The Government seems intent on privatising large parts of the public sector. This agenda is neither efficient nor effective, but ministers are blinded by a crusade against anything done outside of the market. As a union we now face the privatisation of children’s social care to what are often referred to as ‘trusts’. This name is quite meaningless in a legal sense on its own, as a company has to be something, for example a limited company by guarantee, registered with Companies House.
So far, in Doncaster and Slough, the councils were forced into a trust . Both have the legal structure of a private limited company by guarantee. Such a legal model is quite common for:
Non-profit organisations that include social enterprises, clubs, NGOs and political parties
Companies which do not have share capital or shareholders
Members who act as guarantors. This is an undertaking to contribute a nominal amount – usually very small – in the event the company is wound up.
The reach of this agenda is now extending to Sunderland, Sandwell, Birmingham, Windsor and Maidenhead.
In both Birmingham and Sandwell, the commissioners are proposing two wholly owned council companies. In Birmingham the preferred model is a “Community Interest Company” (CIC) which is a social enterprise. It's best to think of a CIC as the "wrapper" for a Company Limited by Shares, Company Limited by Guarantee or perhaps some other structure. The usual procedure is for the new delivery vehicle to be first registered with Companies House, which then asks the CIC Regulator if it's OK for it also to be a CIC. The CIC adjudicates on its "common purpose" and asset lock. It can't be free standing, on its own. It will need to be something else in the first place. This is where it gets confusing. Normally CICs are not wholly owned by councils, but have a separate legal identity .
The CIC regulator believes in “light touch” regulation, so alarm bells should start to ring. Many in social care believe that these new models cause fragmentation and increase costs. For example, in Doncaster the trust cost £2.9m to set up. In Slough the cost was £3.3m. This extra cost was funded by the taxpayer, redistributed by the Department for Education. The ongoing costs can be steep. According to the consultants LaringBuisson – who advocate for greater marketisation of the sector - the annual cost for a trust model is £3.5m.
In Sunderland a social enterprise called Together for Children Sunderland will be running their children’s social care at a cost of £2.45m to set up. In Windsor and Maidenhead, Achieving for Children – a social enterprise - will be running children’s social services.
It is only a matter of time before the funding for these trusts will come from social finance or social impact bonds, where payment is made by results. This will mean private companies will be rewarded for number crunching rather than protecting children from abuse and victimisation. In reality, investment in the service with a focus on the outcomes is perfectly achievable by in-house local authority services.. Unfortunately the Westminster Government disagrees, and is costing public services millions of pounds with its obsession with privatisation.