Memorandum by UNISON (PSR 34)
0.1 UNISON welcomes the opportunity to discuss
public service reform with the Select Committee. UNISON has 1.25
million members who deliver public services, working in the public,
voluntary and private sectors. The largest group of UNISON members,
700,000 work in local authority services, and we have 400,000
working in health. UNISON is the largest union in education with
250,000 members and we are the majority union for support staff
in the police and have members in the utilities and transport
and the wider criminal justice system.
0.2 UNISON members are keen to ensure that
Britain's public services are amongst the best. They are experienced
in change and welcome innovation that will lead to better service
delivery. They are also clear that there must be more to change
than cutting the terms and conditions of their employmentregrettably
a trend that many have experienced.
0.3 UNISON further welcomes the public attitude
towards public services and the fact that poll after poll shows
that the public does care who delivers their services. An NOP
poll for UNISON in September 2001 found that 83 per cent of the
public do not want private companies running public services for
profit. Furthermore, this figure has risen from 78 per cent at
the time of the election in June 2001 and from 66 per cent in
0.4 In our evidence we wish to concentrate
on the three issues identified by the committee that we believe
are fundamental to high quality public services and are pertinent
to any discussion of the role of the private sector in the delivery
of public services:
Principles and strategy for Reforming
0.5 UNISON agrees with the Prime Minister
that the terms and conditions of frontline staff should be "geared
to proper recognition for the work they do, real incentives for
better performance, higher morale and greater fulfilment".
In our evidence we shall draw on the experience of these frontline
staff. However, the interests of our members go beyond their roles
as providers of public services. Our members and their families
also use public services and finance public services as taxpayers.
1. Principles and Strategy for Reforming
Public Services (Questions 1-5)
1.1 Public services exist as a result of
a complex set of interactions between the state and the citizen.
Public services exist, for example where:
there is no market interest in their
provision eg rural post offices;
consumers have poor information about
quality eg healthcare, water or food quality;
there are external costs (eg pollution);
there are benefits that impact on
society beyond the individual (eg education);
where protection from monopoly suppliers
is needed; or
where there is wasteful competition.
1.2 In addition the state takes account
of principles such as equity, social justice and distribution.
It ensures that citizens have equal access to services, regardless
of their ability to pay for them. Thus public services are not
defined by specific ownership arrangements but rather by their
function and provision. So for example, the fact that Railtrack
and the train operating companies are privately owned cannot and
has not altered the obligations that the government has to ensure
that the railways provide a safe and effective means of transport
for the public, at a reasonable price.
1.3 Much of the discussion about public
services takes place at a very general level, but it is UNISON's
experience that in order to do justice to the full range of public
services discussions must be service specific. What may be a good
solution for one service may be wholly inappropriate for another.
Thus, the Committee asks questions about devolved institutions
(question 3) and policies at different levels (question 4) and
in UNISON's view the answer will depend on the service under discussion.
1.4 In general, UNISON would like to see
devolved decision making across public services within a strong
statutory and financial framework that must be accompanied by
democratic accountability at an appropriate level. However, in
some cases, such as education, devolution can go too far and end
up with fragmentation of both delivery and accountability.
1.5 The Nolan committee report into standards
in public life (1996) looked at local public spending bodies,
including further and higher education institutions, grant-maintained
schools, TECS, LECS and housing associations. Nolan states in
the address to the Prime Minister that:
"There is and will continue to be, a tension
between the management driven and output related approach which
is central to many recent changes, and the need for organisations
providing public services to involve, respond to, and reflect
the concerns of the communities which they serve."
1.6 Thus there is no general answer to the
first questions without looking in more detail at the services
2. The Concept of a Public Service Ethos
and the Involvement of the Private sector (Questions 6-18)
2.1 We have said that the state takes account
of principles such as equity, social justice and distribution
and it ensures that citizens have equal access to services, regardless
of their ability to pay for them. UNISON believes that it is within
such a framework of public service values that the public service
ethos exists. An ethos that is shared by some voluntary organisations,
although it does not follow that any organisation that is not-for-profit,
automatically embodies these values. Similarly, the individuals
who work in public institutions will tend to adopt their values
2.2 Public institutions such as the civil
service, local authorities, hospitals, schools and the police
service exist to perform public services and the values of public
service are at the heart of these institutions. Public authorities
have social responsibilities as well as statutory responsibilities
to provide a range of services. Local authorities also have a
role to promote economic development in their areas under the
Local Government and Housing Act 1989. Furthermore, they have
a power to promote the social and economic well being in their
area under the Local Government Act 2000. A core principal of
the NHS is to provide a universal service for all based on clinical
need, not ability to pay. The obligations of such broad and open-ended
goals can only be borne by public institutions, nor would it be
reasonable to expect other kinds of institutions, such as private
companies to undertake such a role.
2.3 Very often, public institutions are
required to choose between conflicting interests for example in
planning decisions and to choose how to allocate scarce resources
between competing interests eg rationing of health treatments
or distributing grants. Citizens must be able to trust them to
perform these functions impartially and must also have adequate
means of scrutiny and redress to back up that trust. This is particularly
important in the criminal justice system. A simple model based
on business practices cannot encompass the ethical dimensions
of public services.
2.4 The question then is, can the private
sector do the same, or at the very least, perform defined tasks
within such a framework? The answer is not simple. Contractors
may strive to perform services to high standards, not least because
a good reputation will bring more business. But their very nature
and structure subjects them to competing interests. Not only must
they fulfil the terms of their contract, but they are also obligated
to their shareholders. A private company gains little from performing
above contract, on the contrary, this may detract from their competing
goal of maximising shareholder return. At the same time, a contract
held in one local authority or a hospital will be just one of
many contracts that the company is responsible for, diluting the
commitment that they are able to invest in any particular contract.
Again there may be conflicts between different contracts. Ultimately,
if a contract goes wrong or becomes too difficult, a company can
walk away, an option that the public sector does not, nor should
not have. The nature of public service is such that come what
may, there has to be sustained commitment to users and the community.
2.5 The case of the care sector exemplifies
these tensions. The major share of care is now delivered by the
private care sector. Laing and Buisson data shows that as a result
of costs being driven down in the residential and nursing care
services, 700 independent care homes have closed each year for
the past two years. In some cases it has become more profitable
to realise the value of the homes as assets in a rising property
market, than to continue providing care. This is an entirely logical
response for a private, profit making enterprise to make, it is
not an option for a public service that must put the interests
of the client group first.
2.6 Defining services by contracts also
places limitations on both the service and on the contract holder.
Contract specification is not easy and however carefully services
are specified, there will be elements and transactions that are
omitted. It is always easier to specify quantifiable factors rather
than the many intangibles that can make a service human and special.
This is inherent in a contract culture. And when there are many
contracts operating together, then the chances of service users
or aspect of services being left out, become all the more likely.
2.7 The values of public service are also
reflected in the practices within public service organisations.
So, for example, public service organisations tend to have flatter
employment structures than private sector organisationsreflecting
a higher priority given to equality. This is illustrated by recent
research for UNISON
that showed that every one of the top 20 contractors supplying
public services, paid their executives a larger multiple of their
average employees pay than is found in the public sector. In fifteen
of the top twenty contractors, the average executive pay was more
than ten times the average pay of their employees, the highest
multiple being 77 times. Furthermore, whereas in the public sector
all staff are members of a single pension scheme, directors of
contracting companies give themselves more favourable pensions
arrangements than their staff. Indeed, for the most part, new
starters taken on to public contracts are denied any occupational
pension at all.
2.8 In another research project commissioned
significant differences were found between public and private
employers in the application or existence of a range of employment
policies that could be said to reflect values akin to a public
service ethos. So, for example, studies of Compulsory Competitive
Tendering have found that it has led to a deterioration of maternity
benefits and the loss of policies covering sexual harassment.
Part II of the Local Government Act 1988 specifically outlawed
taking workforce issues into consideration into contracting, so
it is hardly surprising that UNISON members identify private sector
employment with a reduction of policies that we identify with
good employment practices and a wider concern for employees within
public service. The amendments to Part II that allow a consideration
of workforce matters remain voluntary rather than mandatory so
this trend could continue. UNISON would like to see them made
2.9 Finally, UNISON is concerned by the
track record of many privately run services. Taking two services,
rather than individual contracts, of which there are many examples.
Housing benefit is a notoriously difficult service to deliver.
A recent Audit Commission report found that private contractors
administered 9 out of 14 local authority areas in England where
new claims took more than 100 days on average to process. At the
same time, there are outstanding examples of good practice, such
as the housing benefits service in the London Borough of Camden.
The Department of Health's own evaluation of hospital cleanliness
found that four out of the five dirtiest hospitals were run by
2.10 Some individuals are attracted to work
in public services because of the function they perform. They
are also attracted by not working to corporate goals, but to wider
societal goals. They may also prefer the more equitable practices
and structures that are consistent with their wider values and
to the relative openness and transparency of public sector organsiations.
2.11 Many of our members who provide manual
services, such as cleaning and catering, have clearly told us
that they derive job satisfaction from performing these tasks
within the public service. Over 600 UNISON members working in
the Dudley Group of Hospitals took industrial action over a six
month period, precisely because they did not want to transfer
to the private sector, albeit doing similar work. They said that
within the NHS they worked as part of a health team, fighting
infection or providing nutrition. They feared their jobs would
be reduced to menial and unsatisfying tasks if they were both
separated from the rest of the NHS team and transferred to a profit
making company, under separate management.
2.12 In a survey
of UNISON members working in local government, respondents were
asked if they ever worked additional hours for which they were
neither paid in money or in time off. The survey found that 28
per cent of respondents worked up to ten hours extra per week
unpaid. Not surprisingly, more than 60 per cent of chief executive
and senior managers figured in this group. However, 49 per cent
of nursery nurses, 41 per cent of classroom assistants and 53
per cent of school administrators were also in this category,
showing their tremendous commitment to providing vital care and
education to children.
2.13 Individuals working for private companies
delivering public services may well share a sense of public service
ethos. However, they will also have obligations to their employers,
whose first duty is to their shareholders. There may well be a
conflict of interest between providing a better service and ensuring
the commercial success of a contract.
2.14 The public service ethos extends beyond
those who work in such services. It is exemplified by the army
of volunteers who give their time and energy to the support of
public services. Volunteers are to be found in schoolsboth
private and publicas parents tend to share a commitment
to helping with their children's education. However, the same
degree of voluntary commitment is not to be found in private hospitals
or private nursing homes. Indeed, some volunteers object to giving
freely of their time, knowing that their efforts will ultimately
contribute to the profitability of a privately owned company.
2.15 A key lesson from the problems at Railtrack
has been how difficult it is to incentivise a private company
to perform what should be its core task. Not even the combined
efforts of the Rail Regulator, the Government and the Strategic
Rail Authority have been sufficient to force Railtrack to prioritise
the safe, maintenance of the railways.
2.16 In another example, a key public service
is suffering because responsibility for it lies between publicly
owned servicelocal government and a privately owned public
servicewater. According to a survey of local authority
pest control units by the National Pest Technicians' Association,
"Rats are a growing problem. Latest research shows an average
annual increase of 18 per cent in the population of brown ratsthe
dominant variety in this country. The increase is as high as 31
per cent in the summer months." There are a number of causes,
"But at the heart of the problem, many argue, is the way
sewershomes and passageways for ratsare maintained.
On this analysis, there is a crucial and damaging tussle between
the public and private sectors." and "vital co-ordination
has been lost."
2.17 In another sector, UNISON has concerns
that the use of the private sector in a variety of functions will
have a detrimental effect on the government's stated intention
of achieving a joined up criminal justice system. So for example,
the fact that separate agencies may be involved in the transportation
of prisoners has led to a break down in communications and a threat
to the health and safety of both staff, clients and the general
public, on a number of occasions.
2.18 UNISON has a significant membership
in the voluntary sector and believes that the voluntary sector
can play an important role, but only within a framework of publicly
run services. Voluntary sector organisations can and do demonstrate
a commitment to public services, however, they are subject to
competing demands and are ultimately answerable to their governing
boards and funders. Voluntary sector organisations would not therefore
be appropriate bodies to take on whole services.
2.19 At one time, housing associations were
seen as the remedy to large-scale council housing departments,
that were sometimes perceived as being large and unresponsive.
Now that so much resources have been diverted into housing associations
they have come to be criticised for the same failings they were
expected to correct. In several respects, their sense of public
service ethos could be questioned. A recent survey found that
the pay of housing association directors had increased by almost
three and a half times inflation in a year and that 24 housing
associations paid their chief executives £100,000 or more
per year. Another study by the Audit Commission
has also criticised a number of housing associations for changing
the way that tenants are represented, so that they now have far
less influence over decisions affecting their homes than previously.
And the National Audit Office
found that housing association boards could not be trusted to
provide reliable information about their organisations.
2.20 The fact that organisations are either
charities or not-for profit does not necessarily mean that they
are not also subject to competing demands for their resources.
For example, when careers services were privatised some contracts
were awarded to not-for-profit organisations that were part of
educational charities. As such the subsidiary companies running
the careers services did not pay dividends, however, they did
make a "donation under deed of covenant to the parent charity".
The parent charities were then free to spend that money on other
activities. Thus, public money, originally allocated to the careers
service, may find its way into other activities, pursuing the
interests of the organisations that own the careers subsidiaries.
Whilst these charities may share a public service ethos, this
may ultimately be overridden by the interests of the larger group
to which they belong.
3.1 Involving the private sector in the
provision of public services leads to a number of accountability
issues that UNISON would like to draw to the committee's attention:
(a) Democratic Accountability
(b) Access to information and consultation
(c) Accountability of the private and voluntary
sectors providing public services
(d) Accountability of staff moving between
20, 21, 25)
3.2 An essential feature of public services
is that those who deliver them are democratically accountable
for them. A mixed economy of providers has led to less accountability.
It is not uncommon for Ministers to decline to answer for services
because they have been privatised and the ministers either no
longer have the information or decline to take responsibility.
3.3 There are concerns across the board
that using the private sector in PFI leads to a distortion of
public policy priorities whereby making projects attractive to
the private sector takes precedence over policy considerations.
Thus single school upgrades are unlikely to get funding, whatever
their local priority and the reality is that only grouped schools
are likely to get PFI credits. The effect of privatisation in
criminal justice has seen policy decisions increasingly following
commercial imperatives rather than social policy objectives. It
is the terms of the PFI project that set the criteria for the
location/function of new buildings. For example, green field sites
for police buildings may make sense from a commercial point of
view, but they do not from a public access point of view. Such
sites may make it difficult for relatives to visit family members
held in custody for instance.
3.4 Local authorities are democratically
accountable bodies where the decision-makers, councillors, are
directly elected by local communities. The involvement of the
private sector has damaged the democratic accountability of local
authorities and limited their control over expenditure and resources.
At its simplest, there is often a confusion of accountability
between the council and the contractor when problems arise in
a service. Another manifestation is where one generation of councillors
enter into very long contracts, typical of the Private Finance
Initiative (PFI) and strategic outsourcing. At the last local
elections, the ruling political party was ousted from control
of the London Borough of Islington, not least, because of their
poor handling of some services. The incoming administration found
they were bound by long contracts that would be too costly to
break. They in their turn entered into more very long contracts,
which will bind future administrations. It cannot be right that
a group of councillors or school governors, with a four year term
of office can commit funding and the form of service provision
for up to 30 years into the future.
3.3 The Audit Commission
has warned "PFI contractually commits the public sector body
to paying for services for long periods of time. This could restrict
the future flexibility of the body to determine the way that services
are provided unless careful attention is given to incorporating
into the contracts provisions for making changes to the nature
and cost of services provided." In a later section it also
warns that PFI "limits the ability of public bodies to switch
resources in the future."
(QUESTIONS 23, 26)
3.4 UNISON welcomes the very large programme
of infrastructure renewal that the government is undertaking.
However, UNISON is concerned by the lack of user, community and
employee consultation over the schemes and the way they are being
3.5 Members of the public, employees and
trade unions are regularly denied access to information about
PFI, often on the grounds of commercial confidentiality. This
is especially common in local government, where it is regularly
used as an unnecessary excuse for withholding information about
PFI or other contracts. As a result accountability to local communities
is reduced and it is almost impossible to debate, to assess and
to scrutinise projects.
3.6 Guidelines should be set to ensure genuine
consultation with local staff and communities. A number of Members
of Parliament have expressed concerns about the refusal to allow
the public access to information on PFI proposals. For example
in a House of Commons debate in March 1999, David Lock MP for
Wyre Forest, whilst being supportive of PFI, voiced his concern.
"As a result of the commercial confidentiality
inherent in the PFI process, virtually no informed public debate
has taken place on the merits of that scheme. The details have
seeped out and the local authority has quashed every request for
information or a public debate on the ground that it would breach
"there is no opportunity in that process
for local peopleeven local councillorsto have their
say on the overall strategy. The demands of commercial confidence
in the PFI process come into direct conflict with the openness
that the Government rightly require from public authorities."
More MPs complained during a debate on PFI in
July 2001 including Edward Davey (Kingston and Surbiton) who said
"In so many PFI deals we have seen a complete
lack of accountability. There has not been a full analysis, in
the House or in Whitehall, of the deals before they have been
signed. The deals have been pushed through with political drive
and the issue of whether they are good for the taxpayer and the
user of that service has been neglected."
3.7 The Audit Commission document "Building
for the FutureThe Management Of Procurement Under The Private
notes that the interest of service users can be neglected. And,
"there is often a tendency to adopt an insular common manager
approach to PFI . . . but community involvement in proposed PFI
schemes is becoming a critical issue as local opposition to some
PFI deals has intensified. Local people care about the future
and shape of public services and the provision of health services
is a particular emotive issue in many areas".
3.8 With regard to consultation, the Audit
Commission acknowledges in "Building for the Future' that"
"provisions requiring contractors to consult
with users is being built into some contracts. This is not the
norm, however . . . the general performance of existing local
government PFI contracts in meeting the best value consultation
requirement could best be described as mixed".
3.9 Despite Government requirements for
disclosure of information which are better in the NHS than elsewhere
there have been several examples where the "Commercial confidentiality"
has been used to withhold information from the public, information
that the public should have a right to, about the services they
depend on. For example, the Health Select Committee has requested
information on the profit levels of private sector companies involved
in PFI and UNISON believes such information should be in the public
3.10 Finally, in February 2001 UNISON was
threatened with legal action by a police authority that did not
want a critical report about a PFI scheme, prepared for UNISON,
to enter the public domain. In this case, UNISON representatives
had been given a copy of the PFI Outline Business Case and had
informed the authority that they would be seeking expert advice
on it. As a courtesy, a copy of the report was given to the authority
prior to publication and it was at this point that they sought
to gag UNISON. After lengthy correspondence and legal advice,
UNISON published a revised version of the report.
3.11 UNISON would like to see the full disclosure
of information and full consultation on PFI proposals with key
stakeholderstrade unions, employee, user and local community
representatives, before any decision is made to opt for a PFI
proposal. Information and consultation with key stakeholders should
begin at the outset and continue throughout all 14 key stages
of the PFI process.
3.12 There should be mandatory guidelines
on disclosure in every sector, along the lines of those recommended
by the NHS Executive in "Public Private Partnerships in the
National Health Service: The Private Finance InitiativeGood
Practice". All key PFI documents including Outline and Full
Business Cases for PFI schemes should be made publicly available
within one month of their respective final approval. Where any
information is withheld about a PFI scheme, public authorities
should be required to give a full explanation for non-disclosure
rather than hiding behind blanket phrases of "commercially
confidential" or "not in the public interest."
(c ) ACCOUNTABILITY
3.13 UNISON is concerned that neither the
voluntary nor the private sectors are subject to the same degree
of accountability as the public sector. Neither accountability
to service users nor a wider accountability. The Health Select
Committee has recently requested information on the profit levels
from companies undertaking PFI contracts. UNISON would go further
and supports the recommendations of the Sharman report.
Sharman states that "Public Audit has a key part to play
in safeguarding public money, ensuring proper accountability,
upholding proper standards of conduct in public services helping
public services achieve value for money".
3.14 In a mixed market of service provision,
public bodies have a duty to ensure that the bodies to whom they
subcontract services observe the highest standards of performance
and practice. They are, after all, spending public money and often,
the private and voluntary bodies act as agents of the public authorities,
in their dealings with clients and citizens.
3.15 A recent report by the Kings Fund
said "All UK health care should be subject to a common system
of state regulation, regardless of whether it is provided by the
NHS or the private or voluntary sectors." And, "If the
Government is determined to bring more public-private partnerships
(PPPs) into the NHS, it will have to take greater responsibility
for regulating the work of private companies. It is simply illogical
to have two separate systems of regulation when more and more
NHS patients are getting treated in non-NHS facilities."
UNISON believes the same standards must be applied to public services
regardless of who delivers them.
3.16 There is currently uncertainty as to
whether the government is likely to apply the terms of the Race
Relations (Amendment) Act 2000 to the private sector. In the context
of the criminal justice system, the possibility of the private
sector being allowed to take on increasing direct responsibility
for contact with the general public, but not being required to
meet the same high standards in relation to the diversity and
equality agenda, is extremely worrying, especially in light of
the post-Lawrence agenda. The need to ensure that private companies
are accountable in law in the same way as the public sector in
terms of diversity is a vital issue.
(d) Accountability: Moving between
3.17 UNISON is concerned that there are
possible conflicts of interest when individuals move between sectors.
Public servants going to work for the private sector should be
subject to a code of practice. There is a code for civil servants
that is followed in the NHS but no such code exists for local
government. There is nothing to stop a local authority officer
working on the client side of a contract and taking their knowledge
to a job with a contractor.
3.18 UNISON is also concerned at a blurring
of roles that can occur when private sector companies or individuals
act in advisory capacities to public bodies. They may give advice
from which their company or another client may stand to gain.
It is important that roles are clearly separated and that individuals
advising public bodies or government have no other affiliations
or remuneration from other interested parties.
3.19 An example would be the government
advice on refinancing of PFI projects, which was largely written
by private sector experts who were seconded to work for the Treasury
Taskforce. That advice essentially warned public sector bodies
to leave refinancing to the private sector. Following the scandal
of the huge sums that the PFI consortia have made from refinancing,
new advice recommends a 50:50 split on any gains. The point is,
that the advice was written from a private sector perspective.
The public interest was subordinated to a business point of view
and this represents a real danger of using private sector experts
to produce public sector advice.
4.1 A public service ethos exists in the
very institutions of public services: in the compact between citizens
and the government that leads to the development of public services;
in the trust that citizens place in government to allocate resources
and spend their taxes; in the values underpinning public service
and in the wider duties and obligations born by public bodies.
4.2 Individuals subscribe to and reflect
a public service ethos within this institutional framework, both
as employees and as volunteers.
4.3 Whilst companies may well wish to subscribe
to the values of the service they undertake, they cannot and should
not be expected to take on the wider duties of public services.
The private sector also has obligations to its shareholders that
may conflict with their obligations within any one contract.
4.4 The public service ethos should be valued
and nurtured. It is being damaged by the constant blame and criticism
heaped on public service workers. By the insecurity with which
they face the future and by the constant threat of transferring
their employment to the latest winner of a contract for the service
they work in.
2 Public Service, Private Profit , UNISON, September
Contracting culture: from CCT to PPPs: The private provision of
public services and its impact on employment relations, Sanjiv
Sachdev, UNISON 2001. Back
Making a Difference Under Pressure: UNISON Members Delivering
Local Services , UNISON 2001. Back
Group Dynamics-Group Structures and Registered Social Landlords,
Audit Commission, November 2001. Back
Regulating Housing Associations' Management of Financial Risk,
NAO, April 2001 Back
Audit Commission, Taking the Initiative, A Framework for Purchasing
Under the Private Finance Initiative, 1998. Back
"Building for the Future-The Management Of Procurement Under
The Private Finance Initiative", Audit Commission, June 2001. Back
"Holding to Account : the review of Audit and Accountability
for Central Government". Report by Lord Sharman of Redlynch,
February 2001. Back
Public-Private Relations in Health Care, commissioned by the King's