Best Value poses threat to outsourced service deals

The Best Value regime will place severe restrictions on local authorities’ ability to secure favourable terms and conditions for outsourced staff, the national employers’ body has warned.

Working closely on HR issues with providers during the tendering process and throughout the life of the contract is desirable but will raise many difficult issues, said Mandy Wright, assistant director of the Employers’ Organisation, in its first annual report.

“If we set high requirements but then use our monopoly position or small or new providers’ vulnerability to drive down contract prices, there could be a real risk of poor performance and service or contractor failure in just those services where clients are most vulnerable,” Wright warned.

She predicted the need for major changes to the national bargaining and the national employers’ role, and suggested private contractors could not be excluded from some role in pay bargaining and other areas.

“It will not be in the best interests of the public to have increased bankruptcies and service failures because we have made agreements that cause general difficulties for providers.”

Wright stressed new approaches and strong relationships between councils and external providers would be vital. New and better procurement and commissioning skills would be needed, combined with greater HR expertise.

But the Employers’ Organisation has not yet defined the role it will play in improving the process. “Should we work with external providers to develop HR services to support good practice by them?” Wright said.

Executive director Charles Nolda said there was evidence of “considerable interest” among authorities of the potential of competency-related pay, despite the fact that “satisfactory experience with individual or team-based performance pay in public services remains elusive”.

He also questioned the efficacy of extended pay deals in a low-inflation environment. “For cash-strapped organisations this seems a high price to pay for the relative stability and certainty of a longer deal,” he said.

Web Link

Managing Change – Employers’ Organisation annual report, 020-7296 6600

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