The Day of the Council Mega-Outsource is Dead – But Get the Wooden Stake Out Just in Case …

Over the years we have covered a whole range of major local authority (council) outsourcing deals to a range of suppliers – Capita, Serco, BT, IBM … the list goes on. Some were focused around IT, other moved beyond IT into business process, and some like Capita in Barnet encompassed a whole range of different council  activities.

So, let’s celebrate the great successes of this outsourcing movement with some positive case studies.  We should start with … er…. well, there’s … um… come on, rack your brains, there must be something …

Well, if you know of a positive example, a verifiable case study where an outsourced service contract of this nature has driven business performance, has improved value for local residents and taxpayers, has brought innovation to the delivery of public services, then please let us know. We enjoy nothing more than celebrating success.

But the sad fact is that there are precious few success stories here. It is not only the provider's fault, we should stress. I have talked to someone closely involved on the supply side of Southwest One  (the Somerset venture)  and he has some interesting stories about the dysfunctional nature of councils as clients and the tensions between elected members and paid officers.

The latest news is that Barnet Council, who were going to be the “EasyCouncil” and outsource everything except core policy making, are now looking to reconsider, even though the Tories just about managed to hang onto council power after the recent elections (thanks to Labour’s perceived anti-Semitism, almost certainly).

The council is considering three options;

-- Maintain the status quo in terms of the outsourced contracts

-- “Re-shape the contracts to better align service delivery to the council and Capita’s strengths and priorities, within the context of the existing contractual structure”

-- Bring the Capita partnership to an end, and either bring services back in house or re-procure them.

Number two is the council's favoured option, so we will continue to observe with interest what goes on in Barnet in the coming months. But this all made us think about lessons learnt at a general level. We’d suggest three to start with:

  1. Companies will tell buyers that they (the outsource service provider) are good at all sorts of activities and have many different capabilities. But when it come down to it, it is really difficult to be good at everything from serious leading-edge IT to facilities management, from running call centres to medical records management. (We suspect incentivisation of sales people played into this problem too). Indeed, the big firms in this sector like Capita and Serco are admitting that themselves, as they review their own strategies and talk to investors about more focus and being more selective in what they bid for.
  2. Outsourcing vital public services is not easy. There are so many stakeholders; the political aspect inevitably intervenes; the landscape and environment constantly changes; you are in the public eye; governance and change management is always tough … we could go on. It isn’t easy, and the more complex the basket of service you wrap up in a single contract, the more likely it is that something will go badly wrong.
  3. The public sector has suffered from a combination of commercial naivety, the “musical chairs” approach which means people don’t hang around to take responsibility for their actions (true on the provider side too) and the arrogance of senior people (both officials and elected representatives) who had big ideas and little idea how to manage them through to successful delivery.

And on that final note, we were shocked to read the recent Public Accounts Committee minutes where Simon Stevens, NHS supremo, basically denied that NHS England was in any way even partly to blame for the incompetent outsourcing to Capita of primary care back-office services. We just hope his words were driven by legal advice not to take any responsibility for the problems, in case matters still end up in court, because if he really believes what he said, then he perfectly illustrates some of those characteristics that have contributed to past problems.

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