More outsourcing, more problems
An expanded edition of this week’s In Common, Rory Hamilton highlights the gap between rhetoric and reality in light of the STUC’s analysis of local government outsourcing against the backdrop of the Scottish Government’s championing of Community Wealth Building.
You may have seen in Monday’s Daily Briefing our write up of STUC analysis which suggested that local authorities have increased their rate of outsourcing of public services by about 40 per cent over four years, putting the estimate profit extracted from the public sector at around £3 billion.
What this STUC analysis highlights is a renewed consideration of what ‘sovereignty’ and ‘self-government’ actually mean. Scottish independence and energy sovereignty means nothing if power is centralised at Holyrood and local government is under-resourced to perform the role that it is meant to.
The case for outsourcing generally falls into two categories; efficiency or expertise. Either private sector scale, infrastructure, competitiveness and discipline can cut costs and deliver efficiency, or very specific skills are sought best found in the private sector. The risks of this, however, are substantial. The first is straightforward; the terms and conditions in the private sector are almost always worse for staff, and particularly lower-paid frontline staff. There are often lower levels of training and, because the pay and conditions are low, staff often have little reason to be motivated in work.
Among other issues, capacity also becomes a problem, as Robin highlighted about the delivery of the census, “It is beyond belief that Scotland's emaciated and failing civil service is not capable of designing a census.” In other words, the more we outsource, the less able our own public sector is to be able to delivery core functions, thus fostering a reliance on the private sector which inevitably drains the public purse.
“The truth is that outsourcing is rife in Scotland and it is fundamentally weakening our democracy.”
Outsourcing is often just a disguised way of cutting pay and making people work longer hours in worse conditions. It is also deeply ideological – as the STUC research shows, this is big business and an enormous amount of money is spent marketing the idea that 'privatisation is good'. And it also reduces transparency - directly delivered public services are covered by Freedom of Information laws but outsourced services are not.
The truth is that outsourcing is rife in Scotland and it is fundamentally weakening our democracy. It is why I fail to feel much enthusiasm for the SNP’s ambitious manifesto pledges. How can I take public-first social democratic rhetoric seriously, when in practice they breed a culture of profit-motivated private finance?
Take, for instance, the recently passed Community Wealth Building Act. Much lauded, it does indeed have the capacity to create a more democratically owned economy, but this is indubitably challenging in the context of other national economic strategies which run counter to the pillars of such a piece of legislation.
As highlighted by Future Economy Scotland’s analysis, the act “contains too little detail on implementation, resourcing, and support for public bodies,” and as it stands, “there is a risk of dilution, centralisation and contradictory policy signals limiting [its] impact.”
Community Wealth Building has been an effective response to local government austerity in Preston, in several London boroughs, in North Ayrshire, and further afield. Evidence would suggest it makes for an effective economic strategy in targeted instances, acting as a dialectical response to external pressures. It seems pretty hard to implement that approach at a national scale, however, when the national scale is also (one of) the scale(s) that is exerting pressure on local economies.
Some key questions need to be asked in the next parliament and at next year’s local elections as to what extent an outsourcing and privatisation culture seeps down from the national government to local governments in Scotland’s largest cities? How far are the Scottish Government themselves bound by the CWB Act? And furthermore, how far do private sector-led approaches championed by the Scottish Government inhibit the ability of local government to use CWB practices in a proactive way, rather than simply as firefighting austerity and outsourcing?
Take Glasgow, for example, as the city with the highest population of people living within 500 metres of a derelict or vacant site, the City Council should be taking a more interventionist approach to repurposing vacant and derelict sites, such as the Egyptian Halls or Govan Lyceum, for socially just use. Of course, the Scottish Government could help them with more aggressive land reform legislation which would accelerate the process of transfer of ownership where the sites are in private ownership.
Similarly, the Scottish Government needs to ensure ways of not only supporting opportunities for worker-owned cooperative when they arise, such as the failed cooperativisation of the 13th Note Bar in Glasgow city centre, but also incubating them organically. City Property, the council’s commercial leasing arm, which denied the 13th Note workers’ cooperative, also recently effectively forced out artists and creatives at Trongate 103 after having leases terminated, giving only four weeks notice to agree a new lease with a fourfold rent increase. Clearly to make the principles of CWB line up in practice, public sector bodies like this need a strategic re-evaluation.
“The gap between rhetoric and reality is, sadly, alienating and breeds distrust in politics.”
In 2024, Glasgow was ranked Europe’s number one large city for attracting foreign direct investment (as we’ve argued before, for FDI, read profit extraction). In theory, FDI could indeed be used to repatriate global capital investment to more democratic financial flows within the city economy, but as economic geographer David Harvey observed of urban entrepreneurialism in 1989,
since the main aim has been ‘to stimulate or attract in private enterprise by creating the preconditions for profitable investment’, local government ‘has in effect ended up underpinning private enterprise and taking on part of the burden of production costs’. Since capital tends to be more rather than less mobile these days, it follows that local subsidies to capital will likely increase while local provision for the underprivileged will diminish, producing greater polarisation in the social distribution of real income.
Underpinning this innovation sector-led inclusive growth are anchor institutions like the University of Glasgow, Strathclyde University and Glasgow City College. You would think this forms the sound basis for a CWB approach, however fair employment and just labour markets are hard to do as a pillar of CWB with the currently model universities and colleges are following, with the University of Strathclyde planning to cut over 70 jobs as part of a £35m savings package, and when Glasgow City College continues to exploit its staff, whilst cutting jobs and paying out its senior managers. We’ve also seen that the council can be pretty unfair and unjust too, forcing cleansing workers out on strike during COP26 over pay.
All of this is to say that community wealth building could indeed be an effective economic model, particularly for places like Glasgow, if only SNP administrations which laud the principles of CWB would follow through on their rhetoric. The gap between rhetoric and reality is, sadly, alienating and breeds distrust in politics.
The task ahead of next year’s local elections is to highlight these inconsistencies and build an effective movement coalesced around a public-first programme. In the first instance this has to be about fixing the short term economic failings of neoliberalism for cities like Glasgow through redistributive policies stuck as CWB – thereby addressing working people’s immediate material conditions. In the second instance, there needs to be a wider restructuring of the economy around the just transition that will make the need for fixes like CWB redundant in the long term. A Green New Deal feels like the obvious place to start.