Government plans “Community Right to Privatise”

The government’s Localism Bill includes a new policy called “Community Right to Challenge”.

Under this proposal, charities, parish councils and local authority workers will get the power to submit an Expression of Interest to run services which are currently delivered by local councils. The idea is that this will allow people who have good ideas about how to run services better or at a lower cost to be able to do so.

Now you might think that, as the stated aim of this policy is to increase the number of services run by voluntary and community groups, that the way it would work is that the council would either accept the expression of interest, in which case they transfer the service to the relevant charity or co-operative, or they would reject it.

Here’s what is actually planned:

“If an Expression of Interest is accepted, the relevant authority must carry out a procurement exercise relating to the provision of that service. This should be appropriate to the nature and value of the contract. So where the contract is for a service, or it is of a value to which the Public Contracts Regulations 2006 apply, the authority must follow the procedures for advertising, tendering and awarding contracts set out in those regulations. Where the service is of a nature or value that the Public Contracts Regulations 2006 do not apply (i.e. where it is listed in the regulations as being exempt, or is below the threshold of £156,000) then the authority will need to decide what sort of exercise to run – just as it will already do when contracting out a service. Other organisations may bid in the procurement exercise that follows a successful challenge relating to the provision of the service – these could include other relevant bodies, or private sector organisations.” [my emphasis - DP]

So the government says that the aim is to transfer services to local community and voluntary groups. But once these groups have gone to the time and expense of developing expressions of interest, they then get to compete against private sector companies in a procurement exercise. I wonder who will really benefit from this?

One thing which we know, and the government admits, is that small, innovative community groups are at a disadvantage when competing in procurement process against private companies and larger charities which are more distant from local communities.

If I worked for a private company which wanted to make serious money out of the Localism Bill, I'd already be preparing to make use of this legislation by working out how to get local authority workers or astroturf community groups to submit expressions of interest and open up contracts to bid for. Just as in the welfare to work field, more and more public money would end up going to a handful of private prime contractors, while small, innovative community groups lose their funding and have to cut or stop their work.

There's a very simple fix to this problem, if the aim is to encourage local community groups to have opportunities to run more services. Just amend the process so that only non-profit groups can take part in the procurement processes created by the Right to Challenge. But under the rhetoric of "more power for communities", the legislation as currently written is bad for users of public services - who can expect lower quality services and no protection if they fail, bad for community groups, and good for companies looking to make a profit out of public services.