Strategic Partnership in Crisis Dexter Whitfield Centre for Public Services May 2005

Methodology Analysis of information on the SSP held by the Bedfordshire County Council UNISON branch. Analysis of Audit Commission Best Value and Comprehensive Performance Assessment (CPA) and OFSTED Local Education Authority (LEA) inspections. A search of Bedfordshire County Council’s web site for reports and minutes of the Council, the Executive, Strategic Partnership Management Board, Scrutiny etc. Semi-structured interviews with a cross section of staff and trade union representatives. A review of reports and technical notes published by the Office of the Deputy Prime Minister’s (ODPM) Strategic Partnering Taskforce. Bedfordshire-relevant material from research reports and surveys on SSPs by the Centre for Public Services.

The partnership Between Bedfordshire County Council and HBS Business Services Group Ltd (Terra Firma - equity investment group). £267m 12-year contract starting June Local authority services - information technology, financial services, human resources, school support services, communications, management of outsourced contracts. HBS has similar contracts in Lincolnshire, Middlesbrough, Milton Keynes and Bath.

HBS company performance Financial indicators03/200103/200203/200303/2004 Turnover (£m) Profit/Loss before tax (£m) Profit margin (%) Return on Capital Employed (%) Gearing (%) Liquidity Ratio Number of employees1,7742,9932,7952,887

The promises A Regional Business Centre in Bedford to win additional work and create new jobs. A 45 seat Customer Contact Centre for all services. Investment of £7.8m in new IT, including integrated resource management system, SAP. £6.9m investment to improve accommodation. High quality and competitive support services to schools. A review of training facilities and a National Centre for Excellence in Education. Improved services to achieve upper quartile Best Value performance. An annual reduction in service costs of 2% (about £900,000).

Impact on Services Service delivery problems Performance down in the 4 Best Value Corporate health indicators. No evidence of Regional Business Centre or new jobs. Quality of school support services in decline. National centre of Excellence in Education constantly delayed. Council incurred considerable additional costs and unclear whether original savings target met. Only part of £7m investment in County Hall spent. “The strategic partnership is not delivering improvement in services” - District Auditor, January HBS achievements Customer Contact Centre and SAP implemented

Performance

Performance comparison

Additional evidence “The strategic partnership is not delivering improvement in services” Annual Audit and Inspection Letter, District Audit, January Failure to publish Council 2003/04 Accounts on time partly blamed on arrangements with HBS. “The Council has not yet been able to gain capacity from its strategic partnership” Comprehensive Performance Assessment, 2004, Audit Commission.

Impact on Jobs 550 jobs transferred to HBS in June HBS employed new staff on different terms and conditions- sometimes big wage differentials. Two-tier workforce and Best Value Code of Practice on Workforce Matters does not apply because contract started before March HBS refuses to sign local or national recognition agreement with UNISON and other unions. HBS poor record in communicating with staff. Some services now being transferred back to the council from HBS.

Strategic Lessons Sharpen critique of partnerships - they are essentially large contracts but with a contractor in a powerful position inside the local authority. Get the message across to Elected Members and the trade union membership about the limitations of partnerships. Demand that the Scrutiny Committee(s) fully monitors and assesses the implementation process and all aspects of the partnership. Ensure that Strategic Partnerships and PPPs are democratically accountable and transparent.

Alternative to Partnership Original UNISON position: –Council should acquire hardware, software and expertise/training as and when required on ‘best in class’ basis. –A phased qualitative implementation of ICT involving staff and user organisations. –Staff remain council employees. Advantages - builds council capacity, minimises risk and reliance on one contractor, better employment conditions, greater staff involvement, phased process learning lessons as it progresses.

Recommendations The partnership contract with HBS should be terminated. Council should adopt an incremental approach to ICT based on testing and using best-in-class suppliers. In the interim period HBS should :1. negotiate a recognition agreement locally/nationally with UNISON. 2. eliminate the two- tier workforce with HBS agreeing to voluntarily abide by Code of Practice on Workforce Matters. 3. agree to full participation and consultation with staff, UNISON and other trade unions. Comprehensive evaluation of contract - evidence from elected members, staff, trade unions, schools and user organisations. Improve the governance and transparency of the partnership. Public debate about the need, role, cost and plans for a National Centre for Educational Excellence. UNISON and other trade unions should be fully involved in the service review process.