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Reasons why the Royal Mail shouldn’t be privatised - and more outsourcing failures…

The first part of this post is via We Own It, with the second part of this blog by us, where we list of famous outsourcing failures, as well as links to information about services that are being outsourced as we speak.

From We Own It:

Today Vince Cable announced that the Royal Mail will be sold off 'in the coming weeks'. Here are ten reasons why this shouldn't happen.

1) Nearly 70% of the public oppose it.

2) The Conservative Bow group believes the privatisation will be 'poisonous' for the party.

3) The Royal Mail is a national institution. Even Margaret Thatcher opposed 'privatising the Queen's head'.

4) The Royal Mail is succeeding in public hands and made £440 million in profits last year - money that can be reinvested into the service.

5) If privatisation goes ahead, stamp prices are expected to rise to £1.

​6) Deliveries will be reduced and the 'universal service obligation' of delivering to households six days a week may be threatened.

7) Post Offices in rural areas are more likely to close.

8) Small businesses and rural communities will be the first to suffer - but all 26 million British households will be affected.​

9) Privatisation has failed us - look at what's happened to rail fares, energy prices and water bills since these industries were privatised.

10) The public hasn't been consulted. The Royal Mail is ours. We use it, we pay for it, we should have a say in what happens to it.

If you agree that the Royal Mail is better in public hands...Tell Vince Cable to change his mind - sign the petition. Join the Save Our Royal Mail campaign.

Take action now for a Public Service Users Bill which would mean we always get consulted before our services can be privatised.


And from us - another list:

How much does it cost councils to get out of private sector contracts, or to deal with contract disputes and cost overruns with private companies? Answer: a lot. Here's a list of expensive council privatisation failures:

1) Barnet council vs Catalyst Housing

In 2011, Barnet council was forced to pay out about £10m after a disagreement with private company Catalyst Housing after a contract dispute over care buildings. This followed a two-year industrial dispute between careworkers and the Fremantle Trust where the Trust cut careworkers' salaries by as much as £300 a month their leave allowances. The Trust was forced to ultimately concede that the salary cuts had not balanced its books to the extent it claimed they would.

2) Bedfordshire County Council was forced to pay its “business service provider" HBS £7.7m to terminate a £250m, 12-year outsourcing contract prematurely. According to documents released at the time in 2005, the local authority was "deeply dissatisfied" with HBS's performance and served a written termination notice on the company for alleged breach of contract.

3) Let's have Barnet again. Barnet council really is the gift that keeps giving and doubtless will continue to be as the council pursues its already-failing plans to mass-outsource council services:

Earlier this year, Barnet Council had to fork out tens of thousands of pounds for “emergency” IT services after its regular provider went into administration.

Said the local press:

“The authority has been forced into a costly interim arrangement with business processes firm Capita after IT company 2E2 Ltd called in administrators. Finance officers are now looking at how the authority can reclaim £220,000 in advance payments to 2E2, which passed a council credit check days before it collapsed.”

And not only that – as Barnet bloggers report here, the council decided that the way around this problem was to start to shell out more than £72,000 a month to Capita to pick up the “service”: “To get themselves out of a hole quickly, Barnet Council have appointed Capita, without any form of tender, on the basis that it was an emergency and they had already had discussions with Capita to take over the running of this service. This new contract will cost £72,595 per month.”

4) Redcar and Cleveland council – failed contract with Liberata. Following a 'strategic review of services,' HR and Payroll, Finance and Accounting, ICT, Public Access and Business support were brought back in-house in September 2006 after only three years of the 10 year contract. About 500 staff were transferred back to the council.

5) Swansea city council and contractor Capgemini: Swansea outsourced IT in 2005 despite opposition and a lot of strike action. The council decided that Phase Two with a new call centre was not affordable only two years into the ten year contract. It seemed that £7.4m of ‘cash realisable benefits’ over ten years was achievable but the full contract would cost Council £40m more than its normal IT budget over ten-year period.

Said Computer Weekly: “Swansea City Council failed to apply key principles of IT management properly when it agreed an £83m outsourcing deal that is struggling to deliver anticipated benefits, a report by auditor PricewaterhouseCoopers has concluded.

6) Cornwall council: Cornwall was hit with all kinds of problems over its plans for a mega-outsourcing deal with BT or CSC – including a vote of no-confidence in the council leader before a smaller deal was finalised earlier this year.

Said Tony Collins of the costs of the fiasco (the mega-outsourcing plan that caused such controversy):

“The council’s own budget for the outsourcing project so far has escalated. An independent panel set up as a “critical friend” to scrutinise the council’s plans for outsourcing has learned that the costs to Cornwall’s taxpayers of planning for the scheme were £375,000 in July 2011.

In March this year the “Single Issue Panel” members were told that the costs for the project would need to be increased from £650,000 to £800,000.

“The current estimate of the cost of the procurement process at the time of writing this report is £1.8m,” says the panel in its July 2012 report.”

There's a good list here from Dexter Whitfield on similar failures across the country in the last decade. You'll notice that names like Capita, Atos Origin and Liberata appear regularly in it.

And here's a list we're building up of council, NHS and other public sector services that are being outsourced to the private sector. If you know of any in your area - add those to the list!


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