40% cuts to Councils-How does this affect outsourced services?

[Titanic99]

I’ve been reading over the weekend that some Departments are potentially going to have to deal with 40% cuts in Budgets but that NHS and Overseas Aid won’t see any and that the Police and Armed forces will only see around 10-15%.

 

This would them imply that Local Authorities will be the ones seeing the highest cuts of around 40%.

 

This got me wondering how this will affect services already outsourced, for example in Sheffield the company Capita won a massive contract to deliver a lot of services and I believe Kier have the contract to repair Council Homes.

 

Certainly in the case of Capita I believe their contract was for around 7 years, it involved significant investment by the contractor and significant rewards and penalties if the terms of the contract are or are not achieved.

 

But now that the Council will get less money from Central Government what will happen to these contracts, will they need to be re-negotiated and presumably coming with that will come the likely suing for breach of contract.

 

The obvious problem in my eyes is that this outsourcing was introduced initially to improve the service and to save money (whether this was achieved is a different question altogether), now that the money will presumably be less then the outsourcing companies will have to reduce their staff and/or the level of service, which seems to defeat the argument that these companies do things cheaper and better.

 

So in a nutshell, how do you cut a service that has been outsourced in order to be more efficient.

 

http://news.bbc.co.uk/1/hi/uk/10500081.stm

[andyofborg]

I’ve been reading over the weekend that some Departments are potentially going to have to deal with 40% cuts in Budgets but that NHS and Overseas Aid won’t see any and that the Police and Armed forces will only see around 10-15%.

 

This would them imply that Local Authorities will be the ones seeing the highest cuts of around 40%.

 

are you on double time on a sunday?

 

as always, you seem to have read wrongly. no department will have a 40% budget cut. the average across all departments will be 25%.

 

This got me wondering how this will affect services already outsourced, for example in Sheffield....

But now that the Council will get less money from Central Government what will happen to these contracts, will they need to be re-negotiated and presumably coming with that will come the likely suing for breach of contract.

.................

So in a nutshell, how do you cut a service that has been outsourced in order to be more efficient.

 

this is probably the sanest thing you've posted in the last 6 weeks.

 

the council has certain contractual obligations with other companies. the changed priorities as a result of the reduction in central funding may need those contracts being renegotiated. everyone is aware of the public sector debt problem and i'm sure that everyone will go into these negotiations with the knowledge that funding is constrained and will act in an suitably businesslike manner. it generally isn't a good idea to sue your customers so its likely that nothing will end up in court.

[Titanic99]

the council has certain contractual obligations with other companies. the changed priorities as a result of the reduction in central funding may need those contracts being renegotiated. everyone is aware of the public sector debt problem and i'm sure that everyone will go into these negotiations with the knowledge that funding is constrained and will act in an suitably businesslike manner. it generally isn't a good idea to sue your customers so its likely that nothing will end up in court.

 

But the main point of these contracts was to employ companies who could run these services better, so if we are benefitting from this already then how can you cut it some more as the waste isn't there.

 

That is of course assuming you believe the reasons given for the outsourcing in the first place.

[Rupert_Baehr]

.

 

But now that the Council will get less money from Central Government what will happen to these contracts, will they need to be re-negotiated and presumably coming with that will come the likely suing for breach of contract.

 

What is the likelihood that the courts would find in favour of the contractor? - Remember, Parliament makes the laws, it can make any law it likes and in the past the courts have declined to rule in favour of a party where such a ruling might 'open the floodgates' and allow unlimited claims by others.

 

.So in a nutshell, how do you cut a service that has been outsourced in order to be more efficient.

 

As it says in the advert: 'Just do it.'

[discodown]

Nowhere has it said that LA's are going to experience 40% cuts. You can say it implies that but it doesn't, you are implying it.

[Titanic99]

 

 

As it says in the advert: 'Just do it.'

 

If it possible to do it then that would imply that the initial objective of outsourcing hasn't been met as they haven't been "doing it".

 

And everybody keeps telling me the Private Sector is more efficient than the Public Sector.

[Titanic99]

Nowhere has it said that LA's are going to experience 40% cuts. You can say it implies that but it doesn't, you are implying it.

 

I appreciate this but which Departments are left after you remove the protected areas:

 

NHS protected

Overseas Aid protected

Police reduced to 10%

Defence reduced to 10%

 

Surely the only major area of spending left is Local Government grants.

[andyofborg]

But the main point of these contracts was to employ companies who could run these services better, so if we are benefitting from this already then how can you cut it some more as the waste isn't there.

 

That is of course assuming you believe the reasons given for the outsourcing in the first place.

 

if the operational requirements of the service haven't changed then maybe there wont be a need to renegotiate the contract.

 

though given the anticipated funding constraints it might be worth discussing the contract to see if there are areas which can be changed without affecting service provision.

[discodown]

I appreciate this but which Departments are left after you remove the protected areas:

 

NHS protected

Overseas Aid protected

Police reduced to 10%

Defence reduced to 10%

 

Surely the only major area of spending left is Local Government grants.

So it couldn't possibly be any other goverment areas?

[Titanic99]

if the operational requirements of the service haven't changed then maybe there wont be a need to renegotiate the contract.

 

though given the anticipated funding constraints it might be worth discussing the contract to see if there are areas which can be changed without affecting service provision.

 

There can't possibly be an alternative to re-negotiating the contracts, if Central Government reduce funding by 25-40% then this has to be passed on to the Contractor, meaning the nice non-wasteful contractor has to find 25-40% of efficiency savings.

 

Which comes back to my original point of how can a service outsourced to improve efficiency take on massive cuts.