Tuesday, 16 July 2013

Things are Turning Toxic

You sort of know things are going pear-shaped when you start seeing influential people like Dame DeAnne Julius, a former member of the Bank of England's Monetary Affairs Committee, rushing to the aid of outsourcing. As quoted in this Public Service website, she remains confident that a little difficulty over G4S and Serco shouldn't put anyone off the idea as:- 

"the private sector could in many cases run services more efficiently and more effectively than the public sector.

"Using a specialist provider whose reputation and share price are on the line, commissioned and monitored by an in-house procurement team, results in higher reliability, better quality and cost savings – it is better than doing it yourself," she said in an article for the Financial Times newspaper.

"It's a hat-trick too good for the public sector to pass up, especially when money is tight."

Julius said it would be wrong to "condemn" the outsourcing industry, over the latest overcharging accusations, especially before investigations had concluded.

But as the BBC's Business Editor Robert Peston discovered, potential bidders for government contracts like probation are now seriously rattled by what's happening:-  

The boss of another outsourcing company - not Serco or G4S - told me the incident was tainting the sector. This chief executive told me: "My shareholders are telling me not to touch UK government contracts with a barge pole, if I can possibly help it, that I should look for any business rather than UK government business".

Interestingly, he'd been to interview the Chairman of G4S, John Connolly, and he didn't mince his words in adding fuel to the spat with Chris Grayling by in effect saying the Minister had been a little economical with the truth:-

"Mr Connolly did not give a view on why Mr Grayling had not made clear that it was G4S which had opted to call in the SFO."

It's clear that G4S mean business seeing as they've instructed Linklaters, a very expensive firm of lawyers not particularly known for pussy-footing about.  I think it's possible that the Ministry of Justice and HM Government generally might be about to be reminded as to the importance of contracts and sticking to them. 

Meanwhile, as this piece in the Observer makes clear, in this brinkmanship initiated by Grayling, it will almost certainly end in tears, causing someone some serious damage as well as unsettling the whole outsourcing sector:-

Unlike its rival Serco, which faces similar allegations, G4S has refused to submit to an independent probe of its tagging work – Grayling's preferred option. That has raised the stakes, locking Grayling and Ashley Almanza, the new G4S boss, into a game of brinkmanship. All of a sudden, it is hard to see how they can both escape unscathed, and the affair now looks like it could easily be the undoing of one of them.

Meanwhile, parts of Almanza's counterclaim have been emerging. The G4S boss blames the court and prison services for failing to formally end curfew notices to which the billing process was linked.
Whether such an argument has legal merit or not, it is surely devastatingly toxic for G4S's reputation. Was it really prepared to keep taking millions from the taxpayer for offenders whose need for monitoring it knew to be non-existent? Or was there negligence at play? Neither sit well.
There will be some who cheer Grayling for airing suggestions of impropriety at G4S so publicly in the Commons, and hitting the recalcitrant firm where it hurts – in the share price. But on careful reading, his message was a little confusing. As G4S was quick to point out, despite his forthrightness the justice secretary did state at one stage: "I have no information to confirm that dishonesty did take place."
It all looked so different back in October last year when this article in the Independent quoted Harry Fletcher, then Assistant General Secretary of Napo:-
Large companies such as G4S and Serco will win the lion's share of contracts to run probation services, unions forecast last night after David Cameron announced a drive to slash levels of reoffending by hardened criminals.
The National Association of Probation Officers (Napo) predicted that most probation services that are outsourced would go to large companies rather than charities or voluntary groups.
Bidders are likely to include such firms as G4S, Serco and Sodexo, which run England's 14 private prisons. Downing Street yesterday insisted the scheme would be designed in such a way as to enable charities to partake.

But Harry Fletcher, the Napo assistant secretary, said: "It's a certainty that large security companies will win virtually all the contracts. It is they who can afford to subsidise bids under a payment-by-results system.

"Charities that can't afford to bid will go out of business and standards will fall."

I wonder how many bidders of any size there are left in the dutch auction for probation work and that are still interested in getting stuck in to this omnishambles, especially now that it's all turning toxic? 


  1. Only just found this blog, many thanks for the analysis and insight which is sadly lacking everywhere else (where are NAPO?) keep up the good work, am now a daily reader!

    1. Napo can be found here:- http://www.napo.org.uk/about/napolog.cfm and on other links on that web site and via Twitter and the various branches https://twitter.com/Napo_News

    2. Thanks! - there is a link to Napo on the right handside of this blog too.

  2. It would appear in the light of the latest NHS report that suppression of information, and being economical with the truth are acceptable practice for government.
    The large security firms would do well to talk to those who took contracts relating to the work scheme. I"d wager non would sign the dotted line in hindsight!
    It really is time for NAPO to enter the fray with some aggression. Pressure is required now while the fire burns hot.

  3. Working is the public sector now after several years in outsourcing in the private sector I'm going to predict now that no party will come out of this looking good but the public sector will look the more foolish.

    There is still no proper comprehension about the necessity to monitor outsourced provison in the public sector.

    A random phone call to G4S saying "Oh yeah Joe Bloggs is back inside now" wont be the contractual billing end.

  4. Ethics raise their head here again for me. In order to run effectively and have all bases covered, any company must be constantly aware of its stock, distribution, its retail outlets and its wholesalers.
    In these circumstances its humans that will be the companies stock base.
    "Stock" just doesn't sit right with me.

  5. Moral compass is a very important issue here. It may be the largest obstacle present in this public/private debacle.
    Consider this. G4S as a private enterprise must have forcast projections and profit margins all tied up nicely before they can get their shareholder investment.
    If they are charged with monitering joe bloggs on tag and are told this will be for say 3mths, then the cost/profit equation must be calculated.
    The MoJ however breach poor old joe after only one week.
    Problem! The government are not delivering the 3mth agreement that was innitally proposed to G4S. That 3mths is the commodity that G4S is trading on.
    Therefore G4S,s financial projections costings and profits become haphazard and unmanagable. Moral compass pointing north, profit sustainabillity and happy shareholders.
    The south pointing needle faces the MoJ. Public safety, rehabilitation and signifigant cost cutting. Their public duty is to reduce the very product its trying to sell to G4S. It's obviously a marrage coveted where deep religious and political divide exist.
    To put it another way if you wewre a wholesaler talking to a producer about procuring tomatoes, and the wholesaler opened discussions by saying hes actively seeking to reduce tomatoe growth on a yearly basis, then maybe your shareholders wouldn'd be to pleased with you for singhing a long term contract with the supplier.
    Its opposing points on the compass for me I'm affraid.

  6. 'During a meeting with Probation Minister Jeremy Wright on Wednesday (June 5) Sebert Cox, PA Chairman, and Sue Hall, PCA Chair, emphasised that our professionalism in engaging with the TR programme should not be misread as meaning we no longer stood by these concerns.' This quote came to mind listening to the furore over the latest damning indictment of NHS failures. What you hear from NHS managers are pledges to learn lessons and move on, but from patient's representatives it's calls for a public inquiry, for accountability, protection for whistleblowers. The NHS, like other over-manged public services, bred a culture of fear. Menwhile the PCA empasises its 'professionalism'. The PCA claim to hold real fears about the safety of the TR proposals, but never mind they can be relied upon to work to implement the proposals as is happening up and down the country. It seems to me their professionalism is devoid of any ethics: if you believe something is truly likely to put the public at risk you should shout it from the rooftops – or even tweet it if you must. The PCA and senior managers in Trusts are cowards who don't have the courage of their convictions. And as they silence their own dissent so they seek to silence their own workforces. Probation 'leaders' are lickspittles.

    1. I've been trying to get my head around this very point. We all know it's utter shite, including the PCA, and we all know it's dangerous shite. There must come a point at which 'professionalism' just doesn't hold any water and as various commentators have been saying, ethics and principle must take precedence.

      What would I do? In the end that is the key question isn't it? I'd like to think I'd go public as a Chief and tell it like it is - it's a crock of shite! Easy to say, but you'd think one of them would, wouldn't you?

      A campaign, revolution or change of opinion often takes just one person making a stand.............

    2. The problem isn't cowerdice. Nor is it any fear to voice ethical and professional questions. It 's much more devious then that. They're all to busy feathering their own nests, watching and waiting to grasp their own oppertunities to worry about rights and wrongs.

    3. I heard the realities of this on a shop floor meeting in our office last week. From one of our 'executives' came the line that our Chief had been silenced. I figured you could only be silenced if you were working on the basis of pragmatism rather than ethics...the pragmatism being "it would ruin my career". Nests are being well and truly feathered, but surely there must be at least one of these Chiefs who is waiting on retirement and has the morale compass to come clean on this charade.

    4. Many of those who might have already had golden handshakes and put out the door. The vacant possitions (tat technically don't exist anymore) will be earmarked ( under a differet name but same role) for those helpful souls that assisted the cause. Don't bite the hand that feeds you.
      Beware those that hold that sentiment. When you've done your duty that hand no longer needs to feed you.

    5. All those eligible can't have already jumped ship surely? There must be someone who wants to put principle before personal gain?

  7. Very interesting news from Doncaster today. At first glance it would appear to be a very sneaky backdoor move to privatise social services. 10yrs before you can get it back? Who'll even remember then it was once council responsibillity?
    Whats even more odd about this move is why Doncaster? Will Peterborough be next? Surly such a move by the government should have taken place (if it should at all) would have taken place in Bolton which has had months of national media attention focused on the councils systematic failings with childeren?
    Am I being over synical here?

    1. Impower. And a £1.8m contract. I'm sure it will be working so well in 12months time it will be rolled out nationwide.
      Looks as though Gove has the same remit as Grayling, but being a bit smarter.

    2. Thanks for mentioning Doncaster - I'm watching the story and will do a post on it sometime soon. There are efforts at privatising everywhere so the case against has to be put at every opportunity.