Examination of Witnesses (Questions
270-289)
MR ROD
ALDRIDGE AND
MR JOHN
TIZARD
THURSDAY 22 NOVEMBER 2001
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.
Chairman
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.
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