Private companies delivering public services may be spivvs, ‘Don’t call it outsourcing – call it spivvery’. Aditya Chakrabortty, Guardian Journal, April 24th, page 5. But the problem is the nature of the relationship created by contracts, which is a rent-seeking one. The returns enjoyed by many private companies are based on a management fee. Since Labour took over Liverpool City Council we have insourced some fifty million pounds worth of contracts for public services, from waste management and street cleaning to Highways and Liverpool Direct. In every area we have realized significant savings as a result.
What has been striking is that while the savings on management fees have been substantial, productivity increases have been even bigger. In many of the services this has been achieved by reducing travelling time between jobs and thus increasing time spent directly working. In street cleaning a third of our workers were agency staff. Replacing these posts with full-time permanent posts saved money by eliminating agency fees and improved workers’ conditions. Why did the private companies who previously delivered these services not do this? Because management fees based on a percentage of the price of the contract meant the more it cost the more they got.
None of this could have been achieved without support from the trades unions. In the street services I am responsible for we have adopted a stakeholder model with the GMB, meeting to discuss strategy on a regular basis. Most of the ideas for improved ways of working have come from the trades unions and the workforce. A stakeholder model and partnership with the trades unions must lie at the heart of the approach of the next Labour government in reversing decades of privatisation. We need their support to overcome the inevitable resistance and to create new forms of public ownership and control.
Councillor Steve Munby
Riverside Ward Labour Councillor
Cabinet Member for Highways and Neighbourhoods
Liverpool L8 3TX
Tel: 07769 678749