Labour’s election manifesto pledged to "abolish CCT and replace it with a duty to obtain best value".
Compulsory competitive tendering (CCT) had been central to the Tory strategy for privatising public services and reducing public expenditure through cutting services and jobs and driving down pay and conditions for workers.
Many people hoped that in this area at least, the new Labour government would deliver an improvement. Some hope.
‘Best Value’ could well be worse than CCT. Trade unionists and activists in campaigns to defend public services and the welfare need to understand why.
Labour intends to limit public spending. There will be no extra money in the short term for most services, already damaged by so many years of cuts. The Private Finance Initiative (PFI) will be maintained.
Competition
The concept of Best Value maintains an emphasis on open competition and value for money in the free market. Don’t forget Blair’s words on the need for a flexible, competitive workforce. CCT is not going to be abolished immediately, but gradually replaced.
The plan is to encourage voluntary competitive tendering (VCT) by councils and other public sector organisations by offering incentives, while enshrining Best Value in law. Councils will be allowed to offset VCT tenders against CCT requirements, and given more freedom in decision making.
The main piece of CCT legislation, the Local Government Act 1988, made it illegal for councils to take "non-commercial considerations" into account when awarding contracts. Non-commercial considerations include working conditions, employment rights, practices of a tenderer towards existing workers, etc.
This was clearly intended to stop councillors taking account of workers’ interests.
The only reform now proposed, in a Private Member’s Bill from Oona King, is to require contractors to take part in the Welfare to Work scheme!
To understand the context in which best value is being introduced it is worth looking back at Conservative policy on local government. The local government reorganisation in the 1980s was based on a monetarist approach to economic management and a view that public spending is basically a negative activity, to be minimised wherever possible.
"Customers"
To impose this vision, people who rely on public services had to be reinvented as "customers". Never mind that access to local services isn’t simply a matter of looking round the shops and choosing what you want to spend your money on, or that many "customers" of councils don’t have any money anyway.
Changes in local government taxation were key to this.
While the Poll Tax’s unpopularity led to its replacement by Council Tax, the principle of individuals as customers paying for services was successfully introduced, with huge consequences for local government and for the welfare state.
Any public spending can be linked in people’s minds with a rise in Council Tax. The unemployed, single mothers, asylum seekers, others who need services and do not directly pay Council Tax, are portrayed as scroungers, not just off the state but off those with jobs.
The interests of Council workers asking for decent wages and conditions are also set against those of local people. This nasty but effective piece of divide and rule has had a real impact.
The Labour government explicitly maintains this principle:
"The duty of best value is one that local authorities will owe to local people, both as taxpayers and the customers of local authority services".
Current policy retains the concept of the purchaser-provider split, introduced throughout the public sector in the 1980s to limit public spending. The role of the client/purchaser is to keep costs down by buying the service as cheaply as possible, while the provider/contractor has to be competitive. The needs of the working class whether as employees or service users are deprioritised.
The introduction of PFI by the Tories extended privatisation. Under PFI the public sector contracts to buy services not assets, and retains a role in the project – as client. Far from rejecting PFI, Labour’s concern has been to promote and encourage its implementation.
In local government, there had been no major schemes signed up by April 1997, although a number were being developed. Private companies and banks had doubts about the extent of councils’ legal powers in relation to projects on the scale of PFI schemes, and Labour’s response has been to draw up the Local Government (Contracts) Bill, likely to become law by the end of this year.
Guaranteed profit
This will reassure private investors that Councils have powers to make deals and guarantees and that they will therefore get their money back and make a profit. Labour evidently hopes to make PFI an attractive option for delivering "Best Value" in services.
To return to Best Value, what is the reality behind the rhetoric?
Policies are still being developed, but statements from Hilary Armstrong, minister for local government, and the pilot projects being drawn up by some local authorities, make it quite clear that the emphasis is still on value for money, ie keeping costs down.
The government’s document ‘A Framework for Best Value’ states that authorities should establish a "corporate view of what they want to achieve and how they perform against both objective indicators and against the aspirations of the local community".
Councils will be required to review service activity, monitor achievement and publish and report back on their performance. Monitoring and reviews will be audited. The Secretary of State will have powers to intervene.
Reviews will set "targets for improved performance and efficiency" and "identify the means by which these will be achieved. The presumption will be that open competition will be used unless authorities are able to demonstrate that this is inappropriate".
An emphasis on monitoring and publishing statistics is already endemic in local government (as in schools league tables), CCT monitoring of private contractors and in-house Direct Service Organisations (DSOs).
Anyway what are objective indicators? Why measure something which doesn’t relate to someone’s needs/interests, and isn’t therefore subjective?
Success in reducing expenditure and increased productivity in local government may be in line with the government’s priorities, but measurements of these are not objective indicators.
The published principles of Best Value involve an attempt to put an attractive gloss on government policy, with references to improving the "effectiveness and the quality of local services" and "local accountability to the electorate". But the reality is that this is in a context of cuts in public spending.
Consultation?
There has been a view put forward that "the public" is central to best value, but this is not clearly defined.
Local authorities have prepared for Best Value by setting up consultation procedures, such as surveys of service users, open forums, and talking to residents’ associations. But there is no requirement on local authorities to take any notice of the public’s expressed wishes.
As with CCT, a huge workload is created by the need to collect, analyse and present statistics. The trend to cut staff working directly with the public while appointing more managers on both client and contractor sides looks likely to continue.
Islington Council for example plans to make huge cuts in its front line staff while appointing Quality Managers. You can’t improve the quality of services while cutting the cost.
Like CCT, Best Value will continue to be profitable for the private sector. Money paid for public services is being spent on fees to private companies who have won contracts. They wouldn’t get involved if it wasn’t profitable.
Privatisation of public services means that taxpayers’ money is being paid to directors and shareholders of companies like Onyx, who deal with street cleaning and rubbish collection for a number of London Boroughs.
Competitive tendering, compulsory or voluntary, and Best Value, involves employing consultants to prepare services to be sold off, and commercial law firms to draw up the contracts.
Consultancy firms will be involved in service reviews and monitoring, and the published principles of Best Value imply a role for private management consultancy as a method of intervention where councils have failed to meet performance targets.
The hefty fees paid to these firms will mean money being taken away from service provision: value for money? I don’t think so!