Society: Cornwall's privatisation compromise: The council came perilously close to outsourcing a wide range of services to BT. Why did it change its plans?
(Guardian (UK) Via Acquire Media NewsEdge) Many visitors to Cornwall drive through or past its former county town of Bodmin, which, with its nearby moorland and terraced streets, would not look out of place in the rural north of England. Those driving to Padstow will probably pass a long, high, stone wall on their way out of town. This once kept in patients of what used to be Bodmin's biggest employer: St Lawrence's hospital, the county's former mental asylum.
Some of the older hospital buildings have been turned into private housing, and the health service now occupies only a corner with a small community hospital, a psychiatric intensive care unit and a privately run NHS treatment centre. Between them lies Beacon technology park, set up with state funding in 2005. However, only one building was ever opened - it currently has five out of 13 offices to let and most of the rest is occupied by the council.
"Apart from this, there isn't anything here," says local councillor Ann Kerridge, pointing out sites for potential new buildings. "It's empty space."
Hopes for a new breed of healthcare jobs on this site led Kerridge to vote in favour of Cornwall council and local NHS trusts transferring hundreds of jobs to the private sector in a hugely controversial move that has claimed many casualties including the leader of the council.
Kerridge voted for the mega privatisation plan - which was put on hold last year after leader Alec Robertson was ousted - because it promised to create hundreds of jobs at a national telehealth and telecare centre in Bodmin, employing nurses and operators monitoring patients remotely. As well as creating jobs, she thinks it would encourage other employers. "Bodmin's always been considered a place that is good to do business," Kerridge says. "This will help cement that."
Cornwall council, which was formed out of a county and six districts in 2009, has been considering a larger outsourcing plan since 2010. Many other councils that have trodden this path in a bid to make millions of pounds of savings as they struggle to cope with cuts in Whitehall budgets have found it a bumpy ride. The north London borough of Barnet's radical "easyCouncil" plan to reduce the town hall to a commissioning body in an estimated pounds 1bn deal with Capita has been met by fierce resistance from residents. Somerset county council's partnership with IBM, with minor partners Taunton Deane borough council and the Avon and Somerset police force, has run into trouble resulting in the outsourcing partnership taking legal action against the county council. In 2011, Suffolk county council halted its "virtual council" plan to outsource all services.
In January 2012, Cornwall - run by a coalition of Conservatives and independents, with Lib Dems as the largest opposition party - shortlisted two firms for what it called the Cornwall strategic partnership: telecoms giant BT and US IT firm CSC. The original plans were negotiated by the council's cabinet with the aims of saving money, to cope with deep expected cuts in government income, and to boost local employment. The plans would have moved 778 council jobs into the private sector, from libraries, local offices, benefit processing, procurement, ICT, document management, telehealth and telecare, as well as 154 similar jobs from the county's three NHS trusts.
The mega-privatisation plans were rejected by the majority of councillors in September, but the cabinet decided to carry on regardless, which resulted in deputy leader Jim Currie resigning in protest. The following week councillors passed a motion of no confidence in Robertson. CSC pulled out of the bidding process and Currie took over as leader of the council. Under his leadership, the council reviewed a total of 14 alternative options to the original joint-venture proposal, including keeping everything in-house, an employee mutual, and various levels of private sector involvement.
BT continued to pursue a deal. According to a presentation published by local independent councillor and blogger Andrew Wallis, the firm guaranteed savings of pounds 150m over 10 years if the original deal went ahead, and forecast these could reach pounds 279m. It also promised to create 1,043 jobs in Cornwall on top of the staff transferring, including 505 posts in telehealth and telecare, and 331 in BT's retail division. Staff transferring would be covered by BT's no compulsory redundancy policy and their state sector pension arrangements would continue. But a survey by trade union Unison found 61% of council staff preferred to stay in-house, with only 22% favouring BT.
On 11 December, councillors voted overwhelmingly against the original plans but they also voted against keeping all services in-house. This left a range of intermediate options. They chose an option to transfer 340 staff in ICT, document management, telehealth and telecare to BT. Plans for a national centre for telehealth and telecare were retained, although its location has yet to be confirmed. BT said it was pleased to get approval for a version of the joint venture, and would work with the council on the details.
Fiona Ferguson, who became Conservative group leader and cabinet member for corporate resources after Robertson's resignation, was the driving force behind the smaller joint venture. She describes the deal finally agreed by councillors as "pragmatic". With no dominant party, divisions within parties and an election this spring, a smaller scheme made sense. "I wanted something everyone could get behind," she explains. "Many of the councils that have had these big strategic partnerships have had more political stability. That's not the case in Cornwall."
Ferguson, formerly a London-based lawyer, says that the chosen option excludes riskier areas such as back office work and contact with the public, areas in which BT, she says, made a weaker case for savings and where the council has improved performance significantly over the last few years. Retaining these departments also means the council has the ability to make further cuts, says Ferguson. "It's easier to do [cuts] in-house, as it can be done in a controlled way, rather than renegotiating with a partner," she says.
She believes that staff transferring to BT will have more job security than those who stay with the council, given the firm's policy against compulsory redundancies.
But Helen Willis, a regional manager for Unison, says that, while the smaller outsourcing plan is preferable to the original one, most Cornish local government members want to continue to be public sector employees. "They are proud to work for Cornwall council," she says.
Currie, who initially voted in favour of keeping all work in-house but then backed the smaller deal, says it is "a pretty good compromise". He is keen to increase joint working with the local NHS, to make both council and health services more efficient. But this aspect of the joint venture looks shaky: just before Christmas Royal Cornwall hospitals, the largest local NHS trust, announced that it would seek its own arrangements for health records scanning outside of the strategic partnership, and will decide whether to include its ICT staff later this month. A council spokeswoman says it is disappointed, but adds that the county's other two health service trusts are supporting the proposal for a reduced partnership with BT.
Meanwhile, the council's chief executive, Kevin Lavery, announced on Christmas Eve that he will move to the equivalent job at Wellington city council in New Zealand at the end of March. It appears that Cornish councillors' attempt to bring in the private sector in a way that brings new jobs to the county, saves money but keeps them in control is not yet a done deal.
Fiona Ferguson, Conservative group leader and cabinet member for corporate resources, was the driving force behind the smaller joint venture Photograph: Apex
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