‘Why councils should be cautious of shifting social care to a trading company’

By a social care manager

I worked in a local authority trading company for over two years. I should start by saying I’m not against the idea in principle, it seems to be a good solution for local authorities, but how it is undertaken and the end result can be very different from the vision.

Firstly, we cannot avoid the elephant in the room – no matter how the reasons are dressed up, moving to a trading company is ultimately a cost saving exercise for councils in these days of difficult economic decisions with regards to spending.

For some local authorities, it’s also a way of bringing in some extra income. As a sole shareholder, they stand to gain from any profit generated. In principle, this is not a bad thing – all local authorities are seeking ways to generate extra income for the benefit of residents.

The most prominent part of the experience for me was the wide variation in the terms and conditions of staff. The local authority I worked for moved its supported living, day care, residential and home care services into a trading company. This resulted in new staff being recruited on considerably less pay, holidays, pensions and sickness entitlements.

Meanwhile, those moving into more senior leadership roles managed to keep their old terms and conditions, and often received a large pay rise. This was mostly obvious in the home care service, it was divisive and in my opinion unfair.

‘Staggering inefficiencies’

When the home care service was in-house, the inefficiencies within it were staggering. How these working practices were allowed to flourish was just a mystery. Staff were paid for not working. They had lots of ‘downtime’ at home with no visits to make or worked all their contracted hours over a shorter period, which in effect gave them an extra day off.

This is not a staff bashing. They had just been led into the ways of waste by those at the top – and why would you complain if you’re getting paid for it. A culture shift was needed and this may have been a reason for the move to a local authority trading company.

But I’m not sure how anyone thought they could suddenly lead a complex organisation towards providing high quality, cost effective and efficient services that met local need, given that they couldn’t do it when they were inside the local authority. It was probably naïve to think that once outside, staff would have the skills and appetite for the real changes that were needed.

The other issue is that council managers were mixed in with leaders from the private sector and this seemed to lead to very different views on how to run a business. During some of those boardroom battles, the frontline staff were just forgotten. Sourcing a senior leader with experience of working in the third sector might have worked better.

‘Improving quality’

On the plus side, most staff just wanted to do a great job, were committed and extremely conscientious. I met many such people and felt privileged to work with them. I am sure that we all worked to really improve the quality of services delivered and I loved my time there.

Where there were issues with service delivery from contract holders, we took on those contracts – this involved TUPE and the other issues surrounding any transfer – but ultimately it did save the council money and those in receipt of the service had improved outcomes.

I wonder though, could the same benefits have been achieved through a tendering process, or because of the shareholder’s ultimate control was this the best way forward? Just a little more thought might have made a huge difference and led to a more successful transition.

I’m not sure if I would do this again, but I do think if local authority trading companies can learn from each other, then they do stand a good chance of being a successful way of delivering local services for local people at a fair price. My advice? Proceed with extreme caution.