“Serco given new asylum housing contracts despite £6.8m fines”

“The outsourcing firm Serco was awarded new contracts to house vulnerable asylum seekers despite having been fined nearly £7m for previous failings, the Guardian can reveal.

Responsibility for housing people seeking asylum in the UK was taken away from local authorities in 2012 and given to the companies Serco, G4S and Clearsprings under deals with the Home Office known as Compass contracts.

Despite concerns by leading charities that outsourcing the service had resulted in “squalid, unsafe, slum housing conditions”, in January the Home Office awarded Serco, Clearsprings and the company Mears new contracts to provide housing for asylum seekers for 10 years from September.

Figures released following freedom of information requests and a parliamentary question show that £6.8m worth of “service credits” were imposed on Serco between April 2013 and December 2018. The figures do not include the month of March 2016.

Service credits are sums deducted from a company’s monthly invoice when it fails to meet key performance indicators included in its contract, such as property standards or how quickly issues are resolved.

Serco was fined a total of £2.8m for its contracts to provide asylum seeker housing in Scotland and Northern Ireland over that period, and just over £4m for its contract in north-west England.

Serco’s penalties were at their highest in 2013/14 (£3.9m) and 2016/17 (£1.16m). Between April to December 2018, after the new contracts were put out to tender, it was fined £850,000. In January the firm was awarded two contracts to provide asylum seeker housing: – one in the north-west and one in the Midlands and the east of England, from September.

The figures also show G4S was fined just over £2m for breaches of contract – £1.5m for its contract in the Midlands and east of England and £500,000 for its contract in the north-east and Yorkshire and the Humber, both of which end in August. Most of these fines (£1.7m) were incurred in 2013/14.

Clearsprings, which manages asylum accommodation in Wales and south-west England and London and the south-eaast, was not fined, despite also being criticised over standards of accommodation.

The Home Office initially refused to release data on the fines it had imposed, claiming the information was commercially sensitive, but it was forced to do so following a ruling by the Information Commissioner’s Office. …”

https://www.theguardian.com/business/2019/jun/20/serco-given-new-asylum-housing-contracts-despite-68m-fines-for-failings?

” Taxpayers ‘funding the outsourcing sector’ “

“A union has claimed taxpayers are propping up the outsourcing industry as local authorities spent £20bn on contracts in the last three years.

The GMB union said that local authorities should be focusing on services “not lining the pockets of private companies”.

Research conducted by Tussell – a data provider on UK government contracts – found that between 2016 and 2018 local authorities spent £20bn on outsourced contracts.

Of these Transport for London was the biggest outsourcer of services by value, with 253 contracts costing an estimated £2.3bn over the three years.

Harrow Council, the Metropolitan police, Northern Ireland Housing Executive and North Lanarkshire Council make up the rest of the top five outsourcers.

GMB found that Veolia was the top supplier of services with contracts worth £1.4bn, followed by IBM, Pennon Group, Amey and Amazon.

The most commonly outsourced service was facilities management on which £5.3bn was spent, followed by waste management, business and IT services.

Rehana Azam, GMB national secretary, said: “If we’ve learnt anything form the collapse of Carillion – it’s that outsourcing doesn’t work.

“At a time when local authority funding is already cut to the bone, this out of control outsourcing places even more risks and burdens on budgets and workers.

“Taxpayers’ cash shouldn’t be propping up an outsourcing industry descending into chaos as companies underbid each other for contracts in a race to the bottom, which will see a serious decline in public services.”

https://www.publicfinance.co.uk/news/2019/06/taxpayers-funding-outsourcing-sector

“Plan to hire thousands of foreign nurses for NHS is axed”

Owl sats: this one change means that all NHS plans (and even those for privatised health services) cannot work.

“A controversial target of hiring 5,000 foreign nurses a year for at least 15 years has been cut from a flagship plan to deal with the NHS’s staffing crisis, the Observer understands.

The move will frustrate health chiefs, who are desperate for a clear strategy to reduce NHS staffing pressures, which are expected to worsen.

There are also mounting concerns that new post-Brexit immigration rules could end up making the situation even worse unless the NHS is handed special treatment. The government’s long-awaited plan to tackle shortages included the ambition of recruiting 5,000 nurses a year until 2024 to help relieve short-term pressure. However, it is understood that while the latest version talks about the need for a significant increase in nurses from overseas, the specific figure has been removed.

Senior medics have complained about the government’s failure to solve the health service staffing shortage. Many point to the decision by George Osborne, as chancellor, to stop paying nursing students’ tuition fees and maintenance grants as a key factor in the nursing crisis.

Including the target for overseas would be politically difficult as the government remains committed to a big reduction in net migration. The plan is being drawn up by senior NHS executives led by Baroness Harding, the Conservative peer who chairs the regulator NHS Improvement.

Health experts are still unclear about how new post-Brexit immigration rules will affect the NHS. Proposals released last year that migrants would have to earn at least £30,000 a year would have barred more than 40% of migrant nurses joining the NHS in 2017-18, according to the Nuffield Trust thinktank.

It found that 72% of nurses, 70% of scientific, therapeutic and technical staff and 36% of ambulance staff earn less than the required £35,800 threshold for indefinite leave to remain. It said that while occupations with shortages are exempt from the thresholds, such exemptions are temporary.

Its analysis of the new rules warns: “The NHS is in a state of chronic staff shortage due to poor planning and insufficient training numbers over many years. There are 100,000 vacant posts in English trusts alone, although many will be filled by agency workers. The problem is concentrated in nursing and general practice.”

Mark Dayan, policy analyst at the Nuffield Trust thinktank, said: “Even if you take all the actions that we could identify in terms of boosting nurses in training, preventing them from leaving at the same rate, the nursing gap is not going to shrink at all in the next five years without international recruitment.

“We calculated that international recruitment of 5,000 nurses a year would be what it would take to halve the nursing gap, not even eliminate it, by 2023-24. If that doesn’t happen, the sort of shortages we have now will continue. That’s a patient safety issue and the ability of the NHS to move forward and get out of this crisis situation.”

Ditching the figure will place even more pressure on the need to train up British nurses. Dame Donna Kinnair, chief executive and general secretary of the Royal College of Nursing, said: “While it’s beneficial in the short-term, reliance on overseas nurses to plug gaps in England is clearly unsustainable.”

NHS Improvement said: “NHS Improvement and the Department of Health and Social Care are finalising the interim [workforce] plan which should be published shortly.”

https://www.theguardian.com/society/2019/jun/02/foreign-nurses-target-cut-from-nhs-staffing-plan?

“Calls for compensation after regulator error causes £24.1 billion hike in everyday bills”

Owl cannot believe this was accidental.

“Regulators have allowed water, energy, broadband and telephone networks to overcharge customers by £24.1 billion over the past fifteen years, according to stark new figures from Citizens Advice.

The news comes after research found an initial investigation that unearthed £7.5bn of overcharging for connection to key services was just ‘the tip of the iceberg’.

In 2017 Citizens Advice found Ofgem made errors in setting price controls for energy networks, resulting in energy customers being overcharged £7.5 billion over an 8-year period. After the charity highlighted these concerns, three energy network companies returned a total of £287m to consumers.

But now the charity has found the same errors have been made by Ofgem over a much longer period and by regulators in other markets including water, broadband and phone networks.

This research shows misjudgements by the regulators Ofgem, Ofwat and Ofcom on key decisions have meant customers have been paying far too much for the pipes and wires that connect their homes to essential services over the last 15 years.

These sectors include companies that face little, or no, competition to drive down the price they can charge their customers. Instead, regulators tell the network companies how much they can charge by setting a price control. Customers then pay the charges for these networks as part of their water, energy, broadband and phone bills.

These overpayments partly occurred because regulators made forecasting errors. They predicted that costs, such as debt, would be higher than they became. Regulators also over-estimated how risky these businesses were for investors.

Citizens Advice is now calling for both widespread compensation and a fundamental change in the way these calculations are made.

Instead of forecasting costs, regulators should use available market data to calculate costs and adjust their estimates of investment risk, it argues. This would avoid consumers paying too much in future.

While several energy and water companies have taken steps to return some money to customers, Citizens Advice is calling for all firms to provide a voluntary rebate to their customers. If they don’t, the government should step in.

“Regulator error has meant customers have been charged too much by energy, broadband and phone networks for far too long,” says Gillian Guy, chief executive of Citizens Advice.

“At a time when so many people are struggling to pay their essential bills, regulators need to do more to protect customers from unfair prices. They have started to take steps in the right direction but it is vital they continue to learn from their past mistakes when finalising their next price controls.

“Companies need to play their part in putting this multi-billion pound blunder right. They must compensate customers where they have been paying over the odds. If they don’t government needs to intervene.”

In a statement responding to the research, the energy regulator Ofgem said: “Ofgem remains determined to drive the best deal possible for consumers. Overall, energy network regulation has delivered for consumers, with £100 billion invested, power cuts halved, record customer satisfaction and reduced costs.

“While we do not agree with Citizens Advice’s estimate of excess profits, we welcome their report and recommendations. We will continue to work closely with them and wider stakeholders to apply lessons learnt from previous price controls for the next price control period (RIIO2).”

Last week Ofgem confirmed its methodology for calculating their next set of price controls, including a lower return on equity of 4.3 per cent and a lower allowed return on debt. This would lead to customers’ bills being reduced by £6 billion over five years from 2021, calculations it says Citizens Advice supports.

Meanwhile, households were warned they could be hit with average annual energy bill rise of almost £210, or 20 per cent, as 60 fixed dual fuel energy tariffs come to an end this week according to switching service weflip, charities have called for immediate action to better support energy customers in vulnerable circumstances.

An independent report published this week says urgent action is required by all energy companies, regulators and government as well as price comparison websites – with support from consumer groups and charities – to better identify customers in vulnerable circumstances and improve the help and support given to them.

Joanna Elson, chief executive of the Money Advice Trust, who served as a member of the Commission for Customers in Vulnerable Circumstances, which produced the report, said the charity is increasingly hearing from people struggling to meet everyday household costs.

“This report puts the energy industry firmly under the spotlight. Significant work is needed to improve support for energy customers in vulnerable circumstances. As the report notes, there is good practice out there, but this support is inconsistent and varies greatly across the sector.

“Training frontline staff to identify customers in vulnerable circumstances is a crucial first step, while actions such as committing to not use High Court Enforcement Officers, can also make a big difference for the most vulnerable.

“There is also an important role for the third sector to play alongside suppliers through greater partnership working. This could be through signposting to debt or energy saving advice, and helping people access financial help and other essential costs.”

https://www.independent.co.uk/money/spend-save/regulator-error-24-billion-energy-broadband-telephone-connection-costs-a8937546.html

“Government spends almost £100m on Brexit consultants”

Owl says: When people such as “Failing Grayling” (chaos in all departments he has run, the latest being transport) and Swire’s choice for PM Dominic Raab (the Brexit Minister who didn’t realise how much traffic to and from the EU goes through Dover) in charge – was it money well spent?

And how come these consultants had all the experts and the civil service didn’t?

“… The vast bulk (96%) of the Brexit consultancy expenditure under Cabinet Office arrangements – which accounts for £65m of the £97m total – has so far been handed to six consultancy companies: Deloitte, PA Consulting, PricewaterhouseCoopers (PWC), Ernst & Young, Bain & Company and Boston Consulting Group.

Five departments: the Cabinet Office, Home Office, Border Delivery Group, Department of Health and Social Care (DHSC) and the Department for Environment, Food and Rural Affairs, account for the majority of spending via the Cabinet Office. …”

https://www.theguardian.com/politics/2019/may/29/government-spends-almost-100m-brexit-consultants

Swire’s choice for PM : wants all schools and NHS run by private companies for profit

Should one be judged by the company one keeps?

“Tory leadership hopeful Dominic Raab has been described as more rightwing than Margaret Thatcher over his proposal to let state schools be run by profit-making companies

Raab, who is second favourite in the race to be the next prime minister, made the case for privately run state schools in 2013 and again in 2014, saying the government should open up the education system for companies to make money.

The idea is one of a number of rightwing proposals put forward by Raab in pamphlets over the years. The former Brexit secretary has also suggested encouraging more private companies into the NHS by giving them tax breaks or paying them premiums, and scrapping the 45% top rate of income tax, instead having a basic rate at 15% and a higher rate at 35%.

Asked whether Rabb still endorsed the idea of letting companies run state schools, his spokesman did not rule out the proposal, saying: “Dominic has set out his priorities to fight for a fairer Britain – a fairer deal for workers by cutting taxes for those on low and middle incomes, a fairer society by boosting apprenticeships and getting a fairer deal from Brussels.”

In his 2013 paper Capitalism for the Little Guy, Raab suggested the government should “lift the bar on profit-making companies running academies and free schools”, subject to a minimum of 50% of profits being reinvested into the school. At present academies and free schools cannot be run for profit.

Raab wrote that opening up schools to profit-making companies could help to raise capital investment for education at a time when funding from central government was under pressure, arguing that such a move would help raise standards.

He acknowledged there was an “understandable sensitivity of introducing the profit motive into schooling”, suggesting that as well as the 50% profit limit on, dividends should only be paid if educational performance standards were met and that there should be a bar on the sale for commercial gain of school assets purchased with public money. …”

https://www.theguardian.com/politics/2019/may/29/dominic-raab-more-rightwing-on-education-than-thatcher-tory-private-sector-state-schools-profit?

“Why councils are bringing millions of pounds worth of services back in-house”

“Chris Morgan got a job as an electrician repairing council houses in Stoke-on-Trent just over five years ago. Although he enjoyed his job, Morgan, 36, says he did not always feel he could raise issues with his line manager. “Our supervisors weren’t always in the trade we were in,” he says. The city council had outsourced its housing repairs service to Kier group in 2008. But since the council brought the work in-house last year, Morgan says he feels happier. “I know my supervisor knows what I’m on about. It makes me more confident,” he says. “We have had extra talks, health and safety training. They have put in a new canteen and showers, so the facilities are better too.” And with a £1,000 pay rise, plus an extra £500 for doing asbestos work, Morgan is also a bit better off.

Now all repairs, maintenance and home improvements to the council’s housing stock, as well as public building maintenance, are in-house.

A report by the Association for Public Service Excellence (APSE) published today, shows that Stoke is far from unusual, with 77% of UK councils planning to bring services back in-house this year. And the report calculates that between 2016 and 2018, at least 220 local government contracts have been brought back into council control.

Labour ‘will ban’ outsourcing of public services to private firms.

Outsourcing began under Margaret Thatcher with compulsory competitive tendering back in the 1980s and was embraced wholeheartely by New Labour. Now attitudes seem to be hardening against contracting out. “What we are seeing is a 40-year experiment in public service delivery being put under the microscope,” says Tom Sasse, a senior researcher at the Institute for Government.

The Labour party has pledged that under a Labour government all frontline services would be provided by the public sector, from railways to social care. Even the Conservative government has been forced to look again at outsourcing, renationalising probation services after outsourcing them disastrously failed. And in the NHS, the cervical cancer screening programme for England will be brought back into the health service later this year, after Capita failed to send more than 40,000 women screening invitations and reminder letters to have a smear test.

“A catalogue of failure has shown that private providers have struggled to generate profit and deliver services of the standards that the community expects,” says Paul Evans, director of NHS Support Federation.

“The rise in insourcing shows that commissioners are being forced to recognise this. Not all contracts display problems, but experience now shows that the risk is high.’

For many public sector bodies, bringing services back in-house is increasingly a pragmatic way to cut costs and improve quality. “On its own, it is not an absolute panacea, but there are significant advantages to bringing services back in-house,” says John Tizard, a former Capita executive and now a strategic adviser on public services.

According to today’s report, 78% of local authorities believe insourcing gives them more flexibility, two-thirds say it also saves money, and more than half say it has improved the quality of the service while simplifying how it is managed.

“Insourcing allows councils to regain control over local services,” says Mo Baines, head of communication and coordination at APSE and author of the APSE report. “Fragmented service delivery through outsourced contracts has failed to deliver on price and quality. It is no longer a viable option.”

Sasse adds: “In the 1980s, there were typically 20% cost savings by outsourcing services like waste collection, but those efficiencies have now been made.”

Steven Griggs, professor of public policy at the local governance research centre at De Montfort University, says: “In the context of austerity, insourcing offers reductions in management costs that can be used to fund frontline services. If you are locked into long-term contracts, then inevitably cuts will fall on remaining services.”

Some councils have opted to insource because the provider walked away from the contract. In Scotland, Highlands council brought cleaning public lavatories back in-house in 2017 after the provider said it wished to terminate the contract because it was no longer commercially viable without increasing the contract value by just under £450,000: a 31% increase.

Griggs says councils are also finding other benefits. “Insourcing builds in-house capacity, facilitates the joining up of services, shores up financial flexibility, keeps the public pound in the local economy and provides opportunities to work with small- and medium-sized businesses to strengthen local supply chains.”

And in some cases it can generate much needed revenue.

In Stoke, the council created a wholly owned trading company, Unitas, to allow the housing repair team to bid for other contracts and generate profits. As housing revenue grant is ringfenced, any surpluses or profits made by the council have to be spent within that budget. But by creating the trading company, any profits could go back to the council’s general fund.

“Last year we returned £4.6m to the council and provided an improved service,” says Steve Wilson, operations director of Unitas. The company has won contracts worth £2m to refurbish civic and other local buildings. It is also hoping to bid for maintenance work with other housing providers. “Rather than line shareholders’ pockets, this approach has generated income for the council, improved customer service and staff morale,” says Carl Brazier, director of housing and customer services at Stoke city council. …

In Cheshire, Halton borough council has saved £750,000 a year by bringing its three leisure centres back in-house, while Nottingham has saved £500,000 annually by insourcing maintenance of its civic buildings and cut the cost of staff catering by 17% by bringing it back in-house.

One of the biggest insourcing programmes has been in the London borough of Islington. Following its 2011 fairness commission, the council has brought back about £380m of services, helping to improve the pay and conditions of 1,200 frontline staff and generating net savings of about £14m for the council. Services brought back in-house include building cleaning; housing repairs and maintenance; waste and recycling; grounds maintenance; and temporary accommodation.

Today’s report argues that the economic case for insourcing means all councils should consider it. “In an age of austerity, councils can no longer afford outsourcing failures. Most can deliver quality services at a better price and without sacrificing the workforce on the altar of the lowest bidder.”

https://www.theguardian.com/society/2019/may/29/bringing-services-back-in-house-is-good-councils?