency of decentralised Australia, Japan, Switzerland and the US we could get the same public services we have now for £140bn less and boost our economic growth rate by 0.5 per cent every year. The Localism Bill devolves no tax powers from Whitehall.
It does, however, introduce a large number of localist rights and schemes. Twelve (centrally selected) cities’ leaders will be turned into ‘shadow mayors’ immediately in preparation for referenda in May 2012. Other councils seduced by the government’s talk of the ‘prestige’ of a directly-elected mayor will be able to hold a referendum, too. And councils will be free to change back from the mayoral and executive models to the traditional committee model.
More alarming for people whose admiration for their local council’s competence is less than fulsome is the ‘General Power of Competence’ which ministers say will allow councils to “set up banks, develop property, run new services and own assets.” Some authorities could make good use of this provision, but there is a risk that others will go way beyond their proper role. We’ve already tried big government running ‘key industries’ in the 1970s and it failed. The services were appalling and had to be privatised, the property developments were crime-ridden sink estates which have been fundamentally remodelled where they haven’t been demolished and we need to get rid of the state-run banks we already have, not set up more. Hopefully competition between local authorities will keep a lid on over-ambitious local politicians. The localism we need is more freedom for councils to provide the services they already do more responsively and more devolution of tax decisions so councils have a direct connection between the services they provide and the costs they incur. What we don’t need are councils expanding even further and crowding out the private sector.
The quality of teacher training in Scotland was criticised yesterday. Poor quality candidates are apparently making it in to the profession. In response, Tony Axon of the lecturers’ union UCU said:
“People may complain about spelling and grammar but these days we sit at a computer which works out much of that for you. Are those skills really as important as they used to be?”
You may remember I posted last week on the outrageous pay increase of the Chief Executive of the Local Government Association (LGA). Today 30 local authority leaders sent a letter to The Times calling for John Ransford to take at least a 10 per cent pay cut, if not more. The letter states that the awarding of a £70,000 pay increase is “simply not acceptable in the current climate.” They go on to say that this decision “shows a complete lack of regard to its members and their finances, after all this is taxpayers money.” Hear hear.
It is crucially important that council leaders apply pressure on the LGA and Mr Ransford over this highly insensitive pay increase. The best way for them to do this would be to withdraw their council’s LGA funding. Write to your local councillors here urging them to do this.
Update: The LGA have just announced that John Ransford is to have his salary cut to under £100,000 until he retires at the end of this year. Quite how the remuneration committee justified his initial pay increase beggars belief.
The Cabinet Office has released all departmental spending over £25,000 since the Coalition Government came to power. As long-time advocates of spending transparency, we’re naturally pleased with this. Taxpayers deserve to know how their money is spent and we’re finally starting to see some useful spending data to help generate accountability. The spreadsheets are in the same format so users can manipulate the data and group types of expenditure together, which is a huge improvement on past releases. We’ve heard one or two complaints that some of the items are a little unclear so some more descriptive and less esoteric accounting procedures would be welcome but overall it’s a very positive step and the type of thing we’d love to see more of.
Our Director Matthew Sinclair was on Radio 4’s Today programme this morning (8.55 am) discussing the Government’s measures with David Walker, former Head of Communications with the Audit Commission. While Mr Walker didn’t say publishing this data was a bad thing, he was more sceptical of the Government having to itemise their spending. This is something that that is done routinely for American Federal spending on data.gov and many states also publish full spending data, so there is absolutely no reason why it cannot be done here. It’s our money, after all.
Selected professional data handlers were given these data sets a week in advance and some interesting graphics have been put together. It shows what can be done when the Government puts the numbers out there.
Below is a selection of some of the more interesting, eyebrow raising examples we have found skimming the data this morning. We would like to hear about some more from readers too. Use this link to access the raw data provided by the Cabinet Office and if anything catches your eye feel free to post the items below.
Equality and Human Rights Commission, September only
Department for Energy and Climate Change
Central Office of Information
National Offender Management Service
Following my post a couple of days ago on councils opting to leave the LGA, it has since been revealed that their Chief Executive got a £70,000 pay and pension increase last year. That takes his total remuneration to over £300,000. The LGA say that it reflects a promotion but this shows how out of touch with the public they are. The Chief Executive of a trade association funded with taxpayers money should not be receiving such hefty pay deals. It seems they ape many of the worst traits of some of the councils they represent – such pay increases are above and beyond anything ordinary workers would have received at the start of the financial year, with many looking at pay freezes or even pay cuts. Senior staff at bodies like the LGA should be setting an example and cutting their already enormous remuneration packages.
This is just one of many problems with the LGA. It claims to represent all ‘member councils and the people and communities they serve‘ but their motives and actions often say otherwise. The LGA lobbies central government to further their own political interests, which is a complete misuse of taxpayers’ money, and too often the actual needs of residents are overlooked. Matthew Sinclair explains the injustice of taxpayer funded lobbying and political campaigning here.
As I mentioned the other day, the LGA claimed frontline services would be decimated after the Spending Review. Surely the subscription costs handed over to them by councils would be better spent on these frontline services that they so keenly champion? The chances are your council is a member of the LGA – if they are then you can write to your local councillors here, urging them to leave and save thousands of pounds.
Yesterday, details of another group of councils opting to cancel their expensive subscription to the Local Government Association emerged. The list, published on ConservativeHome, shows how more councils are realising that the £50,000 membership subscription fee could be better spent elsewhere, helping to protect frontline services. With imminent cuts in council spending, the fee charged by the LGA is a cost many councils have decided they simply cannot afford.
The localism agenda is one which the LGA should in theory be fully supportive of. Yet their philosophy seems slightly confused. They are torn between wanting greater power for local authorities and increased funding from central government. The two do not marry well. The LGA have become a group who shamelessly defend local authorities at every juncture. They seem completely oblivious to wasteful council spending.
Rather than encouraging councils to find ways to make savings effectively and efficiently, using examples of councils that have successfully done so, the LGA’s response to the Comprehensive Spending Review was to instantly claim it would mean devastating cuts to frontline services. A very unhelpful response. Instead of praising those councils who have made innovative savings, and increased efficiencies, and rather than helping other councils make such savings, the LGA are themselves an obstacle to localism.
If this body is to continue to exist then it has to become more transparent, more accountable, less bureaucratic and more in touch with reality. If they do not they may see more councils queuing up to leave. The LGA can either choose to help councils or pursue the less helpful strategy, similar to that of trade unions.
After having listened to evidence being given to the Communities and Local Government Select Committee yesterday, it became increasingly apparent that now, more than ever, it is imperative the localism agenda is given space to flourish. This is something that has to be decided at an individual council level and here at the TPA we will continue to highlight areas of waste at Local Government level. At the same time we will continue to highlight innovative ways councils are reducing spending and increasing transparency. Councils and local residents know where there is fat to be cut. With increased council transparency and an effective message, the public can be involved in this process, when the axe does then fall, there would be wider agreement.
Undeniably the localism process is one that will take time, however is one that must begin post-haste. With trust in politicians devastatingly low and unprecedented cuts on the way, there has never been a more essential time for such a shift. If local councils were truly accountable to their residents, they may be far more restrained in the appropriation of taxpayers’ money. Mike Denham explains the compelling arguments for localism here.
The exact contents of the Decentralisation and Localism Bill, revealed later this month, is something to examine closely. Here lies a great opportunity, one which central government must help facilitate and which local government must embrace.