21 November 2003
The contracting out of school support services has been an abject failure, with providers forced to pull out of contracts, say the unions.
On the contrary, argue the providers, in most cases the policy has led to higher educational standards and lower costs.
Despite a conflict in interpretation, some basic facts are clear. Education Bradford, run by Serco, had to abandon stiff targets it had agreed with the city council, and local Labour MPs have complained of falling staff morale.
Earlier this year, WS Atkins walked away by mutual agreement from its contract with Southwark. The London borough is expected to announce that it is establishing a not-for-profit, arm's-length trust to run its school support services from next year.
There have also been reports of difficulties at Leeds, where support services are provided by a not-for-profit, arm's-length company, advised by outsourcing specialists Capita. In the London Borough of Islington, Cambridge Education Associates were fined for failing to meet performance targets.
It is easy to see the attraction to the private sector of moving into another area of support services. Serco's educational service division turns over £80m a year, with the bulk of this coming from just the two contracts at Bradford and Walsall.
And when Serco won those contracts, it expected to line up many more from other failing authorities. Since then, though, fewer local education authorities have been forced by government to contract out their support services, undermining the potential for future growth, to the frustration of Serco and others.
But contractors have arguably been guilty of hubris. They believed it would be much quicker and easier to improve failing authorities' services than has been the case – and authorities often had unrealistic expectations.
Serco claims its contract with Walsall is an outstanding success. It concedes that the reports of problems in Bradford are damaging, but argues that it is in fact a successful operation that is achieving improvements faster than the national average.
The difficulty, of course, is that this is still not fast enough to comply with its own initial contract.
In the Southwark case, WS Atkins claims the government changed the system by devolving funding for support services from LEAs to schools. This, says WS Atkins, meant that its contract lost its viability because of the extent to which it had to negotiate with individual schools.
Another factor might be that, as WS Atkins failed to win any other contracts, it was unable to achieve expected economies of scale.
Tendered prices may have been too low in many cases. Contractors attempted to ride two horses by cutting costs and improving standards. They have been forced to pay above the market rate to attract top managers and compensated by cutting back on essential but less high-profile expenditure. An example is a row in Bradford over the halving of the number of educational psychologists.
The overall picture is that some contracts work well, but elsewhere providers bid at unrealistically low prices because they failed to recognise the scale of problems facing LEAs. According to Unison, contractors have also found it difficult to respond to changing political priorities in the way the public sector is used to.
And the market that contractors expected to expand has stood still. Ministers originally warned LEAs that support services would be outsourced unless standards improved quickly. Contractors entered what they expected would be a burgeoning market, but instead LEAs responded by getting their act together.
'I suspect the problem was always exaggerated and the rate of improvement has exceeded people's expectation,' suggests Martin Rogers, of the Local Government Information Unit's education network. 'It's a good news story. It's more or less the end of outsourcing through intervention.'
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