Inside out


How far on the journey are we?

When I was much younger I spent a wonderful autumn making some extra money through conkers.  It wasn’t big business, but having a conker tree in the back garden meant I had a steady supply when many of my friends didn’t, so I swapped enough money for the odd trip to the tuck shop for some un-treated conkers of varying sizes.  My friends could have gone and got some conkers themselves, or perhaps sourced an external supplier from another school, but my services were cost effective and efficient, I offered a guaranteed service and at the end of the day I shared my sweets with them, so everyone was a winner.

This delve into history came to mind today when I read news that Birmingham City Council’s legal services team have secured a major contract to supply 70 health trusts legal support at a cost of £8.8m.  This has precipitated the development of two brand new divisions – LSB Law and LSB Law Conferencing – which will deliver this work and the training to complement it, a huge task in anyone’s estimation.

To my admittedly limited knowledge, this has to be one of the biggest examples this country has ever seen of a public sector service offered by one Council being sold to other public sector agencies.  I have experience of internal consultancies, many of which prove very successful.  Where a specialism exists which one single team has developed and which other teams need, it is not unusual for that team to charge a modest fee to make use of this service.  Design, communications, consultation, audit, legal advice, training, research, print; all these and more are made use of in the internal marketplace (which we looked at ourselves some time ago).

Some colleagues have expressed serious concerns over these transactions, and feel that they are something which should be stamped out.  The argument is that essentially we are all paid to do a job and provide appropriate services as required.  The budget for support services is met through contributions from all services, so in essence is already paid for.  It also results in money simply being moved around within the council which could be used elsewhere.

This angle is of particular interest to any involved in local press, where some claim that money being pushed towards council-funded newspapers and publications should in fact be feeding the purses of private sector newspapers instead.  Regardless of this bloggers opinion that it is not up to the public sector to additionally fund the private, or that this has anything to do with free press (which is another argument used), or that people would perhaps not actually buy and read these paid-for papers, the point of money flowing from public to private is worth considering.

However, what really is wrong with public sectors recharging each other for providing services?  Surely this will encourage them to produce excellent services in order to attract funding from others?

Well, that’s where I’m having a few problems.  Isn’t that the purpose of the private sector?  Identify a niche you can exploit and then create a market before trying to hoover up as much market share as possible and maximise profits.  And where will it end?  How long before LBS start putting other smaller legal services out of business, or perhaps even swallowing them whole and adding them as subsidiary wings of a larger whole?  Before we are aware, other providers might start expanding their own areas of work and creating their own markets to exploit.  Local authorities would then simply become a conglomeration of vaguely related service providers, perhaps with no more than a small central coordination team to make sure the correct services were commissioned and paid for.

Perhaps even some of these public service service providers could start moving in and taking business from the private sector?

That may all seem far fetched, but I have to say that I for one prefer to see most services staying a little more local.  Some things scale well, but others will sit better in smaller doses.  Yes, some services may be able to be provided efficiently over a number of geographical areas, but at what point do these efficiency’s stop and the same old problems inherent in large organisations surface?  I’m wary of jumping for joy that any service provided by one council grows as large as this deal heralds in case too many others follow suit.

The Audit Commission was rolled up because it was deemed too large and costly to effectively deliver services.  I fear that LBS could soon become similar in size and face the same challenges.

Welovelocalgovernment is a blog written by UK local government officers. If you have a piece you’d like to submit or any comments you’d like to make please drop us a line at: welovelocalgovernment@gmail.com

Explore posts in the same categories: The future of Local Govt, We love the Council

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One Comment on “Inside out”

  1. Will Says:

    I think the issue of any actor (public or private) within a market becoming too big and distoring it should be considered by the competition commission.

    It shouldn’t matter if it is a Council or private supplier providing a service to an other supplier. Public and private providers already compete on paid for services (leisure is one example) and to excluded the public sector from bidding competitively on lucrative contracts whilst allowing the private sector to bid on the delivery of statutory services seems unfair.


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