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The Tory opportunity for suppliers: reform the state, take the knocks

By: SA Mathieson
Published: Thursday, October 9, 2014 - 14:05 GMT Jump to Comments

Another Conservative-led government will mean more work for suppliers willing to get involved in reworking the public sector. Just don’t expect much gratitude

Last week, in his speech to the Conservative party conference in Birmingham, David Cameron largely got right what Ed Miliband largely didn't. This was true in general: the prime minister’s speech was warmly received by both party and neutral observers, while the leader of the opposition was mocked for neglecting to deliver two key sections of his.

But it was also true of specifics. Mr Miliband enumerated increases in types of NHS staff, focusing on inputs. Mr Cameron promised that people could see their GPs at weekends, focusing on what voters would actually receive. The Conservatives have since edged ahead of Labour in a couple of opinion polls.

The prime minister also said that protection for NHS budgets would continue if he was re-elected. That is likely to mean health spending would increase at very slightly more than general inflation, meaning it would not keep up with ‘healthcare inflation’ – which is persistently higher than the general kind, given longer lifespans and increasingly expensive treatments. This is the reason that medical unions and charities are talking about a £30bn NHS budget deficit by the end of the next parliament.

But the NHS has had it easy compared with other public services such as local authorities, which have experienced real cuts in their funding. Many are putting themselves through severe reforms, and our daily Council News Monitor email is carrying numerous reports of councils planning to cut jobs, such as Monday's report that North Tyneside intends to cut 350 jobs.

Some council plans are aiming to cut costs through reforms that save money but broadly maintain services. Bury Council has just moved to collecting non-recyclable refuse just once every three weeks. Walsall is going to clean some streets every day of the week, as this saves on overtime. Rhondda Cynon Taf is considering all-ages schools – although this is causing protests from parents – and whether it should merge with a neighbour.

In some cases, councils are turning to the private and voluntary sector as part of their reforms. This may involve outsourcing services, but Stoke-on-Trent is going further, by paying PricewaterhouseCoopers £135,000 to come up with money-saving ideas, plus a further £1 of every £8 its plans save the council.

If the Conservative party wins the next election, there are likely to be many more opportunities of these kinds, both outsourcing and shared reward. Tories tend to be pro-business and in favour of greater efficiency, and are comfortable with handing work to the private sector.

The danger for suppliers is that many other people are deeply uncomfortable with this, and instinctively distrust companies to deliver public services. This means strong criticism when a company gets things wrong, although it’s true that a public authority will get similar treatment, and both may well deserve it. But it also includes criticism of companies making significant profits on such work – as seen last week when Service Birmingham paid its parent Capita a £23m dividend for a year’s business with the city council.

The cuts in many public sector budgets that would continue under a future Conservative government would be likely to generate significant opportunities for companies that can reduce costs while reforming and maintaining services. But it makes sense to understand the potential reputational costs – which are something politicians of all stripes are happy to outsource.

David Cameron’s speech to the Conservative party conference

The learning curve of Ed Miliband, apprentice Prime Minister (The Information Daily)

NHS and social care 'at breaking point', medics and charities warn (BBC News)

North Tyneside Council reveals to staff 350 jobs threatened (BBC News)

Bury Council bin collections 'once in three weeks' (BBC News)

Walsall streets to be cleaned seven days a week to reduce costs of overtime (Walsall Advertiser)

Meeting to be held over proposed closures of eleven Rhondda Cynon Taf schools (ITV News)

Cabinet to explore merger potential (Rhondda Cynon Taf County Borough Council)

Stoke-on-Trent Council to pay PricewaterhouseCoopers £135k for outline money-saving plans (The Sentinel)

Capita paid £23m dividend from taxpayer-funded Service Birmingham contract (Birmingham Post)

More about Council News Monitor: If you want to monitor local authorities, we'll ask the locals for you (The Information Daily)

The views and opinions expressed in this article are those of the author(s) and do not necessarily reflect the official policy or position of The Information Daily, its parent company or any associated businesses.

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