The following information has been passed to us for circulation by the DWP Group Executive:
New Guidance Agreed
Following months of detailed talks with the Cabinet Office, PCS has approved new guidance on managing outsourcing and privatisation in the civil service. Details of this new guidance has been issued to branches by the national union in circular BB/30/08.
This Guidance addresses the issue of compulsory redundancy immediately following transfer to the private sector, with management now having to take steps to avoid transferring staff only for them to be made redundant. In addition, in-house bids should now be considered and the department should explain to the unions its reasons for not allowing them when they are requested.
Increased Privatisation Calls
However, there are still many groups arguing that more and more DWP work should be opened up to privatisation.
These people wish to see the DWP reduced to an organisation which merely contracts out work. They may hide behind a variety of reasons for further privatisation: enabling more people to move into work, bringing about professional standards, modernising the delivery of services, etc. However their real reason is to make money!
Pathways to Privatisation
Jobcentre Plus is the area where the government is being lobbied hardest to increase the use of the private sector. The main lobbyists are private companies seeking to make millions of pounds of profit from providing Jobcentre Plus services.
Already a significant amount of DWP work is outsourced. The DWP 3 Year Business Plan shows that a staggering £2.67 billion is now spent each year on contracting work out to private and voluntary organisations as well as consultants. If unchallenged this trend is likely to continue.
A recent report, commissioned by the DWP, looking at the privatisation of the welfare state in America, highlighted the dangers attached to privatisation. “There are risks attached to the significant involvement of for-profit organisations. They are likely to follow profit maximisation strategies shaped by contract incentives and this may not necessarily deliver what is best for clients…..future capacity may be at risk when market conditions change and larger for-profits remove their capital to seek greater profits elsewhere.”
In other words private companies will be tempted to cherry-pick the easier cases when paid by results and will move away altogether if unemployment increases. Given this information, PCS has strongly condemned the decision to hand over 60% of the new Pathways to Work programme to private profit-making companies.
It has been revealed that the new Pathways to Work programme will reward private companies handsomely for their efforts. According to some reports, the DWP could be paying private contractors tens of thousands of pounds for finding an unemployed person a job that lasts for 18 months. This is money that should be invested into Jobcentre Plus to enable our members to improve and develop their already excellent record of getting the unemployed into work. Only this week the government proudly announced that unemployment had fallen to a 30 year low. This is clear evidence that Jobcentre Plus is delivering results and there is no sensible reason for changing a system that is working so well.
Deal or No Deal
The recently announced Flexible New Deal (where private companies provide employment services for those who have been unemployed for over 12 months) will see the privatisation bill to DWP increase dramatically. The companies who win the bids could be netting millions of pounds a year.
The DWP has so far refused to rule out transferring Jobcentre Plus staff to the private sector through the Flexible New Deal. They have asked bidders to include the cost of transferring staff under the Transfer of Undertakings (Protection of Employment) (TUPE) Regulations, though also suggested that staff may be redeployed away from privatisation.
PCS is completely opposed to a single member of staff being transferred to the private or voluntary sector as part of the Flexible New Deal. PCS has called for the Department to reassure its staff that no one will be transferred out of the civil service as a result of the Flexible New Deal. In addition we will press the case for In House bids to be run for every contract.
Future Employment Doubts
PCS is concerned that members’ future employment may be at risk if they have to transfer to private or voluntary organisations. Recent examples of DWP privatisations has shown that private companies are quite prepared to make staff who transfer to them compulsorily redundant, sometimes within weeks of the transfer.
The privatisation of File Storage to Capita, Printing to Xerox and Office Services to Haden have all resulted in members being made compulsorily redundant soon after the privatisation. The new agreement with the Cabinet Office should help to make this harder in future but our experience has shown that privatisation does pose a real risk to members’ jobs.
Private Waste, Public Loss
The DWP 3 Year Business Plan proudly announces that “our estate, telephony and information technology infrastructure have all been outsourced through a series of ground-breaking contracts with our private-sector partners.” One of these, the DWP computer contract (TREDSS) has brought with it numerous problems.
Under this contract the DWP can pay more money to repair a computer than it would actually cost to buy a replacement from a High Street store. Simple tasks, like moving a computer from one desk to another, which was previously carried out by DWP staff, now involves paying a private company to do it.
Following months of detailed talks with the Cabinet Office, PCS has approved new guidance on managing outsourcing and privatisation in the civil service. Details of this new guidance has been issued to branches by the national union in circular BB/30/08.
This Guidance addresses the issue of compulsory redundancy immediately following transfer to the private sector, with management now having to take steps to avoid transferring staff only for them to be made redundant. In addition, in-house bids should now be considered and the department should explain to the unions its reasons for not allowing them when they are requested.
Increased Privatisation Calls
However, there are still many groups arguing that more and more DWP work should be opened up to privatisation.
These people wish to see the DWP reduced to an organisation which merely contracts out work. They may hide behind a variety of reasons for further privatisation: enabling more people to move into work, bringing about professional standards, modernising the delivery of services, etc. However their real reason is to make money!
Pathways to Privatisation
Jobcentre Plus is the area where the government is being lobbied hardest to increase the use of the private sector. The main lobbyists are private companies seeking to make millions of pounds of profit from providing Jobcentre Plus services.
Already a significant amount of DWP work is outsourced. The DWP 3 Year Business Plan shows that a staggering £2.67 billion is now spent each year on contracting work out to private and voluntary organisations as well as consultants. If unchallenged this trend is likely to continue.
A recent report, commissioned by the DWP, looking at the privatisation of the welfare state in America, highlighted the dangers attached to privatisation. “There are risks attached to the significant involvement of for-profit organisations. They are likely to follow profit maximisation strategies shaped by contract incentives and this may not necessarily deliver what is best for clients…..future capacity may be at risk when market conditions change and larger for-profits remove their capital to seek greater profits elsewhere.”
In other words private companies will be tempted to cherry-pick the easier cases when paid by results and will move away altogether if unemployment increases. Given this information, PCS has strongly condemned the decision to hand over 60% of the new Pathways to Work programme to private profit-making companies.
It has been revealed that the new Pathways to Work programme will reward private companies handsomely for their efforts. According to some reports, the DWP could be paying private contractors tens of thousands of pounds for finding an unemployed person a job that lasts for 18 months. This is money that should be invested into Jobcentre Plus to enable our members to improve and develop their already excellent record of getting the unemployed into work. Only this week the government proudly announced that unemployment had fallen to a 30 year low. This is clear evidence that Jobcentre Plus is delivering results and there is no sensible reason for changing a system that is working so well.
Deal or No Deal
The recently announced Flexible New Deal (where private companies provide employment services for those who have been unemployed for over 12 months) will see the privatisation bill to DWP increase dramatically. The companies who win the bids could be netting millions of pounds a year.
The DWP has so far refused to rule out transferring Jobcentre Plus staff to the private sector through the Flexible New Deal. They have asked bidders to include the cost of transferring staff under the Transfer of Undertakings (Protection of Employment) (TUPE) Regulations, though also suggested that staff may be redeployed away from privatisation.
PCS is completely opposed to a single member of staff being transferred to the private or voluntary sector as part of the Flexible New Deal. PCS has called for the Department to reassure its staff that no one will be transferred out of the civil service as a result of the Flexible New Deal. In addition we will press the case for In House bids to be run for every contract.
Future Employment Doubts
PCS is concerned that members’ future employment may be at risk if they have to transfer to private or voluntary organisations. Recent examples of DWP privatisations has shown that private companies are quite prepared to make staff who transfer to them compulsorily redundant, sometimes within weeks of the transfer.
The privatisation of File Storage to Capita, Printing to Xerox and Office Services to Haden have all resulted in members being made compulsorily redundant soon after the privatisation. The new agreement with the Cabinet Office should help to make this harder in future but our experience has shown that privatisation does pose a real risk to members’ jobs.
Private Waste, Public Loss
The DWP 3 Year Business Plan proudly announces that “our estate, telephony and information technology infrastructure have all been outsourced through a series of ground-breaking contracts with our private-sector partners.” One of these, the DWP computer contract (TREDSS) has brought with it numerous problems.
Under this contract the DWP can pay more money to repair a computer than it would actually cost to buy a replacement from a High Street store. Simple tasks, like moving a computer from one desk to another, which was previously carried out by DWP staff, now involves paying a private company to do it.
The TREDSS contract will also mean that even access to the office communications rooms will have to be paid for, despite the fact that a CSO can currently access it for no cost.
Further evidence of the failure to drive out savings via IT privatisations comes in the shape of equipment to aid users with disabilities in accessing their computer. Mice and other such equipment are now routinely hired in at a cost that exceeds their actual outright buying cost. While the CAMS system, being developed for the introduction of ESA, fails to provide the essential adjustments that many disabled staff will need to be able to use the new system. It is a sad irony that the IT system to support paying benefits to sick and disabled people, fails to provide the reasonable adjustments for the department’s own disabled staff.
Conclusion
PCS believes that there is a fundamental problem in treating DWP as a business. The DWP is a provider of essential public services and it is a fundamental mistake to pretend that it can operate as a profit making organisation in an artificial market.
PCS believes it’s time for a fundamental rethink of the use of the privatisation in DWP. PCS is pressing the government to deliver properly on their slogan of ‘what’s works is what’s best’. Jobcentre Plus has for many years shown that it works best. DWP should back its staff and end its policy of privatising our work.
