Cleveland Fire Authority

Iain Wright Excerpts

Monday 13th May 2013 Commons Chamber

[Tom Blenkinsop]

We understand that, under the recent regulations introduced under the Government’s own Health and Social Care Act 2012, the TUPE regulations are worth about 90 days in practice. As for the hon. Gentleman’s claim that the Labour authority is pushing the proposal, the Labour chair actually said “If we were properly funded, we would not even consider going down this route.” As I shall make clear, this is a devolved blame game initiated by Ministers to thrust a mutilation of the concept of mutualisation on the people in Cleveland.

[Mr Iain Wright (Hartlepool) (Lab)]

That is very good. Very clever, at 10 o’clock at night.

[Tom Blenkinsop]

Thank you very much.

Many operational issues arise from the proposals, relating to, for instance, local, regional and national resilience. I understand that the Fire Officers Association, the Chief Fire Officers Association and the Fire Brigades Union have raised them with officials in the Department for Communities and Local Government. I shall focus on four specific concerns. The first is the apparent lack of employee support for the proposals, and the uneasy lack of public awareness. The second is the sheer lack of transparency on the part of both the Government and the fire authority's senior officers. The third is the question of whether a spun-out brigade would raise additional revenue. If so—as a caveat—would such a spin-out have an adverse impact on existing local economy arrangements? Finally, and most importantly, I want to discuss the real risk that these proposals could lead to the privatisation of front-line fire services on Teesside.

I am a member of the Co-operative party, and a supporter of co-operatives and mutuals. I believe that if a mutual is to function effectively, it will require the support of its members, and that measures should not be forced on a work force. I am not at all convinced that that would be the case in Cleveland, given that the proposals appear to be very much management-driven. The only letters I have received from firefighters in my constituency about this matter strongly oppose the proposals. Indeed, at a single meeting attended by more than 250 firefighters, approximately half the uniformed service in Cleveland, there was unanimous opposition to them. The FBU, which represents some 85% of uniformed fire service workers, has identified a total lack of demand from staff for employee ownership in the fire sector. Instead, there has been “overt hostility”, except from a “smattering of principal managers”. Indeed, I doubt whether there is support even among principal managers, with 40 English chief fire officers and fire chief executives adding their names to the CFOA’s pre-consultation response, which highlighted major concerns with these proposals.

Even the language used by those promoting the model seems to have been redefined to address the level of employee support. According to the FBU, the model was originally promoted as a John Lewis-style, employee-owned mutual. However, that was only until it became apparent that employees did not want ownership, and nor would they be afforded shares as per that model. The title changed to an “employee-led” mutual, until the vast majority of employees indicated that they did not support the model, and that the only employees who did were a select group of senior managers. The latest title employed is a “locally led” mutual, which in effect acknowledges employee opposition and in doing so employs the term “mutual” as a misnomer.

Interestingly, one senior local manager has indicated that 51% work force support is the threshold required, although FBU legal advice suggests the fire authority has the ultimate say. It is difficult even to assess the extent to which any spun-out fire brigade would in fact be a mutual, with the authority’s senior officers showing a total disregard for transparency in these proposals. In the authority’s meetings, just about everything related to the proposals has been transacted under “confidential business”, making it impossible for me, my hon. Friends, the media or the public to scrutinise them. Although I believe that the authority will be putting out a business plan to public consultation in due course, I fear it may be presented as a fait accompli. It is indeed remarkable that the authority’s officers, prior to spending tens of thousands of pounds of taxpayers’ money, did not consult stakeholders to ascertain the appetite for these proposals or involve them in setting the terms of reference for the creation of any business plan.

The Minister may want to say that the authority’s integrated risk management planning has previously stated that it would explore alternative business models, which it did, but only in the most generic terms. What it has not done so far is consult in detail the people of Cleveland. It has not even indicated whether this would be subject to detailed consultation as part of the ongoing IRMP process.

The Government are doing all they can do to prevent us from analysing these proposals. The fire authority’s senior officers are also providing the bare minimum they can under freedom of information legislation. When my office requested copies of these briefings and their assessment of procurement options for spinning out the brigade, they declined to provide a copy. Amazingly, they argued that it was not in the public interest to do so.

[Tom Blenkinsop]

I absolutely agree with my hon. Friend, who himself has had to get FOIs and put those letters of information into the House of Commons Library, due to the lack of transparency.

One of the main genuine reasons why some members of the fire authority are even considering going down this route is their belief that it would mitigate some of the cuts, due to the spun-out body’s ability to bid for private contracts. Also, one of the chief fire officer’s stated aims is job creation. The areas the CFB is exploring are not related to core FRS activity; indeed, these are services currently provided by other sectors. The CFB proposals seek to replace these “others” by providing the same service with their existing work force, thus removing other workers from employment. That in no way can be described as job creation; in fact, it is the very opposite. However, nor do I believe that this would raise any further revenue.

[Mr Iain Wright]

I congratulate my hon. Friend on securing what is a vital debate for our area. Can he confirm that there is nothing to prevent the community interest company from bidding for existing work? Can he think of anything that, in an effort to secure additional revenue streams, would prevent the current situation from continuing, compared with what a mutual or private model can do?

[Tom Blenkinsop]

At the meeting mentioned by the hon. Member for Stockton South (James Wharton), the main thrust of the chief fire officer’s argument for seeking a mutual model was to avoid corporation tax. If that is the sole purpose of pursuing the mutual model, one has to assume that the mutual is making a profit, but I want to go into that in more detail. Spending £198,000 from the Department of Health’s social enterprise investment fund, the brigade created an arm’s length company, the Cleveland Fire Brigade Risk Management Services community interest company, to bid for contracts from the private and public sector, with any profits to be given to the brigade. However, it operated at a loss of £38,000 in its first year and has already lost a major telecare contract that it had secured six months previously. I am no mathematician, and I do not know what the corporation tax yield would be for the Treasury on a community interest company running at minus £38,000, but with the CIC struggling to make a profit as it is, I fail to see how spinning out the brigade would generate any more contracts or revenue than the current arrangement.

The most important reason I, along with my hon. Friends the Members for Stockton South, for Hartlepool (Mr Wright) and for Middlesbrough (Andy McDonald), object to the proposals is the scope for privatisation that they permit. I cannot confess to being an expert on the technicalities of European public procurement law, but if the brigade were to be spun out, it would seem almost inevitable that once the initial contract has expired, the authority, as a commissioner, would be obliged to open the process up to competitive tendering, with social value legislation offering little protection. The authority’s senior officers have refused to provide my office with information about the procurement routes it is considering, but none of the “no market”, “joint venture”, “in-house incubation” or “competitive tender” options discussed on the Cabinet Office’s mutuals taskforce website offer protection from competitive tendering in the medium or long term.

There does not appear to be an appetite from senior officers in anywhere but Cleveland for spinning out the brigade, but the necessary changes to the Fire and Rescue Services Act 2004, which the Minister attempted to push through the Regulatory Reform Committee in a legislative reform order, would, in his own words,

“enable fire and rescue authorities in England to contract out their full range of services to a suitable provider”.