It is a Lib Dem Council which has had the job of making the first full LEA outsourcing in the country work. Jeremy Hargreaves reviews Private Sector Working, Islington Lib Dems’ account of how they have made it work. The full booklet by Jeremy is available here.

When Islington Liberal Democrats won a byelection and took control of the Council in January 2000, they faced the task of improving a whole range of sub-standard Council services after thirty years of neglect under Labour. But in Education the task of raising standards was slightly different. The previous year the LEA had received just about the worst Ofsted inspection report ever, and David Blunkett, then Education Secretary, had ordered the whole lot to be contracted out.

In the two years since then, the Lib Dem administration has worked with the contractor (CEA) and has turned the service around. Re-inspecting last year Ofsted agreed that “the tide has turned”. “Communication has been established and effective systems put in place. Even more importantly, a sense of purpose and optimism has been instilled. The task facing the LEA has been a formidable one, but, to a remarkable extent, it has been successfully accomplished”, they said.

Central to this achievement has been the commitment from the Lib Dem Council Group (as well as the contractor) to forging an effective partnership, and to making the whole thing work. The Lib Dems did not choose this arrangement, but the schools and children don’t care about that – only whether it works or not. And at the heart of making any Council service run effectively (or for that matter any organisation) is a good personal commitment to working together, whatever the precise job titles or formal relationships are. Having that here has been a major factor in turning the service around.

Having a contract with an outside contractor has also brought some advantages to the task of improvement. More than anything, Ofsted said, Islington LEA needed change. By offering greater freedom, and the opportunity to be part of a national organisation, this arrangement was able to attract good new senior people who would otherwise have been most unlikely to come to one of the smallest and worst LEA’s in the country. It is difficult to think of any other way which would have brought in such people so quickly, and certainly their presence has been crucial to installing new systems which had not existed before.

And this process was also helped by having the contract itself, which set out in great detail the tasks which the contractor should be carrying out for the LEA. This has helped greatly to focus on putting in place the systems which are necessary to give schools the services they want. These are stringently monitored, and if they fail on any one of these, CEA pay a financial penalty for this.

And as far as Members are concerned, the arrangement has reminded them that their role is to concentrate on strategic questions about Education in the Borough, and not get bogged down on detailed matters of provision which are properly the concern of the professionals.

All this has been helped by the particular structure of the contract which Islington has had. It is not the kind of ‘privatisation’ where the Council simply hands over the cash to the contractor and lets it get on with providing the service in any way it sees fit, or allowing it to take out money as profit if it prefers. Here CEA are specifically prevented from making a profit. Of course they are able to make savings by providing services more efficiently, but any such savings that they do make are handed back to the Council’s Education Committee to re-invest in schools. What CEA are entitled to is a ‘management fee’, of up to £600,000 per year, if, and only if, they meet certain ‘undeniably challenging’ (Ofsted) targets. If they do not provide a better service than the old LEA was doing, they will not receive this – if they do provide a better service, they will receive it. In the current year, for example, they can expect to receive a little under half of it.

The targets they are set are some very rigorous outcome targets, such as GCSE and Key Stage 2 results, and some more detailed ones about the services they provide to schools. Crucially, about a quarter of the overall targets are for satisfaction of the schools. If the schools say they aren’t happy, that directly affects the money CEA makes. So if kids are getting much better exam results, and schools are pleased with the service they are getting, they will get paid more. If they’re not, they won’t.

There has also been ‘risk transfer’ to CEA – for example, they lost money last year because of an internal management issue in a school which was not directly their fault. There was no question of the Council ‘bailing them out’ for this.

So far, the improved LEA service to schools has not brought about the step-change in exam results which we all want to see (although GCSE results did improve by three times the national average last year). Unfortunately simply providing a better LEA service to schools does not automatically mean that those schools offer better teaching or better exam results. But it is still very early days, as Ofsted concluded, “strong foundations have been laid”.

The contract arrangement also leaves the service still accountable to Members, and through them to voters. Decisions about withholding contract payments are made by the Education Committee (Islington moves to a Leader-and-Cabinet model after the May elections), and this gives Members a strong hand in overall management. But even more importantly, all the key Plans (EDP, School Organisation Plan, Asset Management Plan, and more) are still decided by the Education Committee.

The ‘privatisation’ stereotype of the taxpayer lining the pockets of greedy businessmen while school services are slashed could not be more wrong. CEA wants the arrangement to work, and have not behaved rapaciously. At a recent presentation to the Education Committee on the new Education Development Plan (EDP) a CEA officer showed perhaps slightly less respect to one Councillor’s line of questioning than some thought a Council officer ought to do. What is surprising about this is not that this happened, but that, two years into the contract, Members and officers were slightly shocked at a CEA officer not behaving exactly like a Council officer.

In Islington, CEA are making a little money. But that fact is just a distraction from what really matters to Liberal Democrats, that after a lot of work from Councillors and the contractor, schools are at last getting a decent LEA service. Here, now, this arrangement is starting to provide the education service which Islington children deserve.

You can read the full booklet here