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From The Socialist newspaper, 15 December 2006

The 'Third Sector'

Privatisation, but not as we know it

Arguably the biggest threat facing public-sector workers today is privatisation. But New Labour's 'Third Sector' strategy is an attempt to conceal privatisation behind a screen of unprincipled spin.
Fran Heathcote, a group organiser for the civil service union PCS in the Department for Work and Pensions (DWP), pulls apart the spin. (Fran writes in a personal capacity).

THE 'THIRD Sector' strategy seeks to disguise big business's predatory attack on the public sector as the legitimate and desirable involvement of charitable institutions in enhancing the delivery of the welfare state.

But the 'strategy' is really a collaboration with big-business profiteers who want to take over public-sector work, including core areas of delivery.

The PCS recently commissioned Steve Davies, a Senior Research Fellow at the Cardiff School of Social Sciences, to conduct a study of the third sector - which turns out to be composed of not just charities but also a hodge-podge of profit-seeking businesses, government/charity organisations and non profit-making organisations.

Steve's paper provides a damning insight into the true role of the third sector and the government's crude attempt to destroy public services in favour of big business. That a Labour government seeks to do this makes for even more shocking reading.

Socialists need to recognise the sheer scale of privatisation carried out under Labour and secondly, the real role of the third sector. The government's pro-capitalist agenda is based on the falsehood that the private sector is good and the market is efficient and it delivers. Meanwhile, the public sector is bad, wasteful and inefficient. How can it be cheaper for these organisations to deliver this work when they need to make a profit for their shareholders?

Cutting staffing levels to a point where it is impossible to deliver good quality services to the public is all part of the strategy to hand over civil service work for profit.

The third sector idea has been kept very quiet and it is important to expose it for what it is. The idea of charities and faith organisations deciding on benefit entitlement, for example, is a step backwards into Dickensian, begging-bowl times.

Equally unpalatable is the idea of faith groups delivering benefits and potentially imposing their beliefs and opinions on others in determining their entitlement. This could prevent people claiming what they are rightfully entitled to, which is of course cheaper for the government.

Despite hiding the idea behind charities, it is clear that this is about profit and quick wins for the government and big business. As socialists we are absolutely clear in our belief that the correct place for the delivery of the welfare state is within the public sector, a truly 'not for profit' institution.

The other two main political parties have made it clear that they would do the same so the question is, what's the alternative?

The campaign fo a New Workers' Party is a key issue here. There is a burning need for a new party which fights for the interests of the working class, central to which must be the defence of public services and welfare provision.

And this back-door privatisation gives us many more reasons to campaign for a resounding 'yes' vote in the PCS ballot for strike action to defend public services.

Lies, damn lies and not many statistics

THE MAIN organisations representing 'third sector' organisations are the Employment Related Services Association (ERSA) and the Association of Chief Executives of Voluntary Organisations (ACEVO). They constantly make claims that they can deliver advice and training and keep people in new jobs for longer than by using in-house provision. For example Employment Zones (EZs) have been used since 2000 to target resources to areas of particularly high unemployment.

Contractors are now used in all 13 EZs. And they spend a lot of time boasting about how good their performance is and how the public sector is doing a lot worse. These claims are echoed by government.

Employment minister John Hutton told a House of Commons Select Committee this year that "...the private and voluntary sector providers have a very good track record... I think their performance actually exceeds Jobcentre Plus in a number of very important respects."

The ERSA and ACEVO claimed to the same select committee: "Research shows that 10% more of the long-term unemployed secure work in Employment Zones than under existing provision."

But the Davies report exposes the fact that the study on which these claims are based draws no such conclusion. Instead, the study points out that the difference between the performance in the EZs and in-house provision under New Deal was not statistically significant after ten months: "The evidence points to the impact of the two programmes having become more similar as time went on."

The same report also explains how differences in EZ provision is mostly due to more money is available to spend on clients. They also quote the staff's view that the payment-by-results system, encouraged the pressurising of people into inappropriate jobs.

Davies concludes; "Wherever Jobcentre Plus staff have been allowed the same flexibilities and funding as private-sector companies or charitable organisations they have been able to compete with, if not surpass, the performance of contractors."

  • Third Sector Provision of Employment-Related Services, Steve Davies, Senior Research Fellow, Cardiff School of Social Sciences. Available from the PCS website:

  • Job seeking or profit seeking?

    'THE THIRD sector ' is usually used to describe anything which doesn't fit in to the categories of either the public sector or private-profit sector. But it is increasingly being used to conceal and fudge the fact that more and more private companies are becoming involved in providing public services for profit.

    The report commissioned by the PCS exposes what is happening inside the Department for Work and Pensions (DWP). The new version of Job Centres - Jobcentre Plus - had a budget of 1.1 billion for its employment and training programmes in 2005/06. It's no wonder that there's a queue of people lining up to get their fingers in that profitable pie.

    The Association of Chief Executives of Voluntary Organisations (ACEVO) are at the head of the queue, arguing for Britain to adopt the Australian model. There the equivalent of the DWP just presides over a collection of different employment and training providers, all competing in a 'market'.

    These organisations are not interested in providing worthwhile training and advice to unemployed people. They want to push people through the system as quickly and cheaply as possible, ignoring anyone with complex and expensive needs. Consequently many people don't get any help at all.

    The Australian Council of Social Service recently exposed the fact that 300,000 long-term unemployed could not get the training and support they needed.

    But already millions of pounds of government funding has been handed over to 'third sector' employment and training providers in Britain. In 2003/4 about 1 billion was spent on 'outsourced' employment programmes.

    About one-third of this was creamed off by a group of 16 providers, which went on to become the Employment Related Services Association (ERSA).

    ERSA has now expanded beyond familiar organisations like Remploy and YMCA Training to those like Tomorrow's People and Pecan.

    There are now over 20 organisations in the ERSA, who get about 400 million-worth of government funding each year, predominantly Jobcentre Plus contracts. Ten of these organisations are private companies.

    Most of these organisations are guided predominantly by the profit motive. But some also have inspiration from a higher source. Pecan advertised for a manager recently, saying it would be suitable for: "Someone who has a close walk with God." The objects of YMCA training include: "To lead people to the Lord Jesus Christ and to fullness of life in Him."

    This could easily pose problems for people with different faiths, or no faiths, who are forced to come to those organisations for training and advice. And what are the attitudes of people working for those organisations when they come into contact with lesbian, gay, bisexual or transgender people?

    Unsurprisingly some of these organisations are also led from the right. The head of Tomorrow's People, Debbie Scott, is also deputy chair of the Conservative Party's Social Justice Policy Group.

    Both ERSA and ACEVO, the main bodies representing these 'third sector' organisations, are arguing for Jobcentre Plus to merely be the first point of contact for job-seekers.

    The Jobcentre would pay the benefits but all training and advice would be provided by the organisations they represent. They claim they can do this at a lower cost.

    But as the Davies report pointed out for the PCS, some of these organisations pay their senior staff very handsomely indeed - much more than the civil servants they are lining up to replace.

    A4e pays its director 329,000 a year and most of the members of ERSA pay their senior officers over 50,000 a year. Some have become millionaires through their dividend payouts.

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    In The Socialist 15 December 2006:

    NHS Crisis: Turn anger into action

    Teachers support day of action against health cuts

    QEH Hospital - a victim of privatisation

    NHS news

    War and terrorism

    Frankenstein kills out of control monster

    Violence against women

    Ipswich murders lifts lid on violent world

    Workplace news and analysis

    PCS: Vote 'Yes' against job cuts and low pay

    Heroic struggle scores victory for Visteon workers

    Victory for Glasgow's Council Workers in the Fight for Protection

    Special feature

    Privatisation, but not as we know it

    Socialist Party Marxist analysis

    The wealth gap widens

    International socialist news and analysis

    Good riddance to the 'butcher of Chile'


    JOHN HAMILTON Blairites re-write history

    Socialist Party news and analysis

    Private companies rule - and ruin

    BNP fiasco but vigilance essential

    Workplace analysis

    TWGU merger: Build a fighting union

    Mass meeting prepares for action

    Protesting against fare increases

    Leeds workers on strike to defend pensions

    The Socialist Xmas quiz

    The Socialist quiz


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