Spaffer: Boris Johnson has thrown so much money at private consultants and contractors that the UK’s financial stability is in peril.
The cost of privatisation: faced with the Covid-19 pandemic, Boris Johnson has paid consultants more than £100 million to do his thinking for him – and the cash has been wasted.
Clearly it’s money for old rope, considering the failure of every policy announced by Johnson and his cronies including Matt Hancock, Gavin Williamson and Dominic Raab.
And the waste is very clearly a result of privatisation; before Tory neoliberalism demanded that even ideas should be outsourced, governments used to rely on people called civil servants who spent their entire careers in public service and could therefore be relied on to know how things worked.
Those people have been largely ostracised, retired or otherwise cast out by know-nothings like David Cameron, Theresa May and now Johnson, in favour of their know-nothing friends in the private sector. Here’s the gist from the Financial Times:
The UK’s largest consulting firms have been paid more than £100m to advise the government on its response to the coronavirus pandemic, according to a string of delayed disclosures from Whitehall in recent weeks. A total of 106 contracts worth £109m have been agreed between various government departments and consulting firms such as PwC, Deloitte and McKinsey since March, as civil servants scrambled for support to source personal protective equipment, set up test and trace programmes and acquire thousands of new ventilators as the pandemic gathered pace.
The UK’s public finances are now in a terrible state after Johnson and his people awarded huge contracts to firms that were incapable of honouring them – some of which even turned out to be dormant companies – on the advice of firms like PwC, Deloitte and McKinsey. Weren’t these people supposed to be cheaper than doing the work in-house?
The government has been mired in scandal because it adopted a biased algorithm to award ‘A’ level results, on the advice of an outsourced consultancy firm.
It’s a well known adage that the definition of madness is doing the same thing again and again and expecting different results.
And yet we see Johnson going back to these private consultants for more advice.
Why aren’t we all drawing the obvious conclusion?
Have YOU donated to my crowdfunding appeal, raising funds to fight false libel claims by TV celebrities who should know better? These court cases cost a lot of money so every penny will help ensure that wealth doesn’t beat justice.
You’d be forgiven for thinking something is seriously wrong with the headline above. You don’t pay millions of pounds to sell a hugely profitable, going concern, do you?
No, you don’t – unless you’re part of a privatisation-crazy Conservative minority government in a hurry to sell off as many elements of state apparatus as you can before the electorate catches up with you and kicks you out of Whitehall.
The money – from NHS budgets that have been limited by Conservative policies and by the fact that private health companies are already siphoning parts of those budgets into their bank accounts as useless profit – was spent on “external advisors” who were employed to make NHS Professionals attractive to the private sector.
It was a gross, commercial use of cash that should have been focused on patient care.
Meanwhile, Accident & Emergency departments are preparing for the annual winter emergency caused by Tory underfunding and under-resourcing.
Health Secretary Jeremy Hunt’s big idea to stave off such a crisis is to force patients to wait three weeks for a GP appointment to be referred to A&E before they are allowed to go.
So he’ll kill off a large number of emergency patients before they ever get near a medical professional.
And the money spent on this bungle can be added to the millions spent on consultants who were hired to work out cuts to NHS services, in order to meet Tory budget demands. That’s more than £20 million – a small amount in relation to the annual cost of the NHS, maybe, but a huge amount if one accepts that it has been misused.
Here’s the bottom line:
People have died because the Conservatives are more interested in failed commercial interests than the national interest.
The Tories have secretly blown £3 million worth of taxpayers’ cash on consultants in a failed bid to privatise the NHS staffing agency.
Ministers desperately tried to sell off the respected NHS Professionals organisation which supplies doctors and nurses to hospitals.
But they were forced to perform a major U-turn following widespread anger and criticism from MPs, medical chiefs and health unions.
Now we can reveal that the Government spent £2.8 million on “external advisers” to work on the planned sale before it was abandoned.
The identities of the consultancy firms hired by the Tories have not been revealed.
The Department of Health said it abandoned the sale of the agency which supplies 90,000 doctors, nurses and other healthcare workers, after failing to receive any adequate bids.
The proposal had been strongly criticised because the use of NHS Professionals saves the NHS £70 million a year by supplying staff more cheaply than private sector agencies.
The £2.8 million bill will be paid for by taking a divided payment from NHS Professionals, but insisted “this will not impact on delivering frontline NHS services”.
Public opinion on lobbyists: Note the proximity of the words “corrupt”, “cheats” and “influential”. [Picture stolen from PR Week]
A Parliamentary Bill designed to prevent free speech by gagging political commentators, and to enable the ‘blacklisting’ of trade union members by having their names registered, has won the favour of Conservative and Liberal Democrat MPs this evening.
They voted to allow the inappropriately-titled ‘Transparency of Lobbying, Non-Party Campaigning and Trade Union Administration Bill’ to proceed to its committee stage after a debate today (Tuesday).
That stage will last for only a few days, during which it will be examined by a ‘committee of the whole House’ – in other words, the Bill is being guillotined; hurried through Parliament in order to get it onto the statute books after the least possible scrutiny. It seems that the government has something to hide.
Could it be the fact that the Electoral Commission, the organisation that would enforce the Bill’s provisions if it is passed into law, has made it perfectly clear that it is an attempt to stifle political commentary from organisations and individuals: “The Bill creates significant regulatory uncertainty for large and small organisations that campaign on, or even discuss, public policy issues in the year before the…general election, and imposes significant new burdens on such organisations”?
Could it be the fact that new regulations for trade unions mean members could be blacklisted – denied jobs simply because of their membership?
Could it be the fact that the measures against lobbyists – the Bill’s apparent reason for existing – are expected to do nothing to hinder Big Money’s access to politicians, and in fact is likely to accelerate the process, turning Parliamentarians into corporate poodles?
If so, then the attempt has failed, because all of these, and more, were discussed in today’s debate.
But don’t worry – we have the assurances of Andrew Lansley, Leader of the House of Commons, to keep us from losing sleep over it. The man who asked us to believe his so-called reform of the National Health Service would not lead to wholesale privatisation – and look at it now – took a telling question from Glenda Jackson, early in his opening speech.
She said the Bill “has created almost a fire-storm in my constituency. My constituents are appalled at what they regard as a gagging Bill. They wish to see a list of lobbyists that is transparent to ensure that Government cannot be bought — even though that is a debatable issue. They know that the Bill as it stands would prevent democratic voices from being heard.”
Mr Lansley’s response: “I look forward to the Honourable Lady having an opportunity after today’s debate to go back to her constituents, to tell them that the things they are alarmed about will not happen.”
Let’s hold him to that, shall we? Bear in mind that lying to Parliament is an expulsion offence, even if this particular government does not enforce it. David Cameron and Iain Duncan Smith have already defied Parliamentary convention by telling appalling untruths to their fellow MPs and walking back to their jobs; now it seems likely Mr Lansley may have done the same.
High on the list of opposition MPs’ concerns was the fact that the Bill does nothing to prevent lobbyists working directly for commercial concerns from approaching government ministers and trying to influence them.
“Recent freedom of information requests reveal that Treasury officials met fracking industry representatives 19 times in the last 10 months about their generous tax breaks, yet the public are denied any further details of that lobbying on the grounds that it could prejudice commercial interests,” said Green MP Caroline Lucas. “Is the Leader of the House not ashamed that this Bill will drastically curtail the ability of charities to campaign in the public interest on issues such as fuel poverty and energy but do nothing to curb such secretive corporate influencing?”
And Labour’s Chris Bryant had a query of his own: “Every single member of the public affairs team in-house at BSkyB will be able to visit as many Ministers as they want and every single lawyer employed by BSkyB to advance its case will be able to do so without any need to register. The only person who would have to register would be an independent consultant in a company that solely lobbies. How does that possibly afford greater transparency?”
Mr Lansley’s response: “It promotes transparency because if a representative of Sky visits a Minister in order to discuss that business, it is transparent that they are doing so in order to represent the interests of Sky. However, if somebody from ‘XYZ Corporation’, a consultant lobbying firm, visits a Minister in order to discuss somebody else’s business but it is not transparent through the ministerial diary publication who they are representing, that is not transparent. We propose to remedy that by making it transparent.”
Oh, well that’s all right then.
No it isn’t! It’s the complete opposite of all right! Where the public wanted a curb on corporations corruptly influencing the government, it is instead offering to rub that influence in our faces!
“This is one of the worst Bills that I have seen any Government produce in a very long time,” said Lansley’s shadow, Angela Eagle. The last Bill this bad might even have been the Health and Social Care Act 2012, and the Leader of the House of Commons had his fingerprints all over that one, too… This Bill is hurried, badly drafted and an agglomeration of the inadequate, the sinister and the partisan. From a Government who solemnly promised that they would fix our broken politics, the Bill will do the complete opposite.
“The Bill can best be summed up as furious displacement activity by a Government who hope that the public will not notice their problems with lobbying… they are trying to ram through their gag on charities and campaigners… so that they are silenced in time for the next general election, and they are trying to avoid the scrutiny that will show the public what a disgrace the Bill is.”
She said: “Three and a half years ago the Prime Minister, when Leader of the Opposition, told us that lobbying was the next big scandal waiting to happen. He did not tell us then that he was going to do nothing about it for over three years but survive a series of lobbying scandals and then produce a Bill so flawed that it would actually make things worse.
“Under the Government’s definition, someone will count as a lobbyist only if they lobby, directly, Ministers or permanent secretaries and if their business is mainly for the purposes of lobbying. It is estimated that that will cover less than one-fifth of those people currently working in the £2 billion lobbying industry, and the Association of Professional Political Consultants estimates that only one per cent of ministerial meetings organised by lobbyists would be covered.
“It would be extremely easy to rearrange how such lobbying is conducted to evade the need to appear on the new register at all. The Bill is so narrow that it would fail to cover not only the lobbyist currently barnacle-scraping at the heart of Number 10 [Lynton Crosby], but any of the lobbying scandals that have beset the Prime Minister in this Parliament.
“There is a real risk that the proposals will make lobbying less transparent than it is now. The Government’s proposed register would cover fewer lobbyists than the existing, voluntary, register run by the UK Public Affairs Council.”
Moving on to part two of the Bill, she said, “In one of the most sinister bits of legislation that I have seen in some time, this Bill twists the rules on third-party campaigning to scare charities and campaigners away from speaking out. It is an assault on the Big Society that the Prime Minister once claimed to revere… It is clear that these changes will have wide-ranging implications for many hundreds of charities and campaigners, local and national, large and small.
“Some of them have told us that they will have to pull back from almost all engagement in debates on public policy in the year before the election. These changes have created massive uncertainty for those who may fall within the regulations in a way that the Electoral Commission has deplored.
“The changes will mean that third-party campaigning will be restricted even if it was not intended to affect the outcome of an election — for example, engaging in public policy debate. Staff costs and overheads will also have to be included in what has to be declared — something that does not apply in this way to political parties. The Electoral Commission has said that these changes could have a ‘dampening effect’ on public debate. The National Council for Voluntary Organisations has said that the changes will ‘have the result of muting charities and groups of all sorts and sizes on the issues that matter most to them and the people that they support’.”
And on part three, which centres on trade union membership records, she said, “There appears to be no policy motive for the introduction of this new law other than as a vehicle for cheap, partisan attacks on the trade unions, of which only a minority are actually affiliated to the Labour party.
“Officials from the Department for Business, Innovation and Skills have been totally unable to explain the problem that this part of the Bill is designed to solve. During a belated consultation meeting with the TUC — it took place after the Bill had been published — BIS officials could cast no light on why part three exists at all. Nor were they able to explain the origin of these proposals beyond their oft-repeated mantra that the provisions contained in part three ‘came out of a high level meeting between the Prime Minister and the Deputy Prime Minister’. I think that revelation tells us all we need to know about the grubby, partisan nature of the measures.
“These proposals seem deliberately designed to burden trade unions with additional cost and bureaucracy from a Government who claim they are against red tape. This is despite the fact that unions already have a statutory duty to maintain registers of members. I understand from the TUC that neither the certification officer nor ACAS has made any representations to suggest that that was not already sufficient. The Government have to date failed to provide any evidence or rationale for these changes, so I can only conclude that this is a deliberate attempt to hamper unions with red tape because a minority of them have the temerity to support the Labour party.”
And she said: “I have serious concerns about the implications of these changes for the security of membership data. We all know that the blacklisting of trade union members may well still exist in our country. Blacklisting has ruined many lives and these changes could have some very dangerous implications, especially in the construction industry, where many are afraid to declare their membership of a trade union openly for fear of the repercussions.”
And Graham Allen, Chair of the Select Committee on Political and Constitutional Reform, lambasted the Bill. He said: “If someone wanted to do O-level politics on how to produce or not to produce a Bill, I am sorry, but this Bill would be an F — a fail, big time.
“Read the evidence from the Electoral Commission when I publish it in 48 hours’ time. It is damning evidence from people who should really all be on the same side to ensure this provision will happen.
“We should listen to people. Let us have some consultation; let Parliament do its job, smoke out some of the issues and attempt to resolve them. I have a fantastic all-party committee and we could do that job for Parliament, yet those things have been resolutely held at arm’s length.
“Perversely, we are trying to make a Bill that divides rather than keeps people together.”
It isn’t perverse at all. That is precisely the point of it.
Many of you may be aware that I live in a large county called Powys, that has a small population. This means that the amount of money the local authority receives from central government and local taxation is always stretched very thin, in order to provide the services required across – what is it? – 6,000 square miles.
Given that context, it should come as no surprise at all that some of the information I have been receiving about the way that money is being spent has raised concern.
It seems the county council has employed a consultancy to carry out a survey of housing stock – to pinpoint where repairs are required and carry them out. This consultancy has taken £1.5 million from the council’s budget and not one repair has yet been carried out.
In addition, it seems most of the council’s own employees at its benefits section have quit, to be replaced by staff from an agency. This organisation charges £20 per hour for each worker’s services, I’m told.
Is this value for money? I don’t think so.
I think it is a local symptom of a national malaise: the disastrous affair public authorities have been having with the private sector. It is an affair that has already led to the humiliation of the government in the G4S Olympic security debacle; an affair that has its roots in the Private Finance Initiative that was launched by the Conservatives in the 1990s and continued into the current century (to my shame) by my own political party, Labour.
I have recently become quite a fan of ‘lefty’ columnist Owen Jones. This may come as a surprise to some readers as not only has he enjoyed greater success than me at the same career (journalism), but he is 16 years my junior. Talented, young and successful – I should be green with envy rather than cheering him on, right?
In fact I’m simply glad that someone is around to say what I would have said, in his position.
You may have heard this gentleman speaking on the BBC’s Any Questions (Radio 4, last Friday and Saturday), on the very subject of private involvement in public services. If you did not, allow me to enlighten you.
“What’s happened with G4S has exposed the dogma of the last 30 years, that the private sector is good and efficient, and the public sector is wasteful. What happened when G4S failed? The state had to go in and fill the vacuum – and it’s not just there we’ve seen it. We’ve seen it with A4E, this welfare to work programe, this company that basically took taxpayers’ money to line the pockets of those who were running it; we saw it with PFI – started by the Tory government, continued under New Labour, that’s like paying for public services on a credit card, getting these private companies to do what the state should have done, apparently it costs up to £25 billion more, of our money. It’s the same with the London Underground; it’s the same with rail privatisation – we’re now paying up to four times more on subsidies for private rail companies than we did in the time of British Rail. And we’ve seen it recently with water. We just recently had a drought when rain was absolutely hammering the southeast. That’s because a water company sold off 25 reservoirs in the last 20 years.
“Public services should be run by the public sector, accountable to us, democratically-run, instead of taxpayers’ money lining the pockets of private companies who do not have our interests at heart; they just want to make profit out of our services.”
In support of that, let’s have a few facts and figures. Those I have at hand come from a book entitled ‘You Are Here’ by satirical luminaries Rory Bremner, John Bird and John Fortune, with Geoff Atkinson. It was published in 2005 so the information – accurate at the time – may be out of date by now and I would be happy to read any updates on what follows.
In 2005, this was the situation:
When the railways were privatised (by the Conservatives) it was decided that one company would own and run the tracks, one group of companies would operate the trains and another group of companies would own them. There are three rolling stock leasing companies – roscos – that lease their trains to the operating companies. These trains cost just over £2 million to build and are leased out for £500,000 per year. Their lifetime is anything up to 40 years – which is a huge profit margin.
But don’t worry – they don’t receive a penny of taxpayers’ money. No – the subsidy for the South Central franchise was set to increase by £342 million between 2005-2010. Of this, 80 per cent went to the roscos for new rolling stock – around £273,600,000. But it wasn’t taxpayers’ money by then. It was taxpayers’ money when it was part of the operating company’s subsidy, but when it was passed between that company and the rosco it was a simple business transaction.
That’s how they get away with it. You and I both know that the cash came out of our pockets, but because it went through a middle-man, these companies can call it their own.
You might be interested to know that the three leasing companies are (or were, in 2005) all owned by banks.
According to ‘You Are Here’, “The Future of Transport White Paper says: ‘The privatisation of the rail industry in the early 1990s assumed that private sector discipline and innovation would drive down the railway’s subsidy requirement and drive up the quality of service. In part this has been borne out.
“Rail users might well ask: In which part? The same document shows 80 per cent of trains arriving on time in 2004, compared to 90 per cent in 1998. The latest National Rail Trends shows total government support to the rail industry in 1995-96 of £431 million. For 2002-03 it was £2,588 million.”
Private Finance Initiatives were intended to bring private sector cash in to fund public services – which may seem like a good idea on the face of it. As ‘You Are Here’ states: The deal is simple. Money for the new service is raised privately in the money markets and thus kept off the country’s balance sheet… but like any free offer, it does come with small print.
“The long-term value of PFI contracts may go down as well as up. Your public services are at risk if you do not keep up the repayments. The return for consortiums running PFI projects” – on the other hand – “may go up and up and up. Standard terms include: cost-cutting, short-term employment contracts, high management costs, huge legal costs. Every element must be a profit centre. After expiry of contract (typically 35 years) the consortium is under no obligation to renew the terms of the lease and can renegotiate at more favourable rates or move out of the public service sector and turn the property into a hotel or office block.
“PFI often means that an organisation which previously worked to a single goal is now in competition with itself, as different parts of the same system strive to outbid each other, the primary goal being to enhance profitability rather than deliver a service.” To enhance profitability rather than deliver a service.
In February last year (2011), David Cameron promised to deliver a ‘revolution’ in public services, in which he envisaged everything but the security services and the judiciary being privatised. You can read about it here. Private prisons; private police; private health services – we’ve seen these rear their ugly heads already, and I’m sure more is to come.
Considering the disastrous profit-driven performance of the private sector in public services, as detailed above, I cannot think of anything worse than letting private companies continue with what they’ve got, let alone adding anything new to their portfolio of travesties!
With this in mind, I have to ask why Powys County Council thinks employing a private firm to survey its housing stock, or workers for a private agency to administer its benefits, is an economical use of my taxpayer money.
It’s time the madness stopped, and if Westminster is too sick to do it, then perhaps local government should lead the way back to sanity.
‘And that has made all the difference.’ – Robert Frost, The Road Not Taken.
I have a lot of time for Kevin Smith, the film director and co-creator of the Smodcast podcast network. Not only does he know the difference between the media and a medium, but he worked out what is wrong with the modern business model, and is pointing the way towards changing it so that people can make a decent living again.
The fact is that there are too many people in the business world who charge far more than they are worth, in order to provide a service that is either very small or irrelevant – and get away with it because they have conned everybody who does the actual work into thinking they’re necessary.
These people suck cash away from businesses and push the break-even point up and up until it becomes nigh-on impossible to reach.
Kevin Smith is one of the first people I’ve seen standing up and saying it’s time to get rid of this dead weight. And he’s absolutely right.
The way he tells it, he came to this realisation on the set of his most recent movie, Red State, a satirical horror flick shining a light on the atrocities committed in the name of religion along with those committed in the name of law and order (more or less; I don’t want to spoil it for anyone. Go see it). The film had a budget of four or five million dollars and most of the people working on it, including stars John Goodman and Oscar-winner Melissa Leo, were doing it for a lot less pay than they would normally take.
I’ll let Mr Smith narrate his story from here for a while (quoted from passages in his book Tough Sh*t):
“On day four on the set of Red State, while watching all the beautiful people in my cast and on my crew pull together to make this ugly little story, I started thinking about how the marketing dollars spent to open this film eventually would be four or five times the amount that all the generous filmmakers on my cast and crew (who took drastic cuts in salary to work on the flick) ever had to work with in their departments to actually make the flick. I was asking the cast and crew to eat gristle when, postpurchase, the choice cuts would go elsewhere.
“We all hoped someone would eventually buy the film when it was finished, but how much would they buy it for? And if it got bought, what would happen then? Let’s say Lionsgate picked up Red State. Lionsgate spends an almost-standard $20 mil to open any flick (which is lower than the industry norm; LG is actually one of the more frugal studios, spending less on marketing than the majors). So now, my flick doesn’t cost $4 million anymore, it costs $24 million. It’s gotta make $24 million to break even and start seeing profit. But the studio/distributor doesn’t get all that box office, so assume the studio only gets back half of that announced box-office figure. Suddenly my little four-million-dollar movie has to make $50 million JUST TO BREAK EVEN. Like… what happened? Instead of spending all that money trying to make the movie, the money is spent on trying to convince people to come see your shit.
“It just started to gnaw at me. Many cats were breaking their backs to see us hit an ambitiously low budget cap, but whoever bought the flick would then give people who never worked on the movie way more money to simply sell it to an audience that didn’t care about or want it. Four million bucks? We could make that make, without all the crazy marketing spending.”
So he took Red State to the Sundance Film Festival where, “stick in hand, I gave a barn-burner of a speech in which I advocated for art and said the business half of the show-business equation was out of control – particularly marketing spending.
“Then came the moment of truth. ‘Ladies and gentlemen, when I came here seventeen years ago, all I wanted to do was sell my movie. And I can’t think of anything worse, seventeen years later, than selling my movie to people who just don’t get it.’”
He retained the distribution rights for himself and took the movie on a tour of selected cinemas, with the screenings accompanied by talks and question-and-answer sessions. “Over the course of the fifteen shows of the Red State USA Tour, we made almost one million dollars from ticket and merchandise sales. You take the million we made on the tour, you add that to the two million we pulled in from foreign sales, and you add to that two million more from Lionsgate for the VOD and home video rights, and another million from NetFlix for the streaming rights, and you’ll notice our gains were higher than our spending. And without any dopey marketing figures to have to recoup, simple math dictates Red State is in the black.”
Now. I don’t know whether Mr Smith intends – or intended – to give any of that profit to the cast and crew who tightened their belts and took lower salaries to make the film in the first place. To be honest, it’s none of my business. I would – for me, that would be the point of the operation.
But the message is perfectly clear and blatantly obvious if you just stop to think about it: If you want to get by in the world – especially a world in financial crisis as it has been over the past few years – you get rid of the dead weight. For Kevin Smith, that meant ditching a bunch of disinterested marketers who would have provided a bog-standard service on his work while demanding five times as much money as it cost to make the movie in the first place.
I live in Powys, Wales, where during the last financial year the county council spent £6 million – SIX MILLION POUNDS – on consultancy fees. They paid big bucks to people in smart jackets and denim trousers for PowerPoint presentations that provided the kind of – and quality of – information that I could have written on the back of an old envelope and offered to them for nothing.
In fact, my advice would probably have been better.
During the same financial year, the Welsh Assembly Government provided more than £1 million to the county council in the hope that it would not raise taxes on local residents. This proved futile, and council tax rose by 2.5 per cent. The money from the Assembly, coupled with that provided by the tax rise, more or less equals the amount paid to the consultants – for information that was either obvious, unnecessary or inaccurate (in my opinion). The people of this county were forced to forfeit this cash at a time of massively increased austerity, when every household in the UK is having to, as Mr Smith put it, “eat gristle”.
It seems to me that there are similar disinterested third parties in many aspects of business and that now is the time to get rid of them and offer services direct. Ditch the middle person and go straight to the buyer. With the internet and all that, it shouldn’t be too hard to do, in many cases.
My bet is that, in many cases, this would turn a loss-maker into a profitable concern – or at least, as with Powys County Council, make the burden on the investor (the council taxpayer in this case) a little more bearable.
And that – in this day and age – might make all the difference.
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