A lesson from Bradford

This is not about A4e. But it's a story which shows the flaws in the privatisation of public services.

In 2001 the government forced Bradford council to outsource its education services, all of them, to a private company. The 10-year contract went to Serco. The council leader, asked why Serco, a company which had no experience in education, said that they got through the procurement process as the best option on the basis of the promises they made; they would hire the required expertise. Serco said that they would improve education in Bradford, and would be paid bonuses on the only measure which the government saw as relevant, the number of GCSE passes. Those passes went down, with teachers complaining that they were under continual pressure to improve GCSE results at the expense of everything else. Serco tried to renegotiate the contract when it was clear that they were not going to achieve the promised results. Ten years on, the council is taking education back in-house, to no one's regret. Serco say they haven't made a penny from the contract, and insist that they have improved primary education in the city.

There are stark lessons here.

• Large private companies are good at getting contracts in all sorts of areas where they have no experience, because they employ bid writers to make the right promises, and are willing to hire the people with the relevant expertise. But all too often those promises are not fulfilled.
• Contracts have to contain some measure of success on which to base payments to the company; outcomes, in other words. Focussing on these outcomes can do great damage to the overall service.
• Once tied into a contract, a local authority can do little or nothing to save a service from going down the tubes until the contract period is up.

Bradford has learned the same lesson that Middlesborough learned when it outsourced its social care direct payments to A4e. This government, however, has learned nothing.

Family champions - and confidence and doubts about the Work Programme

Do you fancy being one of Emma Harrison's "family champions"? If you live in the Blackpool area, now's your chance. The council is advertising for 5 of them. The pay is £19 - 21k. Although the employer is the council, the advert was clearly drawn up by Harrison. Amidst the gush we find: "You will be working in partnership with multiple agencies to help families affected by inter generational worklessness that need your support within your community and become a positive presence in their lives and homes; challenging the family when objectives have not been met, supporting the family through new experiences and goals." (You might ask at this point, which families? Who is going to decide on the clients? Will they be able to refuse?) The job spec is more sober. And it's here you begin to see it as a kind of prototype for the super-contract. Among other similar requirements we get: "To engage in interagency, partnership and joint working to ensure a more coherent and personalized response to the needs of children, young people and families."

Nowhere can one find a definition of a family. However, while conceding that these "family champions" may achieve some good for some people, it must be seen as a dangerously flawed approach.

The Financial Times continues to take a close interest in the finances of the Work Programme. On 23 March it published a letter from A4e's Mark Lovell, disagreeing with the doubts which have been expressed. He says that A4e pioneered the payment-by-results model, and have been very successful with it in Israel. "Working in close partnership with the investment community, we are confident of success in the UK and in the ability of the market to respond to the policies that the government has put in place," he says. But the Mayor of Newham, Sir Robin Wales, has expressed grave doubts about the programme working at all in his area. In an FT report he says that 3 providers working in competition will just lead to confusion in a contract area which is far too big. The Olympics site is in his borough, and he is worried that the many temporary jobs created by the games will not come the way of local unemployed people. "The prime providers might actively discourage people from taking them because they would not get a significant payment – and those who did take the jobs and became unemployed again could have to go to the back of the queue and start on the work programme again a year later." Excellent point.

Mark Lovell on finance

On an obscure website called myfinances.co.uk A4e's Mark Lovell gets the chance to expound his ideas about "Tackling the challenges of supporting public services". It's not so much an interview, more of an essay, and it makes interesting reading. A4e has long had the ambition to own a bank, and while that may seem an unlikely proposition, the piece shows that there are ways of getting into it sideways, as it were. He addresses the question: "In the current financial climate, what are the three most important initiatives your company is undertaking?" He talks about their debt advice services, and then: "Developing a fund with finance partners from which the people we work with who start their own business, or a social enterprise, can secure capital to help them get going. Access to capital and microcredit / finance is more important than ever in the current economic climate and self-employment or business start up is really important. - Working with likeminded organisations – banks, charities, credit unions, intermediaries, lenders, utilities – to change the way financial products and services are designed and reach low income consumers. Biting off a big challenge on that one!"

Think about the first part of that. It means that A4e clients who want to start their own businesses will borrow money from A4e (or an A4e partnership). Sounds fine, at a time when banks won't lend to start-ups with no security to offer. But a client can only make a profit for A4e if s/he is in work, or self-employment for two years. Getting the start-up loan from A4e would bind him or her into a relationship with the company which could be uncomfortable, to say the least.

The other part of the interview which worries me is: "We want to join up as many services as possible. We deal with around 400,000 consumers per year at the moment. Most of them are either out of work or on low incomes. They access a range of public services from multiple agencies and we contract with nearly 40 different organisations to deliver these services. We can provide better, joined up services at more marginal cost by bringing some of these activities together." Again, this is a long-held ambition of A4e, the "super-contract" which would see A4e having the right to be the gateway for all services to its clients. Am I overstating it to say that, in effect, a local authority would sell people to A4e? We can certainly see Emma Harrison's "working families everywhere" venture as part of this campaign to roll up access to all public services into one contract and direct people's lives.

Incentives

"It's not about maximising profits," said A4e's Mark Lovell, in that strange little piece on the BBC news. That's not a statement that any of the big players - Serco, Capita and G4S, as shown on "Britain's Secret Fat Cats" - would dream of making. It would be ludicrous. They are companies with shareholders, and maximising profits is their entire raison d'etre. They might express the intention to improve people's lives in the context of bidding for contracts; they could hardly do otherwise. But that is incidental. It's a business. And the government obviously acknowledges that. Grayling talked recently about providers being able to make "shedloads" of money. And now Freud has spelled out the scale of those payments. Providers will get between £4,000 and £14,000 for each client who secures work. The higher amounts are for outcomes for people who have been out of work for longest and are regarded as "hardest to help" - and who stay in work for two years. Freud is explicit that it's these incentives which will make the Work Programme successful. The profit motive rules.

So is A4e any different from its competitors?

One obvious point of difference is in the amount of publicity the firms seek. In the case of Serco et al that's nil. They don't need it, and don't get it. That's why their dominance has crept up on people. But for A4e, or at least for its boss, publicity is an essential strategy. There are a few signs, however, that this hunger for the limelight may be counter-productive. The words, "Anybody but A4e" have been uttered by people in local councils.

Mark Lovell on BBC news

Tonight's 6.00 pm news on BBC1 was, of course, nearly all devoted to Japan and Libya. So it was a surprise to hear an item at the end about training for young people and the involvement of private companies. I'm sure that this was intended to be a much longer item. But it displayed the usual amnesia of the media. You wouldn't think there had ever been anything on TV about A4e. There was Mark Lovell, fielding an innocuous question about the profit motive with an oleaginous assurance that maximising profit is not what they're about. This will no doubt come as a surprise to many A4e staff. There was another, small company in the item too. Perhaps the original intention was to draw a contrast between the large and the small. But what emerged was a severely truncated piece which gave a bit a free, if brief, publicity to A4e.

Britain's Secret Fat Cats

I managed to watch this Channel 4 Dispatches programme on 4OD - or rather, the first two thirds of it. It seems that if you pause a programme on 4OD you can't restart it, but have to go back to the beginning. I saw enough to applaud this exposure of the reality of outsourcing.

It focussed on the three biggest companies, Serco, Capita and G4S. We were reminded that David Cameron called in these and other companies to renegotiate some contracts, but the big 3 are totally unconcerned about taking a small hit now, because there's so much business in the pipeline. They are all buoyant about the vast amounts they will make in the near future. Capita's Paul Pindar reckoned they had 30 contract opportunities, worth £4.7bn, and Serco has a £16.5bn order book. The reporter tried to get at the details of these contracts but was told by the government that they were commercially confidential - giving the lie to Cameron's promise of "transparency" in government contracts. Bear in mind in what follows that A4e are in a rather different category to these 3; it isn't a publicly listed company with shareholders, so we can't get at figures for executive pay. Last year Chris Hyman of Serco got £5m, Nick Buckles of G4S got £4m and, in 2008, Paul Pindar of Capita got £10m. And half or more of their business comes from the privatisation of the public sector. We were treated to a fascinating explanation of the self-serving system which results in obscene levels of executive pay. The tax-payer who provides the dosh for the pay of the execs of the outsourcing companies has no say in how much they should get.

The programme then turned to the Work Programme. It looked at Liverpool, where a small local outfit had used the Future Jobs Fund to secure work and / or training fpr more than 400 people. Despite Cameron's talk of the Big Society, power devolving to local people, this organisation and all those like it will not be in the running for contracts under the WP; but in the North West both Serco and G4S are on the shortlist. It was clear, we were told, that even if small, local organisations start out as players in the Big Society, they will soon be swallowed up by the big fish.

The Financial Times has maintained its interest in the finances of the Work Programme. On 8 March they reported that some of the larger providers were privately dubious about whether the payment by results system was going to stack up. They can't afford not to be in it, but they are banking on the fact that the government can't let it fall over and will bail them out if necessary. Yesterday they quoted Chris Grayling's response. No provider will have more than "a limited number of contracts", in order to spread the load if anyone goes bust. And, he said, the providers can make "shedloads" of money if they get the hardest to help into work.

All in all, quite depressing.

PS. Emma Harrison was speaking at a meeting of the Policy Exchange, a Tory think tank, today about Working Families Everywhere.

Dispatches and redundancy

I didn't have the chance to watch the Channel 4 Dispatches programme tonight, but I will when it's on 4OD. The comments on the channel's website suggest that it got to the heart of the matter. If anyone saw it, tell us what you thought.

A4e, like other providers, has been sending out redundancy notices. Although the FND contracts have been extended until the WP starts, Pathways hasn't (and no wonder, given its abysmal results). One can feel genuinely sorry for those who have lost their jobs. But it's an inevitable aspect of privatisation. People are employed only for the length of the contracts. It's one of the reasons why outsourcing is cheaper.

Probation

Jen Byrne of A4e yesterday gave evidence to the House of Commons Justice Select Committee on the role of the Probation Service. No details are available* yet of what was said, but A4e was one of seven organisations or individuals contributing evidence. Byrne is A4e's "Strategic Director for Justice" and was recently in the US looking at the way they do things there. She appears to have joined A4e straight from university, where her MSc dissertation was on "Levels of Self-Esteem and Motivation in Long-Term Unemployed Jobseekers". The criminal justice system is yet another area of our national life into which A4e, amoeba-like, is spreading.

* Here's the link to a video of the meeting.

You couldn't make it up

When I first saw this I thought it was a mickey-take by one of Emma Harrison's critics. But no, it's on her own website. An Emma Harrison video widget! Come on now, you know you want one.

The hunger for publicity can slide into self-parody. But the real drive for contracts and profits is going on behind the scenes.