Scandalous: Council Secret Sell offs!


When I poked fun at “Direct and Care“ on this site, little did I know it really did have a bad name.  Not just that it was badly named, but that it was causing all sorts of financial trouble for the council.

I checked the City’s website this morning, and was surprised to see an entry dated a few days ago (31 October 2008 to be exact) regarding “Direct and Care”.

This is an amazing tale, and it demands your attention for a host of good reasons, not least of which is that almost no-one knows anything about what is going on!

Here’s the deal: “Direct and Care” grew to be one of the biggest council departments, with a staff of about 8000 civil servants.

Now, as you can imagine, all City councils are legally obliged — and committed — to meet financial targets set by the main government.

Back in June 2007, it was noticed that the so-called “Significant Trading Operations” (or “STOs”) of Glasgow’s “Direct and Care” department was in bad shape. Even their targets were to be met over a three year period, they were not on track to do this, they were heading for disaster!

So what to do?

The Executive Committee immediately asked for a “review” — they needed suggestions, ideas, and most of all, they needed answers — and fast.  They needed to get out of this hole — somehow.

So with Grant Thornton and Burness solicitors, a review of different options for getting out of trouble was produced.

The option that was decided upon was to privatise the department — something they had done before with “City Building”, “Culture and Sport Glasgow”, and “Glasgow Community and Safety Services”.  The council’s website puts it like this:

“Members of the Council’s Executive Committee today (Friday, 31 October 2008) approved a business plan to turn the department into the Council’s latest arm’s-length company

The move means Direct and Care will have more opportunity to grow as a business by targeting the external market and should become more competitive in the longer term.”

Basically, there was no way this department was going to toe-the-line financially.  It was a huge money-pit.  There was no way the department would match the cheaper costs in the private sector — but they couldn’t just sack everyone, close down the department and put the workload out to competitive private tender. The City Leader, Steven Purcell said:

“If no action was taken by the Council it’s likely that we may have had to put these services out to competition, and winning contracts would be very difficult.”

Not one civil servant is made redundant, and the newly formed company will continue to provide the expensive and inefficient services we have come to expect — it’s just that because they are no longer aprt of the council, the targets are avoided and the council’s legal obligation evaporates!

Amusingly, the “business plan” produced as part of the review shows the new company becoming profitable in it’s FIRST year! It did not explain why it could not become profitable when run as a council department!

The company formed is a limited liability partnership, so if anything goes horribly wrong, the damage (liability) to the council will be limited — the council being in partnership with the private company — in that it provides work and money for the company but doesn’t take profits!

Things are getting worse when councils can do such significant things without asking the people who voted them into office and who pay for it all.

Things are getting worse when a loss-making department is turned into a loss-making company when the best way to serve the people would be to (a) run the departments better, or else (b) scrap everything and get quotes — the private companies quoting would obviously be unable to meet the sudden demand, so they would naturally have to employ experienced and qualified people — in other words, those who used to do the job for the council department.

This would separate the wheat from the chaff, and we’d get the best people for the best money, but no, we’ve got the wrost people for the worst money — and the government mechanism put in place to make councils more cost-effective has been by-passed.


One Response to “Scandalous: Council Secret Sell offs!”

  1. Pot Luck on Roads « Getting Worse Says:

    […] it seems that the council’s new LLCs would rather spend our tax-quids on speed cameras and speed humps in parking bays than fix the pot […]

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