From: Jon Heuch [mailto:j.heuch@xxxxxxxxxxx.com]
Sent: 20 December 2011 19:43
B) So Councils can “make money” can they? Only in the best socialist
tradition. Council employees
have huge overheads – without even thinking they must be 100% of total
employee costs (salary +
employers NI + pension + whatever else);
There are all sorts of issues to consider, as several people have pointed
out. But I'm really not convinced by this one.
It may have been true when Mrs T. started pushing us down the line of CCT,
but not anymore. Successive rounds of competition and the increasing squeeze
on public finances have led councils, at least the well run ones, to look
very carefully at their organisation and steadily push up efficiency. There
is no fundamental reason why the public sector cannot work just as
efficiently as the private sector. The profit motive and competition may be
the incentive for the private sector, but a very similar set of pressures are
applied to the public sector by the shrinking budgets. The public sector can,
and in places does, match the private for efficiency.
Meanwhile, in a industry such as arboriculture, dominated by small practices,
the public sector has a significant advantage. It has much more buying power.
Whether buying insurance, IT systems, office furniture or heat and light,
corporately it is buying a lot of them, and as such is much more able to push
prices down than the small arb practice. Furthermore, it has sufficient
demand for support services (IT, admin, HR, finance etc) that it can keep its
costs down by providing those in house rather than going out to expensive
agencies. And contrary to what some clearly believe, it is increasingly
pushed to accounting practices that allow the full cost of each service to be
seen. The public sector is actually well placed to compete effectively with
the private, if the will is there to make it happen. And not on some false
accounting, council tax subsidised basis, but on an equal footing, with all
costs recovered in fees.
Mike has mentioned over capacity. Again I have to disagree. I believe there
is a very good reason for council's to look at selling small specialist
services in the private market place, and that is resilience.
Take a small authority that has enough arb work to justify one arb officer.
Like most arb officers, (s)he probably feels like (s)he's sinking under the
load, but just about keeps afloat. Then (s)he goes on leave. Or gets ill. Or
gets pregnant. With only one officer, there is no resilience in the service.
You're stuffed. Faced with either letting the service collapse, or buying in
expensive cover from the private sector.
If you look to take on extra work you can justify, and afford, more staff.
Hit a blip and you have much more capacity to re-jig things, temporarily cut
back on the private work you're taking on, and keep going. Looking to private
work isn't about making use of over-capacity so much as building additional
demand in order to allow you to boost capacity and provide resilience.
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