Councils should adopt the Yellow Pages test

Glyn Gaskarth says councils should actively encourage alternative suppliers to pitch to provide services

The Big Society was marketed as a way of unleashing an army of volunteers to run Britain’s public services. This was poor marketing and it has undermined our message. The Big Society should be more about creating a mixed market in public service provision with more private and charitable input. Tory councils should consider adopting the 'Yellow Pages Test' pioneered by former Indianapolis Mayor Steven Goldsmith to make the Big Society a reality.

Council leaders are very keen on branding public service reform. Barnet gave us the easy council, Lambeth is experimenting with a co-operative council model and Suffolk briefly considered a new strategic direction. Mayor Steven Goldsmith served Indianapolis from 1992 to 2000. He developed the yellow pages test. He divided city services into two; the “Services that relate to governments’ core mission, like police protection, are distinguished from services that are ancillary to government’s central policy concerns—for example, microfilming and printing.” The means of dividing the two was whether a private operator was listed in the yellow pages offering a similiar service. Mayor Goldsmith accepted some services were a legitimate state preserve but insisted all services that were also provided in the private sector compete for their jobs.

Competition not privatisation is the key. The Government are introducing a right to challenge so charitable or private providers can bid to run public services. But we need to stimulate supply.  Not all people are as politically observant as readers of ConservativeHome. How many suppliers will know this right to challenge
is being created? Local authority leaders should perform the Yellow Pages test. Categorise all your services and flick through the Yellow Pages and list every supplier that performs a service similar to one you currently provide in-house. Write to every single supplier saying that as of x date all council services are open to tender and invite them to bid. In addition we should notify some of the 62,000 social enterprises that have been founded in the UK that they too can bid. The opportunities should also be on the governments contracts finder website or an equivalent to allow non local suppliers to bid.

State services will need to decide how to respond. They will grumble. The trade unions will hate it. Slowly they will adapt. The governments plan to give state employees the right to set up mutuals and run services is not enough. Public sector staff often join for the security of a decent regular wage and pension. Many do not wish to be entrepreneurs. The take up of a voluntary scheme is likely to be low. Why would a worker give up the greater job security of the state sector and the guaranteed gold plated pension for the insecurity of private or charitable sector employment? Competition will be a useful spur.

The Yellow Pages test will bring a new discipline to pay and pension negotiations. Public sector workers will face a choice; retain existing pay and pension arrangements and risk losing the state contract and their jobs or mutualise and devise their own reforms to pay and conditions. Some social enterprises may choose to retain gold plated pensions but accept lower wages in return. Other social enterprises will migrate to defined contribution pension plans but maintain or increase wage levels. Some may choose to reduce the size of their workforce. Others may expand the range of services they provide to make their bids more competitive.

For this process to work there should be no unfair subsidy of bids by state employees. Staff pension and wage costs, premises, training, equipment, human resources and legal services must all be budgeted for. State employees will need to prove they provide value in competition with private suppliers. To help them out the government must urgently review the TUPE, which is the legislation governing staff transfers from the state to the charitable and private sectors. If a few state employees want to provide the whole service they should not be obliged to employ all existing employees. If a social enterprise wants to pay its employees a different wage or alter pension conditions they should be free to do so without transition costs undermining their bid to run public services. If they need to make changes early on in their formation they should have the flexibility to do so.

Local policy makers should reform public services by opening up the yellow pages and asking private suppliers to submit bids to perform public services. We can't just sit back and expect the private sector to respond. We need to publicise the opportunities. This could be revolutionary, not because it will mean all contracts will be won by the private sector but because it will increase public sector productivity. Which council will be the first to adopt this model?

The views expressed above are my personal views and not those of my employer or any other organisation with which I am associated.