Strategic Partnership in Crisis

Dexter Whitfield

Centre for Public ServicesMay 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 2001.• 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 indicators 03/2001 03/2002 03/2003 03/2004

Turnover (£m) 43.3 94.8 112.1 120.7

Profit/Loss before tax (£m) -28.8 -16.9 -13.9 -23.6

Profit margin (%) -66.6 -17.9 -12.4 -19.6

Return on Capital Employed (%)

-39.4 -27.9 -24.5 -55.7

Gearing (%) 40.4 40.2 33.8 6.9

Liquidity Ratio 2.38 1.91 1.66 1.4

Number of employees 1,774 2,993 2,795 2,887

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 ServicesService 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 2005.HBS achievements Customer Contact Centre and SAP implemented

Performance

Indicator Corporate Health Indicators 1999/00 2000/01 2001/02 2002/03 2003/04 Performance

BVP13 % citizens satisfied withoverall service provided

N/c 52 N/c N/c 35 down

BVPI4 % complainants satisfiedwith handling of theircomplaint

N/c 32 N/c N/c 28 down

BVPI8/F15 % of undisputed invoicespaid within 30 days

80 81 90 96 78*** down

BVPI57/

F89

% of interactions withpublic capable of electronicservice delivery/E-govttypes of interactiondelivered electronically

N/a N/a 63.5** 60 57.8 down

Performance comparisonIndicator Corporate Health

Indicators2003-04

Middlesbrough

Lincolnshire

Newcastle

KentCC

BedsCC

Performance

BVP13 % citizens satisfied withoverall service provided

57.0 46.0 54.3 75.0 35 lowest

BVPI4 % complainants satisfiedwith handling of theircomplaint

N/a 32.0 34.0 33.0 28 lowest

BVPI8/F15

% of undisputed invoicespaid within 30 days

83.2 90.3 80.8 94.8 78*** lowest

BVPI57/F89

% of interactions withpublic capable ofelectronic servicedelivery/E-govt types ofinteraction deliveredelectronically

66.0 41.3 100.0 72.8 57.8 Secondlowest

Additional evidence

• “The strategic partnership is not delivering improvement in services”

Annual Audit and Inspection Letter, District Audit, January 2005.

• 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 2001.• 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 2003.

• 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 PartnershipOriginal 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.