Select Committee on Public Administration Minutes of Evidence

  Examination of Witnesses (Questions 270-289)



270. But is it not there where the problem is, in terms of the contract itself, you can determine the contract through negotiations and you can implement the letter of the law of the contract? And I can give you an example through my own experiences from some of the staff through Norfolk County Council, where it says, quite clearly, within the contract you have got with the County Council, that you should make payments to the staff, through the payroll, on time; the only problem is that not all of the staff received the correct payments, for instance, on overtime and bonus. So, to the letter of the contract, you actually supply what you have said you are going to, but you do not actually improve the service or give them the service that they should come to expect?
  (Mr Tizard) Clearly, if you have got details, Mr Wright, of specifics in Norfolk, we can respond to those.

  271. I am trying to give you an example which is . . .
  (Mr Tizard) What I would say, in terms of a payroll service, the service we operate for Norfolk County Council, in this case, is to make the payments which Norfolk County Council management has authorised, so if the authorisation of payments has been incorrect, clearly, consequently, the payment will be incorrect. Now I do not, obviously, know the detail of the incident to what you refer. What is clear though is we do need to understand where the responsibilities lie. If we are making the wrong payment against correct information we should be held to account for our mistake, and we should not make those mistakes; equally, if the client is actually giving us false information, that is where that responsibility lies. So it is about having clarity of responsibility. And I would suggest to you that often what happens when a private sector company is engaged as a partner to deliver public services, irrespective of what those services are and what sector of local or central government, the transparency of performance becomes considerably greater, and the number of performance indicators which we are measured against, and which are public, are often considerably greater than those which in-house services operate against and are held to account for. Anecdotally, one could give examples of where the robustness of the client management, or the management, against those performance indicators is greater when there has been an involvement of an external provider. So if this is actually identifying underperformance and issues about performance it is actually adding to transparency and adding to the democratic accountability issue; in that sense, I think it is actually an enhancement. Clearly, we want to get it right 100 per cent of the time.
  (Mr Aldridge) The good thing about the Norfolk one, also, by the way, it is one of the first contracts that we operate with this partnership board that we describe in our evidence. The board is not necessarily given the right place to consider some of the operational points which you raised, but it does give the point about how we are going to move it forward and extend what we do and what the shared aspirations are of us and them; so it has got an extra feature in it.

  272. In terms of partnership boards, I notice you have got the elected representatives and officers, have you got any staff representation, or have they been invited onto the board to share their experience and have their input?
  (Mr Tizard) The local government strategic partnership boards, which we have in place currently, do not have staff representation; but what we do have are methods of consultation and involvement with staff, both ourselves and our clients, and that information is fed in, and clearly there will be consultation with staff particularly around any significant change which is going to occur. We practise, as a company, irrespective of whether we have a strategic partnership board or not, a very inclusive approach to staff involvement in decision-making, because staff, ultimately, are our most important asset and they have much of the knowledge that enables us to develop and improve services. And I believe very sincerely that we empower staff, in a way that often the public sector does not do, to contribute to those processes.

  273. To follow along that line, if they are so important, which obviously they are, then surely it would be best to take them along with you and give them a place on the local strategic partnership boards?
  (Mr Tizard) It is certainly important to take them along with us, and, I think, as we say in our evidence, the strategic partnership board approach to governance and relationship between the public sector procurer and the private sector partner, has gone a long way to eliminate many of the adversarial problems and the mistrust issues that arose certainly under the days of CCT. But we have still got a long way to go to develop more effective governance arrangements and greater clarity of accountability. And I think the area which we need, collectively, and it is not just the private sector, it is local government, it is central government, and, maybe, Chairman, it is this Committee as well, in its deliberations, could look at how we get an involvement of the range of stakeholders in those governance arrangements with greater accountability—this clearly would include staff. They would also, perhaps more importantly, include the service users and the citizens of a locality, and that the relationship should not simply be one that is based on the contract between the procurer and the provider.
  (Mr Aldridge) I think, just taking a broader point, just for the purposes of the Committee and for clarification, the staff point, we are nothing without those staff, and it is important to understand, if I could ask you, that this is not a hostile environment; staff, if asked, would not want to go back to the environment that they came from. This is an environment where we invest 2 per cent of our payroll in them, in terms of development of them, whereas staff turnover is less than 8 per cent, which is half that in the public sector; where our compulsory redundancy, if we have to do that, is about 1 per cent, which is generally around where people are radically underperforming, and frankly that should have been sorted perhaps before they were transferred to us. This is a point, where staff have the ability to grow and to change and be promoted, we are growing at 45 per cent per annum; they have every opportunity, there are many examples. The lady I mentioned at the Teachers' Pension Agency, she was the previous Chief Executive, is now a very key person in our team and she is doing a whole raft of things for us; there are many examples. There are many staff who want to continue doing virtually what they were doing before. But this is not, and I read with interest, about an environment where people are unhappy, quite the reverse, it is an environment where they are nervous when they do the transfer, because, put very simply, 7,000 people have not chosen to work for Capita. We work hard at welcoming them, in developing them and them being a part of us; this is a totally different environment from the one they have come from.

Brian White

  274. Perhaps I ought to declare an interest, at the beginning, in having, when setting up Milton Keynes unitary authority, used Capita very successfully at the time. But is not one of the problems that you have got, you do a lot of projects, project funding, but you then do not translate a lot of the good innovations that you bring forward, with Government or with local authorities, into the mainstream, you take forward the innovations but it does not translate into a transformation of public services?
  (Mr Aldridge) How long have you got?

  275. Not very long.
  (Mr Aldridge) I think, actually, that one of the things we were very keen to come here for is to give you the feel that out there in the real world there are some real things happening and real improvements. If you take somewhere like Hertfordshire County Council, we have revolutionised the way that the front end of that organisation deals with its public. It is a fact that the surveys that we have had undertaken by MORI and NOP have been phenomenal. In the case of the BBC, we deal with every complaint, or every request for information of the BBC, the surveys of what has actually happened in that organisation and the way it is perceived by the people who have done it have been incredible. Through many contracts that we have run, we have improved the performance of the collection of council tax, it improves the way that the correspondence is dealt with, every measure, every contract we have got, even the difficult ones, has shown major improvement in the performance from that which we took over. We are building the infrastructure that will be responsive to customers, will be e-enabled, we have invested enormously, so we now have a portal for parents to interact with schools, we have Academy Direct, which is a product which will interact with the customer, again to help them when they move into an area, or register. Our whole business is about modernising and about doing, and indeed we would not be in business and we would not have sustained the customer base that we have got without doing those things. So, hopefully, in our evidence there are some real examples of what we have done, and some of these obviously are commercial matters, but we felt it was about time that we shared this, I think we do not talk about it enough, we have put down there measures that we have had, how we are performing, good and bad, and we shared those with you.


  276. When the trade unions come along to us, as John Edmonds did the other day, and we have got UNISON after you, and they all tell us that private sector involvement is a uniform disaster story and that there is a catalogue of instances where it has all gone wrong, why do they say that, if what you are saying is true?
  (Mr Aldridge) Essentially, you will hear their answer. I can only say, in the case of the services that we are operating, there has been real, substantial improvement; in the case of staff and some of the suggestions that staff—we have honoured TUPE to the letter, from the outset, we have had a national agreement with UNISON since 1997, and if you ask UNISON about us, as a company, the way we act—

  277. We probably shall do.
  (Mr Aldridge) I hope that you will. And both nationally and locally, so Unions are always involved in every one of the procurements that we are involved with, we involve actively with them, so our staff have representation. Our customers would not be giving us more business unless we actually were performing. They ask us to do things, we do not walk in and expect it, we have to win these things and then stand by our performance. We have a 92 per cent retention of our customers. This is a company, not that it is underperforming. And I accept, however, I do accept, that there are areas which have gained a lot of attention, and one of the areas was, Mr Brennan mentioned, about housing benefit, housing benefit is difficult for every local authority that runs housing benefit, and I do not say that that is an excuse, but, in a sense, it is a service that has gained a lot of attention. But I think the things that we have done and we have indicated in our evidence have made real change. This is the frustration, I think, sometimes, when you read and listen to what people say, and we felt it was time actually to share these with people.

Brian White

  278. So you would accept that many of the changes are still very much skimming the surface, that they have not really got into the depths of many of the public sector organisations; and how do you actually create public sector entrepreneurs, how do you actually break down the barriers, and what are you, as a company, doing to try to break down those barriers that exist at the moment?
  (Mr Aldridge) I think that, if you look at a number of the relationships that have been announced recently, Blackburn with Darwen, Cumbria represent new forms of relationship. And a point I think it is fair to make is that there is a lot of attention going around these new relationships, and, clearly, I want all of them to work, I am not saying that just for what Capita does, but there are equally some very fundamental things, which are not heard of. In Coventry, we collect from one centre 15 local authorities' council tax; that is a major change in the style and the way that organisation, each of those operations now works. So there are pretty basic, back office things, which people do not hear about, people look more at the high end of things; but some of the new areas of what we are doing have had an immediate effect, so the theory driving test I mentioned to you, the Connexions Card, has had an immediate effect on young people. We have been responsible for individual learning accounts, and there have been processes around that; but what everyone says in the involvement and the take-up is very special. And so in the new area we have specialised very much in doing that; and I think that we can drive some of that change much quicker. I think there is a wealth of practical experience.

  279. Your IEG statements, that local government had to provide last July, identified something like £2 billion to £3 billion worth of expenditure needed to put governance into local authorities; the Government has made £300 million available and the private sector is probably about the same. So where is the rest of the money going to come from, or are you not going to be able to deliver on those Electronic Government programmes?
  (Mr Tizard) Government will make its own determination about how much money it is going to make available, and it is perhaps not for us to suggest, either to the Treasury or to other Departments, what level of investment they should be prepared to make. I think what we would say is there is a real opportunity, with the e-government initiatives in local government and indeed across the public sector, to look at some far more creative and imaginative ways of delivering services and securing the e-revolution that we all envisage and all desire. One of those would be to look at authorities and other public agencies working together; it goes back to one of the points that Rod made earlier, for every local authority to have a contact centre, with all the IT infrastructure, and indeed your own authority has recognised that and is currently engaged in a procurement with Northamptonshire County Council. It seems to me that we will see more initiatives of authorities coming together to pool the capital requirements, and IT enables a very localised, front-end service delivery which is bespoke to that individual authority, and may be actually quite different within the authority because it is dealing with different communities, different sections of the community, but actually the back office and the infrastructure can be shared. And that is one way of making relatively small amounts of money go further. The second is, to look not just, as it were, at just plugging it onto the front; a contact centre, or a call centre, or a web-enabled access to the authority, and we see much of that, is actually taking advantage to start to look at the whole re-engineering of the organisation, which actually makes it more efficient, more effective, more customer-responsive, and also frees up resource, both to fund the structures and the systems for e-government but also to release funds for other priorities. What we have got to see, which again we suggest in our submission, is that re-engineering of public services in a much more fundamental way, which I think is what you were getting at in your earlier question, Mr White. We need, and I think this is a role for the private sector, for the Local Government Associations, for central government, to have means by which we actually pool and share expertise and experience far more than we do currently; there is too much reinventing the wheel here to reinvent it there and actually not getting that shared across, and that must be a loss for everyone concerned. The other area where we need to move this transformation forward is to begin to break down some of these rather artificial barriers between the various sectors. One way of that is moving towards perhaps more of a sort of single service approach, where people will move, in career terms, between, and there will be far less suspicion, and we will be much clearer about services maybe delivered by the private sector, the voluntary sector, by the public sector, the public sector working with another part of the public sector, in a whole variety of ways, and that will become the norm. I think, in that way, we will get some radical transformation. But I would not want you to believe that where we have been involved we have not radically transformed, but we may not have taken on the whole organisation, and part of that may not be our timidity, it may be the client's position.

Mr Liddell-Grainger

  280. I am intrigued by this document. Did you write this yourself?
  (Mr Aldridge) Yes.

  281. All of it?
  (Mr Aldridge) Yes.

  282. Because what you are saying in it, and I am going to the Conclusions, if I may,—
  (Mr Aldridge) Maybe I should not have said that.

  283. I will test you. First, can I ask you about something; you say that you recommended the Government should ensure there is better public information available about the benefits of Public Private Partnerships and the differences between these and forms of privatisation: what do you mean by that, what do you mean by forms of privatisation? Are you arguing that public services should be broken up into PPPs and different types of privatisation, or are you arguing sort of three separate things?
  (Mr Aldridge) What we are arguing in there is really to position what we do, as much as anything else, and also the debate around Public Private Partnerships, because the debate tends to drift into areas which are either privatisation or are privately-funded initiatives, which is generally around infrastructure rebuild; we are not in that. And we would suggest that PFI is not an appropriate way of funding some of the forms of activity that we are in. So what we are saying is that our experience is that if you construct an environment. Take a council like Blackburn with Darwen, which has never outsourced, never dealt with the private sector the way that they now have ever before, and yet they have embraced a partnership. I think they ought to be commended for, and I am not saying that just because they have chosen us, but I would have said that whoever it was. And they will go about modernising their business, in a way which enables them to be actively involved in it; where socially we engage with the community. We are going to double the number of jobs there. We are going to be recruiting locally, the Council is very excited about this. And, I think, through that sort of relationship, PPP relationship, and our terms, a lot of change can be driven.

  284. Following on, you then go on to say there is a genuine level playing-field between the private and public sectors and that the option of a contribution by the private sector is always considered for all services. Are you not therefore saying that you would like to see the ethos of a level playing-field throughout public services, but yet, surely, you, as Capita, are unbalancing that, by saying `well, we will do better than you can, we will take your services, we will transform them, we will run Blackburn County Council from Bognor Regis,' or wherever? I am sorry, for simple clarification, I could not remember where Brian was Member for. Is that what you are saying, that you can make it more efficient, the ethos will have to change but, at the end of the day, you think there should be a level playing-field; is there an anomaly there?
  (Mr Aldridge) John is going to cover that, but what I was saying, in moving to that, is that one thing that we do not believe in is that everything should be run by the private sector. Another thing we do not believe in is that the private sector should only be involved where things are failing. It is our experience that that is the wrong way to think about engaging with the private sector; it is one way but it should not be the way. So what we are looking at is a series of opportunities. John, you may want to say something about the level playing-field concept.
  (Mr Tizard) One of the issues about level playing-fields is that if you had the Local Government Associations here, they would say it is a playing-field tilted against local government, we might argue it is tilted against the private sector, and I have no doubt the trade unions would have a view as well. And, in a sense, this is a very subjective view, what is a playing-field? And what is a tilt? What we are saying is that there should be an open-minded approach by public sector bodies as to whether or not they engage the private sector as a partner in a variety of ways to deliver all or part of a service. There should be a genuine willingness to consider that as a strategic option, and in the local government's case it should be part of the challenge process of best value. There are many examples we could give where that is not an option that is ever seriously considered. Having been considered and evaluated against a whole set of criteria, which should be determined by that public sector body in light of its overall objectives, its values, its direction, and indeed its capacity to make change itself, will be the decision as to whether or not to engage the private sector. We are certainly not arguing for a CCT type approach; what we are saying is that there should be an open mind, and where it is appropriate and where it is the view that the engagement of the private sector can add value and retain the right ethos, the right service values and improve quality, it is right and proper to consider that as an option. I think, that often, this is not the case. So that is what we are seeking to do there.

  285. Can I just ask a last question. Fine. You then go on to say there should be a single public service culture. Well we have got one more union today, we had another union leader, who are diametrically opposed, from totally different points of view, to what you are saying. So if you want to try to create a single public service culture and the bits that should be public and the bits that should be private, etc., do you think that is actually possible, given that you have unions that are diametrically opposed to that; can you see that, in the long term, being a sensible alternative culture?
  (Mr Tizard) It is certainly something we should all strive for, and the speed at which we get there may vary. I think what we must not do, in a sense, is to relive the debates of yesterday, and a lot of the current debate, it seems to me, around the role of the private sector in local government, and indeed in central government, still revolves around what may or may not have happened a decade or two decades ago with CCT, which I think did lead to adversarial relations. It often was about bargain-basement contracting, forcing down price, and therefore often having an adverse impact, on the workforce. What we need to do is to look forward, in a pragmatic way, which is actually driven by an ideology that says we want the best quality public service, irrespective of the means of achieving it. That is the debate we need to move towards. What we are talking about in terms of a single culture of public service is partly what I said earlier, in response to Mr White, about having a view that you can deliver public services irrespective of who your employer is, and that people will, in their professional careers, move between sectors in a way that they have not done previously. We are also suggesting is that there is a need for a debate around, and hopefully a move towards, what we have called an ethical framework for public service, which lays down some standards about accountability, values, ethos, respect for the workforce, relationship to customers, which could be common irrespective of who the service provider is, and I believe that may actually begin to break down some of the ideological barriers, if we could get to that position.

  Mr Liddell-Grainger: I am not sure the GMB agrees with that; that is just a thought.

Mr Lyons

  286. Mr Aldridge, can I return to the question of TUPE transfer. You said that of the 13,000 employees 7,000 had come through TUPE transfers. Would you ever be interested in taking on work where there was no transfer of employees to Capita?
  (Mr Aldridge) Where you are taking over an existing operation, we have found it to be very good to have staff transfer to us that were already a part of that operation; and what we have actually done is then worked with them to re-engineer the business or the service that comes with it. So, in a sense, a lot of our management that we now have have come through the TUPE transfer; so we have found it to be very good. We have equally found that you have got to be open and honest with people, people who may not be right for the work, may not have the right skills, if you can move them on in skills then you should do that, and that is what we have done. So it has been an absolute bonus to us to have people that are transferred to us, and we have made that very clear to them in the bids, the way we operate with them, the way we invest in them.

  287. I should have declared that I am a member of UNISON, so I have an interest in this, in particular. But, again, just coming back to that issue, do you make that a condition of whether you will bid for a best value contract that you can get the employees as a transfer, or would you be prepared just to deliver the service and leave the employees with the organisation?
  (Mr Aldridge) Of course, that is in the form of the contracts that people would invite us to bid for, that is the condition under which you bid, because the staff involved are treated as part of the arrangement. Clearly, where we start new things, like the Criminal Records Bureau, we recruit new people, but in the things that transfer the staff will come with it.

  288. Can I return to the question of the Health Service, which you mentioned earlier on, you had some doubts about your involvement in the health, for instance; what would restrict you getting involved in the Health Service?
  (Mr Aldridge) To be honest with you, we have got quite a lot on in the areas that we are in at the moment. We are not against being involved, and we think a lot of the support services and back office type arrangements that we were talking about are equally applicable, and I think it is just a case of see how things emerge and how they evolve. Our understanding of the sectors we are in is very strong; we do do work in health, and a lot of the characteristics are very much the same, it is just, at the moment, we are not major in that area.

  289. If that was developing, would you want these people to remain as employees of the Health Service, or would you want them in Capita?
  (Mr Aldridge) John may want to add something to this, but one thing that we do not agree with, and it is something which is being raised in relation to the health side, we do not agree with secondment, we do not believe that secondment, as opposed to transfer, is viable. All the reasons that I have talked about in terms of the way that we have actively engaged with the workforce and the way they feel about us and we feel about them. It is not an "us and them", it is together. This is impossible through a secondment route. It would be a very, very difficult position for the staff, and what would it be like to be seconded for 15 years! It would be very difficult for people who were running the contract and it would be very difficult for the authority that seconded them. Nobody will win in that scenario. I think we are good employers, we should stand up and say we are good employers. We welcome people. We want people to join us. Tthey are not a problem to us, and we should go about making it happen in that way. Sorry, I did not realise that that was your line, I thought your line was, if we did not have to transfer staff could we still run the service; we want the staff, we are very happy about that.

previous page contents next page

House of Commons home page Parliament home page House of Lords home page search page enquiries index

© Parliamentary copyright 2002
Prepared 7 February 2002