Has council chiefs' pay got "out of hand?"

Today, Communities Secretary, John Denham had a go about council chief executives’ pay, telling the Labour party conference it has “got out of hand”. He re-iterated his pledge to reign in “boomerang bosses”, chief executives who pocket a pay-off from one job before popping up in another shortly after, and said he wanted to limit the “pension entitlements of the very highest earners” in local government.

UNISON have no problem with Chief Executives being well rewarded - many of them are UNISON members and they work hard serving their communities. But if Chief Executives are to be well rewarded, it is only fair that the staff who deliver the frontline services are well rewarded too. At the end of the day public services are not delivered by well paid managers, but by modestly paid people like home care workers, housing officers, envirnmental health officers, refuse collectors and school meals workers. If managers are getting inflation busting pay rises, then so should the workers who deliver the services.

But over the past ten years the pay of Chief Executives (and other senior managers) has galloped ahead of the rate of inflation, whilst front line workers have struggled to see their pay match inflation.

Do readers of this blog think Chief Executives’ pay has “got out of hand,” as John Denham puts it? Well you will all be able to make your mind up soon as in a few weeks we will be publishing the results of our Freedom of Information requests to all 45 councils in the East Midlands where we asked for the salary of their Chief Executive. Watch this space!

Big Business Fleecing the Public Sector

As Nick Clegg, Leader of the Lib-Dems tries to outdo David Cameron about the "savage cuts" he wants to inflict on the public sector, the Office of Fair Trading (OFT) has concluded that some big construction firms have been engaged in illegal anti-competitive bid-rigging activities. Most of these tenders were in the public sector so it was the taxpayer that was ripped off. The OFT has imposed fines totalling £129.5 million.

From the OFT's own press release:

Cover pricing is where one or more bidders in a tender process obtains an artificially high price from a competitor. Such cover bids are priced so as not to win the contract but are submitted as genuine bids, which gives a misleading impression to clients as to the real extent of competition. This distorts the tender process and makes it less likely that other potentially cheaper firms are invited to tender. In 11 tendering rounds, the lowest bidder faced no genuine competition because all other bids were cover bids, leading to an even greater risk that the client may have unknowingly paid a higher price. The OFT also found six instances where successful bidders had paid an agreed sum of money to the unsuccessful bidder (known as a 'compensation payment'). These payments of between £2,500 and £60,000 were facilitated by the raising of false invoices. The infringements affected building projects across England worth in excess of £200 million including schools, universities hospitals, and numerous private projects from the construction of apartment blocks to housing refurbishments. Eighty-six out of the 103 firms received reductions in their penalties because they admitted their involvement in cover pricing prior to today's decision.

A total of £129.5 million in fines have been imposed. That sounds like a lot of money but it is peanuts for most of these firms. To see a list of the firms and the fines imposed see here on the OFT website. One of the firms was Balfour Beatty which had a turnover of about £3.5bn when the offence took place, and was fined £5.2m - or less than 0.2 per cent of their turnover. This is hardly a punitive fine likely to deter future similar behaviour. If a UNISON member had been caught defrauding the public they would lose their job but big business hardly suffers more than a tiny pin prick.

Big business has behaved illegally and stolen money from the public sector - money that could be better spent on much needed public services. Why are the so called Taxpayers' Alliance and their friends in the Tory Party silent about this? Surely they are outraged that the taxpayer is being ripped off?

The private sector is often held up as virtuous and efficient with the public sector being wicked and wasteful. It wasn't public sector workers that created this financial crisis. So they shouldn't be punished - and neither should the communities that they serve.

Outsourcing - an undemocratic option that destroys local economies

Richard Wachman wrote an article in The Guardian earlier this week (see here) suggesting that councils may resort to outsourcing as a way of saving money in difficult times. It might seem to be an easy answer for councils. But If outsourcing is the answer, then councils are asking the wrong question.

There are may reasons to oppose outsourcing - reduction in service levels, loss of democratic accountability, the costs of monitoring contracts, lack of flexibility in contracts - but perhaps one of the least discussed, but most potent reasons, is that of the negative impact on the local economy.

Contractors who win procurement contracts tend to make their profit by driving down the wages of the staff employed by them. Either that, or they re-locate their work to a different part of the country. Either way this has a negative impact on the local economy as there is less money to spent locally. So councils who outsource services, risk working against their economic development objectives - and developing the local economy is a fundamental function of any council.

APSE (the Association of Public Service Excellence) have produced a publication that backs up the argument against outsourcing. Earlier this year APSE produced a guide to "insourcing" where councils have brought services back in house after failed outsourcing ventures. In APSE's own words:

"APSE’s latest research ‘Insourcing: A guide to bringing local authority services back in-house’ explores the growing trend of local authorities insourcing services that have previously been outsourced. Looking at the pragmatic reasons that councils have taken to return services to in-house provision this publication looks at a number of issues. It demonstrates the benefits that can be achieved from insourcing. These include: better performance; increased public satisfaction; greater value for money; efficiency savings; responding positively to changing policies and challenges; joining up services coherently at neighbourhood level; helping meet strategic goals, such as tackling climate change; and boosting local employment and economic development."

You can order the report here - it makes very interesting reading. All councillors should read this report before they decide to outsource.

What local communities need is publicly run, democratically accountable, high quality services run by people who live in the communities they serve. Outsourcing cannot deliver on these requirements.

Slash and burn

Heather Wakefield, UNISON's National Secretary for Local Government has written a very timely piece about the dangers of council service cuts on the Public Finance website. You can find it here.

It's well worth a read as it sets out the case very well, for not cutting council services and making sure we live up to being a civilised society, providing high quality public services at a time of real need.

Leicestershire County Council to cut £70 million

The budget cuts announcements continue.......

On 2 September Leicestershire County Council said it will have to make £70 million of savings over the next four years. No decisions have been taken on where savings will come from, but the Council says they are caused by an expected reduction in Government grant, an intention to hold down Council Tax and higher costs and demands.

Major efficiency savings and significant job losses are expected, but nearly half the cost is likely to come from reductions in services and higher charges. The Council says:
• it has pledged to freeze Council Tax from 2011/12 to 2013/14
• staff have been informed that significant job losses are expected, but at this stage it is not possible to say how many

• more than 50 per cent of the budget reduction will come from efficiency savings, but nearly half will need to come from service reductions and higher charges for some services.

The Cabinet and the Council's Scrutiny Commission will discuss the situation this month (September) and public consultation will be staged later this year, before more detailed plans are considered by the full County Council budget meeting in February 2010.

Before any council thinks about budget cuts it needs to take a good close look at where it might be wasting money. The UNISON East Midlands Regional Office has made a series of Freedom of Information requests to councils and we will be publishing the results soon and we will all be able to see if councils are wasting money on agency workers and consultants.

If these cuts go through there is no doubt there will be an impact on front line services. The local Leicestershire County UNISON branch will be campaigning against these cuts and if you want to assist contact the branch office on 0116 305 6153 or you can e-mail them on unison@leics.gov.uk

If like UNISON, you are worried about these proposals and you are a resident of Leicestershire you should write to your County Councillor and David Parsons, the Leader of the Council to say why you are opposed to these cuts. You can find details of who your County Councillor is here.

Barnet Council - worrying developments

In mid August the Financial Times reported that leading Tory councils are planning radical cuts. One example given was in Barnet, north London, where spending is being cut on local parks, libraries, welfare rights advice and sheltered housing. All of these are vital services that benefit the most vulnerable in our society. You can read the full FT article here. It makes grim reading. But these cuts can fought off, if council workers get organised.

Only last week The Guardian reported that Barnet Council will be using the budget airlines, EasyJet and Ryanair as a model for how council services will be run. You can read about it more here. Basically it means the council will provide a very basic minimum service and residents will have to pay more for any additional services.

It is astonishing anyone would want to ape the practices of Ryanair. They are famously anti trade union (see here) and their business practices are controversial (see here). The suggestion that councils will only provide a very basic service and make people pay for additional services is a disgraceful way of further marginalising the most vulnerable in society.

Whilst Barnet might not be a council in the East Midlands, what is going on there is relevant to UNISON members in this region. What we do know is that ideas like those at Barnet can rapidly gain supporters in the rest of the country and we need to be ready to fight any such ludicrous proposals. Over the coming weeks we will be telling you what you can do to play your part in keeping vital public services running. Three simple things you can do are below:

1. The first thing we need to do is to maximise the number of people in the union. So if you are not a UNISON member, join now. You can call 0845 355 0845 or join online here.

2. If you are already member of UNISON then you need to encourage your colleagues to join UNISON.

3. If your workplace does not have a rep of contact point contact your branch office (if you don't know the number call 0845 355 0845) and volunteer to become a contact or rep.

Successful campaigns come from having a loud voice with strong union membership, and a good network of contacts and stewards to spread the word. Make sure you play your part in defending vital services.