Privatising Public Prisons: Labour Law and the Public Procurement Process 9781474200950, 9781849466547

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Preface I acknowledge, with grateful thanks, the financial support that I have received from the Arts and Humanities Research Council, Trinity College and the Cambridge Law Faculty while producing the thesis on which this book is based. I owe an immense debt of gratitude to my thesis supervisors, Professor Catherine Barnard (Trinity College) and Mrs Nicola Padfield (Fitzwilliam College), who both have been constant sources of invaluable support, guidance and friendship. Thank you both for nurturing and inspiring me. My thanks also extend to Professor Alison Liebling, Dr Ben Crewe, Dr Ruth Armstrong, Helen Arnold and all members of the Prison Research Centre at the Institute of Criminology in Cambridge for sharing with me your sociological curiosity about the inner workings of prison life and your passion for empiricism. Thank you for letting me into your world. Thank you to my thesis examiners Professors Mark Freedland (St John’s College, Oxford) and Dirk van Zyl Smit (University of Nottingham), for your supportive and constructive comments on my work, all of which have assisted in the revision of the text for this book. To Dr Christopher Padfield and Professor Jonathan Steinberg, thank you for taking the trouble to challenge me, boost my confidence when it sagged and ‘poke’ me in the right direction. I wish to thank the staff of HMP Birmingham, NOMS, the POA and the PGA, and anyone else I have missed but who allowed me to share in Birmingham’s journey with them. I remain immensely grateful and humbled by your willingness to share with me so much of yourselves. I hope I have accurately and thoughtfully reflected your hopes, fears and experiences. It is to NOMS’ great credit that they were willing to support and facilitate this research at a time of significant transformation across the prison estate. I thank them, particularly Michael Spurr, Ian Poree, Ian Blakeman, Vincent Godfrey and Linda Kelly, and Birmingham’s Governors, James Shanley and Pete Small, for allowing me such generous access to HMP Birmingham and NOMS. My modest hope is that NOMS might put some of the findings of this research project to good future use. My final thanks go to my partner, William. Thank you for everything.

List of Figures and Tables Figures 1(a): 1(b): 2: 3: 4:

Current Approach to TUPE within Procurement Processes: Regulatory Disintegration Best Practice? Dynamic Integration of TUPE Obligations and Procurement Decisions Overview of Birmingham Competition Timetable Summary of Key Stages in a Procurement Process NOMS’ Structure During the Birmingham Competition

227 228 229 230 231

Tables 1: 2:

Key Legislative and Policy Documents on Social Matters in Public Procurement PQQ Response Categories and Evaluation Weightings

232 235

Abbreviations ACCT AI ASI BAFO BIS CBI CCT CJEU COSOP CPI CSCS CSR CSS DPSMs ECU EEC ETI ETOR EU Fair Deal

GAD GATT GDP GPA GPP HMIP HR HRBP ILO IMB ITT LBDT MEAT MQPL MTT NAO

Assessment, Care in Custody and Teamwork Appreciative Inquiry Adam Smith Institute Best and Final Offer Department for Business, Innovation & Skills Confederation of British Industry Compulsory Competitive Tendering Court of Justice of the European Union Cabinet Office Statement of Practice on Staff Transfers in the Public Sector 2000 Consumer Prices Index Civil Service Compensation Scheme Corporate Social Responsibility Custodial Services Specification Developing Prison Service Managers European Units of Account European Economic Community Ethical Trade Initiative Economic, Technical or Organisational Reasons European Union Annex A: HM Treasury’s Statement of Practice on Staff Transfers from Central Government: ‘A Fair Deal for Staff Pensions’ Government Actuary’s Department General Agreement on Tariffs and Trade Gross Domestic Product Agreement on Government Procurement Green Public Procurement Her Majesty’s Inspectorate of Prisons Human Resources Human Resources Business Partner International Labour Organization Independent Monitoring Board Invitation to Tender Local Bid Development Team Most Economically Advantageous Tender Measuring the Quality of Prison Life Mobilisation, Transition and Transformation National Audit Office

xii

Abbreviations

NOMS NPM ODPM OECD

National Offender Management Service New Public Management Office of the Deputy Prime Minister Organisation for Economic Co-operation and Development OGC Office of Government Commerce OJEU Official Journal of the European Union PCP1 Prison Competitions Programme Phase 1 PCP2 Prison Competitions Programme Phase 2 PC Regulations Public Contracts Regulations 2006 PFI Private Finance Initiative PCS Public and Commercial Services Union PGA Prison Governors’ Association POA Prison Officers’ Association PIN Prior Information Notice PPP Public–Private Partnership PQQ Pre-Qualification Questionnaire PSBU Public Sector Bid Unit RoE Retention of Employment RPI Retail Prices Index SA8000 Social Accountability 8000 Accreditation SLA Service Level Agreement SMT Senior Management Team SQL Staff Quality of Life TFEU Treaty on the Functioning of the European Union TOIL Time Off in Lieu TUPE Transfer of Undertakings (Protection of Employment) Regulations VEDS Voluntary Early Departure Scheme WTO World Trade Organization

1 Setting the Scene A. AIMS, SCOPE AND STRUCTURE

T

HE PRIMARY AIM of this book is to increase our understanding of the operation of competition policies in public services (here, a British prison, HMP Birmingham) and their effects upon social sustainability. ‘Social’ is taken to be concerned principally with the employment relationship. This is defined broadly to extend beyond terms and conditions of employment to encompass workplace culture, customs, practices and expectations. ‘Sustainability’ is taken to mean a state of affairs in which economic and non-economic interests and values coexist in a way that serves long-term inclusive societal prosperity. Although this seems easy to state as a general proposition, the ideological ‘path’ by which sustainability is or should be achieved is, of course, deeply contested. Since the 1980s in the UK and, particularly since the Global Financial Crisis of 2008 in the European Union (EU), the path to prosperity laid by many governments and international organisations has been paved with neo-liberal policies. To varying degrees, regulation reflects, perpetuates and responds to these ideological conditions. I am interested in the ideology of regulation and its role and effectiveness in creating conditions that are socially sustainable. Implicit in this is a contention about what (labour) law should achieve and what value there is in employment protection. Since it is necessary to critique the law and its empirical operation by reference to an express framework of values, I make my understanding explicit in chapter four. I draw particularly upon the labour market work of Davies and Freedland and Sen’s Capabilities Approach to conceptualise labour law and its goals. But my aim is not so much to present this as a fully formed vision for how law might best contribute to the achievement of societal prosperity as rather to provide a counter-narrative against which to critique competition as a policy manifestation of neo-liberal ideology: the goal is to (socially and empirically) probe neo-liberalism rather than present or ally with any particular rival ideology. In so doing I hope this book illuminates the social ‘costs’ of neo-liberalism and contributes to broader normative debates about the proper role of government in public service delivery and contracting.

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Setting the Scene

Put most briefly, the argument that unfolds in this book is that there ought to be clearer, firmer social policy and regulatory ‘limits’ to markets. There are three ‘strands’ of work—sociology, law and an empirical case study—that coalesce to build and substantiate this argument. This tripartite structure has undoubtedly caused a problem of narrative when it has come to writing this book: combining the three strands produces an analysis that is in my view greater than the sum of each part but, since it is not possible to keep each strand simultaneously in the reader’s sight, I have had to present each in turn and ‘weave’ the strands as best I can as the story unfolds and particularly in concluding in chapter eight. Partly for this reason I have used the rest of this ‘scene setting’ chapter to introduce the reader to parts of all three strands in the hope of making clearer how each body of work might relate to, and shed light on, the other. The rest of the book is structured as follows. Chapter two describes the methodologies that were used to collect and analyse data. Discussion in this chapter focuses upon empirical methods, rather than the macro-sociological methods used in chapters three and four or the doctrinal methods in chapter five. This is partly because, by their nature, empirical methods seem to require greatest reflection, though it also might reflect my background as a lawyer for whom empirical methods are new and doctrinal methods are not. But a focus upon empirical methods is also partly a conscious choice because of the infrequency with which such methods are used by lawyers. This seems to me to make empirical methodological discussion particularly interesting and hopefully perhaps useful for colleagues who might wish to undertake empirical work in future. Chapters three and four draw particularly upon sociological literature to argue that the free market ideals upon which competition policies hang are fictitious and that competition in public services is a feature and driver of broader sociological change that imperils social sustainability. A normative case is made for socially sustainable labour law and policy that view social protection as necessary inputs for prosperity and thus respond to, and ameliorate the adverse effects of, the changing social world upon workers and the work relationship. In chapter five I analyse two key pieces of legislation that apply in competition contexts, namely Directive 2004/18/EC (‘the public procurement rules’) and the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE). The macro-sociological analysis presented in chapters three and four is used to ‘open up’ and contextualise a doctrinal evaluation of the two sets of rules against the idea of socially sustainable regulation. I argue that the public procurement rules and TUPE largely reflect dominant neo-liberal ideology and perpetuate a ‘new capitalist’ society. However, I also argue that there is potential within the rules to pursue a different (socially sustainable) ideological agenda and that this potential is not currently as exploited in British procurement policymaking as it is in other EU Member States. Chapters six and seven present empirical

‘Market Triumphalism’ in Prisons and Beyond

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insights from a case study of competition at HMP Birmingham, a prison in the West Midlands of England. Through this I explore the ideology and social sustainability of competition in practice. The data suggest that competition does not work as the British Government thinks or hopes or as neo-liberalism would suggest. The case study also highlights the significant social detriment that can result from competitive tendering processes. Chapter eight concludes by drawing the ‘threads’ together to argue that there ought to be clearer, firmer social policy and regulatory ‘limits’ to markets to secure long-term inclusive social prosperity. For now though, back to some introduction to the book’s three strands: sociology in sections B, C and D, law in section E and the Birmingham case study to conclude this first chapter in section F. B. ‘MARKET TRIUMPHALISM’1 IN PRISONS AND BEYOND

As Sennett has argued, global economic prosperity (which he describes as ‘the new capitalism’), has been ‘deeply tied to the dismantling of fixed government and corporate bureaucracies’ since the 1960s.2 Bureaucracy and government have been replaced widely by markets and market values. Regulation is seen as ‘red tape’ that needs to be cut as far as possible to create the ‘free’ conditions under which the market is said to work best.3 Public services have been ‘liberated’ from public sector monopoly through the implementation of competition and privatisation policies that are said to improve service quality and stretch public money further. Although private finance has become more difficult since the financial crisis of 2007, there remains strong support for the procurement and privatisation of public services (not least among the Troika as reflected in the conditions it has imposed upon Member States in receipt of ‘bail outs’)4 as a way for governments to deliver ‘more for less’. Notwithstanding an extensive political economy literature, doubting the relationship between neo-liberalism, austerity and growth,5 and a paucity of research evaluating 1 This term is taken from M Sandel, What Money Can’t Buy: The Moral Limits of Markets (London: Allen Lane, 2012). 2 R Sennett, The Culture of the New Capitalism (New Haven: Yale University Press, 2006) 3. 3 See, eg, the British Coalition Government’s ‘Red Tape Challenge’: www.redtapechallenge. cabinetoffice.gov.uk/home/index. 4 See, eg, the privatisation of Thessaloniki Water and Sewage Company in Greece (www. popularresistance.org/troika-demands-privatization-of-greek-assets-workers-push-back) and public utilities in Cyprus (www.euractiv.com/euro-finance/cyprus-parliament-rejects-troikanews-533830). The European Parliament has recently criticised the Troika: www.europarl. europa.eu/news/en/news-room/content/20140307IPR38407/html/Troika-helped-to-avoid-theworst-but-flawed-structure-harmed-recovery. 5 See especially M Blyth, Austerity: The History of a Dangerous Idea (Oxford: OUP, 2013); K Busch et al, Austeritätspolitik und das Europäische Sozialmodell: Wie die Krisenpolitik in Südeuropa die soziale Dimension der EU bedroht (Berlin: Friedrich Ebert Stiftung, 2012);

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Setting the Scene

the costs, benefits and impacts of competition policies in practice, supranational organisations, particularly the European Central Bank, G-20 and International Monetary Fund, alongside many states,6 continue to place competition, privatisation and austerity at the heart of their domestic policy and crisis responses.7 Crouch has described this unshaken, yet mostly empirically unsubstantiated, faith in free markets to deliver economic and social prosperity as ‘the strange non-death of neo-liberalism’.8 The use of outsourcing, competition and privatisation has a well-known and long-standing history in Britain;9 in its 2008 Public Services Industry Review the Department for Business, Enterprise and Regulatory Reform (now the Department for Business, Innovation and Skills) described the UK as ‘a global leader in opening up public service markets to competition’. Competition and privatisation are mechanisms that are core to what Hood described as New Public Management (NPM); a doctrine that has dominated political thinking about public service reform since the displacement of the public administration model under Margaret Thatcher in the 1980s. The underlying ideology of NPM is neo-liberal: public services can be ‘improved’ (made more ‘efficient’ and ‘effective’) through the import of private sector, free market practices and management. The market is said to offer an ‘all-purpose key to better provision of public services’: a means to solve ‘management ills’ in many different contexts and an ‘apolitical framework within which many different values could be pursued effectively’.10

R Patel, The Value of Nothing: How to Reshape Market Society and Redefine Democracy (London: Portobello Books, 2009); and C Crouch, The Strange Non-Death of Neoliberalism (Cambridge: Polity Press, 2011). 6 Catherine Barnard’s recent work provides an interesting counter-narrative to dominant discourse that has put ‘blame’ for the negative social impacts of post-crisis measures at the door of only supranational organisations. By analysing country specific recommendations she has found that EU Member States have in fact retained significant control over (and therefore responsibility for) crisis response packages. See C Barnard, ‘A European Nudge and a Domestic Think: Getting states to reform their labour laws’ (2014) 67(1) Maastricht Journal of European and Comparative Law 199–237. 7 See, eg, the G-20 Toronto Summit Declaration (2010) (canadainternational.gc.ca/g20/ summit-sommet/2010/toronto-declaration-toronto.aspx?lang=eng) and an article from the President of the ECB, J Trichet, ‘Stimulate no more—it is now time for all to tighten’ Financial Times (22 July 2010). 8 Crouch, n 5. 9 On compulsory competitive tendering and New Labour’s ‘Best Value’ scheme from April 2000 see K Walsh et al, Contracting for Change: Contracts in Health, Social Care and Other Local Government Services (Oxford: OUP, 1997) and N Rao and K Young, Competition, Contracts and Change: The Local Authority Experience of CCT (London: LGC Communications, 1995). On agencification see O James and S van Thiel, ‘Structural Devolution to Agencies’ in T Christensten and P Laegreid (eds), The Ashgate Companion to New Public Management (Farnham: Ashgate, 2010). On PPP, PFI and beyond see P Vincent-Jones, The New Public Contracting: Regulation, Responsiveness, Relationality (Oxford: OUP, 2006). 10 C Hood, ‘A public management for all seasons?’ (1991) 69(1) Public Administration 3, 8. See further E Ferlie et al, The New Public Management in Action (Oxford: OUP, 1996).

‘Market Triumphalism’ in Prisons and Beyond

5

NPM has continued to shape the current Coalition Government’s vision for public service reform and the financial crisis appears to have (paradoxically) only strengthened its faith in public service markets. The British Government has made strong commitments to procure almost all public services from private and third-sector providers through deregulated markets. In its 2011 Open Public Services White Paper, the Government said: ‘Apart from those public services where the Government has a special reason to operate a monopoly (eg the military) every public service should be open so that … services can be delivered by a diverse range of providers’.11 Consequently, since 2011, the Government has expanded an already large public service market.12 In 2012, for example, the Health and Social Care Act increased the role of commissioning in the National Health Service. The Ministry of Justice is currently restructuring and attempting to privatise the delivery of probation services as part of its Transforming Rehabilitation programme.13 There are few signs that the Government has been deterred from its procurement policies by the series of high profile recent contract ‘scandals’ including G4S’ failure to provide the security staff it had promised at the 2012 London Olympic Games and G4S and Serco overcharging the Government for fitting and monitoring electronic tags on offenders who are supervised in the community. The latter incident has resulted in Serco and G4S repaying £68.5 million and £108.9 million respectively and G4S is still being investigated by the Serious Fraud Office for its tagging contract activities. The prison sector, the object of empirical exploration in this study, has also been swept up in these great ideological and fiscal winds. Competition is the most dramatic manifestation of neo-liberal policies in the sector. It is a major experiment in penal organisation and management, described by James et al in 1997 as ‘the penal experiment of the century’.14 There have been few, if any, penal policies since that can be said to rival prison privatisation in their significance. In many ways competition and privatisation in British public services were pioneered in the prison sector. As early as 1984, the Adam Smith Institute (ASI) recommended that the Government should introduce private sector prison building and management. The ASI’s recommendation was the first serious suggestion to allow private custodial service provision in England and Wales since before 1878 when a national prison service was created. The ASI argued that privately managed prisons would ‘overcome 11 See: www.cabinetoffice.gov.uk/sites/default/files/resources/open-public-services-whitepaper.pdf. 12 For a useful overview see Unison, The Rise of the Public Services Industry (September 2008) 13–18. 13 On probation privatisation see especially the special issue (2014) 6(1) of the European Journal of Probation. 14 A James et al, Privatizing Prisons: Rhetoric and Reality (London: Sage, 1997).

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Setting the Scene

both the spiralling costs of the prison system and the shortage of places by using innovative managerial and technological methods and by concentrating resources on capital investment rather than increased labour costs’.15 Legislation was passed in April 1990 enacting the House of Commons’ Home Affairs Committee’s proposals (section 84 of the Criminal Justice Act 1991) but the final text went beyond the Committee’s recommendations that were confined to private provision for remand prisoners. Amendments were moved at report stage that empowered the Secretary of State to amend or repeal section 84 of the Act, by way of order and statutory instrument. The Secretary of State exercised this power maximally so that any prison could be contracted out.16 This laid the foundations for future competitive tendering (‘market testing’) and the privatisation of ‘failing’—and later all—publicly managed prisons. Following the 1991 Act, HMP Wolds opened in April 1992 under the management of private company, Group 4 (Remand Services) Limited (now G4S). This was the first time in recent history that a prison had been managed by a private company in England and Wales.17 Shortly thereafter the Prison Service began investigating ways to draw further upon the perceived expertise and efficiencies of the private sector. At first, changes were made to the provision of non-core services, such as health care, laundry and education. The Education and Skills Committee reported that the contracting out of prisoner education began in 1993.18 Later, the role of the private sector was extended to providing core custodial services. Between 1993 and 1994, the management of three new prisons was contracted out under the Public–Private Partnership (PPP) scheme: HMPs Doncaster (Premier), Blakenhurst (UKDS) and Buckley Hall (Group 4).19 Full competitive tendering, in which the public sector prison service was entitled to bid, was used to award the contract to manage a rebranded HMP Manchester (formerly Strangeways) after major riots at the prison in 1990. Shortly after New Labour took office in 1997, the Government approved contracts with private providers that had been negotiated by the outgoing 15 ASI as cited in A Coyle, ‘Policy and operational implications of prison privatisation’ (Scottish Consortium on Crime and Criminal Justice, Colloquium on the implications of prison privatisation for penal policy in Scotland, 2007) 4. 16 Criminal Justice Act 1991 (Contracted Out Prisons) Order 1993, SI 1992/1656 and SI 1993/368. 17 Although the private sector (Securicor) was already involved in managing Harmondsworth Immigration Detention Centre at Heathrow airport. See C Bacon, ‘The Evolution of Immigration Detention in the UK: The Involvement of Private Prison Companies’ (2005) Refugee Studies Centre, University of Oxford, Working Paper no 27: www.repository.forcedmigration.org/show_metadata.jsp?pid=fmo:4343. 18 Education and Skills Committee, Prison Education, Seventh Report (HC 2004–05, 114–I) 8. 19 For further on the relationship between NPM and PPP see C Greve and G Hodge, ‘A Transformative Perspective on Public–Private Partnerships’ in T Christensten and P Laegreid (eds), The Ashgate Companion to New Public Management (Farnham: Ashgate, 2010).

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7

Conservative Government to design, finance, construct and manage two new prisons (under the Private Finance Initiative: PFI): HMPs Bridgend (now Parc) and Altcourse. In May 1998, the then Secretary of State for Justice Jack Straw announced that all new prisons would be open to private sector competition.20 Between 1998 and 1999 three Secure Training Centres (housing imprisoned 12- to 17-year-olds) were designed, constructed, financed and managed under the PFI scheme: Medway, Hassockfield and Rainsbrook. A further seven prisons were opened under PFI schemes between 1999 and 2005: Ashfield (1999), Dovegate (2001), Lowdham Grange (1998), Rye Hill (2001), Forest Bank (2000), Bronzefield (2004) and Peterborough (2005).21 In July 2008, ministerial approval was given for a Prison Competition Strategy.22 The strategy, which is still in operation, consists of three strands: (a) the re-competition of all contracted (public and private) prisons; (b) new build prisons in which only the private and third sectors may participate; and (c) continued performance management and benchmarking to identify ‘poor’ performance, including the market testing of two high cost but low performing public prisons.23 This has been implemented by a Specification, Benchmarking and Costing Programme and, most importantly for the purposes of this study, by two phases of market testing. The first phase, known as ‘Prison Competitions Programme Phase 1’ (PCP1), began in 2009. A total of five prisons were put out to competitive tender by the Ministry of Justice in this round. This included a new build prison (Featherstone II, now HMP Oakwood) and the re-competition of two contracted prisons, one that is privately managed (HMP and YOI Doncaster) and one that is publicly managed (HMP Buckley Hall). HMP Buckley Hall had been through a market test before, when it transitioned from private (Group 4) to public management in 2001. Most significantly, two non-contracted ‘poor performing’ public sector prisons, HMPs Birmingham and Wellingborough, were also included in PCP1. This raised the prospect of a management transfer of an operational public sector prison to the private sector for the first time (aside from a failed attempt at HMP Brixton in 2001, which stalled for want of interest from private bidders—see chapter three). In October 2011 this prospect became reality at HMP Birmingham, the prison at the heart of this book, making this the most controversial and challenging use of competition in the prison sector thus far. But even before 20 CBI, Competition: A Catalyst for Change in the Prison Service: A Decade of Improvement (2003) 11. 21 National Audit Office, The Operational Performance of PFI Prisons, Report by the Comptroller and Auditor General (HC 2002–03, 700) 3–4; and Ministry of Justice, Capacity and Competition Policy for Prisons and Probation (2009) 10. 22 Ministry of Justice, NOMS Strategic and Business Plans 2009–10 to 2010–11 (2009) para 15. 23 Ministry of Justice, Capacity and Competition Policy for Prisons and Probation (2009) 11.

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Setting the Scene

HMP Birmingham had been transferred to its new private operator, G4S, the then Lord Chancellor and Secretary of State for Justice, Kenneth Clarke, announced before Parliament a second (currently still ongoing) phase of market testing and competition (PCP2) at HMPs Northumberland, Durham, Wolds, Hatfield, Lindholme, Moorland, Onley and Coldingley.24 Clarke also recommitted to competition as part of his broader vision for the future of criminal justice offender services. He said: For offender services, I intend to employ the principle that competition will apply at some stage to all those services not currently bound to public sector delivery by statute. This will mean the benefits of competition can be felt much more widely, contrasting with the previous approach of only using competition when procuring new services or as a way of managing poor performance.25

NPM, competition and privatisation are therefore deeply rooted in the British prison sector. Out of a total of 135, 14 prisons are now managed by private companies (Sodexo, G4S and Serco); a still small but significant proportion of the estate. Those prisons that remain publicly managed are being put through a benchmarking process that will require them to achieve efficiencies comparable to those delivered by private providers of similar prisons. Small prisons are being closed and replaced by ‘titan’ prisons that can achieve greater ‘economies of scale’ by housing 1500 prisoners or more. The Minister’s recent policy recommitment and the introduction of competition in probation suggest that competition and privatisation are likely to continue to be used in the sector for the foreseeable future. Competition and privatisation continue to be presented unquestioningly in the prison sector and beyond as indispensable conditions for efficient and effective public services. As Liebling has argued, ‘the case for new, larger and competed prisons is constructed as a legitimate outcome of contemporary fiscal and social circumstances’.26 Following Sennett, however, an important premise of this book is that these policy choices remain only one ‘proposition for change which, like any proposition, should be subject to rigorous [social] critique’.27

C. SOCIAL IMPACT AND SUSTAINABILITY

The current political and financial climates described above make it likely that public services will be procured increasingly from the ‘market’ and

24 See: england.unitedkingdom-tenders.co.uk/9203_Prison_Competitions_Programme_Phase_2_ PCP2_custodial_services_and_works_and_future_prison_2011_London. 25 HC Written Ministerial Statements 13 July 2011, vol 531, cols 31–33WS. 26 A Liebling, ‘Perrie Lecture: the cost to prison legitimacy of cuts’ (2011) 198 Prison Service Journal 3. 27 Sennett, n 2, 10.

Social Impact and Sustainability

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the private sector. This is socially significant because competition and privatisation have at least the potential to cause enormous, albeit some might argue necessary, changes to employment and industrial relationships. Competition may affect the employment status and occupational identity of thousands of public sector workers both directly, through imposed change (following a competitive tendering exercise for example), or indirectly through changes to which staff have consented in order to avoid the risk of job loss (following a benchmarking exercise for example). Although the precise figures are contested, the Institute for Fiscal Studies has estimated that public sector employment fell by approximately 5 per cent or 300,000 posts between 2010–11 and 2012–13.28 The Office for Budget Responsibility has forecast that general government employment will fall by 930,000 posts between 2010–11 and 2017–18.29 The Ministry of Justice has forecast a loss of 10,000 posts in the National Offender Management Service (NOMS) over a four-year period from 2010.30 Although some of these job losses will result from redundancy, resignation or dismissal, others will result from public service functions being taken over by private providers. Trade unions across the public sector have argued that competition is being used to undermine their power and thus weaken their ability to secure benefits and protection for their members by fragmenting services and forcing negotiation with multiple (increasingly private sector) employers. This, they argue, has enabled erosion of the traditional public service ‘bargain’, particularly as between the Government and ‘front line’ public sector workers. These ‘traditional’ bargains were characterised by a ‘comfortable lifetime income in exchange for relative security and perhaps intangible “psychic income” in other forms, such as respected social status or intrinsic satisfaction of working for government’31 in return for impartial, stable and obedient public service that is delivered with ‘ethical’ competence; a competence that extends beyond technical ability to encompass ‘public values’, particularly honesty and loyalty.32 There is some good evidence in the (limited) empirical studies of the employment effects of competitive tendering to support this claim that competition weakens both union power and the employment protection and reward afforded to public service workers. The trade union analysis of competition is also consistent with analyses of the macro-sociological picture that describe a shift away from tradition, localism and predictability towards doubt, globalism, an erosion of trust and insecurity (see further 28

Institute for Fiscal Studies, Green Budget: February 2013 (London: IFS, 2013) 149. Office for Budget Responsibility, Economic and Fiscal Outlook (Cm 8573, 2013) 76. 30 Ministry of Justice, Spending Review 2010—Workforce Impact (20 November 2010). 31 C Hood and M Lodge, The Politics of Public Service Bargains (Oxford: OUP, 2006) 65. 32 ibid, 87. See further on traditional public service bargains, B Shaffer, The Administrative Factor (London: Frank Cass, 1973) and H Parris, Constitutional Bureaucracy (London: Allen & Unwin, 1969). 29

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Setting the Scene

chapter four). Competition and privatisation in public services thus appear to be fundamentally reshaping workplace values, experiences, expectations and identities. There seems to be an inherent antagonism between competition and privatisation and employment protection and perhaps, therefore, social sustainability.

D. SOCIAL ‘PLAYERS’ IN PRISONS

Since my interest lies in the social sustainability of competition processes in the prisons context, it seems important to introduce some of the most important social ‘players’ peculiar to the prison world, namely prison officers and the trade union that represents most officers, the Prison Officers’ Association (POA). Prison staff, of whom prison officers are on the ‘front line’ working daily with prisoners, are at the heart of all of the changes to prison structure and management that were described in the preceding sections of this chapter. Far from turnkeys, modern prison officers are mental health experts, social workers, teachers, disciplinarians and first aiders yet they receive only six weeks of formal training.33 They are managing overcrowded prisons accommodating over 85,000 people, most of whom have complex needs and many of whom feel frustrated that the length or indeterminate nature of their sentence is disproportionate to the offence that they committed.34 Officers’ abilities to keep the peace by exercising their authority ‘dynamically’ (using the ‘right’ balance of flexibility and rigidity, closeness and distance and formality and informality) has been recognised by government,35 and demonstrated empirically, to be central to order, safety and legitimacy in prisons.36 Prisons therefore need an adequate number of motivated and experienced prison officers to function safely. Although reoffending rates following imprisonment suggest that prison is in some senses

33 Though this will increase to 10 next year. On prison officer work generally, see A Liebling, D Price and G Shefer, The Prison Officer, 2nd edn (Cullompton: Willan, 2011) and on training see H Arnold, ‘The Experience of Prison Officer Training’ in J Bennett, B Crewe and A Wahidin (eds), Understanding Prison Staff (Cullompton: Willan, 2007). 34 The Criminal Justice Act 2003 created a new type of indeterminate sentence, Imprisonment for Public Protection (known as IPP). This sentence has proved particularly controversial and the IPP prison population has raised significant challenges for the prison system. Its effects are of emerging importance in Liebling et al’s study of trust in the UK’s high security prison estate. 35 Home Office, Managing the Long-Term Prison System: The Report of the Control Review Committee (HMSO: London, 1984) para 16. 36 See J Sparks and A Bottoms, ‘Legitimacy and order in prisons’ (1995) 46(1) British Journal of Sociology 45 and A Liebling, ‘Why Prison Staff Culture Matters’ in J Byrne, D Hummer and F Taxman (eds), The Culture of Prison Violence (Boston: Allyn and Bacon Publishing, 2008).

Social ‘Players’ in Prisons

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an inherently poor rehabilitator,37 if any rehabilitation is to be achieved it requires enough experienced and professional staff to maintain order, create the space for personal development and foster relationships that will support a desire to desist from reoffending.38 Despite the challenging nature of prison work, and the importance of ‘good’ staff to prison performance, staffing levels and terms and conditions of employment have been under long-standing, mostly downward pressure as a consequence of reforms motivated to varying degrees by cost cutting and/or improvement.39 Between September 2010 and 2013, the total number of prison officers in England and Wales reduced by 30 per cent (from 27,650 to 19,325).40 Many prison officers, many of whom have spent whole careers working in prisons, have found it difficult to adjust to these altered occupational surroundings. As former Chief Inspector of prisons for England and Wales, Dame Anne Owers described in her 2006–07 annual report, ‘We have seen staff who are increasingly frustrated at the gap between what is expected and what is deliverable’.41 Many feel undervalued, poorly managed and uninvolved in decisions that affect their work.42 Sickness absence is high (associated with low workforce morale and a poor employment culture).43 Many members of staff claim to be bullied and harassed by management.44 The POA has struggled to respond constructively or effectively to the Government’s proposals for change in prisons. The Union has a reputation for militancy and hostility to ‘management’. In 1995, Black described the

37 Most studies point to a null or criminogenic effect of the prison experience on reoffending. For an overview see D Nagin, F Cullen and C Lero-Jonson, ‘Imprisonment and Re-offending’ in M Tonry (ed), Crime and Justice: A Review of Research vol 38 (Chicago: University of Chicago Press, 2009). 38 A Liebling, ‘What makes prisons survivable? Towards a theory of human flourishing in prison’ (Division of Forensic Psychology Annual Conference, June 2014). See also especially the work of S Maruna, F McNeill and S Farrall on desistance. 39 The most recent changes are known as ‘Fair and Sustainable’ and form part of a package of ‘wholesale organisational redesign’. See NOMS’ Business Plan 2012–13. 40 Howard League for Penal Reform media release (11 July 2014): www.howardleague. org/breaking-point. 41 HM Inspector of Prisons for England and Wales, Annual Report 06/07 (HC 2007–08, 207) (London: The Stationery Office, 2008) 6. 42 Civil Service People Survey, HMP Birmingham and NOMS (London: Ministry of Justice/ Infogroup ORC International, 2010). 43 ‘According to figures from the Ministry of Justice, the average number of days the Prison Service lost to staff sickness in 2007–2008 was 11.7. This compared to 6.5 days lost at Ministry of Justice headquarters and a national average of 2.5 days’: Justice Committee, Role of the Prison Officer, Twelfth Report (HC 2008–09, 361) 37. During a similar period, the national average for the public sector was 8 days and for the private sector, 6.9 days: Health and Safety Executive, Survey of Workplace Absence Sickness and Health (London: Health and Safety Executive, 2005). 44 See, eg, coverage of the two-day unofficial strike by 200 officers at HMP Liverpool in November 2009: news.bbc.co.uk/1/hi/england/merseyside/8366922.stm.

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Setting the Scene

Prison Service as the ‘Jurassic Park’ of public sector industrial relations,45 although there was evidence from some prison governors that this represented an improvement on the state of industrial relations during the 1970s and 1980s.46 In 1997, the former Director General of the Prison Service, Derek Lewis described the POA as the ‘principal obstacle to progress’47 and in 2004 Liebling described the Union as ‘placing constraints on modernization’.48 Although prison officers do not legally enjoy the right to strike, the POA initiated its first national strike in August 2007.49 In 2012, the Union submitted a complaint to the Committee on Freedom of Association of the International Labour Organization.50 The Union has claimed against the UK Government for breach of its rights to association before the European Court of Human Rights, though its application was found to be inadmissible by the Court.51 The Government’s difficulties in implementing prison reforms, some of which have arisen from the POA’s intransigence, have been significant triggers for the Government’s use of market testing and privatisation in the sector. Taylor and Cooper have argued that there is a lack of honesty about the extent to which reforming employment and industrial relationships with prison staff have been central concerns of those driving prison privatisation.52 This may be becoming less true: in PCP1, for example, the Justice Minister was reported by many Birmingham staff as expressly justifying HMP Birmingham’s inclusion in the list of prisons for market testing (over the inclusion of other ‘poor’ performing prisons) by reference to their vocal rejection of a package of workforce reform known as ‘Workforce Modernisation’. In any event, whether politically acknowledged or not, most evidence and commentators (including some in favour of privatisation)53 have acknowledged that prison competition has both direct and indirect employment effects in practice. Direct effects include job 45 J Black, ‘Industrial relations in the UK prison service: the “Jurassic Park” of public sector industrial relations’ (1995) 17(2) Employee Relations 64. 46 Improvements were attributed to reform of the Criminal Justice and Public Order Act 1994, which made it clear that prison officers do not have a right to strike: S Bryans, Prison Governors: Managing Prisons in a Time of Change (Cullompton: Willan, 2007) 122–23. 47 D Lewis, Hidden Agendas: Politics, Law and Disorder (London: Hamish Hamilton, 1997) 137. 48 A Liebling (assisted by H Arnold), Prisons and their Moral Performance: A Study of Values, Quality and Prison Life, Clarendon Studies in Criminology (Oxford: OUP, 2004) 402. 49 See: news.bbc.co.uk/1/hi/6968794.stm. 50 See further A Ludlow, ‘Regulating prison strikes and industrial conflict’ (2011) 198 Prison Service Journal 17. 51 POA and Others v The United Kingdom [2013] ECHR 600. 52 P Taylor and C Cooper, ‘“It was absolute hell”: inside the private prison’ (2008) 32(3) Capital and Class 3, 4. 53 See, eg, W Tanner, ‘The case for private prisons’ Reform Ideas No 2, February 2013, 16: www.reform.co.uk/resources/0000/0635/Reform_Ideas_No_2_-_The_case_for_private_prisons.pdf. Although contra see P Young, The Prison Cell: The Start of a Better Approach to Prison Management (London: Adam Smith Institute, 1987) and G Sturgess and B Smith,

Social ‘Players’ in Prisons

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loss for redundancy or poor performance, reduced collective representation and adverse variation in terms and conditions of employment following prison closures, transfers of prison management to other providers and disciplinary ‘performance management’ processes. Indirect effects stem from the Government using market testing and privatisation as ‘threats’ with which to generate leverage to drive through reductions to pay, other terms and conditions of employment such as pensions and redundancy pay and changes to working practices.54 These effects arise because private sector providers typically operate to a model of lower staff to prisoner ratios, poorer terms and conditions of employment for their staff and fewer trade union constraints by virtue of recognising less hostile and powerful ‘sweetheart’ trade unions and staff associations.55 By comparison to some of its Australian and American counterparts,56 it can be argued that the POA has proved unable to coordinate a strategic response to prison privatisation and market testing to the benefit of its members. As Sachdev has argued, the POA appears to have ‘seriously underestimated the staying power of private prisons’.57 Unlike prison unions elsewhere, the POA National Executive Committee’s vehement opposition to competition, and its consequent policy of non-engagement, arguably have distracted the Union’s leadership from championing the public sector’s strengths and from assisting staff with the practical consequences of the Government’s policies. Thus, market testing has continued to affect many prisons and their workforces without constructive POA input. More broadly, the POA’s adversarial bargaining strategies in response to Government attempts to ‘modernise’ have not always benefited the staff they represent. For example, the Union was responsible for securing the balloted rejection by their membership (including at HMP Birmingham) of Workforce Modernisation in 2007. Almost all the changes that Workforce Modernisation would have introduced have either already been introduced

Designing Public Service Markets: The Custodial Sector as a Case Study (London: The Serco Institute, 2006). 54 As noted by C McLean and A Liebling, ‘Prison Staff in the Public and Private Sector’ in J Bennett, B Crewe and A Wahidin (eds), Understanding Prison Staff (Cullompton: Willan, 2007) 93 and R Morgan, ‘Imprisonment: A Brief History, The Contemporary Scene and Likely Prospects’ in M Maguire, R Morgan and R Reiner (eds), The Oxford Handbook of Criminology, 3rd edn (Oxford: OUP, 2002) 1148–49. 55 The best comparative overview of employment conditions remains that undertaken by MCG Consulting for the Prison Service Pay Review Body in September 2006: MCG Consulting, Privately Managed Custodial Services: www.ome.uk.com/downloads/DLAMCG%20report.pdf. 56 See Western Australia POA’s ‘Respect the Risk’ campaign and J Page, The Toughest Beat: Politics, Punishment, and the Prison Officers Union in California (Oxford: OUP, 2011). 57 S Sachdev, ‘Private Punishment? An Examination of the Expansion, Development and Employment Relations of Private Prisons’ in M Hough, R Allen and E Solomon (eds), Tackling Prison Overcrowding (Bristol: Policy Press, 2008) 88.

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Setting the Scene

or soon will be introduced through a scheme called ‘Fair and Sustainable’ but staff will not receive any of the benefits that the original package entailed (chiefly pay rise security). If one of the aims of prison competition and privatisation is to ‘rebalance’ industrial relationships in favour of management (government) then this evidence of a weaker POA and an employer that is more able to ‘force’ through reform suggests that the strategy has been successful. But a cheaper, more easily controlled workforce that feels devalued and inadequately represented is not without its own social costs or risks to the safety and effectiveness of prisons. The next section of this chapter considers the course on which law and policy ‘steers’ the Government in striking a balance between social protection and market values. E. PUBLIC PROCUREMENT AND TUPE

Public procurement refers to the purchasing by public bodies of goods, works and services from an outside entity. Goods, works and services are typically acquired from the private sector, although as governments have increasingly outsourced public services, other public bodies, operating under a quasi-business model, have begun to compete for government contracts. In 2008–09 the UK Government spent £220 billion on public procurement.58 Public procurement constitutes a significant and increasing proportion of the UK’s Gross Domestic Product (GDP) (19 per cent in 2008).59 The Government forecast the cost of the PCP1 competitive tendering process as £5.84 million.60 Public procurement, as distinct from contracting between private parties, is subject to additional legal regulation. This arises from the public procurement rules, which therefore often provide the framework within which the transformatory promises of the free market (cost reduction, service improvement and innovation) are delivered: they structure how governments are permitted to operationalise competition and privatisation policies by putting public services out to tender. The relevant rules are currently found in two key EU directives that were consolidated in 2004, namely the Utilities Directive 2004/17/EC61 coordinating the procurement procedures for entities operating in the water, energy, transport and postal services sectors and

58

HM Treasury, Public Expenditure Statistical Analyses 2009 (April 2009). D Audet, ‘Government procurement: a synthesis report’ (2002) 2(3) OECD Journal on Budgeting 149. 60 Prison Reform Trust, ‘Bromley Briefings Prison Factfile’ (December 2011) 72. 61 Directive 2004/17/EC of 31 March 2004 coordinating the procurement procedures of entities operating in the water, energy, transport and postal services sectors [2004] OJ L134/1. 59

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the General Directive 2004/18/EC62 on the coordination of procedures for the award of public works contracts, public supply contracts and public service contracts. The relevant implementing domestic legislation—the Public Contracts Regulations (PC Regulations)—came into force on 31 January 2006. As the empirical case study presented in this book is drawn from the prison sector, the focus will be upon the legal position under the General Directive 2004/18/EC, and its relationship with the underpinning EU law principles of equal treatment, mutual recognition and proportionality. The essence of the procurement rules is that when the value of a tender exceeds a specified monetary threshold (currently at least £66,672 for services),63 the Directive prescribes how the work must be advertised and how governments (‘contracting authorities’) should interact with those who wish to tender. However, the procurement related controversies of 2012 alone more than ably illustrate that tendering processes are neither necessarily low-cost, straightforward solutions (see the West Coast rail fiasco)64 nor do they always deliver the services that were promised (see the London 2012 Olympics).65 These controversies have added to long-standing criticism of the public procurement rules. The rules have been described as unnecessarily complex, costly and time-consuming.66 They have also been criticised for unduly narrowing a contracting authority’s discretion to pursue social or environmental policies through its contracting decisions (known as ‘secondary’ or ‘horizontal’ procurement policymaking).67 In evaluating the ‘space’ that the procurement rules offer for socially sustainable procurement this book focuses upon the latter of these critical perspectives. In summary, the ‘problem’ for social sustainability in procurement exercises stems from the Directive’s narrow definition of value for money and the contested nature of what objectives the rules should achieve.68 Value for money is defined by the Directive as relating only to the specific good or service that forms the subject matter of the contract and

62 Directive, 2004/18/EC of 31 March 2004 on the coordination of procedures for the award of public works contracts, public supply contracts and public service contracts [2004] OJ L134/114. 63 See: www.ojec.com/Thresholds.aspx. 64 See: www.guardian.co.uk/public-leaders-network/2012/oct/03/west-coast-rail-fiascoprocurement. 65 See: www.guardian.co.uk/uk/2012/jul/24/london-2012-olympics-g4s-military. 66 PwC, London Economics and Ecorys (for the European Commission), Public Procurement in Europe: Cost and Effectiveness (March 2011); J Fernandez Martin, The EC Public Procurement Rules: A Critical Analysis (Oxford: Clarendon Press, 1996); and T Wilkinson, ‘Rationality, Efficiency and the Market’ in J Boston (ed), The State Under Contract (Wellington: Bridget Williams Books, 1995). 67 C McCrudden, Buying Social Justice: Equality, Government Procurement, & Legal Change (Oxford: OUP, 2007). 68 See further chapter five. For general discussion of the objectives of public procurement see S Arrowsmith, J Linarelli and D Wallace, Regulating Public Procurement: National and International Perspectives (Leiden: Kluwer Law International, 2000) chs 1 and 2.

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Setting the Scene

value is assessed only by reference to the individual contracting authority, rather than society as a whole. This narrowly economic approach equates public authorities with any other private consumer. The underlying logic of this position is that it will minimise opportunities for national protectionism and discrimination against non-national tenders. This, in turn, will ensure that the full benefits of free trade are reaped: ‘Free trade allows for specialization, specialization leads to comparative advantage, and comparative advantage leads to economies of scale which maximize consumer welfare and ensure the most efficient uses of worldwide resources’.69 Such a narrow and commercial definition of value for money deliberately makes it difficult to argue that imposing a contractual condition relating to environmental or social protection that exceeds statutory minima secures best value overall.70 Such a definition ‘champions’ the view that the overriding objective of the public procurement rules should be to achieve a neo-liberal conception of economic efficiency. This position reflects thinking at EU level that has dominated since the Rome Treaty established the European Economic Community in 1957 that ‘labour and social standards flow from economic development but do not generally contribute to it’.71 A strong case is made in chapter four of this book for the counter view, namely that strong labour standards in themselves have positive effects upon growth, competitiveness and employment. Employment protection is posited as a necessary precondition for longterm inclusive social prosperity. This view finds explicit expression in the EU’s Lisbon Strategy of 2000, which aimed to ‘strengthen the role of social policy as a productive factor’ (emphasis added).72 It is also a view that is supported by employment relations research. Employment protection, by way of substantive and procedural employment rights and obligations, has been found to reduce perceived job insecurity, increase job satisfaction and organisational commitment, all of which are causally negatively related to business performance.73

69 C Barnard, The Substantive Law of the EU: The Four Freedoms, 3rd edn (Oxford: OUP, 2010) 3. 70 C Barnard, ‘Procurement Law to Enforce Labour Standards’ in G Davidov and B Langille (eds), The Idea of Labour Law (Oxford: OUP, 2011). 71 H Kountouros, ‘“Quality in Work” after the Lisbon Strategy: Is there a Future?’ in M-A Moreau (ed), Before and After the Economic Crisis: What Implications for the ‘European Social Model’? (Cheltenham: Edward Elgar Publishing, 2011) 60. 72 Commission, ‘Social Policy Agenda’ COM (2000) 379 final, 4. 73 See, eg, A Chirumbolo and J Hellgren, ‘Individual and organizational consequences of job insecurity: a European study’ (2003) 24(2) Economic and Industrial Democracy 217; C Anderson and J Pontusson, ‘Workers, worries and welfare states: state protection and job security in 15 OECD countries’ (2007) 46 European Journal of Political Research 211, 224; and S Deakin and F Wilkinson, ‘Rights v efficiency? The economic case for transnational labour standards’ (1994) 23 Industrial Law Journal 289.

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Yet, building upon the analysis presented in section C of this chapter, studies have found that material employment detriment (most notably job loss and pay and pension reductions) arises from public sector contracting;74 indeed, as seems to be the case in the prison sector, this ‘back door’ workforce reform has been one of the intended aims of competition and privatisation. Further studies have shown that this detriment falls disproportionately upon minority groups of staff, reducing workforce diversity and social integration.75 The labour flexibility practices that are encouraged by competitive tendering, such as low employer commitment to job security through, for example, the use of short-term contracts have been found to be negatively correlated with innovation, an objective that competitive tendering is frequently claimed to achieve.76 Consequently, some of the effects of competitive tendering upon the workforce may negate some of the outcomes (particularly improvement and innovation) that it was hoped competition would achieve.77 In other words, the sort of competitive process that the procurement rules might be partly responsible for creating, may be doing more damage than good to the overall quality of public services and to social sustainability as a mechanism to achieve long-term social prosperity. At the very least, existing research makes clear that the treatment of staff during a procurement and business restructuring process is pivotal to the future success or failure of the service and thus also to the underpinning procurement project. Yet as Cartwright and Cooper noted as early as 1992, in practice and indeed, as is argued in chapter five of this book, in law, this ‘human factor’ is ‘largely ignored or dismissed as being soft or mushy …. Consequently people have come to be labelled the “forgotten or hidden factor” in [merger] success’.78 ‘It is only when “the ink has dried” and the initial euphoria has begun to wear off, that the question of what happens next is usually raised or given any serious consideration’.79 Since Cartwright and Cooper’s contention in 1992, the strengthening of the employment framework that applies in cases of business transfer (see the discussion of TUPE below) may have caused commissioners to pay greater attention to workforce matters before the public service is transferred to the new provider. However, empirical 74

NAO, Protecting Staff in PPP/PFI Deals (London: NAO, 2008). M Jaffe, B McKenna and L Venner, Equal Pay, Privatisation and Procurement (Liverpool: Institute of Employment Rights, 2008) and Equal Opportunities Commission, The Gender Impact of CCT in Local Government: Summary Report (Manchester: Equal Opportunities Commission, 1995). 76 J Michie and M Sheehan, ‘Labour market deregulation, “flexibility”’ and innovation’ (2003) 27 Cambridge Journal of Economics 123, 123. 77 A Davis-Blake and J Broschak, ‘Outsourcing and the changing nature of work’ (2009) 35 Annual Review of Sociology 321, 333. 78 S Cartwright and C Cooper, Mergers and Acquisitions: The Human Factor (Oxford: Butterworth Heinemann, 1992) 1. 79 ibid, 6. 75

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Setting the Scene

evidence about the employment impacts of competition does not lend much weight to such a proposition. The empirical data presented in chapters six and seven of this book shed light upon the ongoing empirical validity of Cartwright and Cooper’s observation. The negative social impacts of this apparent neglect of workforce matters in competition processes have led some commentators to argue that there ought to be greater scope for governments to use procurement as a tool of social policy by stimulating a ‘race to the top’: incentivising bidders to take social policy concerns seriously by making contract award decisions partly dependent upon how bidders help government to realise broader social ambitions. Governments can start, for example, by requiring bidders to comply with enhanced labour standards, such as minimum terms and conditions of employment or trade union information and consultation practices that exceed statutory minima. Arguments in favour of greater integration of social issues within procurement processes have been based upon the state’s unique position and power as an employer. The high number of public sector workers (more than six million in the UK in 2011) means that public sector employment decisions have a much wider impact than those of most private employers. The traditionally more generous terms and conditions of employment in the public sector also mean that there may be more rights and benefits for public sector workers to lose as a result of competitive tendering processes than their private sector counterparts.80 The state’s power and the size of its workforce mean that it is in a position to be a ‘model’ employer and set ‘gold standards’. Further arguments in favour of horizontal procurement policymaking have been based upon the notion of stewardship which, it has been suggested, should shape how governments spend taxpayers’ money.81 It has been argued, for example, by Taylor and Cooper that the state’s simultaneous employer, legislator and governing status means that it has the power to initiate legislation and pursue political objectives through its employment decisions.82 This distinguishes procurement in public services from the private sector: ‘The state is no mere cipher, no passive captive of corporate interests but rather, as many observe, is the initiator and driver of the wider

80 While not without methodological critique (see Income Data Services, ‘Public and private sector earnings: fact and fiction, pay report’ (2011) 1075, 13–17), in July 2011 the Office for National Statistics’ Annual Survey of Hours and Earnings estimated that public sector employees earn on average 7.8% more than their private sector counterparts: Office for National Statistics, Estimating Differences in Public and Private Sector Pay (2011). For comparisons between public and private prison staff, see MCG Consulting, n 55. 81 McCrudden, n 67. 82 S Corby and G White (eds), Employee Relations in the Public Services: Themes and Issues (London: Routledge, 1999).

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capitalist project of neoliberalism, deregulation and globalisation’.83 This power has been said to demand social responsibility: ‘It is incumbent on a government that has opened up public services to the market to set down markers and standards that cannot just be left to the downward pressures of market forces’.84 Yet it is also this potential, for the state to pursue ideological or political objectives through its procurement linked employment decisions, which raises the spectre of protectionism and discrimination against non-national tenders about which EU regulation is so concerned.85 An early empirical finding in this research project was that a more thorough debate about the workforce impacts of competition among senior civil servants was eschewed by another set of rules, namely TUPE. In common with the public procurement rules, TUPE has EU origins. The TUPE Regulations originate in the Acquired Rights Directive,86 which was a product of the EU’s 1974 Social Action Programme that aimed to respond to the consequences of increased business restructuring following integration of the Common Market.87 In 1981, pursuant to the UK’s EU obligations, the Directive was implemented into national law, as TUPE 1981.88 The Regulations were revised in 2006.89 TUPE’s implementation displaced the common law position where freedom and privity of the contract of employment dictate that employees of a transferring public service enjoy no guarantee of continued employment and, if they are re-engaged by the new operator (the transferee), enjoy no protection against adverse alterations to their terms and conditions.90 Domestic statutory intervention prior to TUPE meant that many employees in such situations were entitled to some redundancy compensation, but this is a poor substitute for retained employment.91 Access to redundancy compensation is currently conditional upon two years’ service and average redundancy payments are low, amounting to an average of only £12,500 per person for 2008–10.92

83

Taylor and Cooper, n 52, 7. Jaffe, McKenna and Venner, n 75, 20. 85 See, eg, C Barnard, ‘“British Jobs for British Workers”: The Lindsey Oil Refinery Dispute and the Future of Local Labour Clauses in an Integrated EU Market’ (2009) 38 Industrial Law Journal 245. 86 Directive 2001/23/EC of 12 March 2001 on the approximation of the laws of the Member States relating to the safeguarding of employees’ rights in the event of transfers of undertakings, businesses or parts of undertakings or businesses [2001] OJ L82/16. 87 S Deakin and G Morris, Labour Law, 5th edn (Oxford: Hart Publishing, 2009) 197. 88 Transfer of Undertakings (Protection of Employment) Regulations 1981, SI 1981/1794. 89 Transfer of Undertakings (Protection of Employment) Regulations 2006, SI 2006/246. 90 Albeit that there may be cases where the transferor will (voluntarily) seek to find reasonable alternative employment for the employee in order to negate their obligation to make a redundancy payment. 91 s 139 Employment Rights Act 1996. 92 See: www.hrmagazine.co.uk/hro/news/1017577/uk-redundancy-payments-hit-average500-million. 84

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Setting the Scene

The TUPE Regulations enhance the common law position where staff are working for a business that transfers to a new ‘owner’, most frequently by a sale transaction though the concept of ‘business transfer’ is broader than this. Many procurement exercises, including the transfer of a public prison to private management, fall within the scope of the Regulations; particularly in the UK where, following consultation from 2001 and amendment of the law in 2006, the Government took the view that the definition of ‘relevant transfer’ ought to include ‘service provision change’. This goes beyond what the underlying 2001 Directive appears to require, but the Government took the view that the change was made worthwhile by the increased certainty that it would provide to employees and tenderers. In any case, it was felt that the European Court of Justice’s (CJEU) case law was heading towards a broader definition of transfer that would encompass service provision changes as they were defined in the domestic implementing legislation. The 2006 amendments to TUPE were therefore thought to be somewhat pre-emptive.93 Where TUPE applies, the Regulations afford protection principally by ensuring continuity of employment and terms and conditions for all employees of the transferring business unit. The TUPE Regulations are supplemented in the public sector by three Codes of Practice: Cabinet Office Statement of Practice on Staff Transfers in the Public Sector 2000 (COSOP); Code of Practice on Workforce Matters in Local Authority Service Contracts 2003 (Local Authority Code); and Code of Practice on Workforce Matters in Public Sector Service Contracts 2005 (Two-tier Workforce Code). In combination, these Codes enhance TUPE by (1) enlarging the definition of ‘relevant transfer’ so that contracting exercises will be ‘conducted on the basis that staff will transfer and TUPE should apply, unless there are genuinely exceptional reasons not to do so’ and ‘in circumstances where TUPE does not apply in strict legal terms to certain types of transfer between different parts of the public sector, the principles of TUPE should be followed’ (COSOP); (2) making ‘appropriate arrangements to protect occupational pensions, redundancy and severance terms of staff in all these types of transfer’, which in practice means that public sector employees must be offered membership of a pension scheme that provides benefits that are broadly comparable to their public sector scheme (COSOP Annex A: HM Treasury’s Statement of Practice on Staff Transfers from Central Government ‘A Fair Deal for Staff Pensions’);94 93 Department for Trade and Industry and Employment Relations Directorate, Transfer of Undertakings (Protection of Employment) Regulations 1981 (TUPE): Government Proposals for Reform, public consultation document URN 01/1133 and background paper URN 01/1158, September 2001 and Department for Trade and Industry, TUPE, Draft Revised Regulations, public consultation document URN 05/926, March 2005, para 18. 94 Where transfers are made by Best Value authorities, an employee’s rights derive from the Best Value Authorities Staff Transfers (Pensions) Direction of 2007 rather than COSOP. This

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and (3) obliging employers to give newly recruited employees an overall comparable employment package to transferred (former public sector) staff (Local Authority Code and Two-tier Workforce Code). Thus, in many procurement exercises, the TUPE Regulations (supplemented by the public sector Codes) provide one of the most important frameworks (alongside the public procurement rules) within which social protection and economic freedoms are balanced. The TUPE Regulations stand out as a piece of legislation that is employee protective at a time when the general direction of UK labour law was (and still is) moving in a more business-friendly direction. However, since their inception, the nature and quality of employment protection that the Regulations ensure has been questioned.95 As Barnard noted, the Directive was drafted to facilitate enterprise restructuring with a view to increasing business competitiveness and efficiency so managerial prerogative to restructure and dismiss employees was never in principle questioned.96 Davies and Freedland have suggested that concern to enhance employee protection was motivated by increasing the acceptability of the public sector reform agenda and minimising opposition.97 Other authors have highlighted specific limitations of the Regulations. These include, in particular, the breadth of the so-called ‘ETOR’ (economic, technical or organisational reasons) exception,98 the apparent temporal limitation to the employment protection,99 the absence of any real alternative to transfer for employees,100 the total exclusion of pensions from the scope of protection,101 limitations upon the extent of information and consultation

places the affected employees in a stronger legal position as they can sue to enforce the authority’s statutory obligations on the basis of s 102 Local Government Act 2003. 95 For an interesting critical statement see Lord Hunt of Wirral’s motion to annul TUPE 1981 in the House of Lords (HL Deb 3 May 2006, vol 681, cols 533–36). His motion was defeated by only two votes. For early discussion of TUPE and compulsory competitive tendering (CCT), see S Hardy et al, ‘TUPE and CCT Business Transfers’ (1998) Survey Report No 1, Staffordshire University Law School. 96 C Barnard, EC Employment Law, 3rd edn (Oxford: OUP, 2006) 619. 97 P Davies and M Freedland, Towards a Flexible Labour Market: Labour Legislation and Regulation since the 1990s (Oxford: OUP, 2007) 93. 98 The new operator can dismiss employees or vary their terms and conditions of employment for ‘economic, technical or organisational reasons’ or reasons unconnected with the business transfer: Regs 4(5) and 7. 99 It is not clear how long employment changes will be considered to be ‘connected with the transfer’, but the literature suggests that changes may be considered unconnected with the transfer after only 12 months. See further discussion from the Birmingham case study in chapter seven. 100 Employees who exercise their right to object to transfer to the new employer are not entitled to redundancy compensation: Reg 4(8). On the relationship between TUPE and redundancy, see M Duggan, Business Reorganisations and Employment Law (London: Sweet & Maxwell, 1992). 101 Reg 10, although see also Cabinet Office Statement of Practice on Staff Transfers in the Public Sector 2000 (COSOP), Annex A: ‘Fair Deal’, discussed above.

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Setting the Scene

rights for employee representatives102 and the complexity and uncertainty of the protection that the Regulations afford.103 In November 2011, the Department for Business, Innovation and Skills began a review of the TUPE Regulations. The Government’s call for evidence on the effectiveness of TUPE closed at the end of January 2012.104 The Government responded in September 2012, concluding that there appeared to be scope for improving the Regulations. One of the most significant ‘simplifications’ proposed was to repeal the ‘service provision change’ component of the ‘relevant transfer’ definition.105 Although this proposal has not come to fruition, it is perhaps an insightful reflection of current policy thinking about the value of social protection.106 Beyond the limitations of TUPE, it is arguable that the additional protection for public sector workers provided by the Codes (as were described above) is neither as helpful, nor as strong, as it might first seem. Since the Codes are non-legislative, they do not impose binding obligations. This may raise difficulties for enforceability as the basis of any claim would be failure to comply with relevant guidance. Even if the guidance is followed and the authority contractually secures the relevant employment rights for its transferring employees with the contractor, these rights may only be established by reference to the commercial contract between the authority and contractor, to which the beneficiaries of those rights—the employees— will not be party.107 In any event, the Codes and public sector terms and conditions of employment have been subject to much revision. The Two-tier Workforce Code was withdrawn in December 2010, followed by the withdrawal of the Local Authority Code in March 2011. These Codes have been replaced by six voluntary ‘Principles of Good Employment Practice 2010’, which are supported by the Government as reflecting good employment practice. The Cabinet Office has described these Principles as ‘more flexible’ and a tool to open the public procurement market to smaller businesses.108 Repackaging the Codes as principles and reducing their depth and clarity of expression

102 Reg 13. See H Wenlock and J Purcell, ‘The management of transfer of undertakings: a comparison of employee participation practices in the UK and the Netherlands’ (1990) 1(2) Human Resources Management Journal 45. 103 F Cooke et al, ‘For better and for worse? Transfer of undertakings and the reshaping of employment relations’ (2000) Manchester School of Management Working Paper 13. 104 See: www.bis.gov.uk/assets/biscore/employment-matters/docs/c/11-1376-call-for-evidenceeffectiveness-of-tupe-regulations. 105 See: www.gov.uk/government/uploads/system/uploads/attachment_data/file/34608/121141-effectiveness-transfer-of-undertakings-response.pdf. 106 See: www.gov.uk/government/uploads/system/uploads/attachment_data/file/184947/13533-tupe-regulations-2006-consultation-on-proposed-changes-to-the-regulations3.pdf. 107 I Walker, ‘TUPE Regulations: the correct legal analysis’ (Institute of Employment Rights conference, November 2009). 108 See: www.cabinetoffice.gov.uk/news/two-tier-code-withdrawn.

Public Procurement and TUPE

23

has weakened the protection that they afford. Reacting to the withdrawal of the Code, the public service trade union, UNISON, commented: The justification for removal is the spurious ground that the code inhibited small and medium sized companies from bidding for public sector contracts. The real impact of removing the code will be to deregulate employment standards for new contracts, leading to competition on terms and conditions, especially given the financial squeeze facing public bodies. TUPE protections remain in place but there will be a downward pressure on terms and conditions, which will inevitably lead to poorer quality services.109

Public sector terms and conditions of employment have also been under review. The Government reduced redundancy payments for civil servants under the Civil Service Compensation Scheme (CSCS), through the Superannuation Act 2010. The Independent Public Service Pensions Commission, chaired by the Labour peer Lord Hutton of Furness,110 concluded a ‘fundamental structural review of public service pension provision’. It recommended major changes, most notably a shift from final salary to career average pensions and increased retirement ages. The Commission’s recommendations were accepted by the Government in the 2011 Budget as a basis for consultation with trade unions. Another significant conclusion of the Commission was that ‘the Fair Deal policy, coupled with current public service pension structures, creates a barrier to the plurality of public service provision’.111 On this basis, the Government opened consultation on the Fair Deal policy in March 2011. The consultation process closed in June 2011 and the Government has since agreed to retain Fair Deal in return for a new agreement on civil service pensions.112 In practice then, although many procurement exercises fall within the scope of the TUPE Regulations, employees seem to be placed in a more precarious position during a business transfer than a first reading of TUPE might suggest: rights are limited, qualified and transient, their scope is uncertain and the EU’s motivation in enacting them in the first place was arguably more to neutralise opposition to public sector reform than to protect public sector workers.113 As the British Government continues to respond to the fiscal crisis by taking inspiration about its employment practices from the private sector, public sector workers are also increasingly

109 Unison, ‘Government abolition of the two-tier code’, briefing for branches and regions, January 2011. 110 Lord Hutton was Secretary of State for Work and Pensions under Tony Blair and Secretary of State for Business, Enterprise and Regulatory Reform under Gordon Brown. He resigned from Cabinet as Secretary of State for Defence in 2009 and was given a life peerage in 2010. 111 See: www.hm-treasury.gov.uk/indreview_johnhutton_pensions.htm. 112 The legality of Fair Deal with the public procurement rules and EU Posted Workers’ Directive has been questioned by Walker, n 107. 113 NAO, n 74.

24

Setting the Scene

finding themselves in much less secure and protected employment positions than they once were. In this social, economic and political context, TUPE may provide a convenient ‘legal fiction’ for those seeking to dismiss or diminish concerns about the staffing impacts of procurement, to the overall detriment of the workforce. Given the importance of the workforce to delivering good public services, this might also be to the detriment of the long-term quality of public services. Responding to a question concerning the requirement that the public contracting authority undertakes an equality impact assessment before commencing a competition process, a manager at NOMS commented: I’m sure we must have done one but I don’t know who would have it. And anyway it doesn’t really matter because I think all we put on it was no change. Because nothing will change under TUPE, will it, from our perspective? NOMS isn’t dismissing anybody.

From a formal perspective, that manager was correct. Under TUPE, in principle, there should not be any loss of jobs or variation of terms and conditions of employment. However, as was made clear above, there is broad acknowledgment that TUPE affords less generous, or at least more conditional and complex, employment protection than might first appear. Such a formalist perspective also seems to miss the point. As Colling has argued, there is a direct and predictable relationship between contract specifications that structure a competitive tendering exercise and the employment changes that arise after transfer of the service to new private management.114 This makes it artificial to claim that the old employer is not at least partially responsible for changes that will be made by the new employer. This is even more so where the old employer is the state, which also took the initial policy decision and made any necessary legislative amendments to make competition possible. Increased business restructuring of public services, particularly since the Global Financial Crisis of 2008,115 raises questions about the adequacy and practical effectiveness of TUPE. In practice then, the procurement and business transfer rules operate alongside each other on a temporal continuum that spans the entire duration of a competition (see Figure 1(b) p 228). But, despite the (frequently close) practical relationship between TUPE and the public procurement rules, they seldom have been academically analysed, less still empirically evaluated, in tandem. There are few empirical evaluations of the operation of either set of Regulations even separately. The two fields are treated distinctly in

114 T Colling, ‘From hierarchy to contract? Subcontracting and employment in the service economy’ (1995) 52 Warwick Papers in Industrial Relations. 115 For statistics on EU corporate restructuring, see European Commission, Industrial Relations in Europe 2012 (Brussels: Directorate-General for Employment Social Affairs and Inclusion, 2012).

Empirical Context: HMP Birmingham

25

most academic analyses and the texts of the Regulations themselves do not cross-refer or attempt to coordinate their regulatory regimes. An important contribution of this book thus lies in highlighting the empirical connection between the public procurement rules and TUPE notwithstanding their legal disconnection. Thereafter, an empirical and normative case is presented for their reconnection, built upon the premise that employment protection is an essential prerequisite for social sustainability. In so doing, this book furthers the debate about the appropriate role of social policy within procurement law and makes a new contribution by basing that debate upon an empirical understanding of the employment impacts of procurement processes.

F. EMPIRICAL CONTEXT: HMP BIRMINGHAM

The final section of this chapter introduces the third strand of work upon which this book is built, namely an empirical case study of competition ‘in action’ at HMP Birmingham. Birmingham was part of PCP1: the first ‘wave’ of market testing to be conducted simultaneously across multiple British prisons (Birmingham, Buckley Hall, Doncaster, Featherstone II and Wellingborough)116 that was launched in April 2009 (see section B, above). Buckley Hall117 and Doncaster118 were included in the competition because their contracts soon expired and Featherstone II (now HMP Oakwood) was a new build prison.119 Most notable then, perhaps, was the inclusion of two public sector prisons that had never before been subject to competition: HMPs Birmingham and Wellingborough. These prisons were identified by the Government as being costly and poor performing, although as has already been explained (in section D, above) the vocal rejection of Workforce Modernisation by Birmingham’s staff earlier in 2009 seems to have ‘tipped the balance’ in convincing NOMS to include Birmingham rather than any similarly poor performing prison. Both Wellingborough and Birmingham had pre-existing workforces. This raised the novel prospect of a transfer of an existing publicly employed prison workforce to a private company. The contract notice was placed in the Official Journal of the European Union on 16 November 2009.120 The value of the Birmingham contract was stated to

116

See: www.justice.gov.uk/news/newsrelease161109a.htm. Buckley Hall is a publicly managed prison on a Service Level Agreement. The public sector won the prison back from Group 4 Prison Services in 2000 after a competitive tendering exercise. 118 Doncaster has been privately managed by Serco since it was built in 1994. 119 Most new build prisons are privately managed. TUPE is not at issue as there is no preexisting workforce. 120 Contract 2011/S 97-158764: ted.europa.eu/udl?uri=TED:NOTICE:158764-2011: TEXT:EN:HTML. 117

26

Setting the Scene

be between £183 and £479 million. It was envisaged that a contract would be awarded for between seven and 15 years. The competition announcement was not entirely surprising. It was larger in scale than previous market tests (encompassing multiple prisons), which caused it to appear more systematic and potentially further reaching than hitherto but the Ministry of Justice had already made a strong policy commitment to competition within the sector in its ‘Capacity and Competition Policy’ of early 2009.121 Yet the inclusion of HMP Birmingham came as a surprise to Birmingham’s staff and, as Birmingham staff recognised, to the wider prison community.122 As one Birmingham prison officer commented in late November 2010: The other prisons are looking at us and shitting themselves because if they can privatise Birmingham, they can privatise any prison on the basis of cost. Plus in terms of the POA they’ll have taken on the biggest bully to make the other bullies crumble and give up fighting.

The April 2009 announcement came as a surprise for Birmingham staff because first, despite a long history of poor performance, staff felt that the prison was improving under the leadership of a new Governing Governor who did not ‘avoid difficult conversations’. The new Governor had only been in post just over a year when the decision to market test Birmingham was announced. Staff felt that prisoners were very aware of the market testing announcement and that this had a negative impact upon the prison’s 2009 quality of life audit results.123 Staff felt misrepresented and undeserving of their ‘bad’ prison label. Many staff felt that the prison was no worse than many other local Victorian prisons. As one Birmingham manager said in November 2010: ‘There’s lots of good work happening here. It’s just not always acknowledged, in many ways it’s just expected. We don’t promote ourselves well and labels from the past stick’. Poor performance was seen by many staff as an ‘excuse’ to market test the prison; a political ‘attack’ on Birmingham staff and the local POA branch because of their ‘strong’ reputation for opposition and hostility to ‘management’: ‘Wheatley [Phil Wheatley, former Chief Executive of NOMS] and Jack Straw never liked Birmingham. Workforce Modernisation was the nail in our coffin’ (Birmingham Prison Officer).

121

Ministry of Justice, Capacity and Competition Policy (2009) 10–11. HMP Wellingborough was withdrawn from the competition in December 2010. 123 Ministry of Justice, MQPL survey carried out at HMP Birmingham 18–22 May 2009 (2009) 6. When market testing began, Birmingham was a level two rated prison on the Prison Rating System. Performance is assessed on a four-point scale. Level two is described as ‘overall performance is of concern’: www.justice.gov.uk/downloads/statistics/hmps/prison-probationperformance-stats/prison-rating-system-technical-note.pdf. 122

Empirical Context: HMP Birmingham

27

Notwithstanding these staff perceptions, while it might be true that the Audit and Corporate Assurance Team’s audit methodology does not always fully capture a prison’s performance, HMP Birmingham was, and is, a poor performing prison. In the prison’s 2009 audit (known as MQPL: ‘Measuring the Quality of Prison Life’), 83.8 per cent of prisoners at Birmingham scored their overall quality of prison life negatively.124 The prison has languished for many years alongside HMP Pentonville at the very bottom of the prison performance league table. Alongside consistently poor MQPL performance, the prison has a long history of reported brutality125 and critical reports from HM Inspectorate of Prisons (HMIP) describing, in 2001 for example, the prison’s culture as one of ‘idleness and neglect’.126 Sir David Ramsbotham’s Inspection Report of the prison in November 2000 opens with: ‘Virtually everything about this long, detailed and appalling report is depressing and disturbing’. Improvements at Birmingham were long overdue and, to the extent that some staff could not accept that to be true, they could be seen as ‘culpable’ in bringing about, or colluding with, an unacceptable culture. Whether competition is the right mechanism to bring about that necessary change though, is a separate question. The second source of disbelief about the announcement of competition at Birmingham arose from the prison’s size (approximately 1450 prisoners) and function (a local prison that serves the courts—so has a transient prisoner population—and is an overflow for London prisons), both of which add to the challenges of running the prison. As a former member of the prison’s Independent Monitoring Board (IMB) explained: Birmingham is a difficult prison because of its prisoner population. Prisoners come and go so have no motivation to invest in the prison and behave themselves. There has been heavy HMIP and IMB criticism of the induction process. But 1300 prisoners are processed through reception on average each year, about 30 new numbers (prisoners) per day. So there’s very little time for personal interaction. But staff are still good at picking up prompts and prioritising time with vulnerable prisoners.

Birmingham’s important and flexible function led some staff to question whether it should be managed outside the public sector. The prison was described by some staff as too big and functionally important to hand over to a private company. While these individuals may have been

124

ibid. Barry Prosser was found dead in 1980 in his cell in Birmingham’s health care unit with injuries consistent with heavy beating and Paul Taylor, a Strangeways rioter, was said to have been assaulted by Birmingham staff in March 1995. 126 HMIP reports are accessible online at: www.justice.gov.uk/publications/inspectoratereports/hmi-prisons/prison-and-yoi-inspections/birmingham.htm. 125

28

Setting the Scene

overestimating their own importance, and the importance of the prison within the estate, there are legitimate questions to be asked about whether the private sector has sufficient expertise to manage all types of custodial facilities and whether anything is lost, such as systemic flexibility and cohesion, as a result of contracting out public services. These sorts of question seldom form part of official government discourse and consultation about the use of competition in public services. Beyond these two sources of disbelief, some members of Birmingham’s staff questioned why private companies would be interested in the prison as a business proposition, especially when coupled with the prison’s strong local POA branch and reputation for ‘traditional’ (negative, resistant)127 staffing culture. NOMS’ statistics for 2009–10 indicated that Birmingham already had similar costs per prison place in both direct (£20,585) and overall resource expenditure terms (£31,789) in comparison to other (publicly managed) male local prisons.128 Staff could not understand where the opportunities lay for genuine innovation and cost saving, except by reducing staffing levels. Staff suspected that the private sector was only really interested in Birmingham as a ‘badge of credibility’, or for it to achieve economies of scale that would enable the private operator to access more straightforward and lucrative work at nearby new build prisons such as Featherstone II (now HMP Oakwood): ‘If Birmingham went up [a major riot occurred] Serco’s reputation would be ruined. I don’t even know why they want the jail. It’s probably just to get Featherstone II’. There was a sense that Birmingham was too large, too industrially powerful and ultimately too dangerous a proposition for the Government to ‘take on’ through competition. If Birmingham was transferred into private sector management, there was a feeling that ‘the rules of the game’ would be irrevocably changed and all public sector prisons would be susceptible to future competition: ‘In the back of all of our minds, everyone thinks it won’t happen to Birmingham, it can’t, they wouldn’t really dare’ (Birmingham Senior Officer). Birmingham had some things in common with the stalled competition at HMP Brixton in 2001: both are traditional, city centre prisons with difficult industrial relations histories.129 This may 127 This term is drawn from Crewe, Liebling and Hulley’s work on prison staff culture: B Crewe, A Liebling and S Hulley, ‘Staff culture, use of authority and prisoner quality of life in public and private sector prisons’ (2011) 44(1) Australian and New Zealand Journal of Criminology 94. 128 By comparison, the costs at HMP Wandsworth were £21,892 and £32,015 respectively and at HMP Liverpool £19,691 and £29,862: Ministry of Justice, NOMS Annual Report 2009/10: Management Information Addendum (30 March 2011) 75, table 51. 129 P Strickland, ‘The Offender Management Bill: Bill 9 of 2006–07’ (2006) House of Commons Library, Home Affairs Section, Research Paper 06/62, 47. The NOMS procurement team was acutely aware of the shortcomings of previous competitions in the sector and the need to this time ‘jump over the fence and do what we said we’d do’ to ensure that the procurement process was something in which bidders felt worth investing.

Empirical Context: HMP Birmingham

29

have contributed to a sense of disbelief about the likelihood of real change at Birmingham: ‘The bid process is a red-herring, it’s not happening’ (Birmingham Prison Officer). It fostered early naivety among staff and lack of focus as to the ‘stakes’. Staff gave little serious thought at first as to how the competition might affect their jobs and workplace. The competition was perceived as a ‘game’ of ‘political smoke and mirrors’, a ‘signal’ to force staff and the POA to take NOMS seriously, but a process that would surely stall before its scheduled conclusion. Despite staff expectations and a two-year competition process that was far from smooth (see Figure 2 (p 229) and chapters six and seven), on 31 March 2011 Birmingham’s staff was finally informed of the outcome of the competition. After the Governing Governor had been briefed, he called a full staff meeting at noon in the prison gym. As the Justice Secretary, Kenneth Clarke, rose to address the House of Commons, the Governor read out the news that G4S had been awarded the contract to manage Birmingham. There was general surprise that G4S had been selected. During the process, most staff had considered only Serco as a serious contender. NOMS anticipated that staff would walk out of the prison irrespective of the award decision. Staff were upset, angry and frightened about their job security, but few were ready to dismiss themselves by taking illegal industrial action. The prison functioned almost as normal that afternoon. Birmingham then entered a ‘transition’ phase. This period ran from the contract award announcement until 1 October 2011, when management of the prison was formally transferred to G4S. During the transition period staff remained working for the public sector and, with the exception of some changes to the composition of the Senior Management Team (SMT) (including a new Governor and Deputy Governor), there were few major changes. G4S’ access to the prison and its staff was closely controlled by a team of managers, ‘the transition team’, drafted in from NOMS’ headquarters to oversee the transition process. The transition team’s remit was to safeguard and account for all remaining (public) Prison Service assets, liaise with the new operator and the prison’s SMT over the necessary arrangements for handover in October (especially in relation to information technology and human resources), and ensure that a functioning prison was handed over safely at the point of transfer. The purpose was not, as some might assume from the period’s designation, to begin any process of change or transformation. Chapters six and seven of this book tell the story of Birmingham’s privatisation as it was experienced by the prison’s staff and the process administrators. It combines public source data collection with an empirical case study at Birmingham. Fieldwork, consisting of detailed staff observation and a total of 102 semi-structured interviews and four focus groups, took place between November 2010 and October 2011. The fieldwork period covered

30

Setting the Scene

the middle to latter part of the competition and encompassed both the transition period and a short period after transfer to G4S. Where appropriate, the account draws upon contact with those involved in Birmingham’s privatisation outside this main fieldwork period. To a more limited extent, it draws upon qualitative and quantitative data obtained from Birmingham’s staff and prisoners by a research team of which I was part during fieldwork in December 2011 and one year on, in December 2012.

2 Methodology

T

HIS CHAPTER PROVIDES an overview of the methods deployed in this book, alongside an explanation of why those methods were selected. For the reasons outlined in chapter one, my focus is upon the empirical methods used to generate the data presented in chapters six and seven rather than the macro-sociological and doctrinal methods used in chapters three, four and five. Empirical methodology is discussed in section C within the particularities of a prison setting. Some auto-ethnographic reflections are also provided in this section. The chapter concludes with an explanation of the approach taken to data analysis.

A. EMPIRICAL RESEARCH AIMS AND PHILOSOPHY

Fieldwork in Birmingham had two aims. First, to explore how the public procurement rules and the Transfer of Undertakings (Protection of Employment) Regulations (TUPE) were understood and used by prison staff, managers and trade unions in the context of a competition in public services; and second to produce a ‘thick description’ of the impacts of a competitive process upon the prison and its staff. Since the research aimed to consider the practical operation of a set of legal rules, and their interaction with people and institutions, its guiding philosophy was socio-legal. Following Lacey’s analysis, socio-legal scholarship is taken to have two defining characteristics: First, socio-legal scholarship locates legal practices within the context of the other social practices which constitute their immediate environment. … Second, socio-legal studies subject legal practices to a (broadly speaking) empirical inquiry which scrutinizes not merely the legal articulation of the relevant rules and processes but the meaning and effects of those rules and processes as interpreted and enforced, and as experienced by their subjects.1

1 N Lacey, ‘Normative reconstruction in socio-legal theory’ (1996) 5 Social Legal Studies 131, 132. See also C McCrudden, ‘Legal research and the social sciences’ (2006) 122 Law Quarterly Review 632.

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Methodology

Adopting this analysis, a sociological approach to law has both theoretical and methodological consequences. First, from a theoretical perspective law is defined more broadly than in doctrinal scholarship as consisting of more than the sum of legislation and judicial precedent. Socio-legal theory begins from the observation that law does not operate in a regulatory vacuum; rather it is a dimension of all social relations.2 For socio-legal theorists, ‘the center of gravity of legal development lies not in legislation, nor in juristic science, nor in judicial decision, but in society itself’.3 While it is true that legal discourses have no inherent political tilt, applying socio-legal theory, legal discourse is seen as a ‘medium or location of ideological encounter and conflict’. Law is a social product: it is made by human beings who are shaped by the society around them. Law can be an ‘institutional carrier’ of both history and modern trends. As Deakin and Sarkar have observed in the labour law context, laws ‘reflect the power and influence of interest groups and their capacity to mobilize the political process to their ends’.4 While the statute book can reflect and crystallise larger socio-political themes, in practice, a wide range of social actors interact with the law after it enters into force and shape its utility and meaning. Law is part of social life; a ‘living instrument’ whose life is in the interpretation and mobilisation by social actors and institutions.5 Drawing on Dixon’s analysis, socio-legal approaches accommodate ‘culturalist’ accounts of the relationship between law and practice and acknowledge the potential impact of ‘situational factors’ upon the role and efficacy of legal rules.6 Socio-legal theory therefore suggests that there may be a distinction between ‘law on the books’ and ‘law in practice’7 and divergence between the two—between ‘formal’ law and ‘social’ law—constitutes a valuable object of enquiry. Although there are many lawyers and sociologists who might argue that each other’s work has little relevance or value to their own field,8 and there are some who

2 The work of Roger Cotterrell has proved particularly helpful in understanding socio-legal theory. See especially R Cotterrell, Law, Culture and Society: Legal Ideas in the Mirror of Social Theory (Aldershot: Ashgate, 2006). 3 E Ehrlich, Fundamental Principles of the Sociology of Law, 4th edn, trans W Moll (New Brunswick: Transaction Publishers, 2009) lix. 4 S Deakin and P Sarkar, ‘Assessing the long-run economic impact of labour law systems: a theoretical reappraisal and analysis of new time series data’ (2008) University of Cambridge Centre for Business Research Working Paper No 367, 4. 5 The mechanisms by which laws are translated into practice have been referred to as ‘structural coupling’. See further, R Rogowski and T Wilthagen (eds), Reflexive Labour Law (Deventer: Kluwer, 1994). 6 D Dixon, Law in Policing: Legal Regulation and Police Practices (Oxford: OUP, 1997). 7 This statement is most closely associated with R Pound, ‘Law in books and law in action’ (1910) 44 American Law Review 15. 8 David Nelken, for example, doubts the utility of the broader socio-legal perspective: D Nelken, ‘Blinding Insights? The Limits of a Reflexive Sociology of Law’ (1998) 25(3) Journal of Law and Society 407. For a more classical counter view, see the ‘pure theory of law’

Empirical Research Aims and Philosophy

33

are frustrated by a sense that all scholars are being pushed to become socio-legal,9 my view (and the view of socio-legal scholars) is that a critical account of the relationship between formal rules and social practices can tell us something about the effects and uses of the law and can enable more rigorous sociological reflection upon the law’s social manifestations. As McCrudden has argued, the most productive relationship between law and social sciences ‘is one in which each contributes to the other, with two-way, rather than one-way traffic’.10 Applying a reflexive law approach, even if a legal system must remain ‘operationally closed’ to maintain its systematic integrity (by, for example, maintaining judicial independence and the foreseeability of legal rights and obligations), the law can (and should) remain ‘cognitively open’ to insights arising from any divergence between formal rules and their practical application.11 Since law and legal institutions are embedded within society, sociological scholarship is also improved by understanding the operation and impact of legal phenomena. A sociological approach to law thus describes and evaluates law in its broader societal setting. It offers an ‘external’ approach,12 which captures the social reality of legal norms and is enriched by interdisciplinary insight. A socio-legal methodology therefore rejects the ‘sealed system’ approach of doctrinal legal research where law is ‘studied through methods unique to the “science of the law”, and legal developments can be interpreted, critiqued, and validated by reference to the internal logic of this sealed system’.13 In its place is a methodology that tends towards the use of empirical methods and that demands an interdisciplinary approach, or at least a rejection of the rigidity that can flow from maintaining the strict distinctiveness of intellectual disciplines.14

advanced in H Kelsen, General Theory of Norms, trans M Hartney (New York: Russell & Russell, 1961). 9 R Collier, ‘“We’re All Socio-Legal Now?” Legal Education, Scholarship and the “Global Knowledge Economy” Reflections on the UK Experience’ (2004) 26(4) Sydney Law Review 503. For a recent contribution in the EU law field see R van Gestel and H Micklitz, ‘Why methods matter in European legal scholarship’ (2014) 20(3) European Law Journal 292. 10 McCrudden, n 1, 650. 11 S Deakin and R Rogowski, ‘Reflexive labour law, capabilities and the future of social Europe’ (2011) Warwick Law School Legal Studies Research Paper No 2011/04. The concept of reflexive regulation is most strongly associated with the sociological theory of autopoiesis posited particularly by Teubner and Luhmann. See Rogowski and Wilthagen, n 5. For analysis of how judges should take account of socio-legal scholarship, see B Hale, ‘Should judges be socio-legal scholars?’ (Socio-Legal Studies Association conference, 2013). 12 The distinction between internal (legal) and external (socio-legal) approaches is made by McCrudden. He argued that doctrinal analysis concentrates upon the issue of legal coherence. It analyses legal rules and principles from the perspective of an insider in the system: see McCrudden, n 1. 13 D Vick, ‘Interdisciplinarity and the discipline of law’ (2004) 31(2) Journal of Law and Society 163, 178. 14 Cotterrell, n 2, 5–6.

34

Methodology

Empiricism and interdisciplinarity are challenging and ambitious. There is a strong traditional distinction in English labour law for example between legal scholarship, which analyses formal legal rules, and the broader social science of industrial relations.15 In consequence, there is a paucity of sociolegal research in some legal fields and a lack of expertise among many lawyers to undertake such research. As Dickens, Hall and Wood have noted, there is a need for more research into how the law is used: not simply whether it achieves its objectives (however defined) but how people come to accommodate and live with it; and on how it impacts on, and interacts with, various aspects of employment relations, labour markets and outcomes.16

Transcending the boundaries of established disciplines can also be difficult. As Banakar and Travers have argued, sociology and law have ‘two fundamentally different images of society: a legal image derived through processing individual cases and shaped by formal practice; and a sociological image aspiring towards generalizable knowledge of society and formed through intellectual scientific curiosity’.17 Interdisciplinary approaches require a researcher to internalise (rather than merely ‘neutralise’), and then meaningfully mobilise, unfamiliar social science standards and values in a way that is understood by all of the disciplines upon which the work draws.18 Interdisciplinary research that does not surmount this challenge can result in a failure to communicate. As De Búrca explained: To the political scientist, legal scholarship often appears to be arid, technical, atheoretical … full of unstated or unproven assumptions, lacking empirical support, and seemingly disinterested in the actual dynamics of political and social change. To the lawyer, political science scholarship often appears to be obsessed with methodology, jargonistic and—in particular when it engages with law— remarkably benal.19

It takes time, and effort, for a lawyer to learn new empirical and sociological languages. However, the reward can be great. Interdisciplinary 15 See A Neal, ‘Comparative Labour Law and Industrial Relations’ in C Engels and M Weiss (eds), Labour Law and Industrial Relations at the Turn of the Century (Leiden: Kluwer Law International, 1998). 16 L Dickens, M Hall and S Wood, Review of Research into the Impact of Employment Relations 45 Employment Relations Series (UK Department of Trade and Industry, 2005) 32. 17 R Banakar and M Travers, ‘Law, Sociology and Method’ in R Banakar and M Travers (eds), Theory and Method in Socio-Legal Research (Portland: Hart Publishing, 2005) 12. See also B du Laing, ‘Promises and Pitfalls of Interdisciplinary Legal Research’ in M van Hoecke (ed), Methodologies of Legal Research: Which Kind of Method for What Kind of Discipline? (Oxford: Hart Publishing, 2011). 18 For an overview of different interdisciplinary legal approaches, see R Cryer, T Hervey and B Sokhi-Bulley, Research Methodologies in EU and International Law (Oxford: Hart Publishing, 2011). 19 G de Búrca, ‘Rethinking law in neofunctionalist theory’ (2005) 12 Journal of European Public Policy 310, 314.

Research Process: An Exploratory Case Study

35

approaches foster creativity by providing a ‘space of encounter’ at the cross section of disciplines, which can transcend some of the theoretical and methodological limitations of individual disciplines.20 This book attempts to speak with a unified interdisciplinary voice and reap the methodological and scholarly benefits of the strong historical tradition of sociological approaches to labour law.21

B. RESEARCH PROCESS: AN EXPLORATORY CASE STUDY

1. Case Study Selection A case study empirical approach seemed the most appropriate way to achieve the project’s research aims. Referring to Yin,22 Webley has suggested that case studies ‘are best used to answer “how” and “why” questions through in-depth analysis of one situation, event or location’.23 ‘Thick description’ (how) and detailed analysis (why) were exactly what were sought in this study. The project was initially designed to include two case studies of prisons that were party to the same competitive process (Prison Competitions Programme Phase 1: PCP1). The intention was to draw comparisons between the experiences of competition at one privately managed prison, and another publicly managed prison. This would have enabled comparative insight to have been gathered about, for example, whether private and public sector staff share the same fears and expectations about competition processes; whether private sector managers better manage those fears and expectations; and whether there are any differences between how bid teams from each sector approach tendering. However, as is explored below, because of the decision to award the Birmingham contract to G4S, and the unique research opportunity this presented to follow the first transfer of an operational public sector prison to the private sector in the UK, a comparative dimension to the research ultimately was not pursued. Three establishments were identified from the PCP1 cluster as potential locations for case studies: Birmingham, Wellingborough and Doncaster. Since Doncaster was the only privately managed prison in the group, it was selected as the private sector comparator. It would have been impractical for a single researcher to conduct case studies at three establishments so advice was sought from senior managers at the National Offender 20

Banakar and Travers, n 17, 5. Including work by Hugo Sinzheimer and Otto Kahn-Freund, two of the founding fathers of labour law as a specialist academic discipline. 22 R Yin, Case Study Research: Design and Methods, 3rd edn (Thousand Oaks: Sage, 2003). 23 L Webley, ‘Qualitative Approaches to Empirical Legal Research’ in P Cane and H Kritzer (eds), The Oxford Handbook of Empirical Legal Research (Oxford: OUP, 2010) 939. 21

36

Methodology

Management Service (NOMS) during informal access discussions as to the choice between Wellingborough and Birmingham. These discussions were a vital precursor to the formal access process (see below). HMP Birmingham was described as having a ‘more colourful’ industrial relations history and greater cultural and management difficulties than HMP Wellingborough (see chapter one, section F), which would help to make for an interesting research environment given my interest in social sustainability. Birmingham was also more similar to Doncaster in its operational capacity (accommodating 1450 and 1145 prisoners respectively), role within the estate (both local male prisons) and security status (both category B) than Wellingborough. On these bases, Birmingham was selected as the public sector case study establishment, alongside privately managed Doncaster. This proved a good decision when, in December 2010, Wellingborough was withdrawn from the competition.24 HMPs Featherstone II and Buckley Hall, the other two prisons in PCP1 were discounted. Featherstone II (now HMP Oakwood) is a new build establishment and so did not have a pre-existing workforce. This meant that the outcome of the competition did not have any employment transfer consequences so the prison was not well placed to shed light upon the social impacts of competition. Buckley Hall was a publicly managed prison on a Service Level Agreement (SLA). Public sector SLAs are contracts between a government commissioner and a public service delivery group that specify the nature and standard of services that the delivery group must deliver. There could have been interesting insights gained from comparing how SLA and non-SLA public sector prisons approach competition (perhaps an opportunity for future research). However, it was decided that since SLAs are already a form of ‘management by contract’, the occupational, industrial and cultural impacts of the contract being won by the private sector would not be as significant as in a non-SLA prison. Furthermore, since Buckley Hall is a category C establishment (medium to low security) with a low operational capacity (385 prisoners) it would prove difficult to match it with any of the other prisons in PCP1. This would have made it difficult to control for factors that were unrelated to the competition. Buckley Hall was therefore discounted.

24 The Justice Secretary explained Wellingborough’s withdrawal to the House of Commons as follows: ‘During the competition process it became apparent that HMP Wellingborough could not produce significant improvements without considerable financial investment and therefore a decision was made to remove it from the competition process’: www.justice.gov. uk/news/press-releases/moj/press-release-310311b.

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2. Formal Research Access and Ethics Having selected the prisons in which fieldwork would be conducted, formal research access permission and security clearance had to be obtained. This entailed the completion of lengthy forms and, since access was sought to more than one establishment, the application had to be considered by NOMS’ National Research Committee. Detailed information was required about the aims and benefits of the research, the research plan and methodology, research analysis and dissemination, ethics and the level of access that would be needed. The application was submitted at the end of August 2010 and after requests for further information had been satisfied, and compliance with various (mostly reporting and security) conditions had been agreed, research access was granted in October 2010. NOMS’ security vetting process was completed soon afterwards. Internal ethics approval was granted around the same time from the University of Cambridge. The overall aim of the process was to ensure that the research did not come at the expense of staff well-being. Plans were put in place to ensure that it would be clear to staff that their participation in interviews or focus groups was voluntary and that any data collected, or subsequently used in any publication, would be securely stored and only used in a way that would maintain the anonymity of the research participant. Limits to confidentiality were identified, such as where there was evidence of criminal activity, and these limits were included in a standard consent form and research summary for use in the field. Thought was given to how staff distress would be managed. Responses included referring staff to the prison or Prison Officers’ Association (POA) staff care team or chaplaincy. What was not clear at the time of applying to NOMS for formal research access was that a separate process had to be completed for accessing privately managed HMP Doncaster. While the National Research Committee had authority to grant research access to private establishments, in reality, access depended upon obtaining approval from the private prison’s Director. This was a more informal, discretionary process, though this is not to deny that public sector governors also need to be ‘won over’ by the researcher.25 An entirely separate formal security vetting procedure had to be complied with. This took a further four months to complete, stemming from changes to the process, staff turnover and tardy responses from the prison (perhaps because of lack of ‘buy-in’ by way of consultation during the National Research Committee access process). Partly as a consequence 25 The impact of private management upon research access should be carefully considered. There is a difficult balance to be struck between the culture of openness and accountability that ought to be expected where taxpayers’ money is being spent and legitimate commercial in confidence and establishment specific security considerations.

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of this delay, but mostly, as was explained above, because of the way in which the competition progressed at Birmingham, Doncaster was not in the end included as a private sector comparator in this study.

3. Approach to Data Collection A combination of exploratory (quasi-ethnographic) and evaluative qualitative approaches were taken to the research questions.26 Fieldwork commenced in Birmingham in November 2010. Despite NOMS having announced an initial contractual award date of autumn 2010, the competition was far from concluded when I entered the field (see Figure 2 (p 229)). An exploratory approach predominated during the early stages of fieldwork in Birmingham. As Webb argued, the main aim of exploratory research methods is to uncover the boundaries of the environment in which the problems of interest are likely to reside and to uncover the salient variables that may be found there.27 An exploratory approach enabled the collection of a large amount of unstructured information. This seemed particularly appropriate given the paucity of previous empirical research conducted during a competition process and the research aim of producing ‘thick description’. Furthermore, as a researcher who was new to the prison environment (albeit several prison day visits had given me some taste of what was to come), an exploratory approach developed my general understanding of the working lives of staff and how prisons function. These exploratory insights informed the next phase of fieldwork at HMP Birmingham, which was more structured in design, entailing focus groups and semi-structured individual interviews (see section B.4). A structured, evaluative approach was taken to gathering insights from ‘external’ stakeholders: NOMS senior managers and trade union officials. Semi-structured interviews were the predominant method of data collection. Less time and fewer opportunities for repeat interviews necessitated a more direct and structured research style. Guided by emerging exploratory findings from HMP Birmingham, it was easier to be more up front and challenging with research participants who were based outside the prison. External participants were mostly more senior and had greater knowledge of the competition and its workforce implications. This meant that relevant themes could be addressed more explicitly, and by using vocabulary which, because of the interviewee’s greater familiarity with the issues under

26 Guidance as to the distinctions between these approaches was taken from R Bachman and R Schutt, The Practice of Research in Criminology and Criminal Justice, 2nd edn (Thousand Oaks: Sage, 2003) 11. 27 J Webb, Understanding and Designing Marketing Research (London: Dryden Press, 1992).

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discussion, was more obviously grounded in law and human resource management. It generally took less time to gain the trust and cooperation of external research participants. Interviews were approached with less suspicion than those conducted with staff at HMP Birmingham and there was greater immediate understanding among interviewees of the value to NOMS of the insights that might be gained from their participation in the process than at establishment level. The challenges that were presented by interviewing external stakeholders were therefore different (albeit significant) from those encountered at HMP Birmingham. Notwithstanding some differences between the design of the research process inside and outside HMP Birmingham, a qualitative methodology was deployed in both instances. Kirk and Miller have described qualitative research as ‘watching people in their own territory and interacting with them in their own language, on their own terms’.28 It was more important to capture the presence or absence of something and understand its meaning, than to measure the degree to which a feature was present. A combination of different qualitative methods was used to maximise staff participation and improve the validity of research findings. This is typical of much qualitative research, but it can also be seen as a limited form of data triangulation. Qualitative, rather than quantitative, methods were considered to be more appropriate to study the exploratory research questions raised in this project. The aim was to generate a description of the operation and effects of the law in the context of competition, rather than to test a theory that had already been articulated. Qualitative methods also enabled the research process to be more flexible, which was important given the complex, rapidly developing and interdependent nature of the issues being explored. This flexibility enabled me to be responsive to the research environment and take full advantage of the richness of the data being presented. A repeat study of a prison during a competition process could usefully draw upon the insights gathered in this research project and combine qualitative and quantitative methods. With hindsight, it would have been useful to incorporate quantitative methods to measure staff quality of life at intervals throughout the competition process in this project. This omission reflects inexperience on my own part in empirical methods, but it is also symptomatic of the project developing from a two prison case study, which was intended (unrealistically) to move rapidly from exploratory to evaluative mode, to a one prison case study in which an exploratory approach, and quasi-ethnographic methods, featured more strongly than anticipated. The collection of quantitative data would have increased the project’s methodological robustness. However, this does not, in my view, undermine

28 J Kirk and M Miller, Reliability and Validity in Qualitative Research (Beverley Hills: Sage, 1986) 9.

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the project’s empirical findings. This is first, because of the depth of the qualitative data collected during a lengthy and deep immersion in the field, and the combination of ethnographic and more structured qualitative methods (interviews and focus groups) deployed. Second, it was possible to draw (at least) tacit support for the empirical findings of this project from the quantitative findings of a separate research project in which I was engaged at Birmingham. A team from the Institute of Criminology in Cambridge was invited by HMP Birmingham’s new Director to conduct a detailed study of staff and prisoners’ perceptions of their quality of life shortly after transition to G4S in December 2011, and again, one year into the contract, in December 2012.29 Staff and prisoner quality of life was measured using surveys that had been developed for these purposes following earlier studies of ‘what matters most’ to prisoners and staff. These surveys had been revised over the course of several prison research projects, most recently exploring the differences between staff cultures in public and private sector prisons.30 Since 2004, the surveys have been used by NOMS in all prisons in England and Wales. In that capacity, the surveys are known as ‘Measuring the Quality of Prison Life’ (MQPL) and ‘Staff Quality of Life’ (SQL). 4. Entry into the Field and Data Collection Although the National Research Committee had sanctioned the fieldwork, access still had to be negotiated at an establishment level. Prison governors retain discretion over the nature and quality of a researcher’s access to their prison. They are important ‘gatekeepers’ whose confidence and trust need to be earned. Appropriate thought had to be given to how I presented myself and the research project. The decision was taken to enter Birmingham through its Governor rather than circumventing the management structure by aligning myself with the local POA branch. An information sheet about the research project was circulated through the Governor before contact was made with the local POA branch, although I had met many members of the POA’s National Executive Committee before beginning fieldwork at Birmingham. I therefore had a good grounding in the likely concerns of Birmingham’s local branch committee members. Officially entering Birmingham through the Governor was methodologically significant. It was a sign of respect for management. It was also hoped that it would avoid alienating staff who were either dissatisfied with the 29 A Ludlow and A Liebling, ‘Privatising public prisons: theory, law and practice’ (forthcoming). 30 A Liebling, B Crewe and S Hulley, ‘Conceptualising and Measuring the Quality of Prison Life’ in D Gadd, S Karstedt and SF Messner (eds), The Sage Handbook of Criminological Research Methods (London: Sage, 2011).

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POA or who were members of other trade unions. My hope was that I would be seen as receptive to both management and staff concerns. Yet, given the POA’s local power, there was an obvious need to cultivate good working relationships with the committee members. By going through the Governor, there was a risk that the project would be seen as partisan or that assurances of confidentiality would not be believed. In practice though, while some POA committee members were intransigently suspicious of any involvement with management and NOMS, a mutually respectful understanding was reached and I enjoyed a good working relationship with the Union’s committee members. This process of negotiating trust was certainly helped by the time I had spent with the POA’s National Executive Committee. Managing these industrial relationships is another layer of complexity in researching the work and attitudes of prison staff, which needed to be taken into account (and which, with hindsight, I perhaps underestimated) while planning the project. The research process proceeded from a naive expectation that the formal methodological plans that had been devised before entering the field (namely a swift identification and narrowing of the issues, followed by the application of structured methods of qualitative data collection) would simply be followed. This was unrealistic and perhaps, methodologically inappropriate in light of the complex and changing nature of the issues under examination. It proved difficult to schedule formal appointments with people who did not understand my purpose in the prison and (understandably) distrusted strangers. It took a lot of time to cultivate trust and understanding. This was achieved through extensive, wide-ranging dialogue with staff, which was frequently ‘appreciative’ or empathetic in approach, if not always strictly in content (see further on Appreciative Inquiry below). I had not fully appreciated the importance of this dialogue, as a mechanism to secure research access, but also as a source of data in its own right. Early conversations assisted in the refinement of interview schedules and focus group protocols. What I originally perceived to be merely ‘informal’, casual dialogue and a necessary, but somewhat distracting, precursor to the ‘real’ research that was to follow, proved to be one of the most vital research tools at my disposal. A recording device, which was intended to be used for (formal) interviews and focus groups, proved divisive and limiting in the field. Many individuals (particularly uniformed staff) were not prepared to be recorded, despite assurances of confidentiality and data security. They felt vulnerable in light of the increasingly precarious employment situation in which they felt themselves. In any event, as time in the field increased, I could see some truth in Back’s observation that the emergence of research devices, such as tape recorders and cameras, has not been without detrimental methodological impact. As he argued: ‘Our dependence on the tape recorder and its recent digital equivalent has limited our attentiveness to the

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world. This is in part because there lingers the presumption that if it is not on tape it does not exist’.31 Therefore, far from being just a precursor to more formal data collection, dialogue, observation and participation in all staffed areas of the prison became an appropriately valuable research method. The collection of such multifaceted data was only possible through the generous access (to the Prison Service intranet, management meetings, any physical area of the establishment at any time) afforded by the then Governor and my decision to accept independent access to the prison by carrying my own set of prison keys. This fundamentally reoriented the research process. The methodological significance of the decision whether or not to draw keys does not appear to have been given the attention it deserves in the literature (see further section C.3). A fieldwork diary was used to record detailed notes of all interviews and activities in the prison. This included basic information such as dates, times, the amount of time spent speaking to whom, descriptive information such as where I went and what I saw and reflective, emotional information, about how I felt about what I was seeing and hearing.32 As Jewkes has argued, emotion can be an important intellectual resource.33 It became a useful source of information during data analysis, and was a critical reminder—particularly during the later stages of fieldwork—of the extent to which my engagement with the prison environment and its staff had evolved: my status in the prison had moved from an outsider to something approaching an insider. Rudimentary research shorthand was developed. Conversations were noted verbatim wherever possible, alongside a description of who was making them and in what context. This was particularly important in the prison environment where a huge amount of ‘posturing’ takes place between staff (see section C). This posturing was a source of concern for some of the prison’s managers, who worried that I would form an inaccurate impression of staff culture and behaviours because of it. Staff were generally much less worried by a notebook than a recording device; it became a source of curiosity for them and a useful research tool, a ‘way in’, to stimulate discussion: ‘Ah, look, she’s getting her notebook out again. We’ve got to be careful, what have we said now? You can put me down as Mr Smith … Oh shit you’ve got a good memory [laughs]’ (Birmingham Prison Officer). ‘What have people 31 L Back, ‘Take your reader there: some notes on writing qualitative research’, Durham University Department of Anthropology, ‘Writing on writing’ series, available online at: www. dur.ac.uk/writingacrossboundaries/writingonwriting/lesback. 32 Emerson, Fretz and Shaw explore the importance of fieldnotes in ethnographic research in greater detail: R Emerson, R Fretz and L Shaw, ‘Writing Ethnographic Fieldnotes’ in P Atkinson et al (eds), Handbook of Ethnography (London: Sage, 2001) 352. 33 Y Jewkes, ‘Autoethnography and emotion as intellectual resources: doing prison research differently’ (2012) 18(1) Qualitative Inquiry 63.

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been saying today then? I saw you earlier listening and busy writing things down. What sort of thing do you need?’ (Birmingham Prison Officer). More formal and structured attempts to capture data were interwoven with ongoing dialogue, observation, participation and documentary collection. The process of research was a more dynamic and ongoing negotiation between me and my research participants than I had anticipated before entering the field. Nevertheless, more formal data collection methods comprised a combination of semi-structured interviews and focus groups. A semi-structured interview schedule and an ethics summary sheet for participants had been developed prior to entry into the field. By the time interviews began, the schedule had been refined to take account of insight gained from informal dialogue and questions were more tailored to a particular subset of research participants (managers, operational staff, administrative staff etc). There are (amateur) traces here of ‘grounded theory’, or perhaps less ambitiously, thorough piloting. A semi-structured interview schedule seemed to provide the best balance between gathering information that was focused upon specific research questions and allowing space for a participant to express related thoughts. It enabled interviewees to tell their stories but, in so doing, root information in some of the project’s research language. Space for discussion allowed interviewees to probe and challenge ideas that underpinned interview questions. Meaning could be negotiated and both parties left with a clearer idea of what the other intended to say. This seemed particularly important where there were legal issues underlying the questions being posed. Since my own experiences had mostly been confined to communicating about law with lawyers, it would have been easy to have inaccurately assumed that the use of legal terminology by interviewees was an indication of genuine legal understanding. Interviewees were identified opportunistically at first (whoever would speak to me) but then later, more purposefully, to capture a spectrum of viewpoints and staff groups in the hope that the data collected could be said to be generalisable to the entire population of interest. As I spent more time in the prison, and I became better known, particularly to a certain group of staff, it became important to be seen as sampling fairly across the prison. Staff were therefore sometimes invited for interview, or to participate in a focus group, not because they had particularly different viewpoints from those already interviewed, but because they were identified by others or, more commonly, self-identified as ‘outsiders’. ‘Outsider’ status was not generally related to race or gender at Birmingham, it was much more about where a member of staff worked in the prison (the new or old prison wings), the type of job they performed (residential or non-residential function) and whether she or he had found favour in everyone else’s eyes with the then Governor (the Governor’s ‘blue eyed boys’). ‘Corrective’ sampling in this way was time-consuming and did not always yield significant research fruit. However, it seemed necessary in order to maintain personal

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and project legitimacy, which was particularly important as Birmingham became the principal site for fieldwork. The total sample size of staff members interviewed at HMP Birmingham was 86, of whom 59 were uniformed, and 27 were non-uniformed staff. Most interviewees were re-interviewed to obtain updated experiences of the competition as it changed course. Semi-structured interviews were complemented by focus groups. These proved difficult to organise around the prison’s operational needs at a time when the size of the workforce was shrinking. Individuals were taking early departure schemes or transferring to work at other prisons while Birmingham’s staff profile (which determines how many members of staff are needed to fulfil each prison function) did not take those changes into account. It was therefore exceedingly difficult to take a group of staff away from their working areas. After several abortive attempts to convene a group, a senior manager assisted (not at my request) by mandating attendance. This was regrettable since it ran counter to the intended voluntariness of research participation and caused some shortterm damage to the project’s credibility. It was, however, perhaps somewhat predictable given the militaristic organisational model of prison life.34 In the end, four 90-minute focus groups were conducted across three different operational staffing grades: officers, senior officers and junior managers. Each group had eight to ten participants. Discussions centred upon a sheet of statements that were produced in two versions: one for management grades and another for uniformed grades. The formulation of these discussion statements was informed by ongoing exploratory discussions with staff and emerging findings from both internal and external interviews. The benefit of the focus group format over interviews was that interactions between staff, and group norms, could be observed. Differences or similarities in opinion could be aired without the need for much direction from me: Powney’s characterisation of focus groups as ‘structured eavesdropping’ seems particularly apt.35 It was important that the participants felt free to voice their opinions and were not intimidated by the status of other participants. Focus groups were therefore conducted with staff from a single grade, rather than a mixture. There were plenty of other opportunities to observe mixed staff grade interactions in meetings and on the prison wings. Wherever possible, focus groups ended on an empowering, ‘appreciative’ note (see further on Appreciative Inquiry below), with a question such as ‘tell me about the best thing about working at Birmingham prison?’ This elicited interesting research material; it also contributed to the fulfilment of ethical obligations towards my research participants, in that it attempted to undo any damage inadvertently caused by engaging in the research process by leaving participants in a more positive future-oriented 34

As noted by V Stern, Bricks of Shame (Harmondsworth: Penguin, 1989) 64. J Powney, ‘Structured eavesdropping’ (1988) 28 Research Intelligence (Journal of the British Educational Research Foundation) 10. 35

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mindset. Where more detailed individual discussions seemed fruitful, semistructured interviews were undertaken as a follow-up to focus groups. Relevant stakeholders outside the establishment were interviewed (26 individuals in total). These included NOMS senior managers (TUPE policy, Employment Relations, Procurement, HR, Public Sector Bid Unit), G4S and trade unions (Prison Officers’ Association (POA), Public and Commercial Services Union (PCS) and the Prison Governors’ Association (PGA)). It was difficult to manage the multiple conflicting loyalties that this broad interaction engendered. The research crossed the ‘ethical walls’ that NOMS had erected within its organisation to prevent the perception (perhaps more than the reality—see chapter six) of the public sector having an unfair tendering advantage. Interactions, particularly at NOMS’ procurement level, required considerable care and access was sometimes stopped, owing to concerns about my presence jeopardising the process: ‘Amy needs to be careful that by getting too closely exposed to us and, in particular, the procurement team, she’ll find herself having to make a witness statement. And I’m not exaggerating’ (NOMS Senior Manager). As was mentioned above, external interviewees presented a different challenge to Birmingham’s staff. Unlike Birmingham staff, external interviewees were mostly less challenging about the value of the research project and their engagement with it. Given my personal background, as a legal academic, communication with NOMS managers was more straightforward on some levels than it was with establishment staff. More immediately understanding the language of the group, and its use, made it easier for ground to be covered more rapidly. The challenge in interviewing external research participants lay in moving them beyond the ‘party lines’ they were instinctively toeing, and encouraging them to reflect upon issues from a re-personalised position. This was less comfortable for interviewees and so required care and persistence in conducting the interviews. The task of pushing conversation beyond party lines was made more difficult by the short time available to build rapport and trust. In these circumstances, Appreciative Inquiry (AI), a ‘strengths-based’ method that encourages interviewees to reflect upon their most positive experiences, proved useful. Unlike most questions in the interview schedule, which were ‘fateful’, in ‘problem mode’ (assuming the worst in explicitly seeking to explore tensions and difficulties), AI’s empathetic approach sought to identify peak performance and best (exceptional but real) experiences by posing ‘generative’, ‘unconditional positive questions’ such as ‘when and under what conditions have you felt most able to do your best at work?’.36 Liebling, Elliott and Arnold have argued that, ‘As a mode of inquiry, 36 For an overview of AI see G Bushe, ‘Appreciative Inquiry: Theory and Critique’ in D Boje, B Burnes and J Hassard (eds), The Routledge Companion to Organizational Change (Oxford: Routledge, 2011). The phrase ‘unconditional positive questions’ is taken from J Ludema, D Cooperrider and F Barrett, ‘Appreciative Inquiry: The Power of the Unconditional Positive

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AI seems to take better care of informants and participants in research, enabling them to dwell on “the best of what is” as well as “the worst”. It puts problems and struggles into context’.37 The change in the tone of interviews that appreciative questions engendered yielded some insightful responses. By way of an example, after answering most of the questions on the interview schedule, discussions with one external interviewee remained superficial and ‘professional’ (polite but guarded). Posing an appreciative question altered the course of that interview. It opened up a space for more affirming self-reflection by the interviewee, which was unencumbered by the oppositional binaries (of employee versus manager, or NOMS versus HMP Birmingham) that tended to dominate many of the non-appreciative, ‘problem-oriented’ questions. The ethical advantages of creating such an affirmative space for interviewees have been noted by Robinson et al.38 Appreciative questions highlighted a positive direction of travel, but in so doing, gave space for critical insight into the status quo. Advantage was taken of the ethical and instrumental merits of AI during interactions with Birmingham staff but its significance inside the prison lay in adopting an overarching appreciative approach more than posing explicitly appreciative questions.

5. HMP Birmingham as a Single Case Study After the announcement in March 2011 that Birmingham would be transferred to private management, and that Doncaster would remain privately managed by Serco, the research shifted towards a single case study of HMP Birmingham. Birmingham presented a unique research opportunity to assess the employment and cultural impacts of competition on a staff group that was being required to transition from public to private sector management; the first time this had been attempted in the UK. But this shift to a single case study had two methodological consequences. First, it meant that the time spent in the field at a single prison was much longer than originally intended (approximately one year). This intensified relationships with the prison’s staff, deepened the narrative that was obtained and tended to emphasise dialogue and observation as a mechanism

Question’ in P Reason and H Bradbury (eds), Handbook of Action Research (Thousand Oaks: Sage, 2000). 37 A Liebling, C Elliott and H Arnold, ‘Transforming the prison: romantic optimism or appreciative realism?’ (2001) 1 Criminology and Criminal Justice 161, 162. See also A Liebling, D Price and C Elliott, ‘Appreciative inquiry and relationships in prisons’ (1999) 1(1) Punishment & Society 71. 38 G Robinson et al, ‘Doing “strengths-based” research: Appreciative Inquiry in a probation setting’ (2012) 13(1) Criminology and Criminal Justice 3.

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of data collection. As van Maanen has argued, ‘Narrative is not an ornamental or decorative feature designed to make ethnography more palatable or audience-friendly, but a cognitive instrument in its own right’.39 There is thus real value in a richly constructed single qualitative narrative. In some ways, the project became quasi-ethnographic. Second, the project’s focus upon a single establishment may limit the generalisability of the data collected. That follows from adopting a case study approach, for as Webley has commented, ‘Case-study research is designed to focus in detail on a given situation rather than to provide findings that are generalizable to other situations’.40 Nevertheless, it was anticipated that broader themes and issues would emerge from the case study that would not be specific to Birmingham or the prison sector. In combination with research findings about TUPE and the public procurement rules in other contexts, a useful research contribution could still be made from a single case study.

C. THE RESEARCH EXPERIENCE

As Piacentini explained, the prison is a ‘peculiar site for social research’: it is ‘a well bounded space where enormous bureaucracies and conflict can render officials suspicious of the researcher and prisoners wary and afraid. Indeed, the mere presence of a researcher can be a limitation to the research’.41 The importance and challenges of developing trust between researcher and researched in prison settings cannot be overestimated and gaining trust and openness is intimately intertwined with how a researcher presents herself. As Hammersley and Atkinson explained, people ‘are often more concerned with what kind of a person the researcher is than with the research itself’.42 Prisons are emotionally and physically tough, (mostly) masculine environments.43 As a young female researcher, it can be difficult to present credibly and gain the trust of those you seek to research. Researcher identity affects the nature of the data that can be collected. This

39 J van Maanen, ‘Afterword: Natives “R” Us: Some Notes on the Ethnography of Organisations’ in D Geller and E Hirsch (eds), Inside Organisations: Anthropologists at Work (Oxford: Berg, 2001) 256. 40 See Webley, n 23, 940. 41 L Piacentini, ‘Researching Russian prisons: a consideration of new and established methodologies in prison research’ in Y Jewkes (ed), Handbook on Prisons (Cullompton: Willan Publishing, 2007) 155. See also M Nielsen, ‘Pains and possibilities in prison: on the use of emotions and positioning in ethnographic research’ (2010) 53(4) Acta Sociologica 307. 42 M Hammersley and P Atkinson, Ethnography: Principles in Practice (London: Tavistock, 1983) 78. 43 C Cockburn, Brothers: Male Dominance and Technical Change (London: Pluto Press, 1983) and D Britton, At Work in the Iron Cage: The Prison as Gendered Organization (New York: New York University Press, 2003).

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section reflects upon some of the identity management challenges that are faced by researchers, and considers some of the peculiarities of conducting research in prisons.

1. Identity Management Senior Officer: I used to live in a two up two down. I suppose you don’t know what that is? Researcher: Well actually I was born in a two up two down not far from Slough, so yes I know what you mean. Senior Officer: Er, sorry miss. I was assuming there. Prison research is not for the meek or slow-witted. The quoted exchange above is taken from my fieldwork diary and occurred in one of my earliest solo interactions with Birmingham’s staff. Birmingham has a predominantly local, stable and middle-aged workforce: a significant proportion of the prison’s staff have worked there for over 20 years (15 per cent), and over half of the staff have only ever worked at Birmingham (56 per cent). The staff group is not diverse (83 per cent white British) and is predominantly male. It is methodologically significant that I do not share many of the characteristics of the prison staff I researched. I am a white British female. I speak with a fairly neutral (received pronunciation) accent and I was at Birmingham conducting research for a PhD in law at the University of Cambridge. I too had prejudices about white British, middle-aged, balding or shaven-headed, tattooed, muscular male prison officers. They did not conform to my image of the ‘ideal’ prison officer. These prejudices, just like those of the staff who came to know me, were challenged during my time in the field. As Flood argued, ‘In many ways doing ethnography is a way of developing empathy, which also means finding out more about oneself in the process’.44 There has been some (though still too little) research into the nature of, and differences in, interactions between male and female prison officers and prisoners.45 As Crewe explained, this is an interesting area of research because, ‘in terms of gender, they (female prison officers) represent an inversion of conventional power relations, where it is men who tend to be 44 J Flood, ‘Socio-Legal Ethnography’ in R Banakar and M Travers (eds), Theory and Method in Socio-Legal Research (Portland: Hart Publishing, 2005) 39. See also G Devereux, From Anxiety to Method in the Behavioral Sciences (The Hague: Mouton & Co, 1967). 45 E Crawley, Doing Prison Work: The Public and Private Lives of Prison Officers (Cullompton: Willan, 2004); B Crouch, ‘Pandora’s box: women guards in men’s prisons’ (1985) 13 Journal of Criminal Justice 535; S Martin and N Jurik, Doing Justice, Doing Gender (London: Sage, 1996); and S Tait, ‘Prison Officers and Gender’ in J Bennett, B Crewe and A Wahidin (eds), Understanding Prison Staff (Cullompton: Willan, 2007).

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dominant, and women subordinate’.46 Crewe’s research proved helpful in reflecting upon my treatment by male staff at Birmingham, which, to continue drawing upon Crewe’s analysis, was dominated by discourses of chivalry, sexual objectification and feminine validation. In varying measures, male staff sought to protect me (by apologising for swearing or vulgarity), flirt with me (invitations for dinner or drinks), and especially in private, open up to me in ways they felt unable to do with their colleagues. These interactions arose partly because emotional conversations were not considered to conform to gendered (male) expectations of prison officer behaviour. As one Birmingham prison officer recognised: You tend to have indirect conversations about the bid. People here tend to bottle things up, it’s quite a macho environment. So I think you are a bit of fresh air in here. Everyone is quite pleased to talk to you. Although I bet you are wishing you never came now though with all of us going on.

Anxiety was often disguised as dark humour in front of colleagues. Officers would respond to a question about how they were feeling by describing themselves as ‘suicidal’ or inviting me to open an ‘ACCT book’ on them.47 This was something I learned to decode and follow up in private conversation. In common with Liebling’s reflections upon her ‘Incentives and Earned Privileges’ research, my capacity for unconditional emotional support was assumed to be greater as a female than it probably would have been had I been male. Some staff members explicitly identified my gender, and behaviours they perceived to be gender-related, as relevant to the willingness of others to engage with me: It helps with breaking down barriers and stuff that you are female and blonde. You know how to talk to screws, put us at ease. I’ve seen how you work, you’re clever, know what, you know, how to get what you want—smile, nod your head.

Female identity led me to adopt multiple personal sub-identities.48 This was further complicated by my identity as a labour lawyer and as such, an individual who possessed relevant knowledge in a knowledge scarce environment. And these identities arose within a research project that already demanded multiple attributions and ascriptions as between NOMS and the establishment, within NOMS by virtue of the competition’s ‘ethical walls’ and within the establishment between uniformed and non-uniformed staff.

46 B Crewe, ‘Male prisoners’ orientations towards female officers in an English prison’ (2006) 8 Punishment and Society 395, 396. 47 Assessment, Care in Custody and Teamwork books record assessments and plans made for managing vulnerable prisoners. 48 See C Smith and E Wincup, ‘Breaking In: Researching Criminal Justice Institutions for Women’ in R King and E Wincup (eds), Doing Research on Crime and Justice (Oxford: OUP, 2000).

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As one manager noted, ‘I’ve been watching you; you’re good at wearing lots of hats’. A dual lawyer–feminine identity became a research tool. It enabled engagement with staff on their own terms, whatever discourse they chose (gendered or otherwise). But it was emotionally burdensome and at times personally unsettling. For as Piacentini observed, it required the partial suspension ‘of parts of [my]self in order to avoid remaining only on the outside’.49 I had to learn to behave in ways that were unfamiliar, without jeopardising my authenticity. I became more accepting of behaviour and language towards me and others that I would not have tolerated in other circumstances. I became accustomed to ‘sexual banter’ (a feature of ‘traditional’ public sector prison culture) and I resisted challenging language that seemed outdated and inappropriate: ‘the labour route’ (a description of the paths prisoners walk to attend education or work), ‘bodies’ (prisoners) and ‘feeding’ (serving the evening meal). This is a difficult path to tread and there comes a point of unsustainability, where the researcher feels so compromised that she is no longer authentic. However, particularly given the sensitive nature of the research topics and context, it was vital for me to provide a ‘framework of trust’, in which non-condemnation (rather than judgement) was core.50

2. Trust and Cooperation As was suggested earlier in this chapter, the openness and potential breadth of an exploratory research approach assisted in gaining the trust and cooperation of prison staff. Piacentini described these as ‘non-physical barriers to research’.51 Extensive exploratory dialogue assisted staff to feel like partners in the research, rather than mere objects of it. Staff saw themselves as ‘showing me the ropes’ and reported their enjoyment of that experience. Extensive dialogic conversation made them feel valued and understood. As one prison officer said: ‘Nobody talks to us like you [are] so it has taken me a bit by surprise. We’re a suspicious lot anyway. It’s really nice to be listened to’. Over time, officers came to trust that I was conducting the research for good reasons and that their participation would not cause them harm. However, the trust of the prison’s staff was hard won. Members of staff were almost all initially challenging: ‘Why should I participate in the research?’; ‘What’s in it for me?’; and ‘It won’t change anything’. This required a carefully crafted encouraging, yet honest, response about the 49 50 51

Piacentini, n 41, 166. M Lee, Doing Research on Sensitive Topics (London: Sage, 1999). Piacentini, n 41, 155.

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often limited impact of research and my motivations for engaging in it. Gaining trust and credibility required a significant personal investment of time and energy. Staff members required me to pass tests of humour and humanity. It was important to be seen at the prison at all times of the day, so I worked late, and started early. This was noticed and credited by staff. As one Prison Officer commented: ‘Why are you still here Miss? Haven’t you got a home to go to? Are they making you work E/D [evening duty] too or are they paying you overtime? I’d be straight out of here’. Another officer remarked: ‘What? You’re not being paid? What are you here for then? You must really like your job. Come and have a chat before we bang ’em away’. Staff often had more time to talk calmly and reflectively during later parts of the day. It was easier to hold longer dialogic, rather than dialectic, conversations during the evenings: dialogue that was less focused upon finding a common ground by exchanging ‘verbal opposites’ and more about a mutual expansion of understanding. This sort of dialogic conversation has a cooler, empathetic, rather than sympathetic, tone. As Sennett argued, it is vital that a researcher strikes the correct balance between dialectic and dialogic conversation, between sympathy and empathy, because each type of conversation yields different data and brings its own emotional rewards.52 Since relatively short, dialectic conversations predominated during the prison’s busy days, late evenings and early mornings were important periods of data collection and rebalancing. It seemed particularly important to suspend personal judgement during these dialogic conversations and meet members of staff on their own terms (cultural relativism).53 This was not always easy, especially as I became more used to the prison and my (amateur) ideas developed about how the prison ought to be run. Prisons are emotive, difficult places. Staff and prisoners were dealt with in ways that sometimes felt improper and unfair, particularly in light of research knowledge gained from my access to important stakeholders. My privileged research position cut across divides between management and staff, and bid teams and commissioners. This placed me in a unique position within the prison. It generated a limited form of power because of the paucity of information from other sources. As the conduit of that power,54 I felt at times burdened (often frustrated) and privileged.55

52 R Sennett, Together: The Rituals, Pleasures and Politics of Cooperation (London: Penguin, 2012) 18–22. 53 On the challenges raised by cultural relativism, see P Bowgors and J Schonberg, Righteous Dopefiend (Berkeley: University of California, 2009) 7–11. For reflections upon interview problems, see K Nunkoosing, ‘The problems with interviews’ (2005) 15 Qualitative Health Research 698. 54 This expression is borrowed from Bowgors and Schonberg, n 53, 13. 55 There is a growing recognition that undertaking qualitative research can pose many challenges for researchers: V Dickson-Swift et al, ‘Doing sensitive research: what challenges do qualitative researchers face?’ (2007) 7(3) Qualitative Research 327.

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Nevertheless, many members of staff respected my attempts to see all aspects of the job from their perspective. Where their respect was won, it snowballed to other staff. It was rarely communicated directly but involvement in ‘banter’ seemed a promising sign of acceptance: ‘You can tell Amy how it is. You can trust her, she’s sound’ (Birmingham Senior Officer) and ‘She’s working for Serco—measuring up for curtains’ (Birmingham Senior Officer).

3. Prison Keys and ‘Going Native’ Since prison officers were almost always working on the prison’s wings, significant periods of time were spent in that environment. This necessitated greater exposure to prisoners than was anticipated, which was initially personally challenging. It also presented logistical issues since this level of immersion necessitated frequent moves between wings. Consequently, I was offered a set of prison keys. It seemed convenient, and less burdensome upon the prison, for me to move around independently. Drawing keys allowed me to work in any area of the prison, without anyone needing to authorise my movements, which could usefully underscore my independence. However, the question of whether or not to draw keys also raised methodological questions. Keys would affect how others perceived me. Notwithstanding the importance with which the issue struck me, the existing literature offers little guidance on the question.56 This section therefore reflects upon how my decision to draw keys shaped the nature and quality of the data I collected and explores the benefits and dangers of closeness between researcher and research participants. Keys are normally a significant indicator of power, though in my case they gave me little real power. They do give a researcher an official status and presumed know-how though and there is expertise in using keys (requiring training), which enables a researcher to feel more competent. Keys are of obvious importance when researching prisoners, since they risk heightening the distance between researcher and researched, which may adversely affect a prisoner’s willingness to engage. In my experience at Birmingham, keys are also important in shaping staff opinion. They may have given rise to increased concerns about the neutrality of the research project: why was prison management so trusting of me that they gave me keys? Coupled with the fact that I shared an office on the same corridor as the Governor, was I doing his bidding? Many staff had a difficult relationship with their Governor, to which I needed to be sensitive but non-partisan: ‘I’m not 56 However, see D Wilson, ‘Should I take keys? Some ethical issues to consider when researching in prisons’ (2011) 10 ECAN Bulletin, The Howard League for Penal Reform 7 and A Liebling, Suicides in Prison (London: Routledge, 1992) ch 5, fn 2.

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speaking to you if you report back to the Governor—don’t do it, don’t undersell yourself’ (Birmingham Senior Officer). Keys may have also given the impression that I knew more about prison life than I did, although having keys also played an important role in increasing my knowledge of it: shift patterns, security procedures and prisoner movements all became more familiar as I took greater responsibility for my presence in the prison. The mobility and flexibility that having keys gave enabled me to experience life at the prison in a deeper, more meaningful way. I was not confined to particular wings and no longer felt a burden upon officers who otherwise had to accompany me. Keys allowed me to become ‘invisible’ and part of the furniture (although they initially elicited the opposite reaction for prisoners, who became more curious about my role, mostly with a view to determining whether I might be able to assist them).57 The responsibility of keys and the associated security risks that I perceived were, at first, unexpectedly overwhelming. The novelty soon wore off though and they became a practical necessity to secure the independent high level of exposure to staff that seemed necessary. Keys did, however, alter both the type of data that I was able to collect and my primary mode of data collection. Keys ‘opened doors’.58 They made it possible to engage in extensive dialogue with staff and observe their working lives very closely but fairly unobtrusively. As my time in Birmingham increased, observation became more like the ‘reserved participation’ that Liebling has described: Likewise, the term ‘observation’ does not adequately capture the process of being present in others’ worlds. We see, observe, but inwardly (subjectively) digest scenes and encounters; our inner lives interplaying with the lives of others. We watch, hear, take notes, drink tea, chat, experience periods of engagement, distraction, warmth, sadness or fear; we are entertained, frustrated, fascinated and puzzled—we are no more ‘passive’ agents in our research than our research ‘partners’ are. The term ‘reserved participation’ may be more appropriate than observation to capture this activity.59

This closeness had benefits and dangers.60 It enabled me to gain a more accurate sense of life from a staff perspective; to witness the challenges of prison work first hand. But as Daniel has argued: To forget one’s position as an outsider is to be in danger, not only from interpersonal trouble of various kinds but, more enduringly, from alarming emotional and intellectual identifications. Here the ethnographic desire for (perhaps fantasized

57 This is telling and attests to Birmingham’s poor MQPL performance. If prisoners are well supported and informed, they have no need to look for external assistance from visitors. 58 As Liebling recounts, a prison chaplain once said to her, ‘my keys are to open doors, not just to shut them’: Liebling, Suicides in Prison, n 56. 59 A Liebling, ‘Doing research in prison: breaking the silence?’ (1999) 3(2) Theoretical Criminology 147, 160. 60 R Behar, The Vulnerable Observer (Boston: Beacon Press, 1997).

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but nonetheless compelling) alignment with one’s subject(s) must be relinquished or at least bracketed.61

On many occasions, staff would ask me to ‘bang a few away’ (return prisoners to their cells). On those occasions, the fact that I did not have a cell key served as a helpful reminder of my ‘outsider’ status.62 I was active in the field in other ways though, which did not involve direct engagement with prisoners. I would answer the phone, for example, and relay information between staff and wings. At times, I found myself knowing too much and ‘talking the talk’ too well. Having observed staff doing a task that had recently been devolved to a more junior level, I found myself knowing more about how to do it than the person who was now responsible for doing it. There were times when I felt that I was in too deep.63 The more fieldwork intensified, the more I interacted with staff without the benefit of preparation or reflection. Interactions became less structured, less predictable and less ‘safe’. My notebook and I became increasingly invisible. Male staff apologised less for their bad language: ‘I forgot you were there. Don’t you go saying I told you that’ (Birmingham Prison Officer). In response to a challenge from a manager, a Senior Officer commented: ‘She’s heard worse. She’s part of the furniture now. Just you wait, she’ll be our new boss’. Officers were eluding here to another individual who had conducted some research in Birmingham and then returned as part of the prison’s Senior Management Team (SMT). Although I clearly wasn’t seen as a prison officer (my lack of uniform bore testament to that) there was a perception of increasing commonality between myself and Birmingham’s employees.64 We had begun to develop a shared history. This closeness decreased the Hawthorne effect; that is people’s tendencies to alter their behaviour when they know they are the object of research enquiry. It deepened relationships with staff, which, in some cases, markedly increased emotional openness. Interviews became more emotional, of which these remarks of one Prison Officer are indicative: If you really concerned yourself about the bid, you wouldn’t come into work, you couldn’t cope. I just try and think that there’s nothing I can do to change it

61 E Daniel, ‘Review of a crack in the mirror: reflexive perspectives in anthropology’ (1985) 14(2) Urban Life 240, 246. 62 For examples of participatory research methods in prisons see J Marquart ‘Doing research in prisons: the strengths and weaknesses of full participation as a guard’ (1986) 3(1) Justice Quarterly 15 and H Arnold, ‘Identifying the High Performing Prison Officer’ (2014) (unpublished thesis submitted in fulfilment of a PhD in criminology at the Institute of Criminology, University of Cambridge). 63 Albeit not as ‘deep’ as the authors in J Ferrell and M Hamm (eds), Ethnography at the Edge: Crime, Deviance, and Field Research (Boston: Northeastern University Press, 1998). 64 For reflections upon insider/outsider status, see S Bano, ‘“Standpoint”, “Difference” and Feminist Research’ in R Banakar and M Travers (eds), Theory and Method in Socio-Legal Research (Portland: Hart Publishing, 2005) 108–09.

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so I guess I put it to the back of my head and carry on joking about as much as I can. That’s what we all do in here, use humour as a bit of a cover up. I’ve actually lost weight, not that that’s a bad thing necessarily [laughs] but sometimes I come in here without shaving. I’d have never done that before. I wake up, feel sick and think why even bother shaving. And I was meant to be moving but that’s been put back because you can’t go taking on a mortgage with things as they are. Everything is such a mess.

The emotionally charged content of these conversations was difficult and frustrating. I came to feel like a powerless spectator, glimpsing into the chaotic personal and professional lives of people who had been deeply unsettled by the changes they were experiencing. As Rubin and Rubin argued, the ‘depth of understanding required to do qualitative interviewing makes it difficult for qualitative researchers to remain value free or neutral toward the issues raised’. ‘The researcher is asking for a lot of openness from the interviewees: he or she is unlikely to get that openness by being closed and impersonal’.65 There is arguably an ethical imperative in any research to share something of yourself. Yet as Ribbens argued, ‘to talk about yourself completely openly in an interview situation might significantly shift what is said to you, in fairly unpredictable ways’.66 It is difficult to strike the ‘right’ balance between professional neutrality and humane friendliness. It became even more difficult when interviewees (some of whom now felt more like friends than research participants) showed signs of crisis. There seemed little that could be done beyond empathy, signposting an individual to appropriate resources and attempting to conclude the interview on a positive, ‘appreciative’ note. As Rubin and Rubin note, ‘Qualitative research blurs easily into advocacy and efforts to find solutions to problems’.67 I sought to resist this since it trespassed outside my task of ‘authentic description’ and altered the research environment.68 But this proved difficult, especially given my legal background. Lawyers seek solutions to problems for clients; they advise and demand just satisfaction of legal rights.69 Mere

65 H Rubin and I Rubin, Qualitative Interviewing: The Art of Hearing Data (London: Sage, 1995) 12. 66 J Ribbens, ‘Interviewing—An “Unnatural Situation”?’ (1996) 12 Women’s Studies International Forum 579. 67 Rubin and Rubin, n 65, 13. 68 The term ‘authentic description’ is taken from A Liebling, ‘Being a Criminologist: Investigation as a Lifestyle and Living’ in M Bosworth and C Hoyle (eds), What is Criminology? (Oxford: OUP, 2010) ch 34. 69 Samuel contrasts two paradigms: enquiry (social sciences) and authority (law). He questions whether law can ever be of any value to the social sciences because of its starting point of reasoning inwards and backwards: G Samuel, ‘Interdisciplinarity and the authority paradigm: should law be taken seriously by scientists and social scientists?’ (2009) 36(4) Journal of Law and Society 431.

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‘empathetic neutrality’,70 in the face of legal misunderstanding and vulnerability, was immensely difficult.71 Prolonged exposure also led to desensitisation about my research surroundings. The prison environment rapidly became more familiar and less shocking. Returning to notes from my first fieldwork diary revealed the extent of my transition, echoing the experiences of prison staff. As a senior officer described: Yeah it’s strange working here. You kind of become desensitised to it all. Your moral code sort of shifts and you start getting more confrontational, even at home or doing the shopping, you know if someone pushes in front or something. And back in here self-harm blurs into being an inconvenience to the running of your day. I don’t get traumatised about it now. It’s just how we have to deal with it.72

Critical distance away from the field became essential. Liebling has described this as ‘regular injections of “involvement” and “distance”’.73 The prison environment is ‘all-consuming’; it gets under your skin. There was a risk of ‘going native’, becoming too close to prison staff who were, after all, only one (albeit important) group of stakeholders in the research. There are always at least three views on a single issue—those of prisoners, officers and managers. At times, it became too easy to forget the grim reality of life as a prisoner at HMP Birmingham which had, at least in part, led to the prison being market tested in the first place. It was useful to regain a sense of moral outrage, by returning to critical reports from HM Inspectorate of Prisons (see chapter one). Engagement with stakeholders outside the prison, particularly NOMS’ procurement and industrial relations teams, was instructive in rebalancing my perspective. Time away from the prison proved vital to consolidate ideas, recharge personal batteries and regain neutrality. It also eased my eventual exit from the field in November 2011, although it has taken much longer to process the experience fully.

D. DATA ANALYSIS

Wherever possible, focus groups and interviews were recorded and transcribed. Approximately 30 per cent of data collected were recorded (owing to staff concerns about sharing their views ‘on the record’), which amounted to 33 hours of transcribed material. Professional transcription

70 M Patton, Qualitative Research and Evaluation Methods, 3rd edn (London: Sage, 2002) 50. 71 Behar, n 60. 72 For further on the experience of desensitisation see H Arnold, ‘The Effects of Prison Work’ in A Liebling and S Maruna (eds), The Effects of Imprisonment (Cullompton: Willan, 2005). 73 Liebling, ‘Doing research in prison: breaking the silence?’, n 59, 164.

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services were prohibitively expensive so I transcribed the material myself. Beyond its economic benefits, the intimate interaction with the material that manual transcription necessitated enhanced my understanding of the data and reduced selective recall. This data was supplemented by extensive, often verbatim, fieldwork and interview notes, totalling over 1000 pages. Access to the Prison Service intranet enabled the examination of national and local information and notices to staff. The NOMS procurement team gave access to competition documents that were not commercially confidential. Later, following the Prison Research Centre’s MQPL and SQL exercises at Birmingham in December 2011 and December 2012, I was able to draw upon the quantitative and qualitative data that was collected during those periods, to verify and enhance my analysis. After transcription, the data was analysed thematically, again manually, rather than using data analysis software. Themes and sub-themes were identified inductively from the text, though the literature that informed my prior understanding of the issues clearly influenced the process of induction. Analysis began with proofreading the transcriptions and reading through fieldwork notes and a vast collection of documentation to pick out interesting phrases (either because they were odd or particularly vivid in their use of language or imagery) and repeated ideas. As Ryan and Bernard explained, repetition is one of the easiest ways to identify themes.74 It is a matter of the researcher’s own judgement as to how many times a theme needs to be repeated across the sample before it became empirically significant. In this respect, the quantitative SQL survey data collected in December 2011 and December 2012 proved to be a helpful cross-check. It broadly verified the themes that emerged from my own data, across a sample of 165 staff in December 2011 and 126 staff in December 2012. All texts had to be read multiple times before proper sense could be made of them. A competition and human resource timeline was constructed so that the interviews could be accurately contextualised. Detailed fieldwork notes proved invaluable in constructing this timeline and gaining a sense of how everything fitted together. Quotes and expressions were then arranged within tentative thematic groupings. As the material in each theme group expanded, the theme was refined to take account of its shifting content. In some instances, new themes had to be created. In others, the sophistication of the theme was increased, often as a result of attempts to look for counter-examples in the data. Priorities had to be established. A single interview often contained information about many issues that were not the direct focus of the research project but were somehow tangled up within it. This arose by virtue of my often wide-ranging, exploratory discussions with research participants,

74

G Ryan and H Bernard, ‘Techniques to identify themes’ (2003) 15 Field Methods 85, 89.

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which were sometimes conducted just out of interest, but were at other times a necessary precursor to build rapport. Themes that did not shed light upon my particular research questions had to sidelined. This was difficult but necessary.75 By repeated engagement with the material, including carefully listening to interview and focus group recordings, it became possible to recognise patterns and connections between themes in the data. This increased my confidence about the shape of Birmingham’s narrative as it was emerging and being constructed from the data and my assuredness in distinguishing between core and peripheral issues. It was only really through the processes of writing and editing though that the data was fully refined, triangulated and brought to life.

75 Back argues that including every piece of relevant research data in your writing can lead to an ‘ice cream cone’ version of research writing, ‘where quotations and descriptions are heaped upon each other without purpose’: Back, n 31.

3 The Promises and Fictions of Competition in Public Services

I

N THIS CHAPTER I return to the sociological themes that were introduced in chapter one (section B). What some governments and economists promise competition in public services will achieve is briefly revisited before I challenge, through a case study of British prisons, what is perhaps the most fundamental of all the fictions that belie belief in competition: the notion of the ‘free’ (‘natural’ and ‘neutral’) market. In essence, the arguments advanced in this chapter are that states inherently need to regulate markets (even the most neo-liberal markets) and, that being so, descriptions of markets as ‘free’ are misconceived and eschew proper debate about the role of rival non-market values.

A. THE PROMISES OF COMPETITION IN PUBLIC SERVICES

As will be recalled from chapter one, according to the current British Government, ‘the old centralised approach to public service delivery is broken’. Poor standards in public services are attributed to ‘an outdated approach to organising public services that is out of step with the way we live now’.1 An exclusively publicly administered, centralised system of public services is said to be costly and suppress the quality of public services. The ‘cure’, according to the Open Public Services White Paper of July 2011, is the reorganisation of public services through decentralisation and competition. In the Government’s view, opening up delivery of public services to new providers will ‘empower’ public sector staff and lead to more efficient and effective public services. Competition is both a stick with which to ‘beat’ poor performing public services into shape (the ‘contestability effect’),2 and an end in itself since it produces diversity in the type of service provider (private, public and third sector). In the Government’s

1

HM Government, Open Public Services (White Paper, Cm 8145, 2011) 7. M Gosling, ‘Contestability and the future of the Probation Service’ (2006) 167 Criminal Lawyer 3. 2

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view, this ‘mixed economy’ is the only way that ‘peoples’ complex needs and increasing expectations’ can be met.3 Despite the Government’s stated aim of plurality in public service provision, competitive tendering, and the procurement framework within which it is achieved, are commonly presented as ideologically ‘neutral’. In contrast to the openly ideological motivations of Margaret Thatcher’s Conservative administration (and to some extent also Tony Blair’s Labour administration), competition and privatisation are presented by the Coalition Government as pragmatic, self-evident solutions to improve public services and safeguard taxpayers’ money in a difficult economic climate: ‘We do not have an ideological presumption that only one sector should run services: high-quality services can be provided by the public sector, the voluntary and community sector, or the private sector’.4 The Government insists that competitive tendering delivers savings and that such savings come at neither the expense of service quality nor the treatment of public sector workers. In fact, the process is said to improve, or at least maintain, the quality of public services. As Kenneth Clarke, the then Secretary of State for Justice, said as he announced the decision to transfer management of HMP Birmingham to G4S, the decisions made in this competition ‘will secure significant improvements and savings at all the establishments involved’ and ‘[t]his process shows that competition can deliver innovation, efficiency and better value for money for the taxpayer—but also that it can do so without compromising standards’.5 The Government also denies any necessary conflict between good employment practice and competition. In 2006, the Office of Government Commerce said, ‘There is no conflict between good employment practice, value for money and quality of service. On the contrary, quality and good value will not be provided by organisations who do not manage workforce issues well’. And in 2001, the Prime Minister Tony Blair said: We want to ensure that when services are contracted out, it is not done on the basis of poorer terms and conditions of employment for the staff … if the impact of contracting out is simply to undermine the terms and conditions of staff, it will not usually lead to a better service.

So the Government promises that the market will deliver cheaper, high(er) quality public services that will not come at the expense of public sector workers: competition policies are natural (in the sense of inevitable and not man-made)6 and neutral (in the sense of non-ideological and value free)

3

HM Government, Open Public Services n 1, 39. ibid, 9. 5 Ministry of Justice, ‘Prisons competition outcome’ press release (31 March 2011). 6 Chang calls this the ‘market primacy assumption’: H Chang, Globalisation, Economic Development and the Role of the State (London: Zed Books, 2003). 4

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management tools to that end. The rest of this chapter evaluates, and casts doubt upon, this depiction of competition as natural and neutral.

B. THE FICTITIOUS DIVIDE BETWEEN MARKET AND SOCIETY

Since the 1970s, there has been an increasing debate about the role of ‘the state’, within society. The terms of that debate have been heavily influenced by neo-liberal economists, such as Milton Friedman and Friedrich von Hayek. The neo-liberal school advocates restraint upon the role of the state because it sees the state as self-serving and consequently liable to fail in ways that the market will not. This thinking proved highly influential upon the UK and US governments during the 1980s and came to displace the ‘Keynesian consensus’ that had prevailed since the Second World War; a period characterised by active state involvement, particularly in the establishment of welfare states, which was seen as necessary to correct market failures. In Britain, Margaret Thatcher’s premiership (1979–90) put neo-liberalism at the heart of government policy. She sought to reduce the size and cost of the public sector, through New Public Management (NPM): the import of private sector practices into public services.7 NPM increased the role of socalled ‘free’ markets since, according to neo-liberal thinking, only markets that operate without government interference achieve the most efficient and effective outcomes. Since Thatcher left office in 1990, UK governments of varying political persuasion have continued to promulgate the notion of the ‘free’ market and its inherent and autonomous disciplinary potential in public services, including, as was made clear above, the current Conservative–Liberal Democrat Coalition Government.8 As Raj Patel has argued, it seems that the ‘dazzle of free markets has blinded us to other ways of seeing the world’.9 The separation of market and society is central to the Government’s claim that public service markets are neutral, natural and inherently improving. The purported distinctiveness of the two entities enables the Government to ‘underplay’ its action of opening up a public service to the market. 7 See further K Ascher, The Politics of Privatisation (London: Macmillan, 1987) and A Gamble, The Free Economy and the Strong State: The Politics of Thatcherism (London: Macmillan, 1988). 8 See, eg, John Major’s ‘Choice and Freedom for All’, speech delivered on 19 September 1996: www.johnmajor.co.uk/page1349.html, and Tony Blair’s speech at the Guardian’s public services summit on 29 January 2004: www.guardian.co.uk/society/2004/jan/29/comment. publicservices. Some academics have argued that there was a change in the use of competition under New Labour. See, eg, T Entwistle and S Martin, ‘From competition to collaboration in public service delivery: a new agenda for research’ (2005) 83(1) Public Administration 233. 9 R Patel, The Value of Nothing: How to Reshape Market Society and Redefine Democracy (London: Portobello Books, 2009) 3.

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Competition is portrayed neutrally as ‘offering up’ a ‘troubled’ public service to an ‘otherworldly’ natural institution that thrives, and only survives, because of its capacity to satisfy user (customer) needs through innovation and efficiency. It is as if the market’s ‘recipe’ for improving public services is neither ideological nor inevitable: provide no services beyond what are required, reduce staffing costs, exploit opportunities for additional revenue creation and cut the costs of any necessary consumables. This market society distinction also enables the Government to deny the existence of any political influence upon, or power over, the market: ‘pure’ market forces are said to dictate the outcome of competitive tendering exercises. This allows the Government to allege its powerlessness in the face of calls for it to set an agenda that is anything other than commercial. The market, rather than government, thereby appears to bear the blame for any ‘collateral’ social and environmental impacts of contracting (so-called ‘externalities’). But the market is not, of course, accountable to the electorate. To exemplify the fiction of this market society divide, the following subsection looks behind the rhetoric of government competition policies and traces how the policy has been used in practice over time in the prison sector. From this, it becomes clear that markets are far from ‘free’; an insight that is crystallised in the second concluding subsection of this part.

1. A Case Study of Competition in British Prisons As will be recalled from chapter one, the modern foray into prison privatisation began in the 1990s with a need to find solutions to the UK’s rising prison population and prison overcrowding. Following a recommendation from the Adam Smith Institute, the House of Commons Home Affairs Committee visited privately managed facilities in the United States and proposed the introduction of privatisation on an experimental basis, particularly for remand prisoners whose imprisonment experiences were among the most impoverished, notwithstanding their unconvicted status.10 But the capacity of prison privatisation to further Thatcher’s ideological commitment to shrinking the size of the state was soon seized upon and the enabling legislation was extended to permit the ‘contracting out of any prison, whether existing or new, or for remand or sentenced prisoners’.11 At that time, the Prison Service was attempting to introduce changes to the management and staffing of its prisons (the 1986 ‘Fresh Start’ initiative). This coincided with an era of general deregulation of the employment relationship. Collective bargaining was seen as an obstacle to growth. 10 Home Affairs Committee, Contract Provision of Prisons, Fourth Report (HC 1986–87, 291). 11 A James et al, Privatizing Prisons: Rhetoric and Reality (London: Sage, 1997) 10.

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Consequently, trade unions were disempowered by a series of Acts that reduced their autonomy and made it more difficult to take lawful industrial action.12 In September 1982 the British Government denounced the International Labour Organization’s (ILO) Convention 94, which seeks to protect workers when their jobs are outsourced (see further chapter five). European initiatives to increase levels of social protection were resisted.13 Where European initiatives could not be avoided, such as implementation of the Transfer of Undertakings (Protection of Employment) Regulations (TUPE) (because it had an internal market, rather than a social policy, legal basis and was agreed to by the Callaghan Labour administration, Thatcher’s predecessor), compliance was at best minimal.14 It was claimed that employment law was burdensome for business and that deregulation would lead to superior economic outcomes. As Harding and others have argued, it would seem that the Government’s primary motivation, in expanding the scope of the House of Commons Home Affairs Committee’s initial proposals to encompass existing publicly managed prisons, was to obtain increased leverage over the terms and conditions of employment of public sector prison staff and to reduce the power of an ‘intransigent’ Prison Officers’ Association (POA).15 For its very inception then, the use of competition was far from ‘neutral’: the policy was being used politically to deliver workforce change and fulfil an ideological commitment to shrinking the state. But the threat of competition needed to be credible for the Government’s policy to be effective and acted upon by current public service providers (through self-improvement and employee compromise). The mere existence of an alternative provider, such as GEO Group Australia and its stake in the Australian correctional market, was unlikely to generate the degree of leverage that the Government sought over publicly managed prisons and their workforces. Therefore, far from being the merely neutral arbiter as the Government wishes to be portrayed, the Government had to create the required competitive pressure in the UK prison services market to realise its desired political objectives. It had

12 Employment Acts of 1980, 1982, 1988, 1989 and 1990; Public Order Act 1986; and Wages Act 1986. 13 In 1989, Margaret Thatcher opposed the (then) European Community’s Charter of Fundamental Social Rights of Workers and in 1991, John Major obtained an opt out for the UK from the Social Chapter of the Maastricht Treaty. The general aim of these instruments was to increase levels of social protection within the EU at a time when the single market was rapidly expanding. 14 M Sargeant, ‘A study of the implementation of the Acquired Rights Directive in the United Kingdom and other Member States of the European Community’ (thesis submitted to Middlesex University in partial fulfilment of the requirements for the degree of DPhil, April 1997) 153–54. 15 R Harding, ‘Private Prisons’ in M Tonry and J Petersilia (eds), Crime and Justice: A Review of Research vol 28 (Chicago: University of Chicago Press, 2001) 271.

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to build and sustain a market in order to keep its competition policies in the sector alive. It achieved this in two main stages. First, alternative service providers (mostly private companies) were given a strategic, market-making stake in the prison sector. This began in 1992, when HMP Wolds opened under the management of private company, Group 4 (Remand Services) Limited. This was the first time in recent history that a prison had been managed by a private company in England and Wales. In permitting the private sector to run a prison on its behalf, the Government was sending a clear market-making message to the private sector. It was defining the task of imprisonment as a legitimate object of market exchange (commodification) and redrawing the boundaries defining who might bid to run prisons to encompass private companies. The private sector was also encouraged to become involved in the provision of non-core services, such as health care, laundry and education. Furthermore, between 1993 and 1994, the management of three new prisons was contracted out under the Public–Private Partnership (PPP) scheme: Doncaster (Premier), Blakenhurst (UKDS) and Buckley Hall (Group 4). This was followed by several new build prisons that were designed, financed, constructed and managed by private companies under the Private Finance Initiative (PFI): HMPs Parc (then HMP Bridgend) and Altcourse (1997), Lowdham Grange (1998), Ashfield (1999), Forest Bank (2000), Dovegate (2001), Rye Hill (2001), Bronzefield (Ashford) (2004) and Peterborough (2005).16 PFI was the brainchild of the Australian government in the 1980s.17 It was implemented for the first time in the UK by Conservative Prime Minister John Major but was used more extensively by New Labour under Tony Blair between 1997 and 2007.18 PFI projects were typically underpinned by 25-year management and finance contracts under which the private sector would build a new prison to a pre-defined public sector specification in return for a fixed operations and maintenance fee from the commissioning public authority. Unlike the current competitive tendering model, the public sector was not permitted to compete by producing an in-house bid. The use of PFI can therefore be seen as a deliberate attempt by the Government to undermine the monopoly of the public sector and 16 National Audit Office, The Operational Performance of PFI Prisons, Report by the Comptroller and Auditor General (HC 2002–03, 700) 3–4 and Ministry of Justice, Capacity and Competition Policy for Prisons and Probation (2009) 10. 17 D Whitfield, Financing Infrastructure in the 21st Century: The Long Term Impact of Public Private Partnerships in Britain and Australia (Newcastle: European Services Strategy Unit, 2006). 18 This was part of what led some to argue that New Labour was less distinct from Thatcherism than it claimed. Jessop has described New Labour’s ‘Third Way’ as ‘Thatcherism with a Christian Socialist face’: B Jessop, ‘From Thatcherism to New Labour: Neo-Liberalism, Workfarism, and Labour Market Regulation’ in H Overbeek, The Political Economy of European Employment: European Integration and the Transnationalization of the (Un) Employment Question (London: Routledge/RIPE Studies in Global Political Economy, 2004).

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create a new service market. PFI also enabled the private sector to increase its operational experience, which became important later, when private companies were invited to bid for pre-existing publicly managed prisons. There has been significant criticism of the long-term cost of PFI to the taxpayer.19 The financial model underpinning PFI places private sector providers in a very strong position. If the Government wishes to terminate the management contract, the capital invested by the private company becomes repayable. Since the Government cannot afford to pay back such large sums without increasing taxation, this makes it virtually impossible to hold the private operator strictly to account. Long PFI contracts also limit the competitive discipline of the market because, as Crouch explained, ‘the market exists only at the point of contract negotiation’. There is often little scope within contracts for any fundamental change of terms and conditions of service. Crouch identified this as an example of how ‘the neoliberal policy shift is more about firms than about markets’: the policy aims to increase the stake and power of private firms within public services, more than it seeks to create the conditions for genuine competition.20 Designing PFI in this way was a reflection of the Government’s desire to encourage private firms to enter the market, coupled perhaps with inexperience (that possibly still exists).21 As Crouch recognised, ‘Markets could only be made in policy fields where they had not previously existed if firms could be encouraged to enter them’.22 Both the high risk and universal nature of imprisonment services (that is that a prison operator cannot pick and choose its clients) are not immediately attractive to private providers. As Crouch further explained: An important element of any firm’s strategy in the true market consists in finding niches: in the market it is not only customers who choose providers; also, providers choose customers. Firms often need inducements in terms of generous and long-lasting contracts if they are to manage without this important component of entrepreneurship.

Designing contracts is thus a complex process that requires many ‘publicvalue-laden decisions’ to be taken.23 The need to incentivise private sector

19 R Ball, M Heafey and D King, ‘The Private Finance Initiative: a good deal for the public purse or a drain on future generations?’ (2001) 29 Policy and Politics 95. 20 C Crouch, The Strange Non-Death of Neoliberalism (Cambridge: Polity Press, 2011) 87. See also J Kelly and P Whittlestone, ‘Innovation for the future of PFI’ in G Kelly and P Robinson (eds), A Healthy Partnership (London: Institute for Public Policy Research, 2000). 21 The Kelly Report concluded that the public sector does not currently take sufficient account of the impact of its procurement decisions on the long-term structure of supply markets: C Kelly, Increasing Competition and Improving Long-Term Capacity Planning in the Government Market Place (London: OGC, 2000). 22 Crouch, n 20, 84. 23 T Brown, M Potoski and D van Slyke, ‘Managing public service contracts: aligning values, institutions and markets’ (2006) Public Administration Review 323.

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participation produces an ‘odd concept of consumer “sovereignty”. The government and other public agencies were, in effect, pleading with firms to “please, accept us as your customers!”’24 Winning over the private sector required government compromise and entailed a more involved and complex relationship with market actors than the simple non-interventionism and bifurcation of market and society that neo-liberalism suggests. While giving the private sector a stake in the market provided some leverage to push through public sector reforms, PPP and PFI did not result in as much reform as the Government hoped. The Government therefore moved on to a second stage in its competition strategy—full competitive tendering. This form of competition permits the public sector to produce an in-house bid to rival private bidders and first came to the fore in managing the aftermath of the Strangeways prisoner riots in 1990. The process resulted in the public sector being awarded the contract to manage rebranded HMP Manchester on the basis of a Service Level Agreement (SLA): a contract between the Prison Service and an individual prison that defines the service to be provided and contract price.25 The introduction of performance measures and private prison comparators from PPP and PFI also made it possible to identify ‘failing’ publicly managed prisons. If prisons were unable to improve sufficiently in time (initially under Performance Improvement Plans), they would be market tested and exposed to the possibility of takeover by a private company. This generated the perception at least that there was now a fully developed competitive market for custodial services. Publicly managed operational prisons were all potentially ‘up for grabs’ by private companies. In 2001, HMP Brixton was the first ‘failing’ public sector prison to be market tested. The prison had been subject to a 12-month performance improvement period. However, after only eight months, and mounting concern about conditions inside the prison (culminating in an unannounced inspection by Her Majesty’s Inspectorate of Prisons (HMIP) in June 2000), a decision to market test the prison was announced, but the process stalled due to lack of private sector tenders.26 The episode demonstrated the Government’s reliance for its competition policy upon the interest of the private sector in investing in the market. It fuelled claims from critics of prison privatisation that private companies were only interested in ‘easy’ profitable prisons and would be unable and unwilling to tackle traditional, city centre prisons with a history of difficult industrial relations.27 24

Crouch, n 20, 85. Although the SLA at Manchester was cancelled less than a year after it began and the prison returned to its former public sector non-contracted status. 26 House of Commons Library Home Affairs Section, ‘The Offender Management Bill: Bill 9 of 2006–07’ (2006) Research Paper 06/62, 47. 27 There is also some empirical evidence of private sector selectivity in health services: Z Cooper, S Gibbons, S Jones and A McGuire, ‘Does competition improve public hospitals’ 25

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Sporadic market testing followed but, despite strong formal commitment to the NPM agenda, competition did not seem to be operating as well as had been hoped. It was proving difficult and costly to draft sensible contracts, which ensured service improvement, efficiency and the right balance between minimum mandatory standards, scrutiny and innovation. Internal performance management of prison staff was not really linked to any employment consequences (such as dismissal). Staff disciplinary processes remained cumbersome, performance management poorly understood and the POA powerful. The importance of the Government’s role in creating an effective market was again underscored, and attempts were made to reconfigure how competition worked. Following recommendations of Lord Carter of Coles,28 the Prison and Probation Services were amalgamated within a new body, the National Offender Management Service (NOMS).29 This restructuring led Stelman to question whether NOMS was ‘simply a Trojan horse for “smuggling in” contestability to yet another public sector body’.30 A core recommendation of Carter’s Managing Offenders, Reducing Crime report of 2003 was that there should be a clear division between commissioners of services and providers. Initially, a pure split between purchaser (central government) and provider (NOMS) was created. This did not function effectively for three reasons.31 First, the pure split was predicated on the idea that there would be some capacity within the prison system to absorb purchasing innovation and change. But the prison population continued to rise beyond 80,000 and UK prisons experienced their

efficiency? Evidence from a quasi-experiment in the English National Health Service’ (2012) LSE Centre for Economic Performance Discussion Paper No 1125. 28 P Carter, Managing Offenders, Reducing Crime (2003): www.cabinetoffice.gov.uk/ strategy/downloads/files/managingoffenders.pdf. For criticism see N Padfield, ‘A Critical Perspective on Private Prisons in England and Wales’ in N Capus et al (eds), Public–Prive: Vers un nouveau partage du controle de la criminalite (Chur: Verlag Rüegger, 2006). The Government accepted Lord Carter’s proposals in Home Office, Reducing Crime, Changing Lives (2004): www.homeoffice.gov.uk. 29 The constitutionally inappropriate manner in which NOMS was created is striking. NOMS was created in 2004 but it was not placed on a statutory footing until the Offender Management Act in 2007. In evidence to the Justice Committee, Cordell Pillay, Assistant General Secretary of Napo suggested that ‘It is almost as though the structure (of NOMS) was made up on the back of a match box’. He also highlighted the total lack of consultation: ‘There was no consultation with stakeholders or even with members of Parliament aside from questions from a few back benchers’. (Reported in House of Commons Justice Committee (2009) Ev 53). 30 A Stelman, ‘From probation to the National Offender Management Service: issues of contestability, culture and community involvement’ (2007) 54(1) Probation Journal 91, 91. The increased use of competition in prisons, and its expansion into probation services following the creation of NOMS, suggest that Stelman might have been correct. See, eg, Ministry of Justice, Punishment and Reform: Effective Probation Services (Cm 8333, 2012). 31 This section draws upon a talk given by Michael Spurr, Chief Executive of NOMS, to MST students at the Institute of Criminology, University of Cambridge, September 2010.

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biggest population crisis between 2006 and 2007. NOMS was absorbed in managing the crisis and finding accommodation. Second, the purchaser/ provider split was not supported by any significant increases in investment. The absence of funding needed to make the new commissioning strategy work was exacerbated by a growing probation workload. Finally, and structurally most significantly, the expertise on what was needed in prisons was located mostly in the provider group, that is NOMS, rather than on the purchaser and commissioner side (central government). Lord Carter produced a further report in 2007, which contained recommendations concerning the restructuring of NOMS to improve the delivery of its competition policies.32 In April 2008, following Lord Carter’s recommendations, a new structure was introduced to NOMS as part of a broader reorganisation of the Ministry of Justice, which charged the Ministry principally with criminal justice policy matters and NOMS with service delivery. NOMS’ clearer operational mandate increased its autonomy and potential power as a procurement body. The pure division between purchaser and provider was removed so that commissioners and purchasers now sit within one body. This brought together the knowledge of each side and, at least potentially, improves the organisational coherence of any competitions that the Agency wishes to run. During the same period, the Government made changes to the powers of private prison directors and the role of public sector controllers. When private prisons were first introduced in the UK, an important difference between the scheme’s underpinning legislative framework and its international counterparts was the limitation placed upon the disciplinary powers of private sector directors.33 These powers were exercised instead by a public official, a controller, who was also responsible for the fulfilment of any statutory duties, such as certifying that prison cells are suitable for use and signing licences that permit prisoners to be released on a temporary or conditional basis. The controller was additionally given responsibility for the certification of private prison staff, which meant that she was empowered to remove this authorisation where any doubts arose about an individual’s professional integrity.34 The role of controllers helped to weaken moral objections to prison privatisation because it made it possible to argue that the private sector was only administering a punishment, as distinct from allocating it, which remained a state function, although many authors have highlighted the tenuous nature of this distinction.35 32 Securing the Future: Proposals for the efficient and sustainable use of custody in England and Wales: www.justice.gov.uk/publications/securing-the-future.htm. 33 s 85(3) Criminal Justice Act 1991. 34 s 89 Criminal Justice Act 1991. 35 P Moyle, ‘Separating the allocation of punishment from its administration’ (2001) 41 British Journal of Criminology 77; R Weiss, ‘Private Prisons and the State’ in R Matthews (ed), Privatizing Criminal Justice (London: Sage, 1989); J DiIulio, ‘The Duty to Govern: A

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Changes were made to the powers and responsibilities of private prison directors and prison controllers in the 2007 Offender Management Act. Section 19 of the Act removed the limitation upon the disciplinary powers of private prison directors that was contained in section 85(3) of the Criminal Justice Act 1991. Consequently, in November 2007, rule 82 of the 1999 Prison Rules36 was amended to enable directors to remove prisoners from association (out of cell socialisation with other prisoners), temporarily confine refractory prisoners in special cells, authorise the use of restraints and conduct enquiries into disciplinary changes and impose appropriate punishments. Directors could also delegate these powers to suitably qualified colleagues.37 Controllers remain responsible for staff certification and the fulfilment of certain statutory duties (such as the decision to authorise release on home detention curfew) although there are suggestions that in practice, private operators also play a role in these matters. This realignment of director and controller powers is important not only from an accountability viewpoint, but from a market building perspective. The changes signalled a new level of trust in private sector operators and sent a positive message about the future role of private service delivery. Private operators were being given greater autonomy and their regulatory burden was reduced. They were being given a level of responsibility that was more comparable to public service governors. This more ‘hands off’ approach underscores the purchaser/provider distinction and helps to generate the perception of a more level playing field between the two sectors. According to a Prison Governors’ Association (PGA) source, some private operators have been pushing for the powers of controllers to be further reduced.38 This is reported to have prompted NOMS to conduct an internal review of controller powers in 2012, the proposals from which were intended to be effective as of April 2013 but have not yet been implemented.39 It is anticipated that the review will reconceptualise controllers as contract managers and will recommend the reallocation of further functions from controllers to private prison directors.40

Critical Perspective on the Private Management of Prisons and Jails’ in D McDonald (ed), Private Prisons and the Public Interest (New Brunswick: Rutgers University Press, 1990); and R Harding, Private Prisons and Public Accountability (Buckingham: Open University Press, 1997) chs 3–4. 36 Prison Rules 1999, SI 1999/728. These rules are made under the authority of s 47(1) Prison Act 1952: N Loucks and N Padfield, Prison Rules: A Working Guide (London: Prison Reform Trust, 2000) 6–7. 37 Rule 82 was most significantly amended for these purposes by the Prison (Amendment No 2) Rules 2007, SI 2007/3149. 38 Personal communication (13 June 2012). 39 Personal communication with NOMS senior manager (26 October 2012). At the time of writing, NOMS has still not published these proposals. 40 Though this may be revised in light of the recent high profile failures of prisoners to return to prison following day release from open prisons.

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Despite these 2007 changes, which appeared to strengthen competition and the position of private providers within the sector, there was a risk that private sector interest was beginning to wane. The private sector’s increasing frustrations with the slow pace of market building were reflected in the Confederation of British Industry’s (CBI) criticism of NOMS’ decision in 2005 to use internal performance improvement rather than a competitive tendering process at three prisons on the Isle of Sheppey. The Government’s threat, or promise, of the private sector gaining business from operational public prisons still lacked credibility, amid perceptions of government deference to the POA and public sector bias in bid evaluation, coupled with the high political stakes of criminal justice policy. The private sector already enjoyed a good stake in the custodial market, running 11 out of 139 prisons in England and Wales and housing approximately 10 per cent of the prison population.41 But these were PFI, new build facilities, which only indirectly challenge the public sector monopoly. Moreover, the cost of participation alone in competitive tendering exercises is high. Private companies needed to feel that the market was worth their investment. The Government has played a pivotal role in this respect because, in designing contracts, it has set the terms of the market against which investors have evaluated their prospects of commercial success. Since both the outgoing Labour Government and incoming Coalition championed competition and the shrinking of the state, the threat of privatising an operational public facility soon needed to be made good. Competition was shown to have the bite that private companies hoped for (in directly challenging the public sector monopoly on prison services) in the outcome of the wave of market testing that was announced in 2009. This 2009 programme included the market testing of two non-contracted public sector prisons, HMPs Wellingborough and Birmingham. Aside from the failed attempt to compete HMP Brixton, the inclusion of Birmingham and Wellingborough raised the spectre of a management transfer of an operational public sector prison to the private sector for the first time in the UK. Wellingborough was withdrawn from the competition (owing to the condition of the prison’s site and buildings) but, as will be recalled, the HMP Birmingham contract was awarded to the private company, G4S, which has operated the prison since October 2011. The Birmingham decision was received across the prison estate as a ‘game-changer’. As a prison governor at another establishment remarked: ‘After Birmingham, if any governor doesn’t think he is part of the competition now, then he is deluded. The competition isn’t about the eight of us who are currently going through it; it’s about all 130 of us’.42 A second wave of market testing was announced

41 42

Padfield, ‘A Critical Perspective on Private Prisons in England and Wales’, n 28. Personal communication (23 April 2012).

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in July 2011, which included eight public sector establishments that had not previously been competed but outcomes of that process are still awaited.43 The recent market testing programmes have followed further deregulation of employment law. While New Labour took some steps towards increasing levels of social protection for employees (especially by introducing the national minimum wage, family friendly policies and signing up to the EU’s Social Chapter in the 1997 Treaty of Amsterdam), New Labour’s overall record on employment protection was mixed.44 The current Coalition Government has taken steps to increase social protection in some areas, such as the right to request flexible working and parental leave, but the predominant ‘thrust’ of its agenda has been deregulatory. In May 2010, it launched a wide-ranging Employment Law Review, alongside its ‘Red Tape Challenge’.45 According to the Department for Business Innovation & Skills, the Review aims to ‘improve growth through increased labour market flexibility’, ‘reduce burdens on business’ and ‘give employers the confidence to take more people on’.46 The Government has also concluded ‘calls for evidence’ on the effectiveness of the laws on dismissal, collective redundancy and business transfer (TUPE). Employment law is seen as burdening businesses and inhibiting productivity. A number of deregulatory employment law reforms have been passed as a consequence of these review processes, most of which will make it more difficult for employees to pursue employment claims.47 To give a few examples: (1) section 12 of the Enterprise and Regulatory Reform Act 2013 has inserted a new section 111A into the Employment Rights Act 1996 with the effect that an offer made, or discussion held, between an employee and employer with a view to terminating employment cannot be taken into account by the employment tribunal as evidence of unfairness in a subsequent unfair dismissal case; (2) the qualifying period to claim unfair dismissal has been increased from one to two years; (3) section 31 of the Growth and Infrastructure Act 2013 has inserted a new section 205A into the Employment Rights Act 1996 that provides for a new ‘employee

43 HMPs Lindholme, Moorland, Hatfield, Acklington, Castington, Durham, Onley and Coldingley: Ministry of Justice, ‘Prisons competition and capacity announcement’ press release (13 July 2011). 44 C Kilpatrick, ‘Has New Labour reconfigured employment legislation?’ (2003) 32(3) Industrial Law Journal 135; H Collins, ‘Is there a Third Way in Labour Law?’ in A Giddens (ed), The Global Third Way Debate (Cambridge: Polity Press, 2001); and S Fredman, ‘The Ideology of New Labour Law’ in C Barnard, S Deakin and G Morris, The Future of Labour Law: Liber Amicorum Sir Bob Hepple QC (Oxford: Hart Publishing, 2004). For an employer view, see CIPD/KPMG, ‘Employer Focus’, Quarterly survey report, Spring 2010. 45 See: www.redtapechallenge.cabinetoffice.gov.uk/home/index. 46 See: www.bis.gov.uk/policies/employment-matters/employment-law-review. 47 Although some of Adrian Beecroft’s more radical recommendations, such as ‘compensated no fault dismissals’ have not come to fruition: Report by Adrian Beecroft on Employment Law (BIS, 24 October 2011).

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shareholder’ status—employees who have no rights to unfair dismissal, redundancy pay or flexible working time; (4) the Trade Union and Labour Relations (Consolidation) Act 1992 (Amendment) Order 2013 has halved the minimum period of staff consultation that must take place before the first redundancy can take effect in collective redundancy situations; and (5) section 72 of the Enterprise and Regulatory Reform Act 2013 has repealed provisions on third-party harassment and discrimination in sections 40 and 14 of the Equality Act 2010. As Hepple has argued, these reforms suggest that the Government is ‘locked into a model where there is a presumption that regulation interferes with the efficient working of free markets by limiting the employer’s freedom to manage and hire and fire without restraint’.48 Other employment reforms have given greater flexibility to new operators of privatised public services. Public sector employees were historically given additional protection in outsourcing or privatisation situations, beyond that provided by TUPE, by three Codes of Practice: Cabinet Office Statement of Practice on Staff Transfers in the Public Sector 2000 (COSOP); Code of Practice on Workforce Matters in Local Authority Service Contracts 2003 (Local Authority Code); and Code of Practice on Workforce Matters in Public Sector Service Contracts 2005 (Two-tier Workforce Code). In combination, these Codes enhanced TUPE by: (1) enlarging the definition of ‘relevant transfer’ so that contracting exercises would be ‘conducted on the basis that staff will transfer and TUPE should apply, unless there are genuinely exceptional reasons not to do so’ and ‘in circumstances where TUPE does not apply in strict legal terms to certain types of transfer between different parts of the public sector, the principles of TUPE should be followed’ (COSOP); (2) requiring ‘appropriate arrangements to protect occupational pensions, redundancy and severance terms of staff in all these types of transfer’, which in practice meant that public sector employees ought to be offered membership of a pension scheme that provides benefits that are broadly comparable to their public sector scheme (COSOP Annex A: HM Treasury’s Statement of Practice on Staff Transfers from Central Government ‘A Fair Deal for Staff Pensions’);49 and (3) obliging employers to give newly recruited employees50 an overall comparable employment package to transferred (former public sector) staff (Local Authority Code and Two-tier Workforce Code).

48 B Hepple, ‘Back to the future: employment law under the coalition government’ (2013) 42(3) Industrial Law Journal 203. 49 Where transfers are made by Best Value authorities, an employee’s rights derive from the Best Value Authorities Staff Transfers (Pensions) Direction of 2007 rather than COSOP. This places the affected employees in a stronger legal position as they can sue to enforce the authority’s statutory obligations on the basis of s 102 Local Government Act 2003. 50 Albeit that some groups of staff in industries where spot purchasing was common, such as social care workers, were excluded from the Code’s scope.

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These Codes have been subject to much recent revision and reduction. The Two-tier Workforce Code was withdrawn in December 2010, followed by the withdrawal of the Local Authority Code in March 2011. They were replaced with six voluntary ‘principles’ that are supported by the Government as reflecting good employment practice: ‘Principles of Good Employment Practice 2010’. The Cabinet Office described these principles as a ‘more flexible’ tool to open the public procurement market to smaller businesses.51 While there is no difference between the legal status of the Codes and these new principles, the Government’s clear intention was to make the Principles less binding and prescriptive than their predecessor Codes. Indeed, the Cabinet Office has said that they are ‘outside of the formal procurement decision making process’. Reacting to the withdrawal of the Code, the public service trade union, UNISON, commented: The justification for removal is the spurious ground that the code inhibited small and medium sized companies from bidding for public sector contracts. The real impact of removing the code will be to deregulate employment standards for new contracts, leading to competition on terms and conditions, especially given the financial squeeze facing public bodies. TUPE protections remain in place but there will be a downward pressure on terms and conditions, which will inevitably lead to poorer quality services.52

The UK did not include increased potential for horizontal policies in public procurement as one of its key priorities in responding to the EU Green Paper on Modernising Procurement, which has led to the adoption of new procurement directives. The Government’s priorities as reflected in their response are mostly deregulatory.53 Public sector terms and conditions of employment have also been reviewed. The Government reduced redundancy payments for civil servants under the Civil Service Compensation Scheme, through the Superannuation Act 2010.54 In March 2011, the Independent Public Service Pensions Commission, chaired by Lord Hutton of Furness, concluded a ‘fundamental structural review of public service pension provision’. It recommended major changes to public sector pensions, most notably a shift from final salary to career average pensions and increased retirement ages. The 51

See: www.cabinetoffice.gov.uk/news/two-tier-code-withdrawn. Unison, ‘Government abolition of the two-tier code’, January 2011: www.unison.org.uk/ Acrobat/e6488.pdf. 53 See: www.cabinetoffice.gov.uk/resource-library/modernisation-eu-public-procurementpolicy. 54 The PCS union won a judicial review in 2010 when the previous government attempted to cut redundancy payments. The High Court ruled that the union had not consented to the changes, as required by the Superannuation Act 1972. Following enactment of the Superannuation Act 2010, PCS again took judicial review in The Public and Commercial Services Union v Minister for the Civil Service [2011] EWHC 2041 (QB), arguing that there had been a violation of the property rights of their members under Article 1 Protocol 1 of the European Convention on Human Rights. Their challenge was dismissed. 52

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Commission’s recommendations were accepted by the Government in the 2011 Budget as a basis for consultation with trade unions. Another significant conclusion of the Commission was that ‘the Fair Deal policy, coupled with current public service pension structures, creates a barrier to the plurality of public service provision’.55 On this basis, the Government opened consultation on the Fair Deal policy in March 2011, which closed in June 2011. By December 2011, most trade unions had agreed in principle to new pension schemes from 2015, in return for which the Government agreed to keep Fair Deal.56 In conclusion, although private operators must still offer former public sector workers membership of a pension scheme that provides benefits that are broadly comparable to their public sector scheme, reformed public sector pensions will place less of a financial burden upon the new operator. Coupled with the abolition of the Two-tier Code, which will make it easier for the new operator to employ new staff on separate (inferior) terms and conditions of employment, these changes reduce the regulatory burden upon new private operators of public services. They make public services a more attractive investment prospect for the private sector.

2. The ‘Free’ Market Misnomer: Reclaiming the Debate This review of the use of competition in the prison sector exemplifies the unsustainability of government claims that free market competition is neutral or natural. The prison service market has been entirely constructed and sustained by the Government, at a cost by 2006 of £3 billion annually, plus one-off costs of £8.4 billion.57 Far from freely casting prison management contracts aloft into the market, the Government has had a pivotal and close—albeit principally deregulatory—relationship with the market. Consequently, the schism between market and society is fictitious. As Polanyi has argued, ‘The road to the free market was opened and kept open by an enormous increase in continuous, centrally organised and controlled interventionism’.58 This leads to the paradox that Vogel has highlighted that the neo-liberal deregulation movement has not reduced regulation, but rather has increased it. Although it is politically denied, society and the market seem particularly interdependent in respect of what Crouch has described as ‘merit’ goods. These are goods a person can enjoy independently without

55

See: www.hm-treasury.gov.uk/indreview_johnhutton_pensions.htm. Chief Secretary to the Treasury’s statement to the House of Commons, HC Deb 20 December 2011, col 1203. 57 D Whitfield, New Labour’s Attack on Public Services: Modernisation by Marketisation (Nottingham: Spokesman, 2006). 58 K Polanyi, The Great Transformation (Boston: Beacon Press, 1957) 140. 56

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detracting from enjoyment of the same good by someone else. They are distinguishable from other goods because they produce indivisible gains that are enjoyed by the wider population (such as health and education).59 Although imprisonment has multiple and conflicting aims, rehabilitation is sufficiently central (notwithstanding the perceived popularity of penal punitiveness)60 that imprisonment can be seen as an example of a merit good. Consequently, I think a strong argument can be made in favour of characterising the relationship between society and the market as particularly interdependent in the case of prison services. ‘Free’ public service markets are thus misnomers in at least two senses. The first is that the ‘free’ market does not mean unregulated; it means regulated in ways to which most neo-liberals do not object. As Chang has argued, defining what counts as state intervention is highly complicated.61 Most people readily accept a great deal of intervention in the market including, for example, prohibitions upon child labour and measures to abate the environmental impacts of businesses. Regulation in these fields is seldom considered to be (illegitimate) state intervention in the market since the right that is being curtailed by protective regulation is almost universally considered worth protecting from the market.62 By contrast, previous experience of competition in the prison sector and the general direction of employment law reform still appear to accept employment protection as a legitimate object of policy debate. In fact, reducing employment protection has at times been the key desired outcome of competition in some prisons. This contrasts sharply with the Government’s official rhetoric about the purpose and impacts of competition. The second sense in which the ‘free’ market is a misnomer is that where public services are subjected to competition, the market needs to be created and cultivated by its single customer, the state: a public service market does not spontaneously arise. The market must appear credible to current public service operators for contestability to work. Potential private providers need to be wooed. Where private providers are bringing new capital and investment in a way that the public sector cannot, the state must incentivise them to ensure their participation. The nature of early PFI contracts, as described above, provides a good example of such incentivisation. The Government cannot afford to be as neutral about the operation of the market and its

59

Crouch, n 20, 36–37. True public opinion seems less punitive than politicians think; see B Mitchell and J Roberts, Exploring the Mandatory Life Sentence for Murder (Oxford: Hart Publishing, 2012). 61 H Chang, ‘Breaking the mould: an institutionalist political economy alternative to the neo-liberal theory of the market and the state’ (2002) 26 Cambridge Journal of Economics 539, 542. 62 For an overview of how institutions support markets, see H Chang, ‘The Market, the State and Institutions in Economic Development’ in H Chang (ed), Rethinking Development Economics (London: Anthem Press, 2003). 60

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choice of provider as it claims.63 As Taylor and Cooper have argued, ‘The state is no mere cipher, no passive captive of corporate interests but rather, as many observe, is the initiator and driver of the wider capitalist project of neoliberalism, deregulation and globalisation’.64 Competition is a political choice which, notwithstanding the apparent neutrality of the procurement process, seeks to increase the role of the private sector in the provision of public services and thereby decrease the size of the state and its workforce with all the ‘social’ consequences that flow from that (see further chapter four). Neo-liberalism thus mischaracterises the relationship between the market and society. More significantly, it eschews a proper debate about the normative validity of regulation that creates or supports certain types of market rights and obligations (which Chang terms the ‘rights-obligation structure’) and the balance of power between democratic institutions and businesses in constructing that regulatory structure. As Chang has argued: Unless we recognise the ultimately political determination of the rights-obligation structure that underlies market relationships, our discussion on the role of the state will be conducted with the pretence that our own opinions are based on ‘objective’ analyses while those of our opponents are not and therefore are largely ‘politically motivated’.65

Recognising the limited sense in which the market is truly free and characterising the relationship between the (prison) market and society as one of interdependence rather than independence, enables the mechanism and impacts of competition policies and the market deregulation that neo-liberalism espouses to be seen for what they are, namely, a reflection of political choice. Following Patel, I take the view that it is ‘pure ideology to think that the best way for society to function is to let markets seeks profit, and that the best way for markets to function is with minimal interference’.66 Neo-liberalism is not an ‘economically or politically irreversible fait accompli’.67 Markets are not natural; they are ‘human artefacts’68 constructed and directed by government, which has an even more powerful influence in respect of public services than goods and services without this public interest dimension (‘merit goods’).

63 Caldwell et al highlight the importance of market management to retain competitiveness: N Caldwell et al, ‘Promoting competitive markets: the role of public procurement’ (2005) 11 Journal of Purchasing & Supply Management 242. 64 P Taylor and C Cooper, ‘“It was absolute hell”: inside the private prison’ (2008) 32(3) Capital and Class 3, 7. 65 Chang, ‘Breaking the mould’, n 61, 544. 66 Patel, n 9, 22. 67 Jessop, n 18, 6. 68 D Sainsbury, Progressive Capitalism: How to Achieve Economic Growth, Liberty and Social Justice (London: Biteback Publishing, 2013) 89.

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The Government thus cannot hide behind the market and claim to be powerless in the face of any adverse social impacts of its competition policies.69 Unlike private employers, the state has the power to bring about regulatory change and if it so chooses, give greater protection to non-market interests. Markets may have ‘moral [and social] limits’.70 This is what Corby and White argued distinguishes public from private sector employment relationships: ‘The difference is that, unlike the private sector, the fabric of public service employee relations is shot through with the allimportant dimension of political power’.71 Since markets and society in fact exist together on a horizontal rather than hierarchical vertical plane, it is appropriate for regulation to be evaluated from both an economic and social perspective, without the former inexorably triumphing over the latter. Moreover, reconceptualising the relationship between market and society in this way makes it possible to evaluate the interaction between the two institutions (the social and the economic) free from the assumption that markets are natural economic phenomena and that markets and regulation are necessarily antithetical. This leads to a broader and, in my view, more fruitful doctrinal and empirical analysis of the public procurement rules in the chapters that follow as a legislative intermediary between what governments promise competition will achieve, and contractual or performance outcomes in practice. Before moving on to these other legal and empirical strands of work though, chapter four explores the social nature of the ‘rights-obligation structure’ that underpins ‘free’ competitive markets in public services.

69 This argument underlies the work of Professor Steve Tombs. See S Tombs, Regulation ‘After the Crisis’: Social Harm in an Age of Corporate Barbarism (Bristol: Policy Press, forthcoming). 70 M Sandel, What Money Can’t Buy: The Moral Limits of Markets (London: Penguin, 2012). 71 S Corby and G White, ‘From the New Right to New Labour’ in S Corby and G White (eds), Employee Relations in the Public Services: Themes and Issues (London: Routledge, 1999) 3.

4 Social Values, Identities and Sustainability of Competition in Public Service Markets

I

N THIS CHAPTER I examine the sociology of ‘free’ markets and competition in public services. I explore the social values and identities that competition and ‘free’ public service markets produce to render explicit the antisocial nature of the ‘rights-obligation structure’ that underpins mainstream neo-liberal public service competition policies. I then offer a view about the sorts of social relationships and conditions that law and policy ought to support. This provides a normative frame of reference for the chapters that follow. By exploring the sociological impacts of competition in public services, and coupling them with empirical case study evidence from HMP Birmingham, I make the case for British governments to impose firmer social ‘limits’ on markets.

A. THE ANTISOCIAL IMPACTS OF COMPETITION IN PUBLIC SERVICES

Although governments have long contracted with the private sector to source the goods or services they require,1 public procurement, competition and privatisation have been used since the 1980s in a more controversial way, namely to reduce, and in more recent times replace, public sector provision. As will be recalled from chapter one, the social significance of this ‘market triumphalism’ lies in its capacity to restructure public sector employment and industrial relationships. The Commission on Public Private Partnerships has highlighted the direct social costs of Public–Private

1 Public procurement has a long, though scantily researched, history, originating in the UK in any systematic sense it seems with the purchase of military equipment and weaponry in the eighteenth century. See R Neild, Public Corruption: The Dark Side of Social Evolution (London: Anthem Press, 2002) and S Kenney, ‘The foundations of government contracting’ (2007) Journal of Contract Management 7. See also K Thai, ‘Public procurement re-examined’ (2001) 1(1) Journal of Public Procurement 9.

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Partnerships (PPP) and Private Finance Initiative (PFI) schemes, arguing that ‘the term “partnership” has been applied in too many instances where the only discernible impact of public–private working has been a reduction in the terms and conditions of employees’.2 PPP and PFI have also caused indirect social costs by producing private sector services against whose performance and cost publicly managed services can be compared. This gives rise to internal pressures to improve performance and cut costs, which have been referred to as the ‘contestability’ effect.3 In 2004, for example, the Home Office noted that HMPs Dartmoor and Liverpool had transformed their performance in response to ‘the threat of the private sector’.4 Market testing—a type of competitive tendering (to which the public procurement rules apply) in which the current service provider competes against private sector bidders for the right to operate that public service in the future—is even more controversial and socially significant than PPP and PFI. This is because, as Ascher explained, this form of contracting is the ‘only type of tendering exercise that can lead to switches from one type of labour to another, an event that raises a number of delicate questions’.5 Unlike the partnership ‘new build’ models before it, market testing raises the possibility of the transfer of public services from public to private management. The transfer of HMP Birmingham from the public to private sector is one of only a few (but increasing) examples of an operational public service that has been ‘privatised’ in this way in the UK.6 Such management transfers entail identity changes on two levels: first, a change as to who delivers public services on a daily basis; and second, for the public servants who currently deliver those services, the identity and occupational ethos of their employer (if they continue to have a job). Even if the public sector wins in a market test, that process will, at its very least, entail the contractualisation of the relationship between the competed service and its commissioning government department, through a Service Level Agreement (SLA). Since intra-public sector relationships are often less formally defined than an SLA, competitive processes almost inevitably reshape a competed organisation’s institutional relationships. Likewise, competitive processes per se exert similar pressures upon working practices, organisational cultures and employment relations that are perceived as 2 Commission on Public Private Partnerships, Building Better Partnerships (London: Institute for Public Policy Research, 2001) 52. 3 M Gosling, ‘Contestability and the future of the Probation Service’ (2006) 167 Criminal Lawyer 3. 4 Home Office, Reducing Crime, Changing Lives: The Government’s Plans for Transforming the Management of Offenders (London: Home Office, 2004) 10. 5 K Ascher, The Politics of Privatisation (London: Macmillan, 1987) 11. 6 For other examples, see Circle’s involvement at Hinchingbrooke hospital and G4S’ running of police custodial services for Lincolnshire Police. If the Government sees through its plans for probation privatisation, many former probation trust employees will be transferred to the employ of private companies.

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‘uncompetitive’ and ‘inefficient’. The following sections explore the literature and empirical evidence about the effects of competition upon public sector (employer) organisations and their staff, focusing where possible particularly upon the prison sector.

1. Reshaping Governance and Public Values in Public Service Delivery It follows from what was described above that competition policies in the public sector have led to an increase in the use of contracts by government (with the private sector), as a tool of risk–benefit allocation and management: contractors can be held to account directly through contract for the cost and quality of services that they promise to deliver. Peter VincentJones has described this contractualisation of public life as the ‘new public contracting’ and has presented an empirical and theoretical critique. His central argument is that the pervasive use of contracting leads to ‘practical problems and deficiencies in legal accountability and control’.7 Contracts thus risk placing too much power, without sufficient accountability, into the hands of new service providers.8 This concern has been shared by many scholars, some of whom have highlighted the ‘moral’ and symbolic significance of service provision by the state.9 This has led some to suggest that, even if high levels of accountability could be ensured, there should be limits to the areas of public life that may be legitimately contracted for or delivered by the private sector.10 There has been particular criticism of allowing the private sector to have a role in the delivery of criminal justice and security.11 Some commentators have argued that the private sector’s involvement in the delivery of certain public

7 P Vincent-Jones, The New Public Contracting: Regulation, Responsiveness, Relationality (Oxford: OUP, 2006) vii. 8 See also M Freedland, ‘Public law and private finance: placing PFI in its public law frame’ [1998] Public Law 288. 9 M Minogue, ‘Should flawed models of public management be exported? Issues and practices’ (2000) Public Policy and Management Series, University of Manchester Working Paper No 15; N Padfield, ‘A Critical Perspective on Private Prisons in England and Wales’ in N Capus et al, Public–Prive: Vers un nouveau partage du controle de la criminalite? (Chur: Verlag Rüegger, 2006); and J Andrew, ‘Prisons, the profit motive and other challenges to accountability’ (2007) 18 Critical Perspectives on Accounting 877. A concern for accountability has led some to argue that the freedom of information regime ought to be extended: Public Accounts Committee, Lessons from PFI and other projects, Forty-fourth Report (HC 2010–12, 1201). 10 See, eg, A Crawford, ‘Contractual governance of deviant behaviour’ (2003) 30(4) Journal of Law and Society 479 and O Hart, A Shleifer and R Vishny, ‘The proper scope of government: theory and an application to prisons’ (1997) The Quarterly Journal of Economics 1127. 11 Feeley, for example, has argued that prison privatisation expands social control: M Feeley, ‘Entrepreneurs of punishment: the legacy of privatization’ (2002) 4 Punishment & Society 321.

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services, particularly those which are coercive, is ‘morally hazardous’.12 In November 2009, the Israeli Supreme Court held that a national law, which enabled Israeli prisons to be operated and managed by private profit-seeking companies, was unconstitutional.13 The very principle of prison privatisation was held to violate prospective prisoners’ rights to individual liberty and human dignity.14 Other scholars, such as Harding and Twinn, have argued that contracting out is ‘a tool, a vehicle, and like all tools, it is of itself neutral. The use made of it can be good or bad, depending on how that use is decided, directed and controlled’.15 Logan went further and argued that contracting out public services can improve due process.16 Logan and others answer critics of privatisation in the security and criminal justice fields by arguing that private companies are only involved in the administration of punishment, not its allocation (for which the judiciary remains responsible).17 Kolderie has drawn a similar distinction in respect of public services more generally, characterising the provision of public services as a policy decision, in contrast to the production of a service which he has characterised as a merely administrative action.18 In both cases, these are rather unpersuasive distinctions, since they readily disintegrate, not least in the prison sector where private prison staff enjoy the same wide discretion to respond to prisoner misbehaviour as public prison staff. The exercise of this discretion can result in the alteration of a prisoner’s conditions of confinement or the restriction of his access to the telephone, television and association with other prisoners. Disciplinary decisions will also affect whether a prisoner will be released from prison on licence, on Home Detention Curfew, up to three months earlier than his scheduled release date. This is clearly allocating, rather than merely administering, punishment.

12 J DiIulio, ‘What’s wrong with private prisons?’ (1988) 92 The Public Interest 66; D Shichor, ‘Private prisons in perspective: some conceptual issues’ (1998) 37(1) Howard Journal of Criminal Justice 82; D D’Amico, ‘The business ethics of incarceration: the moral implications of treating prisons like businesses’ (2009) 31 Reason Papers 125; A White, The Politics of Private Security: Regulation, Reform and Re-Legitimation (Basingstoke: Palgrave, 2010); and A Thumala, B Goold and I Loader, ‘A tainted trade? Moral ambivalence and legitimation work in the private security industry’ (2011) 62(2) British Journal of Sociology 283. 13 Academic Center of Law & Business, Human Rights Division v Minister of Finance, HCJ 2605/05, Israeli Supreme Court sitting as the High Court of Justice. 14 See further B Medina, ‘Constitutional limits to privatization: the Israeli Supreme Court decision to invalidate prison privatization’ (2010) 8(4) International Journal of Constitutional Law 690. 15 S Twinn, ‘Contracting Out is Here to Stay’ in Prison Reform Trust, Privatisation and Market Testing in the Prison Service (London: Prison Reform Trust, 1994) 37 and R Harding, Private Prisons and Public Accountability (Buckingham: Open University Press, 1997). 16 C Logan, Private Prisons: Cons and Pros (New York: OUP, 1990) 41. 17 See, eg, Harding, Private Prisons and Public Accountability, n 15. 18 T Kolderie, ‘The two different concepts of privatization’ (1986) 46 Public Administration Review 285.

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Less prominent in the literature, but nevertheless important, has been discussion about the impact of contracting out public services upon broader ‘governance’ values. This hinges on the notion that there is something unique about the public sector that distinguishes it from the private sector.19 Corby and White have argued that the difference is that the ‘fabric of public service employment relations is shot through with the all-important dimension of power’.20 Differentiating public values have been said to include independence, collective working, cohesion of public service delivery, equity, stakeholder input, incorruptibility, reliability and a guiding public interest ethic.21 Some authors have derived sets of specific public values through empirical research, although research in this field is not well developed, and has not, thus far, sought insights from public services that have transferred to private sector management.22 Notwithstanding the uncertainty in the literature as to the existence and nature of public sector values, there still seems to be a perception in practice that values differ between the public and private sectors. A failure to recognise these values has been said to hamper attempts to improve public services. In 2003, the Organisation for Economic Co-operation and Development (OECD) identified ‘a failure to understand that public management arrangements not only deliver public services, but also enshrine deeper governance values’ as one of three factors that has limited the success of public sector reforms.23 This sentiment was shared more recently by the Police Federation. Raising concerns about G4S signing a contract with Lincolnshire Police to design, build and run a police station in February 2012, it highlighted that police force staff have an ‘enshrined sense of public

19 G Stoker, ‘Public value management: a new narrative for networked governance?’ (2006) 36(1) American Review of Public Administration 41. 20 S Corby and G White, ‘From the New Right to New Labour’ in S Corby and G White (eds), Employee Relations in the Public Services: Themes and Issues (London: Routledge, 1999) 3. Fredman and Morris also identify five distinguishing characteristics of the state as an employer: S Fredman and G Morris, The State as Employer: Labour Law in the Public Services (London: Mansell, 1989) 6. 21 See A Lawton, Ethical Management for the Public Services (Buckingham: Open University Press, 1998); J O’Flynn, ‘From new public management to public value: paradigmatic change and managerial implications’ (2007) 66(3) Australian Journal of Public Administration 353; OECD, ‘Public Sector Modernisation’ (2003) Policy Brief; R Gregory, ‘Social capital theory and administrative reform: maintaining ethical probity in public service’ (1999) 59(1) Public Administration Review 63; K Kernaghan, ‘The post-bureaucratic organization and public service values’ (2000) 66 International Review of Administrative Sciences 91; and S Lyons, L Duxbury and C Higgins, ‘A comparison of the values and commitment of private sector, public sector and parapublic sector employees’ (2006) Public Administration Review 605. 22 Z Van der Wahl, G de Graaf and K Lasthuizen, ‘What’s valued most? A comparative empirical study on the differences and similarities between the organizational values of the public and private sector’ (2008) 86(2) Public Administration 465 and T Beck Jørgensen, ‘Public values, their nature, stability and change: the case of Denmark’ (2006) 30(3) Public Administration Quarterly 365. 23 OECD, n 21, 3.

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duty which private employees may not’.24 The extent and role of differences between public and private sector employment values is a field that would benefit from further empirical exploration. There was some empirical evidence from interviews with staff at HMP Birmingham that suggested a perception of ‘difference’ between themselves and their private sector counterparts and a ‘loss’ of something valuable and of which they could be proud when they became G4S employees (see further in chapter six).

2. Reshaping Individual and Collective Employment Rights and Obligations Even in the absence of a management transfer, the existence of a credible threat of an alternative (private) service provider exerts pressure upon the current provider to improve performance and cut costs (the ‘contestability effect’). Since public services are labour intensive, an important potential source of increased efficiency lies in decreasing the number of staff employed and reducing their terms and conditions of employment. Employees and the trade unions that represent them might agree to job losses or variation in terms and conditions in order to forestall competition, and the fear of even more detrimental change.25 In the prison sector, it is widely accepted that competition policies have been pursued in order to achieve a reallocation of power between the National Offender Management Service (NOMS) and staff/trade unions (particularly the Prison Officers’ Association (POA)). Competition has been used to force through workplace changes to which staff would not otherwise have agreed (as was discussed further in chapter three).26

24 See: www.bbc.co.uk/news/uk-england-lincolnshire-17119617. In April 2012, G4S entered into a 10-year ‘strategic partnership’ with Lincolnshire Police, valued at £200 million, to provide the Police with a range of mostly administrative services. A year into the contract, staff who had transferred to G4S employment were said to be ‘unhappy’: www.thisislincolnshire.co.uk/G4Sstaff-Lincolnshire-Police-unhappy-says-union/story-18597536-detail/story.html#axzz2Vv3jR5gy. In the wake of G4S’ problems with security staffing at the London Olympics in summer 2012, the Bedfordshire, Cambridgeshire and Hertfordshire Strategic Police Alliance discontinued negotiations with G4S to provide them with similar services to Lincolnshire Police: www.independent. co.uk/news/uk/home-news/major-blow-to-g4s-as-police-multimillionpound-deal-to-outsourceservices-collapses-8471986.html. 25 See, eg, P Jalette and R Hebdon, ‘Unions and privatization: opening the “black box”’ (2012) 65(1) Industrial and Labor Relations Review 17; J Walsh and J O’Flynn, ‘Managing through contracts: the employment effects of Compulsory Competitive Tendering in Australian local government’ (2000) 31(5) Industrial Relations Journal 454; and S Rimmer, ‘Competitive tendering and contracting: theory and research’ (1994) 3 The Australian Economic Review 79. 26 See further J Bennett and A Wahidin, ‘Industrial Relations in Prisons’ in J Bennett, B Crewe and A Wahidin (eds), Understanding Prison Staff (Cullompton: Willan Publishing, 2007) ch 7 and S Sachdev, ‘Private Punishment? An Examination of the Expansion, Development and Employment Relations of Private Prisons’ in M Hough, R Allen and E Solomon (eds), Tackling Prison Overcrowding (Bristol: Policy Press, 2008). Richard Harding has also itemised the perceived obstructionism of the unionised prison workforce in his list of impetuses for prison

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Despite political statements of support for high levels of employment protection in public sector contracting, research by the National Audit Office (NAO) has demonstrated that material employment detriment (especially job losses and pay and pension reductions) can result from PFI and PPP schemes.27 Notwithstanding the research’s limitations, its findings are consistent with the arguments advanced by the Commission for Public–Private Partnerships (see section A, above). Moreover, support for its fundamental proposition, namely that employment detriment often arises from the contracting out of public services, or at least the proposition that the public sector model of employment is shifting away from full-time, permanent contracts of employment, can be found in other research.28 A number of (now somewhat dated) studies demonstrated increases in the use of short or fixed-term contracts29 and part-time workers in public services between the mid-1980s and late 1990s, which coincides with the introduction of New Public Management (NPM), competitive tendering, PPP and PFI.30 The use of such contracts has been found to have a disproportionate impact upon female workers.31 Colling, the Public Services Privatisation Research Unit, and Ganley and Grahl have all demonstrated that contractors secure their competitive advantages by reducing the terms and conditions of employment of public sector staff that are transferred to them.32 Case studies have found post-transfer reductions in jobs (between 12.2 per cent and 21 per cent), pay, hours, employment benefits and the withdrawal of bonus schemes.33 privatisation: R Harding, ‘Private Prisons’ in M Tonry and J Petersilia (eds), Crime and Justice: A Review of Research vol 28 (Chicago: University of Chicago Press, 2001) 269. 27

NAO, Protecting Staff in PPP/PFI Deals (London: NAO, 2008). See K Stone and H Arthurs (eds), Rethinking Workplace Regulation: Beyond the Standard Contract of Employment (New York: Russell Sage Foundation Press, 2013). 29 B Casey, H Metcalf and N Millward, Employers’ Use of Flexible Labour (London: Policy Studies Institute, 1997) and M Cully et al, Britain at Work: As Depicted by the 1998 Workplace Employment Relations Survey (London: Routledge, 1999). 30 N Millward, A Bryson and J Forth, All Change at Work?: British Employment Relations 1980–98, Portrayed by the Workplace Industrial Relations Survey (New York: Routledge, 2000) and I McIntosh and J Broderick, ‘Neither one thing nor the other: compulsory competitive tendering and Southburgh cleansing services’ (1996) 10(3) Work, Employment and Society 413. 31 Equal Opportunities Commission, The Gender Impact of CCT in Local Government (London: HMSO, 1995). 32 T Colling, ‘Contracting public services: the management of compulsory competitive tendering in two county councils’ (1993) 3(4) Human Resource Management Journal 1; J Ganley and J Grahl, ‘Competition and efficiency in refuse collection: a critical comment’ (1988) 9(1) Fiscal Studies 80; and Public Services Privatisation Unit, Privatisation: Disaster for Quality (London: Public Services Privatisation Unit, 1992). 33 T Colling and A Ferner, ‘Privatisation and Marketization’ in P Edwards (ed), Industrial Relations: Theory and Practice in Britain (Oxford: Blackwell, 1995); McIntosh and Broderick, n 30; and S Bach, ‘Too high a price to pay? A study of competitive tendering for domestic services in the NHS’ (1989) Industrial Relations Research Unit, University of Warwick, Warwick Papers in Industrial Relations. 28

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Job losses and negative changes to terms and conditions of employment have been found to fall disproportionately on minority groups of staff.34 Brandt and Schulten have argued that the public sector has become a ‘reservoir for decent jobs for low and medium qualified workers’.35 As Jaffe highlighted, ‘these are the very workers most likely to be outsourced to the private sector and who have the weakest market power’.36 Ascher has described the ‘overwhelming evidence that contractors select only the youngest and strongest applicants from the former in-house staff’.37 And Sachdev reported a ‘notorious incident’ in which ‘a contracting firm rejected two mentally handicapped men who had been sweeping the streets of one local authority for twenty years. (“We don’t have any room for the ‘John Dawsons’ and ‘Peter Smiths’ of this world” was what the firm reputedly told the press)’.38 There is also some evidence that family friendly policies are more prevalent in the public than private sector.39 This led Dickens to argue that there is ‘an unacknowledged contradiction in public policy in seeking women’s employment equality through anti-discrimination legislation … while simultaneously undermining this goal in other areas of economic, legal and social policy’.40 Research has also demonstrated that competition policies in public services have had an impact upon collective employment rights and protections. As Colling argued, NPM has presented public sector management with the ‘opportunity to reconstruct their collective employment relations. Confining trade union influence to local operational matters has been a key consequence of reform and sometimes an explicit objective’.41 Several authors have noted a general decrease in the use of collective bargaining to determine pay in public sector workplaces and the dismantling of national

34 Equal Opportunities Commission, n 31; M Jaffe, B McKenna and L Venner, Equal Pay, Privatisation and Procurement (Liverpool: Institute of Employment Rights, 2008); Equal Opportunities Commission for Northern Ireland, Report on Formal Investigation into Competitive Tendering in Health and Education Services in Northern Ireland (Belfast: EOCNI, 1996); and B Hinds, The Northern Ireland Economy: Women on the Edge, A Comprehensive Analysis of the Impacts of the Financial Crisis (Belfast: Women’s Resource and Development Agency, 2011). 35 T Brandt and T Schulten, ‘The impact of liberalisation and privatisation on labour relations’ Policy Paper 2 in PIQUE (Privatisation of Public Services and the Impact on Quality, Employment and Productivity) 3: pique.at/reports/pubs/PIQUE_PP5.pdf. 36 M Jaffe, ‘Protecting Public Service Workers: Procuring Employment Rights’ (London: UNISON, May 2012) 12. 37 Ascher, n 5, 106. 38 S Sachdev (a report for UNISON), ‘Contracting Culture: From CCT to PPPs’ (November 2001) 16. 39 Cully et al, n 29, 145. 40 L Dickens, ‘Public sector competitive tendering: the missing equality dimension’ (1997) 26(2) Industrial Law Journal 177, 180. 41 T Colling, ‘Tendering and Outsourcing: Working in the Contract State?’ in S Corby and G White (eds), Employee Relations in the Public Services: Themes and Issues (London: Routledge, 1999) 144.

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collective bargaining structures in favour of local, and if possible, individual employee negotiations.42 This is hardly surprising if the view of Nicholas Ridley (a minister in the Thatcher Government) is still taken as representative of the dominant (if now less openly acknowledged) political consensus: ‘The root cause of rotten local services lies in the grip which local government unions have over those services in many parts of the country … Our competitive tendering provisions will smash that grip once and for all’.43 The decreased trade union credibility and membership that results from competition may lead to longer-term collective bargaining difficulties. Ascher has argued that competitive tendering can be thought of as ‘a zerosum game, in which the Government and the public sector trade unions are the players: the greater the efficiency savings, the more dramatic effect upon union members’.44 After transfer of public services into the private sector, where trade unions continue to be recognised, ‘bargaining units may be defined restrictively and the negotiating structures and terms of reference are left open to local discretion’.45 However, with some notable exceptions, few scholars have given detailed consideration to the impact of NPM upon trade union strategy and relationships.46 While there is evidence that some non-union firms engage in highly progressive human resources practices, there is also evidence that a diminished role for trade unions in the workplace leads to a weakening in terms and conditions of employment.47 Further exploration of this field is merited. The data at Birmingham yielded some helpful insights into the impact of competition upon relationships between trade unions, their members and the employer. It also yielded some tentative insights into individual employment relationship impacts though it has not been possible to collect detailed ‘before’ and ‘after’ data about terms and conditions of employment (see further chapter six). Finally, there has been consideration in the literature of how the procurement of public services might impact upon government attempts to increase employment standards by using policy or ‘soft law’ mechanisms. One of the benefits of in-house public sector employment is the capacity to implement employment standards that exceed statutory minima, consistently

42 Cully et al, n 29; N Millward et al, Workplace Industrial Relations in Transition (Aldershot: Dartford, 1992); and D Martin, ‘The removal of workplace partnership in the UK Civil Service: a trade union perspective’ (2010) 41(3) Industrial Relations Journal 218. 43 Nicholas Ridley, quoted in Colling, ‘Tendering and Outsourcing’, n 41, 139. 44 Ascher, n 5, 97. 45 Colling, ‘Tendering and Outsourcing’, n 41, 144. 46 S Bach and R Givan, ‘Public service modernization and trade union reform: towards managerial led renewal?’ (2008) 86(2) Public Administration 523; and Jalette and Hebdon, n 25. 47 Contrast F Foulkes, Personnel Policies in Large Nonunion Companies (Michigan: Prentice Hall, 1980) with D Guest and K Hoque, ‘The good, the bad and the ugly: human resource management in new non-union establishments’ (1994) 5(1) Human Resource Management Journal 1.

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and across high numbers of employees. The state’s power and workforce size means that it is in a position to be a ‘model’ employer and set ‘gold standards’ in employment practice. The contracting out of public services tends to reduce the possibilities for this by fragmenting the workforce and divesting the state of its employer responsibilities. As Colling explained, the ‘centre is disempowered and can no longer drive policies forward’.48 This may be one of the (unspoken) benefits of contracting out from the Government’s perspective. However, research has identified this as problematic, particularly for equality in employment, where standards can easily be eroded as a consequence of less effective monitoring and decreased effectiveness of human resources policies, as managerial discretion increases and costs are squeezed.49 The decreases in individual and collective employment standards, which the contracting out of public services appears to cause, may suggest that the Transfer of Undertakings (Protection of Employment) (TUPE) Regulations, which are intended to protect staff working for businesses that are being transferred, are not as effective from a social sustainability perspective as they might be. The deficiencies of TUPE may be compounded or multiplied in cases where businesses are transferred as a result of public procurement processes, as in public service privatisation. This is because of the restrictions that the public procurement rules place upon a contracting authority’s ability to use procurement decisions to further social protection objectives (such as workforce diversity, worker recruitment and training or minimum terms and conditions of employment): known as (socially) sustainable procurement or contract compliance.50 The restrictive nature of the public procurement rules in this respect arises from the limited scope available to governments within the rules to include social factors that go beyond statutory minima in their specification and evaluation of tenders. An economic definition of value for money makes it difficult to impose a contractual condition relating to social protection that exceeds statutory minima.51 However, the law in this field is still a focus of considerable academic legal debate, the contours of which are explored, alongside TUPE, in detail

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Colling, ‘Tendering and Outsourcing’, n 41, 106. Commission for Racial Equality, Appointing NHS Consultants and Senior Registrars: A Report of a Formal Investigation (London: Commission for Racial Equality, 1996); Commission for Racial Equality, Ministry of Defence (Household Cavalry): Report of a Formal Investigation (London: Commission for Racial Equality, 1996); Equal Opportunities Commission, nn 31 and 34; and Equal Opportunities Commission, Women and Organisational Change (Manchester: Equal Opportunities Commission, 1995). 50 Sustainability encompasses broader concerns, most notably environmental protection or enforcement of human rights standards. See S Arrowsmith and P Kunzlik (eds), Social and Environmental Policies in EC Procurement Law: New Directives and New Directions (Cambridge: CUP, 2009). 51 C Barnard, ‘Procurement Law to Enforce Labour Standards’ in G Davidov and B Langille (eds), The Idea of Labour Law (Oxford: OUP, 2011). 49

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in chapter five. For now though, it suffices to signpost the potentially aggravating influence of the procurement process upon social protection in a competition context and highlight the deficiencies in our understanding of how procurement law and employment law/policy (particularly TUPE) interface in practice. There has been little empirical exploration of the extent to which contracting authorities address human resources issues in drafting contract specifications and award criteria, despite evidence in some cases that the contracting process was a root cause of industrial conflict post-transfer.52 We therefore do not know whether social considerations are taken into account during a tendering process in practice and if they are, what sort of social conditions are imposed, and how effectively they operate. There are some examples of apparent good practice, particularly the Greater London Authority’s ‘Responsible Procurement’ policy and the West Midlands ‘Common Standard for Equalities’. Brammer and Walker also found strong evidence of worker safety being taken into account in the public procurement exercises that they evaluated.53 The authors of a report commissioned by the Equality and Human Rights Commission found evidence of some good intention in respect of supplier diversity in the procurement policies of the London 2012 Olympics.54 However, the criticism that contracting authorities have inadequate regard for workforce matters in their procurement decisions remains,55 as does criticism of TUPE and the public procurement rules that appear to share some responsibility for these antisocial practices. There is too little empirical evidence to move the debate forward.

3. The Organisational, Cultural and Performance Impacts of Competition Competitive processes in public services thus seldom seem to be without employment impact. Even if the current service provider retains management of the facility, competition challenges the incumbent provider to enhance the 52 Sachdev reports that the ‘short term perspective of the tendering system operated by London transport’ was identified by the ACAS appointed arbitrator as at the root of the problem which led to a dispute involving London Buses: Sachdev, ‘Contracting Culture: From CCT to PPPs’, n 38, 15. 53 See: www.london.gov.uk/rp/policy;/, www.wmf-commonstandardforequalities.gov. uk/wmf/portal.nsf/fcontent?readform&docid=SD-BDEX-7DXCUZ&contentid=1.003; and S Brammer and H Walker, ‘Sustainable procurement practice in the public sector: an international comparative study’ (2007) University of Bath School of Management Working Paper Series 16. 54 D Smallbone, J Kitching, R Athayde and M Xheneti, Procurement and Supplier Diversity in the 2012 Olympics, Research Report 6 (Manchester: Equality and Human Rights Commission, 2008). 55 Transport Committee, Thameslink Rolling Stock Procurement, Eleventh Report (HC 2010–12, 1453) 12 and ODPM, ‘Local Government Act 1999: Part 1—Best value and performance improvement’ ODPM circular 03/2003 (13 March 2003) 10.

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efficiency and effectiveness of its service provision and demonstrate that it offers best value for money for the taxpayer. The labour-intensive nature of the service industry suggests that the current service provider’s success often comes with an employment ‘cost’ attached. There may be (compulsory) redundancies, changes to working practices and culture (such as increased emphasis upon performance management) or workplace reorganisation and changes to individual occupational roles and functions. The contractualisation of the relationship between the commissioning body and service provider, often by virtue of an SLA, generates a new sense of commercial urgency, necessity and accountability to make these employment changes. Consequently, competition impacts upon the occupational culture, values and social capital of a competed organisation.56 A basic division runs through the relevant literature. Most authors take the view that the contracting out of public services leads either to cultural and service quality degradation, or (potentially) to empowerment and innovation.57 A few advance the ‘blended outcome’ thesis,58 which, in employment terms, embodies the European Commission’s perception of the ‘ideal’ balance between flexibility and security, so-called ‘flexicurity’.59 Despite political confidence in competition policies to deliver cost reductions and service quality improvements in public services, there is limited empirical evidence to support these assertions.60 In the prison context, there are examples of high quality services and positive staff cultures (respectful, ordered and professional) in both publicly and privately managed prisons. Conversely, there are examples of bad practice and poor staff cultures in both sectors. There is not a straightforward relationship between who owns or manages a prison and the quality of the services it provides. Research has, however, confirmed the centrality of prison officers through their relationships with prisoners, to determining prison performance and the quality of prison life.61 Prison staff are key intermediaries

56 R Sennett, The Culture of the New Capitalism (New Haven: Yale University Press, 2006) 63–71. 57 For discussion in hospital context, see S Bach and R Givan, ‘Regulating employment conditions in a hospital network: the case of the Private Finance Initiative’ (2010) 20(4) Human Resource Management Journal 424. 58 H Frederickson, ‘Public ethics and the new managerialism: an axiomatic theory’ in H Frederickson and R Ghere (eds), Ethics in Public Management (London: ME Sharpe, 2005) and Kernaghan, n 21. 59 On flexicurity see R Boyer, ‘Employment and Decent Work in the Era of “Flexicurity”’ (2006) DESA Working Paper No 32 ST/ESA/2006/DWP/3. 60 There are conflicting arguments on cost and quality variations between the two sectors. See, eg, B Lundahl et al, ‘Prison privatization: a meta-analysis of cost and quality of confinement indicators’ (2009) 19 Research on Social Work Practice 383. 61 A Liebling (assisted by H Arnold), Prisons and their Moral Performance: A Study of Values, Quality and Prison Life, Clarendon Studies in Criminology (Oxford: OUP, 2004).

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in securing institutional legitimacy and order.62 HR policies, staff recruitment, deployment and management are thus significant determinants of the quality and performance of prisons and arguably also other public services. Public and private prisons typically have very different staffing models, policies and occupational cultures. However, once again, it is not clear which approach is preferable from a service quality perspective, since research has indicated that both models present different problems. Research has found indications of the development of a traditional (negative) culture among uniformed staff in some of the more established and higher performing private sector establishments.63 Since private prisons have been so far mostly new build establishments, private operators have typically been able to recruit new staff, at locally competitive wage rates. This means that private prison staff generally receive lower salaries and poorer employment benefits (notably sick pay, holiday entitlement and pensions) than their public sector counterparts.64 New buildings enable greater reliance upon technology and, together with greater expectations of multitasking and cross-deployment from staff, this means that private prisons operate on lower staffing levels than most public prisons. By virtue of recruiting new staff, private operators are able to mould staff in a fresh set of workplace norms and values. This has contributed to the high performance of some private prisons in areas such as ‘decency’, ‘humanity’ and ‘trust’. Even in struggling private sector establishments, staff have reported feeling relatively safe and have expressed high levels of trust in their managers. Relative to the public sector, notwithstanding their inferior terms and conditions of employment, uniformed private prison staff have been found to be more positive about their work and their employers.65 However, because private prison staff are often new to custodial work, they are frequently less experienced than their public sector counterparts. Staff turnover is generally high, owing partly to the workforce’s inferior terms and conditions of employment.66 A consequence of this inexperience 62 R Sparks, A Bottoms and W Hay, Prisons and the Problem of Order (Oxford: Clarendon, 1996). 63 See B Crewe, A Liebling and S Hulley, ‘Staff culture, use of authority and prisoner quality of life in public and private sector prisons’ (2011) 44(1) Australian and New Zealand Journal of Criminology 94. 64 MCG Consulting, Privately Managed Custodial Services, report commissioned by the Prison Service Pay Review Body, September 2006: www.ome.uk.com/downloads/ DLA-MCG%20report.pdf; and C Andrews, Contracted and Publicly Managed Prisons: Cost and Staffing Comparisons 1997–1998 (London: Prison Service, 2000). Although see Maltby and Gosling who contend that staffing costs are not directly comparable: P Maltby and T Gosling, Ending the ‘Two-Tier’ Workforce (London: Institute of Public Policy Research, 2003). 65 Crewe, Liebling and Hulley, n 63. 66 P Young, The Prison Cell: The Start of a Better Approach to Prison Management (London: Adam Smith Institute, 1987) 15 and 37 and Prison Service Pay Review Body, Second Report on England and Wales (Cm 5719, 2003) 32.

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and high turnover is that some private prison staff have been found to under-use their power or use it in arbitrary ways, and under-police the establishment. This presents clear risks to good order and safety. Furthermore, private prison staff are generally less knowledgeable about the prison system than public sector staff.67 Prisoners in private sector establishments have reported feeling that staff lacked expertise. This has caused some prisoners to feel more frustrated and stressed by their prison experiences than in publicly managed prisons. Together, these features of private prisons have been conceptualised as ‘light’.68 Private sector staff are ‘absent’, or insufficiently active, in managing trouble. By contrast, public sector prisons are staffed by a nationally recruited workforce that is employed in accordance with nationally negotiated terms and conditions of employment and with strong trade union input. There is a military-like chain of command and hierarchy within the workforce such that staff can be visualised as forming much more of a pyramid than the flatter oblong more typical of the private sector. Terms and conditions of employment are generally better than in the private sector (in 2004, the average basic pay for a prison officer in the public sector was £8000 higher than a private sector custody officer).69 Staffing levels are generally higher and staff often intend to remain working in their establishment until they retire. Staff turnover is low, albeit that this presents its own problems.70 Staff may feel unable to leave, despite feeling and manifesting dissatisfaction with their work or role, because they consider it unlikely that they would be able to find equally generous terms and conditions elsewhere. These differences between the sectors in their ‘typical’ employment relationships may explain why staff in public sector prisons have been found to be more likely to adhere to a ‘traditional’ (negative, resistant) culture than their private sector counterparts. Such a culture has been related to negative consequences for prisoners, including feelings of unfairness, punishment and lack of care, leading to low performance in dimensions in which privately managed prisons tend to perform more strongly, especially the ‘harmony’ dimension. The ‘harmony’ dimension encompasses ‘decency’ (assessing agreement with statements such as ‘prisoners spend too long locked up in their cells in this prison’ and ‘anyone who harms themselves is considered by staff to be more of an attention-seeker than someone who needs care and help’) and ‘humanity’ (‘I am treated as a person of value in

67 Young, n 66; Prison Service Pay Review Body, Second Report, n 66; N Padfield, Understanding Recall (2011) Legal Studies Research Paper 2/2013 (January 2013). 68 B Crewe, ‘Soft power in prison: implications for staff–prisoner relationships, liberty and legitimacy’ (2011) 8(6) European Journal of Criminology 455. 69 MCG Consulting, n 64; Andrews, n 64. 70 ibid.

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this prison’ and ‘staff here treat me with kindness’).71 This leads to what has been conceptualised as a ‘present-heavy’ (as opposed to ‘absent-light’) prison experience.72 On the other hand, greater experience and knowledge among the public sector workforce has also been found to be related to a more positive traditional-professional orientation, with staff using power with greater sophistication, to achieve order and safety as well as getting things done for prisoners, which prisoners have welcomed. This has led to higher performance scores in public sector prisons than private sector prisons on some ‘harmony’ dimensions and most ‘security’ and ‘staff professionalism’ dimensions, such as institutional respect, staff–prisoner relationships and staff use of authority.73 There are grounds, then, for evaluating the impact of competition upon approaches to staff recruitment, deployment and management. Both sectors have different performance strengths, in which, on the basis of existing research, staffing policies and practices seem to play an important role. Treatment of prison staff during competitive processes may influence their future occupational identity and role, and the values and organisational ethos of NOMS as their current employer. Even in the absence of a labour transfer from the public to the private sector, competition has been described critically as a ‘harsh exercise in self-justification, a matter of compelling staff to demonstrate that they are at least as competitive as the best of their private sector competitors’.74 As Ascher has argued, competition processes can be damaging to service quality per se: [U]ncertainty surrounding the tendering process has a damaging effect upon the morale of the existing staff. Not all understand the mechanics of the tendering process; most are extremely concerned that they will lose their job. The operating environment becomes much less secure and working conditions deteriorate in three main ways: job losses, pay reductions and changes to conditions of service.75

The mere process of competition can strain relationships between staff and managers76 and adversely affect the quality of service provision as it is experienced by service users.77 Davis-Blake and Broschak have argued that

71

Crewe, Liebling and Hulley, n 63. Crewe, n 68. 73 S Hulley, A Liebling and B Crewe, ‘Respect in prisons: prisoners’ experiences of respect in public and private sector prisons’ (2011) 11(5) Criminology & Criminal Justice 1. 74 S Bryans, ‘The market testing of prisons: ideology, economics and reality’ (1996) 104 Prison Service Journal 38. 75 Ascher, n 5, 104–05. 76 S Bryans, ‘Prison Governors: New Public Managers?’ in J Bennett, B Crewe and A Wahidin (eds), Understanding Prison Staff (Cullompton: Willan Publishing, 2007). 77 J Warr, ‘Personal Reflections on Prison Staff’ in J Bennett, B Crewe and A Wahidin (eds), Understanding Prison Staff (Cullompton: Willan Publishing, 2007)26. 72

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the cultural and organisational impacts of competition can negate the entire purpose of competition as it was originally intended: Regardless of the managerial motives for outsourcing activities, the limited available evidence suggests that outsourcing is likely to affect organizational structure and culture, although some of those effects are not anticipated or even necessarily understood by managers who make outsourcing decisions. Indeed, some of these effects may negate the desired purpose of outsourcing arrangements.78

Consequently, the manner in which the procurement rules shape the process of competition, and thereby shape staff cultures, alter a workforce’s composition or structure, and impact upon the performance of public services, is an important object of enquiry. Since even outside the prisons field there are few precedents for the transfer of operational public services to private management in the UK, there is limited empirical evidence of the cultural and performance impacts of public procurement exercises.79 Criminological research into differences between the performance and cultures of public and private prisons has necessarily been in the context of purely publicly or privately managed prisons. It is thus not clear how the different approaches to staffing and performance in the two sectors might interact with, and affect, each other. The transfer of HMP Birmingham from the public sector into private management provides a new and, in the prisons context thus far, unique research opportunity to re-evaluate and build upon our existing understanding of the relationship between performance, staff culture and workforce policies and practices. Notwithstanding the limited previous empirical research in a public procurement context, there is a wide management/human resources literature on the cultural and organisational impacts of other types of business restructuring that might usefully be drawn upon. There is also a literature on public sector strengths (and weaknesses) and therefore the potential losses (and gains) incurred by contracting out public services to the private sector.80 An important starting point is that a change in how an employing organisation operates, or a change in its values, can be just as worrying and potentially damaging to employees as formal changes to terms and conditions of employment. These changes may violate the unwritten, reciprocal expectations between employer and employee that have been referred to as the ‘psychological contract’. This is not a contract in any legal sense and it

78 A Davis-Blake and J Broschak, ‘Outsourcing and the changing nature of work’ (2009) 35 Annual Review of Sociology 321, 333. 79 The limited nature of the literature in this field is partly reflected in the broad list of future research directions suggested in Davis-Blake and Broschak, n 78, 336–37. 80 H de Bruijn and W Dicke, ‘Strategies for safeguarding public values in liberalized utility sectors’ (2006) 84(3) Public Administration 717.

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has conceptual difficulties.81 However, the psychological contract arises in practice because contracts of employment are only incomplete reflections of the ‘real’ employment relationship that operates on a day to day basis. As Guest has explained, the ‘socialization process for any newcomer to the organization and the social information processing that occurs, results in assumptions about appropriate behaviour and expectations about the consequences of conforming or transgressing which go beyond the formal employment contract’.82 This is especially true where the employment relationship is long-standing, as are many relationships in the public sector. Although the precise content of the psychological contract is disputed, drawing upon fieldwork conducted in the UK, Herriot, Pemberton and Hawtin have suggested that it comprises principally aspects of the work environment, pay and fairness.83 The concept serves as a helpful encapsulation of the perceptions and consequent obligations that flow between the parties to an employment relationship. Following the literature on the distinctiveness of public sector values and ethos, we would expect these perceptions to be different as between the parties to a private sector employment relationship from those of a public sector relationship.84 Differences in the psychological contracts of staff, and how those contracts might change over time where labour is transferred from one sector to the other, are under-explored in the literature.85 The psychological contract can provide guidance as to which (non-legal) employment rights and obligations and organisational values employees consider to be important. It can provide a model through which the consequences of transgression of these (non-legal) rights, obligations and values can be explored.86 Progressive human resources practices (underpinned by an empirical understanding of the role of organisational values) are important in both a normative and instrumental sense. Organisational values, such as procedural fairness and equal treatment, shape and reflect employee perceptions of job satisfaction, job security, workforce morale

81 D Guest, ‘Is the psychological contract worth taking seriously?’ (1998) 19 Journal of Organizational Behavior 649. 82 ibid, 651. 83 P Herriot, C Pemberton and E Hawtin, ‘The career attitudes and intentions of managers in the finance sector’ (1996) 7(2) British Journal of Management 181. See also PSYCONES, Psychological Contracts across Employment Situations (Brussels: Directorate-General for Research, European Commission, 2006). 84 Z van der Wal, ‘The content and context of organizational ethics’ (2011) 89(2) Public Administration 644; Lyons, Duxbury and Higgins, n 21; and Kernaghan, n 21. 85 See, however, Hebsen et al for some consideration of these issues in the PFI context: G Hebsen et al, ‘PPPs and the changing public sector ethos’ (2003) 17(3) Work, Employment & Society 481. 86 E Wolfe Morrison and S Robinson, ‘When employees feel betrayed: a model of how psychological contract violation develops’ (1997) 22(1) The Academy of Management Review 26.

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and legitimacy.87 In the context of mergers and acquisitions, uncertainty has been associated with lower morale, job dissatisfaction, unproductive behaviour, decreased organisational citizenship and increased staff turnover and stress.88 Likewise, communication and fair processes have been identified as of great importance.89 It has been demonstrated that employment culture and work ethos affect business performance (including success in innovation) and the acceptance and consequent cooperation of employees with organisational change.90 Davy et al attributed human resource problems as responsible for between a third and a half of all merger failures.91 In the context of the UK National Health Service, Walsh et al argued that any efficiency gains arising from contracting out public services can be offset by the damage that can be done to trust and collaboration among the workforce.92 Cutler and Waine emphasised the damaging effects of NPM upon public sector workforce morale.93 Contracting out has little chance of improving the quality of public services if the procurement process and the behaviours of the new operator do not carry the workforce with it. It is therefore important to understand how the procurement rules interact with these workforce and organisational values. There is also reason to pay particular attention to the normative impacts of procurement upon the psychological contract in the public sector. As Burchell, Lapido and Wilkinson have argued, privatisation of public services has become the definite proof for all citizens that jobs are no longer

87 See, eg, R Larsson and M Lubatkin, ‘Achieving acculturation in mergers and acquisitions: an international case study’ (2001) 54(12) Human Relations 1573 and S Chatterjee et al, ‘Cultural differences and shareholder value in related mergers: linking equity and human capital’ (1992) 13(5) Strategic Management Journal 319. 88 S Cartwright and C Cooper, Mergers and Acquisitions: The Human Factor (Oxford: Butterworth Heinemann, 1992); M Sinetar, ‘Mergers, morale and productivity’ (1981) 60 Personnel Journal 863; J Davy et al, ‘After the merger: dealing with people’s uncertainty’ (1988) Training and Development Journal 57; and D Schweiger and L Ivancevich, ‘Human resources: the forgotten factor in mergers and acquisitions’ (1985) Personnel Administrator 47. 89 Schweiger and Ivancevich, n 88; D Schweiger and A Denisi, ‘Communication with employees following a merger: a longitudinal field experiment’ (1991) 34(1) Academy of Management Journal 110; and on procedural legitimacy and compliance, T Tyler, Why People Obey the Law (New Jersey: Princeton University Press, 2006). 90 See, eg, P Herriot and C Pemberton, ‘Facilitating new deals’ (1997) 7(1) Human Resource Management Journal 45 and E George, ‘External solutions and internal problems: the effects of employment externalization on internal workers’ attitudes’ (2003) 14(4) Organization Science 386. 91 Davy et al, n 88. See also A Buono and J Bowditch, The Human Side of Mergers and Acquisitions (San Francisco: Jossey-Bass, 1989). 92 K Walsh et al, Contracting for Change: Contracts in Health, Social Care and Other Local Government Services (Oxford: OUP, 1997). For recent research in health care, see Z Cooper, S Gibbons, S Jones and A McGuire, ‘Does competition improve public hospitals’ efficiency? Evidence from a quasi-experiment in the English National Health Service’ (2012) LSE Centre for Economic Performance Discussion Paper No 1125 and J Le Grand, ‘Choice and competition in publicly funded health care’ (2009) 4(4) Health Economics, Policy and Law 479. 93 T Cutler and B Waine, Managing the Welfare State (Oxford: Berg, 1994).

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secure, even in the public sector.94 Since public employment is often seen as the last bastion of ‘traditional’ employment relationships (hierarchical, stable, permanent and based upon loyalty), the state’s conduct as contracting authority and employer matters not only to public sector workers, but to all workers. The state’s conduct and the changing nature of public service employment bargains have wider symbolic value.95 As Kalleberg noted: Creating insecurity for many people, has pervasive consequences not only for the nature of work, workplaces and people’s work experiences, but also for many non-work individual (eg education and health), social (eg family, community), and political (eg stability, democratization) outcomes.96

This brings this chapter to the precipice of a broader, macro-sociological perspective on competition and its social impacts, to which section B now turns.

B. COMPETITION AND THE MACRO-SOCIAL CONDITION

Macro-sociology offers insight into the nature of modern society and the forces that are shaping it. It provides a picture of the world that describes common high level developments and reflects upon their significance and meaning for individuals. Two sociologists, Anthony Giddens and Richard Sennett, have been particularly helpful and influential in shaping my thinking about the relationship between competition in public services and employment, culture, values and performance in those competed services. Giddens has argued that we are living in an era that he refers to as ‘late modernity’. For Giddens, modernity refers to a phase in social development (‘modes of social life or organisation’), ‘which emerged in Europe from about the seventeenth century onwards and which subsequently became more or less worldwide in their influence’.97 In The Consequences of Modernity, Giddens presents an institutional analysis of modernity and examines its impacts upon culture and social fabric. He argues that we are living in an era where tradition, localism and predictability have been

94 B Burchell, D Lapido and F Wilkinson, Job Insecurity and Work Intensification (London: Routledge, 2002). 95 For further discussion of the nature of public service bargains, see C Hood and M Lodge, The Politics of Public Service Bargains (Oxford: OUP, 2006). 96 A Kalleberg, ‘Precarious work, insecure workers: employment relations in transition’ (2009) 71 American Sociological Review 1, 2. See also K Sisson, ‘Why employment relations matter’ (2009) 92 Warwick Papers in Industrial Relations and Jahoda’s five ‘latent psychological benefits of employment’ in M Jahoda, ‘The impact of unemployment in the thirties and seventies’ (1979) 32 British Psychological Society Bulletin 309. For a more general, powerful discussion of the impact of austerity and neo-liberal policies, see D Stuckler and S Basu, The Body Economic: Why Austerity Kills (London: Penguin, 2013). 97 A Giddens, The Consequences of Modernity (Stanford: Stanford University Press, 1990).

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replaced by doubt, globalism, an erosion of trust, unfettered marketisation and insecurity: the ‘disembedding processes of modernity’. The rise of individualism, globalisation, technological innovation and the fragmentation of social institutions are developments that are closely associated with this era. Bauman has described this state of affairs as ‘liquid modernity’.98 The disembedding processes of modernity have restructured social relationships at both an institutional and an individual level.99 Giddens developed his account of the impacts of modernity upon individuals in Modernity and Self-Identity: ‘Modernity must be understood on an institutional level; yet the transmutations introduced by modern institutions interlace in a direct way with individual life and therefore with the self’. One of the distinctive features of modernity is an increasing interconnection between the two ‘extremes’ of extensionality (the external) and intentionality (the internal): an increased relationship and interaction between globalising influences and personal spheres.100 As Liebling and Lacey have described, the ‘psychological “habitus”’ of late modern individuals includes ‘economic and ontological insecurity, resentment, powerlessness, anxiety and lack of trust’. ‘For the excluded, there is humiliation and disrespect, along with a sense of alienation which comes with relative deprivation in a world which prizes material success and purports to offer equal opportunity. Identities are fragile’.101 Giddens is not the only sociologist to have presented a theory about current social conditions, nor has his theory been without criticism.102 Giddens’s account of modernity differs from most preceding it in its rejection of the post-modernity thesis. According to the latter view, the world’s previous social order ended and a new state of affairs was established in the late twentieth century. Giddens contends instead that the world is simply moving into a period of ‘late modernity’, ‘in which the consequences of modernity are becoming more radicalised and universalised than before’. For the purpose of this book though, the precise designation of the current era matters less than the overarching theoretical steer that Giddens is able to provide. It is therefore not necessary to engage with Giddens’s critics in detail, not least because a significant proportion of his modernity thesis has attracted consensus. Perhaps this is because its underlying proposition—that social life is now more fragmented and precarious, and less

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Z Bauman, Liquid Modernity (Cambridge: Polity Press, 2000). See also J Young, The Vertigo of Late Modernity (London: Sage, 2007). 100 A Giddens, Modernity and Self-Identity: Self and Society in the Late Modern Age (Cambridge: Polity Press in association with Blackwell, 1991) 1. 101 A Liebling and N Lacey, submission to the British Academy project on Crime, Punishment and the Prison (2014). 102 See, eg, J Clark, C Modgil and S Modgil (eds), Anthony Giddens: Consensus and Controversy (Bristol: Falmer Press, 1990) and C Bryant and D Jary (eds), Anthony Giddens: Critical Assessments (London: Routledge, 1996). 99

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trusting—feels like a valid reflection of our collective lived experiences. It is the ability of Giddens’s analysis (together with Sennett’s—see below) to articulate and correlate institutional changes (competition in public services as a manifestation of late modern marketisation) and individual impacts (the restructuring of public service employment relationships) that makes his work so attractive and instructive for the subject matter of this book. Giddens’s thesis provided a narrative against which empirical findings began to make sense. It provided a basic map with which themes of trust, risk, relationship and adaptation could begin to be explored. At the empirical analysis stage, Giddens’s late modernity was supplemented by Sennett’s The Corrosion of Character, The Culture of the New Capitalism and Together: The Rituals, Pleasures and Politics of Cooperation.103 Sennett’s work resonated strongly with what was being observed in the field (see further chapter six onwards). Like Giddens, Sennett has sought to articulate the nature of the current era and its cultural impacts. His account has attempted to bridge the institutional and individual impacts of late modernity. But Sennett’s thesis is more narrowly drawn than Giddens’s since it excludes analysis of three of the four ‘institutions of modernity’, namely industrialism, military power and surveillance, and focuses solely upon current experiences of an impatient and short-term capitalism: ‘the new capitalism’. This narrower focus rendered it immediately and particularly useful in analysing and understanding the data from HMP Birmingham. Sennett’s main argument is that the structural changes that have been involved in dismantling the ‘iron cage of bureaucracy’ have produced three ‘social deficits’: low institutional loyalty, diminished informal trust among workers and weakened institutional knowledge. Taken together, these social deficits reduce ‘social capital’104 and create ‘the spectre of uselessness’. A new form of power has been situated simultaneously within the flexible organisation. Flexibility is demanded in terms of both employee number and function. This increases job insecurity and labour commodification. It decreases the role for collective institutions, most notably trade unions. Employment in both an individual and institutional sense has been transformed: ‘In these ways, the social has been diminished; capitalism remains’.105 103 R Sennett, The Corrosion of Character (New York: WM Norton & Company Ltd, 1998); Sennett, The Culture of the New Capitalism, n 56; and R Sennett, Together: The Rituals, Pleasures and Politics of Cooperation (London: Penguin, 2012). 104 ‘Social capital’ is a term taken from sociological theory that emphasises the positive consequences of sociability and highlights how non-economic values and features can be important sources of power and success. Its origins lie in R Putnam, Bowling Alone: The Collapse and Revival of American Community (New York: Simon & Schuster, 2000). For discussion of the definition and origin of the term, see A Portes, ‘Social capital: its origins and applications in modern sociology’ (1998) 24 Annual Review of Sociology 1. The term has been subject to criticism on the grounds of its definitional elusiveness and wide-ranging, uncritical application. See, eg, B Fines, ‘They f**k you up those social capitalists’ (2002) 34(4) Antipode 796. 105 Sennett, The Culture of the New Capitalism, n 56, 82.

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Sennett’s analysis resonates strongly with the analyses of employment relationships at more micro levels in the literature that was discussed in the preceding sections of this chapter. It tends to suggest that the ‘rightsobligation structure’ that underpins the use of competition in public services is weighted in favour of commercial and corporate interests (‘market values’) over social interests (‘non-market values’). At best, competition might be able to stimulate innovation, reduce costs and professionalise the delivery and management of public services. But there are risks that, following Sennett’s thesis, institutional loyalty, knowledge and informal trust may become replaced by flexibility, insecurity and distrust. Such a state of affairs seems likely to prove socially unsustainable and it may jeopardise, rather than improve as was intended, the long-term quality of public services. Both Giddens and Sennett’s theses suggest that competition should be seen as part of a broader, systematic feature of late modern or new capitalist life: it is a dominant social condition. Analysing competition in this way helps to render visible the connections between apparently disparate fields and policies, opening up the terms of debate in work that has an apparently narrow focus (as it does here, on competition resulting in the transfer of a workforce and the public procurement rules) and providing a sufficiently broad conceptual framework to enable the authors of such work to find common ground with those working in other fields but sharing an interest in constructing a critical narrative or competing ideology with neo-liberalism.

C. SOCIAL SUSTAINABILITY: A COUNTER-NARRATIVE

The previous sections of this chapter have painted a picture of the antisocial impacts of competition in public services. They have described job loss, eroded terms and conditions of employment, the disempowerment of collective representative institutions (particularly trade unions) and the rise of a fragmented, insecure, untrusting, performance driven workplace culture. Implicit in all this has been the contention that these are negative, unsustainable developments; that the apparent ‘gains’ of public service competition—cost savings and secure, accountable and innovative service provision by virtue of contractual relationships and dynamic service provider markets—are either not all that they seem or, in any event, simply come at too high a social cost. There is good evidence on which to base arguments that the benefits of competition in public services are less than are claimed or, more strongly, are illusory. Research has highlighted the ‘hidden’ costs of competition (incurred for example in monitoring contracts, engaging the market and running the procurement processes) and the monopolistic tendencies of British public service markets (dominated by only a few international outsourcing companies, particularly Serco and G4S). Moreover, as G4S’ failure

100 Social Values, Identities and Sustainability to provide adequate staff at the 2012 London Olympics demonstrates, the Government does not by outsourcing or privatisation devolve itself of responsibility for delivering essential public services. Where private companies fail to deliver the Government must ‘step in’. The security, accountability and transfer of responsibility that outsourcing and privatisation is said to achieve thus can be seen as more of a perception than reality. But even if we accept that public service competition, outsourcing and privatisation may produce some economic or service performance benefits, it is possible to make the case that the social costs or dis-benefits of the processes that are said to achieve these gains are unacceptably high. This perspective is potentially a more fundamental critique in that it can withstand (some) arguments and evidence about the ‘gains’ produced by competition. The extent to which account is taken of competition’s ‘gains’ in my analysis, reflects to a large extent the view that I take about what labour law is, and what it should achieve. There is now a wide range of views and conceptions about labour law and its goals, arranged roughly along a spectrum from the traditional Kahn-Freund view at one end and the more recent labour market view at the other. This chapter concludes by outlining some of the most significant schools of thought and explaining which conception has been adopted in this study, and why. According to the traditional view, labour law’s core normative ‘task’ is to counteract the subordination that results from ‘inequality of bargaining power which is inherent and must be inherent in the employment relationship’, through the creation of individual employment rights and collective social power on the workers’ side.106 Thus, traditionally conceived, the scope of labour law is limited to the employment relationship and the collective bargaining process. As Collins has argued, the coherence of this traditional subordination basis for labour law suffers from the blanket assumption it makes about employees enjoying unequal bargaining power at all times and in all circumstances.107 Globalisation, changing patterns of work—particularly the rise of atypical and ‘precarious’ work108—the declines in worker organisation through trade unions and in labour as a class and social movement, and the rise of a neo-liberal economics that views labour regulation as an imposition on flexibility and efficiency, have challenged labour law’s traditionally conceived emphasis upon formal legal institutions and law that regulates long-term, stable contracts of employment. As Mitchell has described, these changes mean that labour law is no

106 P Davies and M Freedland (eds), Kahn-Freund’s Labour and the Law, 3rd edn (London: Stevens & Son, 1983) 18–19. 107 H Collins, ‘Labour law as a vocation’ (1989) 105 Law Quarterly Review 468. 108 Precariousness is particularly associated with Standing’s The Precariat: G Standing, The Precariat: The New Dangerous Class (London: Bloomsbury, 2011).

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longer ‘anchored by a social and economic context in which it was once embedded’.109 For some labour law scholars, these changing labour market practices and conditions raise a fundamental normative challenge which, unless addressed, risks the discipline losing, or at least blunting, its ‘critical edge’.110 Freedland has been at the forefront of articulating the source of ‘anxiety’ for some labour law scholars: It is a fear that, as one extends the frontiers of labour law to include contracts of relationships formerly regarded as outside the territory, because they are more in the nature of business contracts of relationships with independent contractors, so one risks foregoing the normative claim for labour law to constitute an autonomous legal domain within which inequality of bargaining power between worker and employer may be taken for granted, and where protection of the worker against unfair exploitation is therefore a paramount and systemic rationale for law-making and for adjudication.111

Responses to this ‘anxiety’ have varied. Some have denied the normative challenge, arguing that the challenge is mostly empirical and that labour law’s traditional core assumptions hold true. Applying this logic, labour law should continue its work as before, centred upon notions of ‘humanity’, ‘dignity’ and ‘social justice’, and simply adapt to new structures and forms of mobilisation.112 Others have struck more fundamental challenges. Hepple, for example, has questioned the utility of normative theory at all, arguing that labour law ‘is not an exercise in applied ethics’.113 More dramatically, some have foretold the ‘death’ of labour law,114 arguing that the field’s ‘theoretical pantry’ is now bare.115 Others still have argued in favour of the constitutionalisation of labour rights (‘labour rights as

109 R Mitchell, ‘Where are we going in labour law? Some thoughts on a field of scholarship and policy in process of change’ (2010) Monash University Workplace and Corporate Law Research Group Working Paper No 16, 13. 110 Collins, ‘Labour law as a vocation’, n 107, 482. 111 M Freedland, ‘From the contract of employment to the personal work nexus’ (2006) 35(1) Industrial Law Journal 1, 28–29. 112 See, eg, R Dukes, ‘Hugo Sinzheimer and the Constitutional Function of Labour Law’, M Weiss, ‘Re-Inventing Labour Law?’ and H Arthurs, ‘Labour Law After Labour’ in G Davidov and B Langille (eds), The Idea of Labour Law (Oxford: OUP, 2011). 113 B Hepple, ‘Factors Influencing the Making and Transformation of Labour Law in Europe’ in G Davidov and B Langille (eds), The Idea of Labour Law (Oxford: OUP, 2011). 114 See, eg, K Ewing, ‘The death of labour law?’ (1988) 8 Oxford Journal of Legal Studies 293; D Davis, ‘Death of a Labour Lawyer?’ in J Conaghan, R Fischl and K Klare (eds), Labour Law in an Era of Globalisation (Oxford: OUP, 2002); and P O’Higgins, ‘The End of Labour Law As We Have Known It?’ in C Barnard, S Deakin and G Morris (eds), The Future of Labour Law: Liber Amicorum Sir Bob Hepple QC (Oxford: Hart Publishing, 2004). 115 A Hyde, ‘The Idea of the Idea of Labour Law: A Parable’ in G Davidov and B Langille (eds), The Idea of Labour Law (Oxford: OUP, 2011).

102 Social Values, Identities and Sustainability human rights’)116 or in favour of a new ‘paradigm’117 built around the labour market.118 This latter labour market school of thought has been particularly informed by the influential work of Davies and Freedland from 1984 onwards in which they suggest the reformulation of labour law based on the labour market, owing to their view that the traditional conception of labour law now lacks explanatory and normative power. Viewed through the labour market prism, labour law is redefined as a field concerned with regulation (including state administrative action), rather than just law, and concerned with a wide range of regulatory issues affecting the organisation of labour supply and demand, rather than just the contract of employment and the collective bargaining process.119 As Deakin has described, this has normative implications since it acknowledges ‘that labour law performs a multiplicity of purposes beyond its traditional protective ones, including the promotion of employment opportunities, and conceivably, economic goals such as competitiveness’.120 This normative reorientation has been received critically by some scholars. Some of the work described above, which has re-emphasised the role of traditional protective labour law concerns, has been motivated in part by a desire to expressly or implicitly doubt, or dilute, Freedland and Davies’s idea of labour law. Writing in 1989, Collins expressed direct concern about Freedland and Davies’s new model, arguing that, without a clearer ‘vocation’, it risked ‘dissolv[ing] into simply another economistic exercise of evaluation of the efficiency of market regulation’.121 Freedland has similarly acknowledged that the labour market view risks resulting in ‘a normatively crippling compromise with the economic and social neutrality of general private contract and commercial law’.122 Collins has therefore argued in favour of retaining labour law’s traditional focus on the subordination of labour to capital, but thinking more carefully about the source and nature of that subordination. Notwithstanding its critics and shortcomings, my view is that the labour market analysis is leaving a lasting legacy that has shaped scholars’ 116 P Alston (ed), Labour Rights as Human Rights (Oxford: OUP, 2005); H Collins, ‘Theories of Rights as Justifications for Labour Law’ in G Davidov and B Langille (eds), The Idea of Labour Law (Oxford: OUP, 2011). See also V Mantouvalou, ‘The right to work in the European Convention on Human Rights: key normative concerns’ in Cambridge Yearbook of European Legal Studies, Vol 16, 2013–2014 (Oxford: Hart Publishing, 2014). 117 S Deakin, ‘A new paradigm for labour law?’ (2007) 31 Melbourne University Law Review 1161. 118 See, eg, C Arup et al (eds), Labour Law and Labour Market Regulation: Essays on the Construction, Constitution and Regulation of Labour Markets and Work Relationships (Sydney: The Federation Press, 2006). 119 P Davies and M Freedland, Labour Law: Text and Materials, 2nd edn (London: Weidenfeld and Nicholson, 1984). 120 Deakin, ‘A new paradigm for labour law?’ n 117, 1162. 121 Collins, ‘Labour law as a vocation’, n 107, 482. 122 Freedland, ‘From the contract of employment to the personal work nexus’, n 111, 29.

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collective understanding about the scope of the field and our disciplinary goals. Although some scholars have continued to resist its ‘pull’,123 labour market concerns now often feature alongside more traditional labour concerns in scholars’ attempts to conceptualise the discipline’s goals. Collins has included ‘competitiveness’ alongside ‘social inclusion’ and ‘citizenship’ in his analysis of labour law’s three goals.124 Similarly, Befort and Budd describe labour law’s goals as ‘efficiency’, ‘equity’ and ‘voice’125 and Davies reconceptualises the field along a spectrum of ‘economics’ and ‘human rights’.126 From a pragmatic perspective recognising the multiplicity of potential policy aims in labour law instruments seems to be a more realistic, and thus potentially more fruitful, basis on which to engage with policymakers. For the purposes of this study, the labour market analysis seemed to provide the most suitable and convincing framework within which to explore the public procurement rules and TUPE. This is because the core functions of the public procurement rules are transparency and non-discrimination, rather than worker protection. The rules thus do not readily fall within labour law’s traditionally conceived narrower scope of interest. They are, however, accommodated by the labour market analysis’s broader perspective and interest in a wide range of regulation that constitutes and shapes the labour market, given their obvious importance in the restructuring of public services.127 Moreover, although the TUPE Regulations are more directly concerned with worker protection, the policy motivations that led to their enactment were not straightforwardly protective. As I argue in chapter five, by reference to Freedland and Barnard’s work, TUPE was adopted to a large extent in an effort to neutralise opposition, particularly on the part of trade unions, to the business restructuring that was expected to follow growth in the EU’s internal market. It is perhaps unsurprising then, that the level of protection TUPE affords staff is not in practice as strong or as useful as it first might seem (see further chapters one and five). This particular policy history seems better captured and reflected by the labour market analysis, which recognises the multiplicity of labour law’s regulatory aims, including for example competitiveness and efficiency alongside social protection. Having adopted the labour market view is seems necessary to briefly reflect upon the normative impact of that decision, given that one of the major criti123 See, eg, Ewing’s analysis of labour law’s goals (social justice and democracy): K Ewing, ‘Democratic socialism and labour law’ (1995) 24 Industrial Law Journal 103, 111. 124 H Collins, Employment Law (Oxford: OUP, 2010) 20–25. 125 S Befort and J Budd, Invisible Hands, Invisible Objects: Bringing Workplace Law & Public Policy Into Focus (Stanford: Stanford University Press, 2009). 126 A Davies, Perspectives on Labour Law, 2nd edn (Cambridge: CUP, 2009) chs 2–3. 127 See C Barnard, ‘Using Procurement Law to Enforce Labour Standards’ in G Davidov and B Langille (eds), The Idea of Labour Law (Oxford: OUP, 2011).

104 Social Values, Identities and Sustainability cisms of this school of thought is that it lacks firm, independent normative foundations. I think it is possible to draw a distinction between recognising the multiplicity of labour law’s potential aims and accepting all those aims as well conceived or as of the importance that their neo-liberal policymaking context ascribes to them. My view is that the labour market conception of labour law does not necessarily adopt the false neo-liberal opposition between security and flexibility. There is no inherent antagonism between the labour market view and more traditional conceptions of the field: labour law scholars taking a labour market conception of their discipline can still take social justice and protection as their central concerns; they just explore this by reference to other (economic) concerns and interests within a broader policy and regulatory context. The potential ‘gap’ between labour lawyers and economists and their goals can be bridged by evaluating economic goals by reference to criteria whose normative underpinnings focus on welfare, rather than merely income growth. Sen’s Capabilities Approach is an example of work that offers rich possibilities in this respect: an intellectual vehicle by which dominant economic ideology can be resisted and probed.128 Sen’s work has been harnessed by labour lawyers,129 particularly since 1999 when Supiot and colleagues presented their ‘Sen inspired’ report on the transformation of work and the future of labour law in Europe to the European Commission.130 In short, Sen argues that (economic) policy 128 See A Sen, ‘Equality of What?’ Tanner Lecture on Human Values, Stanford University, May 22 1979; A Sen, Commodities and Capabilities (Oxford: OUP, 1999); A Sen, Inequality Re-examined (Oxford: OUP, 1992); A Sen (edited with M Nussbaum), The Quality of Life (Oxford: OUP, 1993); A Sen, Development as Freedom (Oxford: OUP, 1999); and A Sen, The Idea of Justice (Cambridge MA: Harvard University Press, 2009). See also M Nussbaum, Frontiers of Justice: Disability, Nationality, Species Membership (Cambridge MA: Harvard University Press, 2006) and M Nussbaum, Creating Capabilities: The Human Development Approach (Cambridge MA: Harvard University Press, 2011). 129 See especially Deakin’s work, including: S Deakin, ‘The ‘capability’ concept and the evolution of European social policy’ (2005) University of Cambridge ESRC Centre for Business Research Working Paper No 303; S Deakin, ‘Capacitas: Contract Law, Capabilities and the Legal Foundations of the Market’ in S Deakin and A Supiot (eds,) Capacitas: Contract Law and the Institutional Preconditions of a Market Economy (Oxford: Hart Publishing, 2009); and S Deakin, ‘The Contribution of Labour Law to Economic and Human Development’ in G Davidov and B Langille (eds), The Idea of Labour Law (Oxford: OUP, 2011). See also K Kolben ‘Labour Regulation, Human Capacities and Industrial Citizenship’ in S Marshall (ed), Promoting Decent Work: The Role of Labour Law, report to DIALOGUE section (Geneva, ILO, 2010); J Fudge, ‘Labour as a “Fictive Commodity”: Radically Reconceptualizing Labour Law’ in G Davidov and B Langille (eds), The Idea of Labour Law (Oxford: OUP, 2011); and B Langille, ‘Labour Law’s Theory of Justice’ in G Davidov and B Langille (eds), The Idea of Labour Law (Oxford: OUP, 2011). For critique see, eg, G Davidov, Notes, debates and communications ‘The (changing?) idea of labour law’ (2007) 146 International Labour Review 311 and M von Broembsen, ‘A new “constituting narrative” for labour law: a critique of development and making a case for Fraser’s conception of social justice’ (Labour Law Research Network conference, Barcelona, June 2013). 130 A Supiot (ed), Beyond Employment. Changes in Work and the Future of Labour Law in Europe (Oxford: OUP, 2001). See also C Barnard, S Deakin and R Hobbs, ‘Capabilities and rights: an emerging agenda for social policy?’ (2001) 32(5) Industrial Relations Journal 464.

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should be evaluated by reference to the extent to which it gives people ‘capabilities’: real opportunities (‘functionings’ and ‘freedoms’) to do and be what people have reason to value. The most important consequence of this analysis for labour law is that the Capabilities Approach recognises that it is necessary for people to enjoy a range of social rights in order for them to participate meaningfully in the market. Thus, unlike neoclassical economic accounts, there is no straightforward or necessary negative correlation between regulatory ‘burden’ and economic performance.131 Deregulation is not always ‘the answer’ and, viewed through Sen’s capabilities lens, labour law can be thought of more positively as providing ‘institutionalised capabilities’; necessary prerequisites for human well-being and development. As Barnard, Deakin and Hobbs have argued, this ‘implies a rejection of the [neoclassical economic] argument that social regulation of the employment relationship necessarily entails economic “costs” which must be weighed in the balance against the social gains thereby achieved’.132 This is consistent with the arguments advanced in chapter three of this book that there is not an inherently antithetical relationship between markets or growth and regulation or necessarily an independent or hierarchical relationship between markets and society. It is also consistent with evidence from the literature, and the argument that runs implicitly throughout this book, that labour law should be seen as a necessary, market constituting input for long-term, inclusive social prosperity. References to ‘social unsustainability’ in this book thus describe a state of affairs in which there is an unwarranted domination of economic over social interests because law and policy reflect the neo-liberal assumption that there is inherent opposition between the two rather than adopting a market constituting analysis (such as Sen’s). To that extent, Sen’s approach provides a useful normative ‘backcloth’ against which TUPE and the public procurement rules are doctrinally evaluated in chapter five and the empirical data from Birmingham are presented in chapters six and seven.

131 There is growing evidence in the literature to support this in the labour law field: See S Deakin and P Sarkar, ‘Assessing the long-run economic impact of labour law systems: a theoretical reappraisal and analysis of new time series data’ (2008) University of Cambridge Centre for Business Research Working Paper No 367; E. Jordan et al, Employment Regulation. Part A: Employer Perceptions and the Impact of Employment Regulation (BIS, Employment Relations Research Series 123, March 2013); B Amable, L Demmou and D Gatti, ‘Employment performance and institutions: new answers to an old question’ (2007) IZA Discussion Paper No 2731; R Freeman, ‘Labour market institutions without blinders: the debate over flexibility and labour market performance’ (2005) NBER Working Paper No 11286; H Feldmann, ‘The quality of industrial relations and unemployment around the world’ (2008) 99 Economics Letters 200; and C McLaughlin, ‘Challenging the neo-liberal prescription: the industrial relations lessons from Denmark, Ireland and New Zealand’ (Fifth International Conference in Commemoration of Marco Biagi, University of Modena, March 2007). 132 Barnard, Deakin and Hobbs, n 130, 466.

5 The Public Procurement Rules: Creating a Socially Sustainable Regulatory Framework for Public Service Competition?

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N CHAPTER THREE I argued that, properly conceived, the relationship between market and society is one of interdependence rather than independence. In chapter four I argued that the ‘rights-obligation structure’ that underpins mainstream neo-liberal public service competition policies is antisocial and unsustainable in the sense of reflecting neo-liberal assumptions about the oppositional relationship between market and non-market values. Following these arguments, the questions for this chapter are first, what sort of regulatory framework has the state chosen to structure public service competition and second, what is the position of non-market interests within that framework and what might that analysis suggest about the ideology of law and policy in this field? As is made clear in chapter one, the Transfer of Undertakings (Protection of Employment) Regulations (TUPE) and the public procurement rules both have potential to afford some protection to staff working in public services that are put out to tender. I do not propose to analyse TUPE any further than I have already done in earlier chapters (see particularly chapter one, section E). This is because the textual analysis of TUPE is somewhat more straightforward than the public procurement rules. It is also because my predominant interest in the TUPE Regulations for this book lies in their practical application and interaction with the procurement rules more than in any freestanding doctrinal analysis. This chapter therefore focuses exclusively on the public procurement rules and seeks to answer three questions. First, how did the current law on public procurement come to exist, and what are its key features (sections A and B)? Second, what is the position of non-market (principally social) interests within that framework? And third, how consistent is that position with the historical development of the procurement rules and the EU’s competence in the field and social aims and objectives (sections C and D)? My overarching argument is that the European Commission’s interpretation of the procurement rules is not

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justified in light of the legal basis of the rules and their original objectives, and that it is, and ought to be, possible for contracting authorities to put into practice a socially sustainable vision of public procurement.

A. DEVELOPMENT OF PUBLIC PROCUREMENT REGULATION

Governments have long bought goods and services from the private sector. As Thai recounts: Written on a red clay tablet, found in Syria, the earliest procurement order dates from between 2400 and 2800 BC … Other evidence of historical procurement includes the development of the silk trade between China and a Greek colony in 800 BC.1

In more recent history, governments have bought goods and services from the private sector because the public sector lacked expertise or resources to produce them in-house. However, the scale of public procurement markets today strongly reflects political choice; a desire to reduce the size of the state and the scale and benefits of public sector employment, as described in chapters three and four. There was little regulation of early public procurement. Governments were free to contract with whoever and on whatever terms they wished.2 According to Keeney, civil servants were frequently unpaid and so took a cut of what they could from contractors. The British field army had developed a slightly more systematic approach to procurement by the mid-eighteenth century but the system’s main objective was still simply to obtain the supplies that were required from the area in which the army was operating.3 There was little concern about opening up the market to increase competition since, prior to the Industrial Revolution, commercial and social mobility were low. The first significant regulation of public procurement occurred in 1891, when the House of Commons passed the Fair Wages Resolution. This was an administrative directive to the executive that required contractors working on government contracts to guarantee ‘payment of the rate of wages generally accepted as current for a competent workman in his trade’.4 It is interesting that the first piece of regulation in the procurement 1 K Thai, ‘Public procurement re-examined’ (2001) 1(1) Journal of Public Procurement 9, 11, citing C Coe, Public Financial Management (Englewood Cliffs: Prentice Hall, 1989) 87. 2 Prior to 1939 government contracting authorities, as agents of the king, could not be sued for any wrongdoing in their procurement activities: A Denning, The Changing Law (London: Stevens & Sons, 1953) 20–21. 3 S Keeney, ‘The foundations of government contracting’ (2007) Journal of Contract Management 7, 8. 4 There were similar laws in the US from 1931 onwards: United States Federal Prevailing Wage Law 40 USC 3141–48 and the United States Federal Public Contracts Law 41 USC 35–45.

108 The Public Procurement Rules field concerned social protection when today, as is explored below, there is such resistance to increasing, or even maintaining, pre-existing levels of social protection within procurement processes.5 However, despite the Resolution’s obvious importance to procurement, the policy background suggests that the Resolution was more an early attempt to introduce a minimum wage (in response to concern about sweatshop labour) than it was an attempt at public procurement regulation. According to Beaumont, the Resolution was seen by the ruling classes at the time as more acceptable than national minimum wage legislation,6 although Brodie suggests that a desire to restrict unfair competition was allied to this.7 Two further versions of the Resolution were passed, one in 1909 and another in 1946, which extended the protective scope of the Resolution beyond wages to cover working hours and conditions.8 As the middle classes gained power in Parliament, and the Industrial Revolution opened up new national, rather than merely local, trading opportunities, individual traders wanted to emulate the success of trading companies such as the East India Company and Hudson Bay. These companies had been given monopoly powers by Parliament to secure the UK’s international economic prosperity. As a consequence of social change, there was growing pressure, particularly under the popular intellectual influence of Adam Smith’s The Wealth of Nations, to dismantle such monopolies and allow equal access to the ‘free’ market.9 Competitiveness thus increased at the national level, of which the Government was able to make use when purchasing its goods and services. There was, however, little development of a supranational market, stemming in part from the two world wars that hampered international trade. The contours of the market were entirely redrawn in the wake of the Second World War. The 1957 Treaty of Rome led to the establishment of the then European Economic Community (EEC). The Community sought to create economic interdependence first, by pooling coal and steel production and later, by establishing a broader European supranational Common Market. It was hoped that by breaking down national trading barriers and creating a larger, open market, Member States would be more 5 Albeit that the effectiveness of the Resolutions as a mechanism of social protection has been questioned: B Bercusson, Fair Wages Resolutions (London: Mansell Information Publishing, 1978). 6 P Beaumont, ‘Experience under the Fair Wages Resolution of 1946’ (1977) 8(3) Industrial Relations Journal 34, 34. 7 D Brodie, A History of British Labour Law: 1867–1945 (Portland: Hart Publishing, 2003) 50. 8 On the history of the Fair Wages Resolutions, see N Brunn, A Jacobs and M Schmidt, ‘ILO Convention No 94 in the aftermath of the Rüffert case’ (2010) 16(4) Transfer: European Review of Labour and Research 474. 9 See CIPS Australia, ‘A short history of procurement’: cipsintelligence.cips.org/opencontent/ a-short-history-of-procurement.

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easily able to export their best goods and services and import those that other Member States could produce more cheaply or to a higher standard. This competition would lead to European growth and an increasing mutual dependence between European states which, it was hoped, would make another war less likely.10 European reconstruction increased public contracting. This became a matter of social concern for the International Labour Organization (ILO),11 which wanted to ensure that it did not diminish the terms and conditions of employment of public workers. It thus adopted the Labour Clauses (Public Contracts) Convention 1949 (Convention No 94) and the Labour Clauses (Public Contracts) Recommendation 1949 (Recommendation No 84), both of which remain in force in many countries today. As an ILO guide explains: The rationale behind the adoption of Convention No 94 and Recommendation No 84 lies in the desire to prevent public authorities from entering into contracts involving the employment of workers—whether for construction of public works, manufacture of goods or supply of services—at conditions below an acceptable level of social protection, and moreover, to encourage public authorities to raise the bar and act as model employers.12

Drawing inspiration from the UK’s Fair Wages Resolution, the Convention and Recommendation require contractors to respect locally prevailing pay and working conditions as determined by law or collectively bargained agreements between staff representatives and their employer. The ILO thereby sought to protect employees from both governments and their new private sector employers: the (back door) potential for employment deregulation by outsourcing public services was recognised by the ILO from the outset. Today’s public procurement regulation is rooted in the Treaty provisions that established, and continue to define, the EU’s Common Market. The Treaty provisions are directly applicable, such that they apply within a Member State’s legal order without the need for any domestic implementation.13 In general terms, the Treaty prohibits government action that discriminates against products or companies from other Member States. The key Treaty provisions are found in Articles 18, 34, 49 and 56 of the Treaty 10 See the Schuman Declaration of 9 May 1950 that expresses the hope that ‘solidarity in production’ will make war ‘not merely unthinkable, but materially impossible’. 11 The ILO was established as part of the Treaty of Versailles, which ended the First World War. It became a specialised agency of the United Nations, after its establishment in 1945, shortly after the end of the Second World War. 12 ILO, Labour Clauses (Public Contracts) Convention 1949 (No 94) and Recommendation (No 84): A Practical Guide (Geneva: ILO, 2008) 5. The UK denounced Convention No 94 in September 1982. 13 For further on concepts of direct applicability and direct effect see P Craig and G de Búrca, EU Law: Text, Cases and Materials, 5th edn (Oxford: OUP, 2011) 180–89.

110 The Public Procurement Rules on the Functioning of the European Union (TFEU). These provisions have a negative, prohibitive, legal character. Article 18 is a general principle of non-discrimination on grounds of nationality. Articles 34, 49 and 56 are more specific manifestations of the non-discrimination principle. They prohibit quantitative restrictions on imports and exports and measures having equivalent effect (free movement of goods), restrictions on the freedom of establishment of nationals of a Member State in the territory of another Member State (freedom of establishment) and restrictions on freedom to provide services to persons in Member States other than that in which the person providing the services is established (freedom to provide services). The Treaties thus prohibit discriminatory public procurement decisions and practices. As Trepte suggests, however, non-tariff barriers to trade (such as preferential procurement practices) rather than tariff barriers (such as discriminatory customs duties), were not at the top of the (then) EEC’s original legislative agenda.14 This was because tariff barriers were more easily identifiable and remediable obstacles to trade than non-tariff impediments. As the Common Market matured, tariff barriers became less common and national preferential procurement practices began to attract attention, especially from the European Commission in its role as ‘guardian of the Treaties’. In 1961, the Council adopted two General Programmes that sought the gradual abolition of national procurement rules and practices that placed limitations upon the participation of non-nationals in procurement processes for public works contracts.15 Since the Programmes were based only upon Articles 49 (establishment) and 56 (services), the procurement of public supplies (goods) was not yet addressed. The General Programmes were implemented by a series of liberalisation directives. Three directives made provision for particular industries during the transitional period.16 Two further directives reiterated the need for Member States to abolish discriminatory rules in their national procurement systems,

14 P Trepte, Public Procurement in the EU: A Practitioner’s Guide, 2nd edn (Oxford: OUP, 2007) 5. 15 General Programme for the abolition of restrictions on freedom to provide services (JO 2/32; English special edn, series II, Vol IX, 3) and General Programme for the abolition of restrictions on freedom of establishment (JO 2/36; English special edn, series II, Vol IX, 7). See also C Turpin, ‘Government contracts: a study of methods of contracting’ (1968) 31(3) The Modern Law Review 241. 16 Directive 64/427/EEC of 7 July 1964 laying down detailed provisions concerning transitional measures in respect of activities of self-employed persons in manufacturing and processing industries [1964] OJ L117/1863; Directive 64/428/EEC of 7 July 1964 concerning the attainment of freedom of establishment and freedom to provide services in respect of activities of self-employed persons in mining and quarrying [1964] OJ L117/1871; and Directive 64/429/EEC of 7 July 1964 concerning the attainment of freedom of establishment and freedom to provide services in respect of activities of self-employed persons in manufacturing and processing industries [1964] OJ L117/1880.

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as had been detailed in Title III of the General Programmes.17 They also provided greater detail about the types of discrimination that were prohibited. Both directly and indirectly discriminatory measures were prohibited. This meant that rules that treated parties differently on the grounds of nationality and rules that formally put nationals and non-nationals in the same position but, in practice, hindered ‘exclusively or principally’ nonnationals, were impermissible.18 This corresponds with the scope of the free movement provisions upon which the Directives were based, which also prohibit direct and indirect discrimination.19 More far-reaching, secondary legislation soon followed.20 Unlike the earlier liberalisation directives, these directives sought to coordinate the procedures through which public procurement decisions are reached. The Directives introduced three key principles. The first was that contracts had to be advertised throughout the Community, the second was that tendering and award procedures had to be based on objective criteria and the third was that the technical specifications of what governments sought to buy had to be non-discriminatory. This latter principle could be derived directly from the free movement provisions of the Treaties. However, the procedural coordination implicit within the first two principles went beyond what the Community could achieve on the basis of Articles 34, 49 and 56 alone, and so Article 100 (now Article 114 TFEU) provided the additional legal basis. This Treaty provision empowers the (now) Union to ‘issue directives for the approximation of such laws, regulations or administrative provisions of the Member States as directly affect the establishment or functioning of the internal market’. As the Court of Justice of the European Union (CJEU) has explained, directives adopted upon this legal basis must genuinely have as their object the improvement of the conditions for the establishment and functioning of the internal market.21 Article 114 does not empower the Commission to take any measures that it sees fit; a strict test of legality must be satisfied. The transparency obligations imposed by these Directives were thought to satisfy this test, and thus fall within the Article,

17 Directive 70/32/EEC of 17 December 1969 on provision of goods to the State, to local authorities and other official bodies [1970] OJ L13/1 (public supply contracts); and Directive 71/304/EEC of 26 July 1971 concerning the abolition of restrictions on freedom to provide services in respect of public works contracts and on the award of public works contracts to contractors acting through agencies or branches [1971] OJ L185/1 (public works contracts). 18 See, eg, Art 3(c) Directive 71/304/EEC. 19 See C-152/73 Sotgiu v Deutsche Bundespost [1974] ECR 153 and C Barnard, The Substantive Law of the EU The Four Freedoms, 3rd edn (Oxford: OUP, 2010). 20 Directive 77/62/EEC of 21 December 1976 coordinating procedures for the award of public supply contracts [1976] OJ L13/1 (coordination of public supply contracts); and Directive 71/305/EEC of 26 July 1971 concerning the co-ordination of procedures for the award of public works contracts [1971] OJ L185/5 (coordination of public works contracts). 21 See in the context of the complementary Art 114 TFEU, C-376/98 Germany v Parliament (Tobacco Advertising) [2000] ECR I-8419, para 95.

112 The Public Procurement Rules on the ground that a lack of advertising of tendering opportunities creates a significant obstacle for companies that may be interested in bidding for public contracts in other Member States.22 Following the Community’s approval of the World Trade Organization’s (WTO) General Agreement on Tariffs and Trade (GATT) and Agreement on Government Procurement (GPA),23 the sphere of application of Directive 77/62/EEC was extended by Directive 80/767/EEC24 so as to apply to products originating from outside the Community.25 This amendment also altered some of the procurement framework’s procedural obligations so as to ensure that they were equally favourable to tenderers as they were under the GPA.26 The most significant changes were that Member States had to produce a report justifying their decision not to use the open tendering procedure, and the minimum time limit for receipt of tenders was increased. The applicability of the Directive was also extended by a reduction in the contract value threshold, from 200 to 140 ‘European units of account’ (ECU—the predecessor to the euro), beneath which the Directive does not apply (see section B.1). Notwithstanding the Community’s regulatory endeavours, the Commission’s 1985 White Paper for the Completion of the Internal Market identified Member States’ discriminatory public procurement practices as a significant barrier to the full realisation of the Common Market.27 The White Paper noted the ‘tendency of the authorities concerned to keep their purchases and contracts within their own country’28 and argued that ‘This continued partitioning of individual national markets is one of the most evident barriers to the achievement of a real internal market’.29 The Commission argued that there was a ‘serious and urgent need for improvement of the Directives to increase transparency further’. The limited applicability of the Coordination Directives in practice was noted, and proposals 22 Recital 2 of Directive 71/305/EEC makes clear that the Directives did not seek to replace national tendering procedures with a set of common European rules. 23 The Council approved the GPA in Decision 80/271/EEC of 10 December 1979 concerning the conclusion of the Multilateral Agreements resulting from the 1973 to 1979 trade negotiations [1980] OJ L71/1. 24 Directive 80/767/EEC of 22 July 1980 adapting and supplementing in respect of certain contracting authorities Directive 77/62/EEC coordinating procedures for the award of public supply contracts [1980] OJ L215/1. 25 This means that Member States that comply with the Directive should in principle also comply with the GPA. See recital 7 of Directive 2004/18/EC on the relationship between the GPA and Directive and further S Arrowsmith and R Anderson (eds), The WTO Regime on Government Procurement: Challenge and Reform (Cambridge: CUP, 2011). 26 See recital 5 of Directive 80/767/EEC. 27 Commission, ‘Completing the Internal Market’ COM (85) 310 final. 28 The Commission’s conclusion that inadequate political commitment was the main barrier to an open procurement market has been questioned: A Cox, ‘Implementing 1992 public procurement policy: public and private obstacles to the creation of the Single European Market’ (1992) 2 Public Procurement Law Review 139. 29 COM (85) 310 final, n 27, 23.

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were made to increase the Directives’ coverage. These included decreasing the financial contractual value threshold below which the Directives do not apply (and preventing Member States evading the threshold by subdividing contracts or underestimating their value) and extending application of the Directives to the utilities sector (which had been excluded on account of the strategic importance of utilities to Member States). The Commission also called for more visible compliance monitoring. Following the White Paper, and changes to the Internal Market provisions of the Treaty that had been introduced by the 1986 Single European Act, the Commission launched a research programme. The research sought to assess the extent to which Europe’s markets remained fragmented and identify the causes and costs of fragmentation. One of the study’s 13 reports focused upon government protectionism in public procurement markets. It found that only 0.14 per cent of Gross Domestic Product (GDP) was awarded in public procurement contracts to companies from other Community countries, out of a market that was estimated to be 7–10 per cent of GDP. The report described national procurement practices as ‘almost hermetically-sealed’ and estimated that more open procurement markets could save 17.5 billion ECU. This amounted to 0.5 per cent of the Community’s total GDP for 1986.30 The Commission introduced further secondary legislation in response to these research findings, which aimed to improve the provision of procurement information and ease of access to Community contracts. New transparency requirements were introduced, including a requirement to publish Prior Information Notices (PINs) and contract award notices, and to offer debriefing to unsuccessful tenderers. Directive 88/295/EEC amended all previous public supplies directives and instated a more open default tendering process.31 Directive 89/440/EEC made similar amendments to the previous public works directives.32 The public works and supplies directives were then consolidated into two new directives: Directive 93/36/EEC33 and Directive 93/37/EEC.34 This was followed by the first utilities directive, Directive 90/531/EEC35 and the first remedies directives, Directive 89/665/EEC

30 P Cecchini, The European Challenge 1992: the Benefits of a Single Market (London: Wildwood House, 1988) 16–17. 31 Directive 88/295/EEC of 22 March 1988 amending Directive 77/62/EEC relating to the coordination of procedures on the award of public supply contracts and repealing certain provisions of Directive 80/767/EEC [1988] OJ L127/1. 32 Directive 89/440/EEC of 18 July 1989 amending Directive 71/305/EEC concerning coordination of procedures for the award of public works contracts [1989] OJ L210/1. 33 Directive, 93/36/EEC of 14 June 1993 coordinating procedures for the award of public supply contracts [1993] OJ L199/1. 34 Directive 93/37/EEC of 14 June 1993 concerning the coordination of procedures for the award of public works contracts [1993] OJ L199/54. 35 Directive 90/531/EEC of 17 September 1990 on the procurement procedures of entities operating in the water, energy, transport and telecommunications sectors [1990] OJ L297/1.

114 The Public Procurement Rules (relating to public works and supply contracts)36 and Directive 92/13/EEC (introducing a slightly more flexible regime for public utilities).37 Once again, however, the Commission concluded that the Directives were not having sufficient economic impact, in part because of incomplete implementation by Member States. Therefore in 1996, the Commission presented a Green Paper that was ‘intended to provide a framework for a wide-ranging debate on public procurement in the European Union’.38 The Green Paper acknowledged the high amount of past legislative activity in the field and stated that a ‘period of stability in this framework is desirable and it is not therefore intended to make any fundamental changes’.39 The Commission received almost 300 responses to its Green Paper, in light of which it presented its proposal for the development of public procurement regulation over the following five years (1998–2003).40 It promised to simplify the legal framework, initially with an emphasis upon clarification, but later by amendment as necessary. It also promised to make tendering procedures more flexible by introducing a new competitive dialogue procedure and increasing the use of electronic procurement. Finally, the Commission noted the uncertainty about the coverage of the Directives in light of the emerging novel public–private sector partnerships and the extent to which social and environmental factors could be taken into account in procurement processes. It therefore proposed communications (binding guidance) to clarify these matters alongside consolidation of the relevant directives. The Commission reiterated its legislative intent in the public procurement field in its Work Programme for 2000.41 This was followed by concrete proposals for two new (consolidating and amending) directives, one for the public sector (supply, service and work contracts)42 and another for the utilities sector.43 After a lengthy legislative process of almost four years, owing partly to the struggle that occurred between the European

36 Directive 89/665/EEC of 21 December 1989 on the coordination of the laws, regulations and administrative provisions relating to the application of review procedures to the award of public supply and public works contracts [1989] OJ L395/33. 37 Directive 92/13/EEC of 25 February 1992 coordinating the laws, regulations and administrative provisions relating to the application of Community rules on the procurement procedures of entities operating in the water, energy, transport and telecommunications sectors [1992] OJ L76/14. 38 Commission, ‘Public Procurement in the European Union: Exploring the Way Forward’, Green Paper adopted on 27 November 1996 COM (1996) 583, I. 39 ibid, II. 40 Commission, ‘Public Procurement in the European Union’ COM (1998) 143 final. 41 Commission, ‘The Commission’s Work Programme for 2000’ COM (2000) 155. 42 Commission, ‘Proposal for a directive of the European Parliament and of the Council on the coordination of procedures for the award of public supply contracts, public service contracts and public works contracts’ COM (2000) 275 final. 43 Commission, ‘Proposal for a directive of the European Parliament and of the Council coordinating the procurement procedures of entities operating in the water, energy and transport sectors’ COM (2000) 276.

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institutions over social clauses in public procurement,44 two new directives were adopted.45 Despite some peripheral amendment of the procurement regulation package since 200446 and, in December 2011, proposals for the ‘in-depth modernization of public procurement in the European Union’ that have since flourished into a set of new directives,47 it is the 2004 Directives that form the subject matter of this study and are described and evaluated in the sections that follow.

B. PUBLIC PROCUREMENT REGULATION IN ENGLAND AND WALES

The deadline for transposition of the 2004 Directives into the national law of EU Member States was the end of January 2006. The Directives were implemented on time in England and Wales by the Public Contracts Regulations 200648 and the Utilities Contracts Regulations 2006.49 Since imprisonment services do not fall within the definition of utilities, this section will focus exclusively upon the former set of regulations (the PC Regulations).50

44 The European Parliament was in favour of increasing the use of social clauses in public procurement, whereas the European Commission and Council sought to restrict the use of such clauses. See C Kilpatrick, ‘Internal market architecture and the accommodation of labour rights: as good as it gets?’ (2011) EUI Working Papers in Law 2011/04 (Florence: European University Institute). 45 Directive 2004/17 of 31 March 2004 coordinating the procurement procedures of entities operating in the water, energy, transport and postal services sectors [2004] OJ L134/1 and Directive 2004/18/EC of 31 March 2004 on the coordination of procedures for the award of public works contracts, public supply contracts and public service contracts [2004] OJ L134/114. 46 Most notably, the adoption of Directive 2007/66 of 11 December 2007 amending Council Directives 89/665/EEC and 92/13/EEC with regard to improving the effectiveness of review procedures concerning the award of public contracts [2007] OJ L 335/31 (amending the two remedies directives), and Directive 2009/81/EC of 13 July 2009 on the coordination of procedures for the award of certain works contracts, supply contracts and service contracts by contracting authorities or entities in the fields of defence and security, and amending Directives 2004/17/EC and 2004/18/EC [2009] OJ L216/76 (governing defence and security contracts). 47 For background see Commission, ‘Proposal for a directive of the European Parliament and of the Council on procurement by entities operating in the water, energy, transport and postal services sectors’ COM (2011) 895 final; Commission, ‘Proposal for a Directive of the European Parliament and of the Council on Public Procurement’ COM (2011) 896 final; and Commission, ‘Proposal for a Directive of the European Parliament and of the Council on the award of concession contracts’ COM (2011) 897 final. The new directives are: Directive 2014/23/EU of 26 February 2014 on the award of concession contracts [2014] OJ L 94/1; Directive 2014/24/EU of 26 February 2014 on public procurement and repealing Directive 2004/18/EC [2014] OJ L94/65; and Directive 2014/25/EU of 26 February 2014 on procurement by entities operating in the water, energy, transport and postal services sectors and repealing Directive 2004/17/EC [2014] OJ L 94/243. 48 The Public Contracts Regulations 2006, SI 2006/5. 49 The Utilities Contracts Regulations 2006, SI 2006/6. 50 On the procurement regime for utilities refer to the relevant chs in S Arrowsmith, The Law of Public and Utilities Procurement, 2nd edn (London: Sweet & Maxwell, 2005).

116 The Public Procurement Rules While the PC Regulations are structured differently from the Directive that underpins them (2004/18/EC), they nevertheless cover the same material and do not significantly alter or enlarge upon the wording of the Directive. While the PC Regulations will be cited in the overview of the regulatory framework that follows, the descriptive account is equally accurate for the Directive. Useful reference might be made to Figure 3 (p 230), which provides a diagrammatic overview of the general stages of a public procurement process.

1. Scope The PC Regulations apply whenever a body that is governed by public law (‘contracting authority’ within Regulation 3)51 contracts for the execution of public works, supply of products or the provision of services. The scope of the Regulations is reduced by a number of specific contract type based exclusions,52 a contract value threshold and a more limited regime in respect of ‘Part B’ services. The specific exclusions need little further elaboration; they are fields of activity that the European legislature considers so core to statehood or of primarily local interest that their exclusion from the full procurement regime would be of little cross-border competitive consequence. The other two limitations upon the scope of the PC Regulations require greater explanation. First, a contract value threshold is imposed such that the contract price must exceed a given financial value for the Regulations to apply (Regulation 8). Where central government authorities seek ‘Part A’ public service contracts, the current threshold is €130,000 (Regulation 8(3)(a)). The Commission revises these thresholds every two years.53 Tendering exercises for contracts that are priced at less than this value need not follow the specific procedures laid down in the PC Regulations. As with the specific exclusions outlined above, the imposition of a contract value threshold reflects the legal basis that empowers the Commission to act in this field. To the extent that the procurement rules go beyond their free movement origins, 51 On the definition of public body see C-44/96 Mannesman [1998] ECR I-73, para 21. The Regulations may also apply to contracts awarded by bodies that do not fall within the definition of public body but that rely upon public funding. See further Reg 34. 52 Exclusions include: telecommunications contracts; contracts declared secret or affecting the essential interests of a Member State and contracts concluded pursuant to international agreements (see Reg 6(2)); contracts for utilities within the definition of Reg 3 Utilities Regulations; reserved contracts for supported businesses, employment programmes and factories (Reg 7); and some concession contracts (see Reg 5(3)). 53 For most recent thresholds, see Commission Regulation 1251/2011 of 30 November 2011 amending Directives 2004/17/EC, 2004/18/EC and 2009/81/EC of the European Parliament and of the Council in respect of their application thresholds for the procedures for the awards of contract [2011] OJ L319/43.

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Article 114 TFEU only empowers the Commission to take action to improve the functioning of the internal market by removing distortions in competition. It does not enable the Commission to remove mere restrictions on the market or regulate the market in a more general sense.54 As Advocate General Fennelly emphasised in Tobacco Advertising, ‘the internal market is not a value-free synonym for general economic governance’.55 The EU only has competence to regulate where the good or service is of cross-border interest or to correct a distortion in competition.56 Contracts that are valued at less than the threshold price are unlikely to satisfy this test. Even if the PC Regulations do not apply, the Treaty free movement and non-discrimination principles apply, provided that there is an interstate element.57 This means that the procurement exercise must be transparent, which necessitates advertising.58 Moreover, since the CJEU has moved towards a broader, integrationist market access, rather than discrimination model, in its free movement case law, requirements imposed by contracting authorities can be easily characterised as ‘restrictions’ by the Court, which fall foul of the Treaty.59 Compliance with EU law obligations even outside the PC Regulations framework can be demanding (see section C). Second, the scope of the PC Regulations is narrowed by the distinction that is drawn between Part A and Part B services (Regulation 5(2) and Schedule 3). Part A lists the priority services in which the full rigours of the procurement regime are thought to be demanded. Examples include maintenance and repair of equipment, financial services and advertising services. By contrast, Part B services are considered to be of greater local interest and thus of less cross-border interest.60 Examples include health, social services and rail and water transport. Where Part B services are not

54

Tobacco Advertising, n 21, para 84. Opinion in Tobacco Advertising, n 21, para 85. 56 C-507/03 Commission v Ireland (An Post) [2007] ECR I-9777. See further B Drijber and H Stergiou, ‘Public procurement law and internal market law’ (2009) 46 Common Market Law Review 805. 57 See C-220/06 Asociación Profesional de Empresas de Reparto y Manipulado de Correspondencia [2007] ECR I-12201, paras 72–75; C-412/04 Commission v Italy [2008] ECR I-619 on non-discrimination and transparency; and C-226/09 Commission v Ireland [2010] ECR I-11807 on the interstate element. 58 On the sufficiency of advertising see C-231/03 Coname [2005] ECR I-7287; C-458/03 Parking Brixen [2005] ECR I-8585; and Commission, ‘Commission Interpretative Communication on the Community law applicable to contract awards not or not fully subject to the provisions of the Public Procurement Directives’ [2006] OJ C179/02. 59 See C-376/08 Serrantoni [2009] ECR I-12169. 60 The distinction between Part A and Part B services is anachronistic. It can no longer be assumed that Part B services are of less cross-border interest and it seems likely that this distinction will be removed in future reforms: Commission, ‘Green Paper on the modernisation of EU public procurement policy: Towards a more efficient European Procurement Market’ COM (2011) 15 final, 8. AG Sharpston recognised the ‘very significant economic importance’ of some contracts that fall outside the scope of the procurement rules in her Opinion in C-195/04 Commission v Finland [2007] ECR I-3351, para 85. 55

118 The Public Procurement Rules excluded by virtue of falling within the excluded categories,61 or by falling below the contract value threshold, only a small proportion of the PC Regulations apply,62 albeit that a contracting authority must still comply with Treaty obligations.

2. Substance Where the Regulations apply, the contracting authority’s fundamental obligations are to treat economic operators equally and to act in a transparent manner (Regulations (4)(2) and (3)). This implies a variety of compulsory procedural duties: publication of contract notices and award decisions, a duty to give feedback to unsuccessful tenderers and a mandatory standstill period between notification of the contract award decision and entering into any contract of at least 10 days (Regulation 32A). These fundamental obligations also dictate that the technical specification, which defines what the contracting authority wishes to purchase, must ‘afford equal access to economic operators’ and must not have ‘the effect of creating unjustified obstacles to the opening up of public procurement to competition’ (Regulation 9(4)). Specifications should be defined in performance and functional terms and, wherever possible, refer to European (rather than national) standards (Regulations 9(6) and (7)). The Regulations also constrain the choice and conduct of procurement procedures. The ‘open procedure’, whereby any interested economic operator may submit a tender, is the default procedure (Regulation 12). This is fleshed out in Regulation 15, which mandates a period of not less than 52 days in which tenders may be received in response to a contract notice. The Regulations provide alternative procurement procedures (such as the restricted, negotiated and competitive dialogue procedures—see Regulations 13, 14 and 16–18) but since these are derogations from the basic open procedure rule, a contracting authority must justify its decision to use one of these other procedures.63 A third core feature of the Regulations is that they exhaustively prescribe the grounds upon which a tender may be excluded from evaluation by the contracting authority (Regulations 15(11) and (12)).64 Mandatory

61

See n 52. See Reg 5(2). Part 9 on remedies remains applicable. The other key obligations that remain binding in respect of Part B service contracts are to ensure that technical specifications afford equal access to economic operators (Reg 9) and that a contract award notice is placed in the OJEU (Reg 31). 63 C-71/92 Commission v Spain [1993] ECR I-5987, para 36. 64 C-76/81 Transporoute v Minister of Public Works [1982] ECR 417 but see C-213/07 Michaniki AE [2008] ECR I-9999, which suggests that the grounds for exclusion may be less exhaustive than originally thought. 62

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grounds for exclusion include participation in a criminal organisation and corruption, and discretionary grounds include bankruptcy or failure to fulfil taxation payment obligations (Regulation 23). A contracting authority may request information about the tenderer’s economic and financial standing and technical or professional ability provided that the required information is specified in the contract notice or invitation to tender (Regulations 24 and 25). Finally, the Regulations contain rules about how contracting authorities must evaluate tenders. Contracts may only be awarded on the basis of one of two contract award criteria, namely lowest price or most economically advantageous tender (MEAT) (Regulation 30). The former leaves the contracting authority little discretion and so is less commonly used than MEAT. Greatest economic advantage for MEAT is determined from the point of view of the contracting authority by reference to ‘criteria linked to the subject matter of the contract’ (Regulations 30(1) and (2)). The Regulations give non-exhaustive examples of criteria, including quality, price, technical merit and environmental characteristics. Whatever criteria the contracting authority chooses, the Regulations require contracting authorities to explain them to tenderers and provide guidance about their relative weighting in the contract documents (Regulation 30(3)). Abnormally low tenders may not be rejected without first giving the tenderer an opportunity to provide an explanation (Regulations 30(6) to 30(9)).

C. WHAT IS THE POSITION OF NON-ECONOMIC INTERESTS AND VALUES WITHIN THE PUBLIC PROCUREMENT RULES?

With that overview of the PC Regulations in mind, the purpose of this section is to evaluate how the Regulations balance economic and non-economic interests and values.65 Society has an interest in obtaining public services at the best price and ensuring that the public procurement rules achieve optimum economic outcomes. However, society also has non-economic interests, such as employment or environmental protection, which go beyond finding the lowest price for its goods and services. Where jobs are lost to non-national service providers for example, society has to bear the costs of rising social security payments and the family breakdowns that can stem from the stress and economic hardship of job loss.66 Consequently, 65 This has been most extensively analysed by S Arrowsmith and P Kunzlik (eds), Social and Environmental Policies in EC Procurement Law: New Directives and New Directions (Cambridge: CUP, 2009); and C McCrudden, Buying Social Justice: Equality, Government Procurement, & Legal Change (Oxford: OUP, 2007). See also S Arrowsmith, ‘Horizontal policies in public procurement: A taxonomy’ (2010) 10(2) Journal of Public Procurement 149. 66 J Ferrie et al, ‘Employment status and health after privatisation in white collar civil servants: prospective cohort study’ (2001) 322 British Medical Journal 1; A Winefield et al,

120 The Public Procurement Rules procurement decisions that have these sorts of social consequence may not represent best value in its broader (national) societal sense. This is why procurement decisions can prompt such intense political debate and public reaction.67 The state may wish to pursue some non-economic interests, which are referred to as ‘secondary’ or (following Arrowsmith’s more appropriate suggestion, since it does not imply any hierarchical relationship) ‘horizontal’ policies, as part of its procurement processes in order to discharge its responsibility for a country’s overall long-term prosperity.68 Indeed, as discussed throughout previous chapters of this book, governments promise that competition will not only reduce costs, but that it will also improve service quality and have minimal adverse impact upon employees. In order to fulfil these promises, contracting authorities might reasonably be expected to take non-economic factors into account in coming to their contract award decisions. But this desire to further (local) non-economic interests comes into tension with the EU’s ethos of dismantling national trade barriers and cultivating efficiencies across the whole European market. From a European perspective, the pursuit of interests that do not have tangible and immediate economic benefits, suggests national protectionism and discrimination, the very antithesis of the European free market. This is why the European Commission takes a narrow view in its guidance about the possibilities to include non-economic factors within procurement processes (see section C.1). The question that is addressed in this section then is what scope do the procurement rules afford Member States to pursue non-economic interests in their procurement decisions?69 Given the context in which the empirical evidence for this thesis was obtained, analysis will focus upon imprisonment services. Imprisonment services fall within Part B of the PC Regulations and are not subject to the full rigours of the procurement regime. However, as was explained above, the Treaty free movement and non-discrimination

Growing Up with Unemployment: A Longitudinal Study of its Psychological Impact (London: Routledge, 1993); and M Borrero, ‘Psychological and emotional impact of unemployment’ (1980) 7 Journal of Sociology and Social Welfare 916. 67 The Department for Transport’s decision in June 2011 to award the Thameslink contract to Siemens rather than to the UK company Bombardier is a recent example of a controversial procurement decision. The Coalition Government argued that the procurement process, begun by the Labour Government, was to blame for the decision. However, the EU Commission dismissed criticisms of the procurement rules: ec.europa.eu/unitedkingdom/press/ press_releases/2011/pr1164_en.htm. 68 For a description of the international history and modern use of government contracting as a tool of social policy see C McCrudden, ‘Using public procurement to achieve social outcomes’ (2004) 24 National Resources Forum 257. 69 For a comparative discussion of public procurement practices in respect of labour standards, see Public World (on behalf of the Department for International Development), ‘EU Public Procurement Regulations and Core Labour Standards’ (May 2007).

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principles remain applicable and so will be discussed. The PC Regulations also remain relevant because a small proportion of the Regulations continue to apply, even to Part B services. In any event, an analysis of the scope and development of the Regulations from a competence perspective remains important to an evaluation of the balance between economic and non-economic interests, because of the contested nature of the relationship between the Treaties and the Regulations, and because of the declining sustainability of the distinction between Part A and Part B services.70

1. Pursuing Non-Economic Interests Within the Public Procurement Regulations i. A Textual and Competence Analysis The European Commission has long opined that there is little scope within the PC Regulations for contracting authorities to take non-economic interests into account in their procurement decisions (see Table 1 for summary of key documents).71 This position reflects what the Commission perceives to be the functions of public procurement regulation at EU level, which are seen as inimical to meaningful consideration of non-economic factors. In the Commission’s view, the functions of the public procurement rules extend beyond non-discrimination and transparency to encompass achieving best value for the taxpayer72 and procedural standardisation.73 These are functions for which it is argued below, following Arrowsmith, the EU does not have competence. The textual basis for the Commission’s view (at least in respect of Part A services) is that the grounds upon which an authority takes its decision about who should be awarded a contract (‘award criteria’) must be, according to Regulation 30(2), ‘linked to the subject matter of the contract’ and in Regulation 30(1) most economically advantageous ‘from the point of view of the contracting authority’. In the Commission’s view, this precludes 70 Boeger and Prosser have noted the difficulties that the UK has encountered in translating European procurement concepts into domestic law: N Boeger and J Prosser, ‘The Changing Framework of Public Services in the United Kingdom’ in M Krajewski, U Neergard and J van den Gronden (eds), The Changing Legal Framework for Services of General Interest in Europe (The Hague: TMC Asser Press, 2009) ch 18. In such a context, it would be surprising (especially given the complexity of the law involved) to find domestic implementing regulation and policy that was free from any ambiguity in respect of the relationship between the TFEU and the procurement directive. Thus, even in the context of a Part B service, it seems worth reflecting upon the legal position as if the PC Regulations applied in full. 71 See especially Commission, ‘Interpretative Communication on the Community law applicable to public procurement and the possibilities for integrating social considerations into public procurement’ COM (2001) 566 final and COM (98) 143 final, n 40. 72 Green Paper COM (2011) 15 final, n 60, 3–4, 39 and 48. 73 COM (2011) 896 final, n 47, 6.

122 The Public Procurement Rules the use of social or environmental award criteria since they mostly do not affect the characteristics or performance of the product or service that is being purchased. They cannot be objectively assigned a direct economic value. Electricity that is produced from renewable energy works just as well from a functional perspective as electricity produced from coal powered sources. Office furniture that is manufactured at factories that pay below the living wage (but above any statutory minimum wage) is just as serviceable as furniture produced by higher paid staff. These examples illustrate the difficulty of creating environmental or social award criteria that are still related to the subject matter of the contract, as it has been narrowly economically defined by the Commission. This difficulty is compounded by the requirement that advantage be assessed purely from the perspective of the contracting authority, the effect of which appears to exclude consideration of more general community advantage.74 In the Commission’s view, non-economic interests are mostly confined to the contractual performance stage of procurement processes.75 This is problematic because it means that horizontal policies cannot be explored prior to an award decision being taken, with the consequence that they cannot be made pivotal in selecting a tenderer. It also means that horizontal policies may not have been taken into account within the contract price by the tenderer while negotiations are ongoing. Since many horizontal policies have cost implications, a tenderer may have valid grounds to increase the contract price in return for compliance with these supra-statutory standards at the performance stage. Since the award decision has already been taken, the contract authority is no longer in a position to receive competing offers that also comply with the performance conditions. By confining consideration of horizontal policies to the performance stage, the contracting authority is also limited by its own imagination: it is unable to benefit from the potentially innovative and progressive suggestions of tenderers as to how horizontal policies might be delivered. This conflicts with the Commission’s support for innovation as a benefit of an open public procurement market. However, beneath the European Commission’s restrictive economic rhetoric, there already exist good, and strengthening, legal grounds upon which social policies may lawfully be taken into account in procurement decisions. The legislative history of the PC Regulations, along with the treatment of environmental interests, will be drawn upon to strengthen this argument from a competence perspective, alongside research studies and European policies that support the view that social matters should be seen as an input for economic growth, rather than a drain upon it. The first stage in this analysis is to briefly recap the legislative background to the PC Regulations and underlying 74 For an account of the Commission’s interpretation of ‘linked to the subject matter of the contract’ and rationale, refer to its 2011 Green Paper COM (2011) 15 final, n 60, 39–40. 75 Interpretative Communication COM (2001) 566 final, n 71.

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Directive. In my view, this, along with an understanding of the evolving social ‘face’ of the EU, should frame the interpretation of the Regulations. It will be recalled (from section A, above) that the Commission considered the low rates of success of non-national tenderers in public procurement exercises to indicate a need for legislative intervention. It sought to improve the functioning of the internal market by drafting a directive that aimed to remove distortions in competition by making procurement exercises more procedurally transparent in order to avoid discrimination against non-national tenderers. Thus, as Arrowsmith argued, transparency was introduced to ‘support the non-discrimination obligation by ensuring that compliance with that obligation could be monitored’ (original emphasis). As she recalled, this was at a time before the CJEU had ‘interpreted the free movement provisions as themselves implying an obligation of transparency’.76 The idea was that transparency would help to constrain any arbitrary decision-making on the part of national contracting authorities. The highly detailed provisions that are now embodied in the PC Regulations might give the impression of exhaustive European harmonisation, but as the CJEU has made clear: The title of the Directive and the second recital in its preamble show that its aim is simply to coordinate national procedures for the award of public works contracts, although it does not lay down a complete system of Community rules on the matter.77

The EU institutions and Member States continue to share competence for regulating the functioning of the internal market (Articles 114 and 115 TFEU). Member States therefore remain free to regulate their public procurement processes to the extent that the Directive does not exhaustively cover the issue, provided that their actions comply with the primary EU law norm of non-discrimination.78 There are good grounds to suggest that the public procurement directives should be narrowly interpreted. This enlarges the space for regulation (and the inclusion of horizontal procurement policies) by Member States. As Arrowsmith has argued, such grounds follow from thinking more carefully about the functions of public procurement in light of the nature of the EU’s regulatory competence in this field.79 As the CJEU made clear in Tobacco 76 S Arrowsmith, ‘The Purpose of the EU Procurement Directives: Ends, Means and the Implications for National Regulatory Space for Commercial and Horizontal Procurement Policies’ in C Barnard et al (eds), Cambridge Yearbook of European Legal Studies, Vol 14, 2011–2012 (Oxford: Hart Publishing, 2012) 8. 77 Joined Cases C-285/99 and 286/99 Lombardini and Mantovani [2001] ECR I-9233, para 33. Reiterated in C-470/99 Universale Bau [2002] ECR I-11617, paras 88–89. 78 For an example of a Member State being free to regulate in the absence of Union action but failing to comply with primary Treaty provisions, see C-120/78 Cassis de Dijon [1979] ECR 649. 79 See Arrowsmith, ‘The Purpose of the EU Procurement Directives’, n 76.

124 The Public Procurement Rules Advertising, the EU does not possess a general competence to regulate the internal market; rather, it has the power to regulate to remove genuine obstacles to free movement or appreciable distortions in competition.80 However, the scope of the public procurement directives has been clouded in confusion, which has generated functional ambiguity. This ambiguity has been filled with suggestions (on the part of academics, the European Commission and the CJEU) that the procurement rules have more ambitious functions, namely procedural standardisation,81 increased competitiveness and the introduction of private sector economic imperatives into public sector markets82 and obtaining best value for taxpayers’ money. This has obscured crucial policy questions regarding the regulatory space that remains with Member States. Yet, it is apparent from both the inception of the various public procurement directives, and the nature of the EU’s regulatory competence in this sphere (see Tobacco Advertising above), that the Union had neither the intention nor power to fulfil these broader functions.83 The Union cannot dictate what Member States purchase or how they balance their policy objectives within that purchase process. Member States retain discretion as to whether they open up their public sector to the private market. The concept of best value remains national, provided that it is not discriminatory or arbitrary.84 And, contrary to the view of Sánchez Graells, the purpose of the procurement rules is not to broadly enhance competitiveness within the public sector.85 While increased competitiveness (and value for money) may be a by-product of the introduction of competitive procedures and a nondiscrimination obligation, it is not a function of the rules.86 As Arrowsmith explained: ‘This, however, puts the cart before the horse … the purpose of competitive procedures is to secure transparency to prevent discrimination, 80

See Tobacco Advertising, n 21. See A Haagsma, ‘Information and Communication Technology Issues in International Public Procurement’ in S Arrowsmith and A Davies (eds), Public Procurement: Global Revolution (London: Kluwer, 1999) ch 9. 82 A Sánchez Graells, Public Procurement and the EU Competition Rules (Oxford: Hart Publishing, 2011); C-247/02 Sintesi [2004] ECR I-9215 and C von Quitzow, State Measures Distorting Free Competition in the EC: A Study of the Need for a New Community Policy Towards Anti-Competitive State Measures in the EMU Perspective (The Hague: Kluwer, 2002) 42. 83 See Arrowsmith, ‘The Purpose of the EU Procurement Directives’, n 76. 84 This division of regulatory competence is reflected in the Opinion of AG Jacobs in C-19/00 SIAC Construction [2001] ECR I-7725, para 33. 85 Sánchez Graells goes on to argue that the state should be neutral as to the distributive effects of the exercise of its buying power, n 82, 95. 86 For further on the relationship between the public procurement and competition rules, see C Bovis, ‘Financing Services of General Interest in the EU: how do public procurement and state aids interact to demarcate between market forces and protection?’ (2005) 11(1) European Law Journal 79 and G Olykke, ‘How does the Court of Justice of the European Union pursue competition concerns in a public procurement context?’ (2011) 20 Public Procurement Law Review 179. 81

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rather than transparency being required to secure competition in general’.87 Properly conceived, the effects of the procurement rules are only on how a government purchases its goods and services, and only to the extent that a framework of common procedure is necessary to achieve transparency to support the overarching obligation of non-discrimination. In the absence of empirical evidence of an appreciably obstructive relationship between procurement procedures and cross-border tendering for public contracts, the Union does not possess the competence for comprehensive procedural harmonisation.88 To the extent that these procedural rules might be interpreted as frustrating governments in being guided by non-economic interests when purchasing goods and services, the nature of the Union, as defined in the TFEU, lends a counterweight. Although the Union originally had an economic focus, it has since developed into a more comprehensive legal order.89 While the initiative remains with Member States in matters of pure social policy, the Union has a coordinating function (Article 2(3) TFEU) and exercises its powers with the aim of securing social policy objectives: promoting ‘a high level of employment, the guarantee of adequate social protection, the fight against social exclusion, and a high level of education, training and protection of human health’ (Article 9), combating ‘discrimination based on sex, racial or ethnic origin, religion or belief, disability, age or sexual orientation’ (Article 10) and promoting sustainable development and environmental protection (Article 11). The CJEU has held that these social policy objectives ‘constitute an important aid, in particular for the interpretation of other provisions in the Treaty and of secondary Community legislation in the social field’.90 Moreover, according to Article 7, social policy objectives must be implemented consistently across fields of Union activity. This need for integration and consistency is reiterated in Article 114 (the legal basis for the public procurement directives): paragraph 3 instructs the Commission to take a high level of protection as its base in proposals concerning health, safety and environmental and consumer protection, and paragraph 4 empowers Member States to maintain national provisions that conflict with EU measures adopted under Article 114

87

See Arrowsmith, ‘The Purpose of the EU Procurement Directives’, n 76, 26. For an example of procedural standardisation, see the UNCITRAL Model Law on Public Procurement. 89 Union citizenship and the Union’s Charter of Fundamental Rights seem to be worthy of particular mention in this respect. See A José Menéndéz, ‘Chartering Europe: the Charter of Fundamental Rights of the European Union’ ARENA Working Papers WP 01/13; P Hansen and S Hager, The Politics of European Citizenship: Deepening Contradictions in Social Rights and Migration Policy (Oxford: Berghahn Books, 2012); and J Coppel and A O’Neill, ‘The European Court of Justice: taking rights seriously?’ (1992) 12 Legal Studies 227. 90 C-126/86 Zaera [1987] ECR 3697, para 14. 88

126 The Public Procurement Rules where they consider this necessary on grounds that include protection of the environment and working environment. The Union is thus now much more than its internal market. It has a strong social dimension that will (and should) colour the textual and case law analysis of the public procurement rules that follows. There are a few provisions in the Regulations that specifically enable Member States to harness their procurement powers to achieve social purposes. At the specification stage, governments are told that they should define their technical specifications ‘so as to take into account accessibility criteria for people with disabilities’ (Regulation 9(3)). Contracting authorities may also reserve the right to participate in a public contract award procedure to companies that operate supported factories, businesses or employment programmes (Regulation 7). These are services, schemes or establishments where more than 50 per cent of workers are impaired, by the nature or severity of their disability, from taking up work in the open labour market.91 At the supplier selection stage, under Regulations 23(4)(e) and (f), governments may exclude suppliers that have committed ‘an act of grave professional misconduct’ or have ‘not fulfilled obligations relating to the payment of social security contributions’. According to recitals 34 and 43 of the underpinning Directive, ‘grave misconduct’ includes (but is not expressly limited to) non-compliance with the Posted Workers Directive, Equality Framework Directive and Equal Treatment Directive.92 The contracting authority may also request a statement from the tenderers of their ‘average annual number of staff and managerial staff over the previous 3 years’, as part of their assessment of a tenderer’s technical or professional ability (Regulation 25(2)(i)). Under Regulation 38, contracting authorities may include information in the contract documents about the broader employment protection provisions and working conditions that will apply to the services at issue. A contracting authority may request that the contractors indicate that they have taken that information into account in preparing their tender. Under Regulation 39, compliance with the social considerations of which a contractor has been made aware in the contract documents, may become a condition for the performance of the contract. Indeed, it is at the contract performance stage that the wording of the Regulations most explicitly suggests scope for social matters to be addressed. Recital 33 of the underpinning 91

See recital 28 to Directive 2004/18/EC. This contrasts with the position under the WTO GPA, where there are specific grounds upon which contracting parties may exclude tenderers for non-compliance with core labour standards. The CJEU has held that the list of grounds upon which tenderers may be excluded is exhaustive, except in cases where additional grounds further transparency and equal treatment objectives: C-31/97 Beentjes [1988] ECR 4635, para 28 and Michaniki AE, n 64. See also Joined Cases C-226/04 and 228/04 La Cascina Soc Coop [2006] ECR I-01347. 92

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Directive makes specific reference to social interests that may be compatible with the Directive at the performance stage. These include measures ‘intended to favour onsite vocational training, the employment of people experiencing particular difficulty in achieving integration, the fight against unemployment or the protection of the environment’ or requirements to ‘recruit long-term job-seekers or to implement training measures for the unemployed or young persons, to comply in substance with the provisions of the basic International Labour Organisation (ILO) Conventions, … and to recruit more handicapped persons than are required under national legislation’.93 Recital 34 confirms (circularly) that all employment legislation, whether of national or European origin, will apply during performance of the contract, provided that it complies with EU law. It seems worth briefly contrasting the treatment of employment protection with that of another non-economic interest, namely environmental protection, within the text of the Regulations. Recital 5 of the Directive recalls the obligation, under Article 6 TFEU, to integrate environmental protection into European policies.94 The positive, even obligatory tone of this recital (which is reflected in the Commission’s guidance)95 contrasts with the more tentative recitals on employment protection (and Commission guidance on social matters), which were described above. These recitals recall neither the Union’s obligation to exercise its powers with the aim of securing the social policy objectives in Articles 9–11 TFEU, nor its obligation under Article 7 TFEU to implement those objectives across all the Union’s policy fields.96 Furthermore, unlike employment protection, ‘environmental performance levels’ and ‘production methods and processes’97 are specifically mentioned as examples of characteristics that can be included within a technical specification (Regulations 9(1), (7) and (12)).

93 Barnard suggests that this recital can be read both broadly and narrowly and argues that the Commission seems to support the broader reading in its 2001 Interpretative Communication (n 71): C Barnard, ‘Procurement Law to Enforce Labour Standards’ in G Davidov and B Langille (eds), The Idea of Labour Law (Oxford: OUP, 2011). 94 See also C-379/98 PreussenElektra [2001] ECR I-02099; Directive 2005/32/EC of 6 July 2005 establishing a framework for the setting of ecodesign requirements for energy-using products [2005] OJ L191/29); and Directive 2009/33/EC of 23 April 2009 on the promotion of clean and energy-efficient road transport vehicles [2009] OJ L120/5). 95 ‘Interpretative Communication on the Community law applicable to public procurement and the possibilities for integrating environmental considerations into public procurement’ COM (2001) 274 final and ‘Public procurement for a better environment’ COM (2008) 400 final. 96 This contrasts with the tone of recital 2 in the Commission’s proposal for a new public procurement directive which states that it seeks to ‘enable procurers to make better use of public procurement in support of common societal goals’ (emphasis added): n 47. 97 See further on this G Davies, ‘Process and Production Method-based Trade Restrictions in the EU’ in C Barnard (ed), Cambridge Yearbook of European Legal Studies, Vol 10, 2007–2008 (Oxford: Hart Publishing, 2008).

128 The Public Procurement Rules Greatest divergence in the treatment of environmental and employment protection occurs at the award stage. For unlike employment practices, environmental characteristics are specifically included within the (nonexhaustive) list of award criteria in Regulation 30(2).98 Environmental characteristics must still be linked to the subject matter of the contract and their benefit must be assessed from the perspective of the contracting authority rather than the community as a whole. This may suggest that it would not be possible to specify, for example, that wood from a sustainable forest be used in a contract to obtain office furniture, since the sustainability of the wood would not have an effect upon the performance or functionality of the furniture within Regulation 9(7). The sustainability of the wood cannot be objectively assigned a direct economic value. However, that conclusion seems at odds with the pains that have been taken within the text of the Regulations, as described above, to endorse the pursuit of environmental protection through procurement decisions. Such a conclusion would also directly conflict with Green Public Procurement (GPP) model specifications and award criteria that have been produced by the European Commission. The Commission’s guidance for the purchase of furniture includes ‘sustainable forest management’ as an award criterion.99 If it is possible to have environmental award criteria that do not alter the performance or function of the good or service being purchased (see also case law discussion in section C.1.ii below, especially EVN), why would it not be possible to award contracts on the basis of employment standards that are above statutory minima? The wording of the TFEU does not seem to provide any justification for the difference in treatment between these two non-economic interests—employment and environmental protection are given equal prominence. If the distinction is unsustainable, the Regulations should be interpreted consistently for both types of non-economic interest, and there ought to be equivalent scope for their consideration within procurement processes. In any event, such a restrictive interpretation of ‘connection to the subject matter of the contract’, whether it refers to environmental or employment conditions, seems to conflict with the legislative background to the public procurement rules and the Union’s competences in the procurement field, which were discussed above. The fundamental argument in this respect is that the Directive aimed to achieve transparency (as a means to monitor compliance with the primary obligation of non-discrimination) by bringing about a degree of procedural coordination. The aim was not, and indeed

98 As Bovis reports, the European Parliament insisted on the inclusion of workforce matters as part of the award criteria in the draft Directive but these provisions were removed in the final draft: C Bovis, ‘The new public procurement regime: a different perspective on the integration of public markets of the European Union’ (2006) 12(1) European Public Law 73, 86. 99 See: ec.europa.eu/environment/gpp/pdf/toolkit/furniture_GPP_product_sheet.pdf.

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could not be from a competence perspective, to restrict what a Member State could buy or to impose a common framework of what a Member State should value or constrain how it implemented its policy choices. Such an aim would go beyond the transparency and procedural coordination that was necessary to improve the functioning of the internal market. It would also be beyond the prohibition of discrimination, which is at the heart of the free movement provisions that are the other legal bases for the public procurement rules. Even though there is some rather far reaching free movement case law (based upon the market access model), which is discussed below, none of it yet limits a Member State’s scope for social policy choices quite so narrowly in the name of the free market. Indeed, recital 6 of the Directive expressly refers to Article 36 TFEU, which contains the grounds upon which a Member State can justify imposing discriminatory barriers to trade. These include public policy, morality and health. The EU might take the view that there are more appropriate or effective means at a government’s disposal to regulate non-economic or ‘secondary’ policies,100 or even that it is illegitimate to impose non-economic objectives upon businesses,101 but there do not seem to be grounds to justify denying that possibility to a Member State as a matter of EU law. ii. Case Law Analysis Since the first recital of the public procurement Directive states that it is based upon the case law of the CJEU, how has the Court interpreted the possibilities for integration of social issues within the Regulations? The Court’s case law is relevant in qualifying the preceding textual analysis of the Regulations in two main respects: first, in interpreting what constitutes an appropriate and sufficient link to the subject matter of the contract; and second, in defining the outer limits of non-discrimination and the possibilities for social justifications. First, the CJEU has recognised that the definition of the MEAT award criterion is broad. Contracting authorities enjoy discretion in respect of their choice and ranking of award criteria, provided that the criteria are ‘aimed at identifying the offer which is economically the most advantageous’.102 The examples given in the Directive (price, running costs, technical merit, etc)

100 There is some academic support for this view: R Watermeyer, ‘The use of targeted procurement as an instrument of poverty alleviation and job creation in infrastructure projects’ (2000) 9 Public Procurement Law Review 226; N Seddon, Government Contracts: Federal, State and Local (Sydney: Federation Press, 1995) 29; and P Minford, Markets Not Stakes (Littlehampton: Orion Business Books, 1998). 101 See especially M Friedman, ‘The social responsibility of business is to increase its profits’ New York Times (13 September 1970). 102 Beentjes, n 92, para 19.

130 The Public Procurement Rules are thus non-exhaustive.103 Moreover, the Court has held that it falls within the discretion of contracting authorities to utilise non-economic considerations as award criteria, provided that such criteria do not confer an unrestricted freedom of choice on the authority, do not infringe the prohibition of discrimination and comply with the Directive’s rules on advertising.104 The Commission subsequently attempted to argue that the condition relating to the employment of long-term unemployed individuals in Beentjes was a performance condition, rather than award criterion, but this was expressly rejected by the CJEU in Nord-Pas-de-Calais.105 The Court reiterated that award criteria need not be of a purely economic nature in Concordia Bus; a case in which a contracting authority had used environmental considerations (vehicle emissions and noise levels) as award criteria.106 However, the Court subjected this possibility to a new condition in Concordia Bus, in addition to those arising from Beentjes, namely that the award criteria ‘must themselves also be linked to the subject-matter of the contract’.107 Notwithstanding the Commission’s definition of linkage, which requires an impact upon the good or service’s characteristics or performance, the CJEU has defined the necessary link more broadly. In EVN the Court permitted an award criterion that required electricity be produced from renewable energy sources (which has no impact upon the quality of the electricity produced) and was given a 45 per cent weighting in the evaluation process.108 Citing Concordia Bus, the CJEU held that award criteria need not necessarily be of a purely economic nature and such a high weighting could be justified by reference to the importance of the objective pursued by the criterion.109 However, what went too far, in the Court’s view, was the allocation of points for the total amount of renewable source electricity produced in excess of the volume required for the particular contract. This ‘excess’ component was considered to be unconnected to the subject matter of the contract (the provision of a particular volume of electricity) and was liable to result in unjustified discrimination against smaller tenderers who could meet the primary contractual requirement but could not compete with larger companies on production volume above what was required.110 The Court confirmed its broad interpretation of linkage (in the context

103 C-324/93 R v The Secretary of State for the Home Department, ex p Evans Medical Ltd [1995] ECR I-596. 104 Beentjes, n 92, paras 29–31 (employment of long-term unemployed persons) and C-368/10 Commission v Netherlands ECLI:EU:C:2012:284 paras 85, 91–92 (fair trade tea and coffee). 105 C-225/98 Nord-Pas-de-Calais [2000] ECR I-07445, paras 50 and 52. 106 C-513/99 Concordia Bus [2002] ECR I-7251, paras 54 and 55. 107 ibid, para 59. 108 C-448/01 EVN AG v Austria [2003] ECR I-14527. 109 ibid, paras 32, 39 and 42. 110 ibid, para 68.

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of fair trade and organic ingredients as award criteria) in Commission v Netherlands.111 In Commission v Germany (occupational pensions) the CJEU did not even refer to the need for a link with the subject matter of the contract. The Court was rather unconstrained in its language in holding that ‘application of the procurement procedures (does not) preclude the call for tenders from imposing upon interested tenderers conditions reflecting the interests of the workers concerned’.112 No reference was made to its earlier (more conservative) case law, nor did it limit its comments to any particular procurement stage113 or to any of its ‘market access’ free movement case law, which in some cases appears to offer a rather limited scope for the protection of social interests (see below). While, as Barnard points out, this case differs from the Court’s earlier case law on social clauses because it concerned ‘a total failure to tender rather than a criticism of the terms’, it nevertheless provides a good case law basis, in a purely social rather than environmental context, upon which contracting authorities might rely (alongside EVN and Commission v Netherlands) in requiring social matters to be addressed through procurement decisions.114 It therefore appears permissible to take into account more general noneconomic interests within the Court’s case law, so long as they are connected with what the government is seeking to purchase. The Commission’s requirement for direct economic benefit to follow from each award criterion does not seem to have any case law basis. How then has the Court interpreted the other key limitation upon award criteria, namely the prohibition of discrimination, in the context of social interests? There has been a well-documented shift in the CJEU’s free movement case law from the original discrimination model to a so-called market access approach.115 Unlike the discrimination model, market access challenges restrictions on free movement if they are liable to prohibit or impede access, even if the restrictions apply without distinction to both nationals and non-nationals and do not have a national protectionist purpose.116 111

See Commission v Netherlands, n 104, para 92. C-271/08 Commission v Germany (occupational pensions) [2010] ECR I- 07091, para 56. 113 It may therefore be possible to use this decision to challenge the apparent exhaustiveness of the grounds for immediate tender deselection. 114 Barnard, ‘Procurement Law to Enforce Labour Standards’, n 93. 115 See Barnard, The Substantive Law of the EU, n 19, 103–08 and E Spaventa, ‘Leaving Keck behind? The free movement of goods after the rulings in Commission v Italy and Mickelsson and Roos’ (2009) 35(6) European Law Review 914. 116 C-76/90 Säger [1991] ECR I-4221 and C-110/05 Commission v Italy (trailers) [2009] ECR I-00519, although contrast the slightly more tentative language of the CJEU in C-142/05 Åklagaren v Mickelsson [2009] ECR I-04273. See also Commission v Italy (data-processing) for an example of an indistinctly applicable criterion which was considered to constitute an unjustifiable barrier to trade. There was however also the suggestion of disguised protection since there were no data processing companies from other Member States all or a majority of whose shares were in Italian ownership. 112

132 The Public Procurement Rules This approach tends to have a deregulatory effect since both home and host state rules can be challenged and almost anything can constitute an impediment to free movement. There have been suggestions that this might lead to a ‘race to the bottom’.117 Moreover, as Snell has argued, the Court has applied market access incoherently and ‘when pressed, the notion of market access collapses into economic freedom or anti-protectionism, and obscures the need to choose between the competing paradigms of free movement law’.118 This led Advocate General Tizzano in Caixa-Bank to question whether anybody could now lawfully impose a trading rule within the Court’s free movement case law.119 Restrictions may be justified by reference to an unlimited number of public interest motivations, which include the protection of social interests.120 However, shifting the emphasis in the legal analysis from the issue of prima facie breach, to the issue of justification, has an impact upon the balance between social and economic interests. Once a rule is found to breach the free movement provisions it is presumptively unlawful. The defendant (state) then bears the burden of proving that a non-economic justification exists for that restriction and that the restriction is proportionate (suitable and necessary) to meet the aims of that justification. This is why Barnard has argued that the Säger (market access) approach ‘inevitably prioritises the economic right over the social interest’.121 It explains why the market access approach is considered deregulatory.122 It is no mean feat for a defendant to satisfy the justificatory and proportionality burden that is placed upon it. This is especially true where the justification that is being advanced has a social character. This is because the Court’s jurisprudence on social justifications has, in recent times, become

117 In an environmental context, see D Esty and D Geradin, ‘Market access, competitiveness and harmonisation: environmental protection in regional trade agreements’ (1997) 21 Harvard Environmental Law Review 265 and in the social sphere, J Donaghey and P Teague, ‘The free movement of workers and social Europe: maintaining the European ideal’ (2006) 37(6) Industrial Relations Journal 652. See also C Barnard and S Deakin, ‘European Labour Law after Laval’ in M-A Moreau (ed), Before and After the Economic Crisis: What Implications for the ‘European Social Model’? (Cheltenham: Edward Elgar Publishing, 2011). 118 J Snell, ‘The notion of market access: a concept or slogan?’ (2010) 47 Common Market Law Review 437. 119 Opinion in C-442/02 Caixa-Bank [2004] ECR I-8961, paras 62–63. There are still some limits to what can be considered to contravene the free movement rules. See C-190/98 Graf [2000] ECR I-11 (on remoteness) and Joined Cases C-51/96 and C-191/97 Deliège v Asbl Ligue Francophone de Judo [2000] ECR I-2549 (on market structuring rules). 120 C-55/94 Gebhard [1995] ECR I-4186. 121 Barnard, ‘Procurement Law to Enforce Labour Standards’, n 93. 122 See H Schepel, ‘Constitutionalising the market, marketising the constitution, and to tell the difference: on the horizontal application of the free movement provisions in EU law’ (2012) 18(2) European Law Journal 177. See also G Meardi, Social Failures of EU Enlargement: A Case of Workers Voting with their Feet (Abingdon: Routledge, 2012).

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narrow and difficult for a defendant to satisfy. In Viking, for example,123 not only did the Court hold that trade unions are bound by the free movement rules (because of their role in regulating access to employment) and that collective action taken by trade unions constitutes a prima facie breach of the free movement provisions,124 but it also said that while the right to strike was a fundamental right, it would only rarely justify the trading restriction that it caused. According to the Court, collective action could only be justified if jobs or conditions of employment were jeopardised or under serious threat (notwithstanding the broader employment protection function of trade unions). Since the company had given an undertaking that no Finnish workers would be made redundant, the Court doubted that this was the case. Even if justified, the Court would only consider collective action to be proportionate if it met a strict test which, in practice, would mean that all other possibilities short of collective action must have been exhausted.125 Thus, notwithstanding Barnard’s optimism in noting a more thoughtful balancing of economic and social interests at the justification stage by the Advocate General in Occupational Pensions, it remains difficult for EU Member State governments to provide strong protection for social interests within the CJEU’s free movement case law, and therefore also within the public procurement framework into which this case law is imported.126 These difficulties are compounded where the workers required to fulfil a government contract come from another Member State. This is because the Court has interpreted the Posted Workers Directive (96/71/EC) as imposing a maximum ceiling upon the employment protections with which a

123 See also C-341/05 Laval [2007] ECR I-11767. These decisions have been extensively analysed: J Malmberg and T Sigeman, ‘Industrial actions and EU economic freedoms: the autonomous collective bargaining model curtailed by the European Court of Justice’ (2008) 45(4) Common Market Law Review 1115; G Orlandini, ‘Right to strike, transnational collective action and European law: time to move on?’ (2007) Jean Monnet Working Paper 8/07; and A Davies, ‘One step forward, two steps back? The Viking and Laval cases in the ECJ’ (2008) 37(2) Industrial Law Journal 136. 124 This conflicts with the Court’s earlier decision in C-67/96 Albany [1999] ECR I-5863 where the Court held that a collective agreement negotiated by the social partners fell outside the scope of Art 105 TFEU. For analysis of direct effect, see K Apps, ‘Damages claims against trade unions after Viking and Laval’ (2009) 34 European Law Review 141, 147; P Syrpis and T Novitz, ‘Economic and social rights in conflict: political and judicial approaches to their reconciliation’ (2008) 33 European Law Review 411, 420; A Dashwood, ‘Viking and Laval: Issues of Horizontal Direct Effect’ in C Barnard (ed), Cambridge Yearbook of European Legal Studies, Vol 10, 2007–2008 (Oxford: Hart Publishing, 2008) 536; and B Bercusson, ‘The trade union movement and the European Union: judgment day’ (2007) 13 European Law Journal 279. 125 For analysis of proportionality see N Hos, ‘The principle of proportionality in the Viking and Laval cases: an appropriate standard of judicial review?’ (2009) EUI Working Paper LAW 2009/06, 19–21; and C Barnard, ‘Restricting restrictions: lessons for the EU from the US’ (2009) 68 Cambridge Law Journal 563. 126 Barnard, ‘Procurement Law to Enforce Labour Standards’, n 93.

134 The Public Procurement Rules host Member State can demand compliance in respect of non-national temporary workers.127 Although the temporary nature of posted worker services makes them less appropriate for delivering many of the public services that are currently contracted out, since most procurement processes have an open character, this case law is likely to have at least an indirect influence upon tendering exercises.128 Brunn, Jacobs and Schmidt have highlighted the problems that Rüffert raises for compliance with the ILO’s Labour Clauses (Public Contracts) Convention 1949 (Convention No 94).129 As was explained above, this Convention ensures that where public work is contracted out, workers are guaranteed terms and conditions that are no less favourable than industry standards. Since the UK denounced the Convention in 1982, this is not a direct concern for UK public procurement, but the rationale of the case may have implications for the UK’s public sector Codes, as were described in chapter one (section E) as providing protections for public sector workers that go beyond TUPE. Therefore, while the European Commission seems to suggest that it is the link that is required between the award criterion and the subject matter of the contract that is the greatest fetter upon a Member State’s social policy discretion, analysis of the relevant case law suggests that it is the Court’s approach to discrimination in its free movement case law that may present the more significant obstacle. That is not to say that the counterviews, namely (1) that from a competence perspective, the Court ought to be more constrained in its analysis of what constitutes a breach of the free movement provisions and (2) that in light of the EU’s policy commitments to social progress alongside economic development it ought to take the protection of social interests more seriously in its justification and proportionality analysis, are not still strongly arguable. The European Court of Human Rights’ case law, particularly in respect of collective action, coupled with the EU’s accession to the Human Rights Convention, might offer new ground upon which such arguments can be strengthened.130 127 See C-346/06 Rüffert [2008] ECR I-1989; C-319/06 Commission v Luxembourg [2008] ECR I-4323; and C-113/89 Rush Portuguesa [1990] ECR 1417. For analysis, see C Barnard, ‘The UK and posted workers: the effect of Commission v Luxembourg on the territorial application of British labour law’ (2009) 38(1) Industrial Law Journal 122; Trepte, n 14, 332–33; and A Koukiadaki, ‘The far-reaching implications of the Laval quartet: the living wage campaign in the UK post-Rüffert’ (2014) 43(2) Industrial Law Journal 91. 128 Indeed, McCrudden has argued that Rüffert raises a more general problem for noneconomic factors in public procurement, beyond the posted worker context: C McCrudden, ‘The Rüffert case and public procurement’ in M Cremona (ed), Market Integration and Public Services in the European Union (Oxford: OUP, 2011) 133–34. Arrowsmith and Kunzlik do not share this view and argue that Rüffert is confined to the posted worker situation: n 65, 6. 129 Brunn, Jacobs and Schmidt, n 8. In 2008 the ILO stated that it did not see any conflict between Convention 94 and the procurement directives: ILO, ‘Labour clauses in public contracts’ (Geneva: ILO, 2008). 130 Demir and Baykara v Turkey App no 34503/97 (ECtHR, 12 November 2008) and Enerji Yapi-Yol Sen v Turkey App No 68959/01 (ECtHR, 21 April 2009). For analysis, see

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2. Pursuing Non-Economic Interests Within the TFEU Where a Part B service is at issue (as is the case for imprisonment services), or the contractual value threshold is not met, only a small number of the public procurement Directive’s provisions apply. Case law has nevertheless established that Treaty principles continue to apply.131 If the above analysis of the relationship between the Directive and the TFEU is incorrect, and the Directive goes beyond the Treaty in substance, rather than just procedural coordination to the extent necessary for transparency and non-discrimination, then the arguments advanced above apply more forcefully in respect of Part B or below threshold goods and services. Since these types of contract were deliberately excluded from the full rigours of the procurement rules, there ought to be greatest scope to address non-economic interests within procurement processes where these excluded contracts are at stake. However, if the analysis above is correct, it extends in the same way to excluded contracts. The arguments that were advanced above apply equally such that there would be the same scope to take non-economic interests into account for both excluded and Part A or above financial threshold contracts. The only difference would be procedural and perhaps, in practice, a reduced likelihood of enforcement in respect of excluded contracts, since the Commission might take a less proactive stance to enforcement where contracts are of lower financial value or cross-border interest. While the distinction between Part A and Part B services has already been criticised in this chapter as anachronistic, the issue has been raised here, for the sake of completeness, but also because of the Part B nature of the services under contract at HMP Birmingham. As will be explored further in chapter six, while the National Offender Management Service (NOMS) could have benefited from the additional procurement ‘wriggle room’ in the Birmingham competition, it did not do so, and procurement staff seemed unaware of the distinction. In chapter six it will be argued that this is evidence of procurement law having taken on a life of its own. Having become detached from its original objectives, the procurement framework is anchored in practice in a self-perpetuating, socially damaging interpretation of the free market. In this context, domestic policy and guidance in England

F Dorssemont ‘How the European Court of Human Rights gave us Enerji to cope with Laval and Viking’ in M-A Moreau (ed), Before and After the Economic Crisis: What Implications for the ‘European Social Model’? (Cheltenham: Edward Elgar Publishing, 2011); K Ewing and J Hendy ‘The dramatic implications of Demir and Baykara’ (2010) 39(1) Industrial Law Journal 2; and K Dzehtsiarou, T Konstadinides, T Lock and N O’Meara (eds), Human Rights Law in Europe: The Influence, Overlaps and Contradictions of the EU and the ECHR (London: Routledge, 2014). 131

C-324/98 Teleaustria [2000] ECR I-10745 and C-6/05 Medipac [2007] ECR I-4590.

136 The Public Procurement Rules and Wales, which is explored in the final section of this chapter, has proven insufficiently robust and ambitious to enable contracting authorities to deliver a socially sustainable vision of public procurement.

D. HOW IS THIS BALANCE REFLECTED IN DOMESTIC POLICY?

As the foregoing analysis has demonstrated, the extent to which Member States may pursue non-economic, horizontal policies in their procurement decisions is far from straightforward. Textual and case law analysis suggests that there is greater scope for horizontal policies than is reflected in the Commission’s guidance. The restrictiveness of the Commission’s guidance is also at odds with the positive approach that it has taken to corporate social responsibility (CSR) within the private sector132 and the research studies that have confirmed that CSR makes good business sense.133 As international concern about sustainability has increased,134 especially in the wake of the financial crisis, there are some signs that may lead to policy change at the European level in future.135 However, while such reform remains pending, the procurement legal framework is still complex. Comparative studies of sustainable procurement practices reveal significant international variation.136 Brammer and Walker identified policy and legislative support for sustainable procurement as the most frequently cited facilitator of sustainable procurement practices.137 National guidance and policy therefore play a critical role in determining the extent to which decision-makers incorporate horizontal policies within procurement processes in practice. What scope does national guidance suggest exists for the fulfilment of horizontal policies in public procurement?

132 Commission, ‘Implementing the partnership for growth and jobs: making Europe a pole of excellence on corporate social responsibility’ COM (2006) 136 final. 133 For an overview of the literature see A Carroll and K Shabana, ‘The business case for Corporate Social Responsibility: a review of concepts, research and practice’ (2010) International Journal of Management Reviews 85. 134 See, eg, the work of Client Earth and the European Federation of Public Service Unions and the Sustainable Public Procurement Network. 135 Monti’s report to the President of the European Commission recommends that greater use is made of public procurement as a tool to achieve social policy objectives: M Monti, ‘A new strategy for the Single Market at the service of Europe’s economy and society’ (9 May 2010) 78. The Commission’s proposals for new public procurement rules seek to ‘allow procurers to make better use of procurement in support of common societal goals’, n 47, 2. 136 S Brammer and H Walker, ‘Sustainable procurement practice in the public sector: An international comparative study’ (2007) University of Bath School of Management Working Paper Series 16; and M Bouwer et al, ‘Green Public Procurement in Europe 2005—Status overview’ (2005). 137 Brammer and Walker, n 136, 21.

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Once again, there is significant international variation between sustainable procurement policy and guidance at a national level.138 Policy discussions are of a predominantly environmental (rather than social)139 character in Europe, although this has not translated into well-developed environmental procurement policies across Europe. Steurer and Konrad’s analysis showed that only a third of governments had adopted an environmental public procurement action plan by 2007.140 There is divergence in policy and practice even within the UK. The Office of Government Commerce (OGC), an independent office of the Treasury, is responsible for transposing the relevant EU and international legal frameworks into national law and issuing guidance in England, Wales and Northern Ireland. However, in line with devolution arrangements for Scotland, the Scottish Parliament makes separate arrangements for transposition and issues its own guidance (although there is no separate Scottish Sustainable Development Commission).141 Scottish guidance on horizontal policies in public procurement is generally more ambitious than its Westminster counterpart. According to the Scottish Procurement Directorate’s website in March 2010, John Swinney, Cabinet Secretary for Finance and Sustainable Growth, said: ‘The first question that we should ask when developing any contract specification should be: “Can we include a community benefit clause?”’142 The Directorate has produced extensive, positive guidance on CSR (covering social, economic and environmental issues)143 and community benefits in public procurement.144 The Procurement Reform (Scotland) Act 2014 imposes a ‘sustainable procurement duty’ and a ‘community benefit requirement’ upon contracting authorities.145 Even before the Procurement Reform (Scotland) Act, the authors of a review of the international literature produced by the University of Strathclyde (published on the Scottish Government’s website) concluded that: The UK Government appears to be placing less emphasis on efficient use of resources (including recycling) and job opportunities that can be created by renewables than Scotland (highlighted in the green jobs strategy). The Scottish

138 See T Biachi and V Guidi (eds), ‘The comparative study on the national public procurement systems across the PPN’ (Rome: Authority for the Supervision of Public Contracts, 2010) and Brammer and Walker, n 136, 11–14. 139 This contrasts with the position in the United States where McCrudden reports greater emphasis upon social issues within procurement, particularly non-discrimination and equal opportunities: McCrudden, ‘Using public procurement to achieve social outcomes’, n 68. 140 R Steurer and A Konrad, ‘Sustainable public procurement in EU Member States—the survey results’ (Fifteenth meeting of the EU High-Level Group on CSR, Brussels, 2007). 141 See further Biachi and Guidi, n 138, 227–32. 142 See: www.scotland.gov.uk/Topics/Government/Procurement/policy/procurecombenefits. 143 See: www.scotland.gov.uk/Topics/Government/Procurement/policy/corporate-responsibility. 144 See: http://www.scotland.gov.uk/Topics/Government/Procurement/policy/procurecombenefits. 145 See especially ss 9–10 and 24–26 of the Act.

138 The Public Procurement Rules Environment Protection Agency seems to be more advanced in recognising and addressing environmental justice concerns than the Environment Agency in England and Wales and FoE Scotland has also been far more proactive in making the links between environmental and social justice than its English counterpart.146

Notwithstanding some internal policy divergence, the UK is at the forefront of environmentally sustainable public procurement among European Member States.147 A Sustainable Procurement Task Force was established in 2005, which launched a National Action Plan in June 2006. In its Sustainable Development Strategy, the UK Government committed itself to being among the leaders of the EU on sustainable procurement by 2009.148 The remit of the Environment Audit Committee extends to scrutinising the Government’s performance on environmental sustainability in procurement. In 2006, the Greater London Authority launched its ‘Responsible Procurement’ policy.149 Most recently in March 2012, Parliament enacted the Public Services (Social Value) Act 2012. The Act began as a Private Member’s Bill150 and imposes an obligation upon contracting authorities to consider how what is being procured and the process by which it is procured might ‘improve the economic, social and environmental well-being of the relevant area’ (section 1(3)). At national level, best value for money has been defined in terms of whole life cost and quality. There is scope built into the central aim of public procurement for contracting authorities to take horizontal policy objectives into account in their procurement decisions.151 However, the 30 or more sources of detailed guidance that have been issued on social policies in procurement are complex and cautious in tone (see Table 1). The Treasury’s Green Book contains guidance about how non-market impacts should be valued, but these impacts do not include employment issues.152 OGC guidance provides suggestions about how social issues might be addressed at each different procurement stage, but defers extensively to the Commission’s (conservative) Interpretative Communication, especially on

146 Centre for Sustainable Development, University of Westminster and the Law School, University of Strathclyde, ‘Sustainable Development: A Review of International Literature’ (2006): www.scotland.gov.uk/Publications/2006/05/23091323/13, para 12.8. See also A Cumbers and G Whittam (eds), Reclaiming the Economy, Alternatives to Market Fundamentalism in Scotland and Beyond (Glasgow: Scottish Left Review Press, 2007). 147 Bouwer et al, n 136; Steurer and Konrad, n 140; and Brammer and Walker, n 136. 148 HM Government, Securing the future: Delivering UK sustainable development strategy (Cm 6467, 2005). 149 See: www.london.gov.uk/rp/policy. 150 For a useful overview of the Act’s legislative history, see: www.navca.org.uk/socialvalue-bill-history. 151 Office of Government Commerce (OGC), Social Issues in Purchasing (London: OGC, 2006) 3. The emphasis in this guidance was however upon what could not be done. 152 HM Treasury, ‘The Green Book: Appraisal and Evaluation in Central Government’ (London: TSO, 2011).

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the issue of social award criteria.153 The Office of the Deputy Prime Minister (ODPM) recognises that although the ‘Interpretative Communication goes some way to clarifying these complex issues, difficulties may remain about the boundaries of what is admissible’.154 Aspey reports that in her study of UK utilities procurement practitioners, interviewees found the OGC’s guidance unhelpful and unclear.155 Guidance was generally more coherent and ambitious in respect of local authority contracting, until the withdrawal of Annexes C (handling of workforce matters) and D (two-tier code) to the ODPM Circular 03/2003 in March 2011.156 Since the Government has special equality duties,157 the OGC’s guidance is (predictably) most far-reaching in respect of equality issues.158 However, in February 2011, the Cabinet Office advised contracting authorities ‘not [to] place disproportionate or unnecessary “selection” criteria or marking schemes including relating to equality, on economic operators’.159 UNISON reported that the Coalition Government abandoned the Labour Government’s suggestion that procurement should be used to promote equality in the 2010 Equality Act.160 The UK Government’s report to the ILO in 2007, illustrates a negative attitude towards social protection in procurement: The inclusion of labour clauses can add cost and bureaucracy to contracts, without any clear indication of benefits, and the contracting authority runs the risk of contravening EU rules. With this in mind, the UK Government has no intention to ratify Convention 94 at this present time.161

In sum, the UK’s policy guidance is far from ambitious.162 Moreover, as Barnard has argued, citing the failure to deliver a living wage for all those 153 OGC, Social Issues in Purchasing, n 151 and OGC, Buy and Make a Difference: How to Address Social Issues in Public Procurement (London: OGC, 2008). 154 ODPM, ‘Local Government Act 1999: Part 1—Best value and performance improvement’ ODPM circular 03/2003 (13 March 2003) 46. 155 E Aspey, ‘Labour considerations in EU procurement: a study of UK utilities’ (2012) 37(3) European Law Review 294, 301–02. 156 ODPM, n 154, 10–12 and 36–50. See also Luton Borough Council’s guidance, ‘Procurement Code of Practice—Workforce Matters and Equality’ (February 2004). 157 s 1 Equality Act 2010. 158 OGC, Make Equality Count (London: OGC, 2008). 159 Cabinet Office, ‘Procurement Policy Note—Update’ (April 2011). 160 M Jaffe, ‘Protecting Public Service Workers: Procuring Employment Rights’ (London: UNISON, May 2012). 161 UK Government report to the ILO (2007). 162 See also, Cabinet Office, ‘Joint Statement on Access to Skills, Trade Unions and Advice in Government Contracting’ (2008), a modest, uninspiring document, and s 17 Local Government Act 1988, as amended by the Local Government Best Value (Exclusion of Non-commercial Considerations) Order 2001, SI 2001/909 which enables workforce matters to be considered in determining best value in local authority contracts, but only to the extent that it is ‘necessary or expedient to the achievement of best value’. Authorities were previously prohibited from having regard to workforce matters, because they were defined as ‘non-commercial’.

140 The Public Procurement Rules working on the London Olympic sites, ‘Rhetorical commitment is one thing, application in practice is another’.163 Notwithstanding the plethora of guidance, Brammer and Walker reported that ‘83 per cent of purchasing professionals considered themselves ill equipped to deliver sustainability through procurement’.164 There is a paucity of empirical insight into if, and how, contracting authorities make use of their discretion to incorporate horizontal policies in procurement (which this thesis is helping to fill—see chapters six and seven). The evidence that exists has, at best, suggested that contracting authorities are well intentioned (‘so, the people who are operating the contracts essentially are being told “do what you can and it will get tested out by the Court at the end of the day”. So to an extent, people are just … ignoring the problem and hoping they won’t get picked on’),165 but has still acknowledged that these good intentions do not always translate into enforceable socially protective outcomes.166 Metcalf and Dhudwar reported that this is partly because of a concern that to force the issue would run the risk of causing litigation for breach of EU law.167 A comprehensive review by the Transport Committee in December 2011, of the decision to award the Thameslink contract to the German firm Siemens rather than the British Bombadier, was also critical of the procurement process, and held it in part responsible for the significant adverse social impact of the award decision. The Committee found that the Invitation to Tender (ITT) focused unduly on economic issues, overlooking socio-economic factors which, it argued, could be legitimately included and were more routinely included in other EU Member States.168 In 2002, the Government reviewed best value contracting by local authorities and highlighted concerns that some providers that had a poor approach to workforce matters were nevertheless winning work from local authorities, and that some authorities were not taking proper account of workforce matters in their contracting.169 Previous research, outlined in chapter one, has demonstrated the detrimental impacts that competition can have upon public sector workforces. These impacts include increased workforce casualisation, decreased pay protection, decreased trade union coverage and the erosion of equal opportunity and diversity policies. The existence of these impacts tends to suggest that social protection is not being prioritised, or is not being addressed 163

Barnard, ‘Procurement Law to Enforce Labour Standards’, n 93, 271. Brammer and Walker, n 136, 9. 165 Local Government Association interview notes in Koukiadaki, n 127. 166 R Fee, P Maxwell and A Erridge, ‘Contracting for services—a double jeopardy? An analysis of contract compliance in the context of European and UK social and public procurement policy’ (1998) 13(1) Public Policy and Administration 79. 167 H Metcalf and A Dhudwar, Employers’ Role in the Low-pay/No-pay Cycle (London: Joseph Rowntree Foundation, 2010). 168 Transport Committee, Thameslink Rolling Stock Procurement, Eleventh Report (HC 2010–12, 1453) 12. 169 ODPM, n 154, 10. 164

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sufficiently effectively, within procurement processes.170 This would not be a surprising conclusion (albeit as I have argued not a necessary or inevitable one) given the shape of the relevant legal landscape at both a European and domestic level that has been sketched in this chapter, and its likely ‘chilling’ effect upon social ambition. However, it is a conclusion that is without significant empirical support, for want of previous research. Consistent with the socio-legal theoretical framework of this thesis, since the law must be brought to life by social actors, it does not follow that law on the page will be mirrored by law in practice. Indeed, in her recent qualitative study of attitudes towards the Living Wage Campaign among social actors and policymakers in the UK, Koukiadaki found evidence of a ‘significant consolidation and further promotion’ of living wages, notwithstanding the developments in EU law outlined above.171 The aim of chapters six and seven is to cast an empirical spotlight upon social public procurement practices, in the context of the competition to manage HMP Birmingham.

170 Although see Brammer and Walker, n 136, who found greater evidence of worker safety being taken into account in public procurement exercises (especially in the UK) than environmental issues. And see also the Greater London Authority’s London Living Wage and Responsible Procurement Policy, which stand out as notable successful UK exceptions. In reporting the Rüffert case, the OGC issued a thinly veiled threat to the London Living Wage. They recommended that the wage requirement should only be pursued on a voluntary basis: OGC, ‘Procurement policy note—Quarterly update’ (March 2009). See also the West Midlands Common Standard in Equalities in Public Procurement. 171 Koukiadaki, n 127.

6 Competition in Action: Social Sustainability and Public Procurement

A

S I EXPLAINED in opening chapter five, there are two important legal sources of potential social protection within a competition context. The first arises from the contracting authority’s exercise of its capacity to further social policies within the public procurement rules. This has a critical impact upon the level of social protection that staff enjoy after management of the service has been transferred to the new provider. It will shape staff experiences of competition, having the potential to damage and diminish social capital and thereby, most moderately stated, cast doubt upon the use of competition as a tool for raising standards. The second source of potential social protection is the Transfer of Undertakings (Protection of Employment) Regulations (TUPE). TUPE protects staff by transferring the employment relationship, with its existing terms and conditions, to the new service provider. In principle, staff retain both their jobs and terms and conditions. However, as I argued in chapter one, the high level of social protection that TUPE appears to offer does not necessarily materialise in practice. Moreover, on a doctrinal level, the relationship between the public procurement rules and TUPE is uncertain, complex and potentially tending to undermine, rather than reinforce, social standards. Following the socio-political and legal context outlined in the preceding chapters, this chapter evaluates the first potential source of social protection by presenting findings about the extent to which employment issues were addressed within the procurement process and contract documents at HMP Birmingham, and about how the competition process affected the social character of the prison and its staff. Chapter seven evaluates the second potential source of social protection, TUPE, by presenting findings about how the rules were understood and mobilised, and about what effects that had upon the prison and its staff. The overall aim of these chapters is to provide the basis for reflection in chapter eight upon the social nature, impacts and (implicitly) efficacy of public procurement processes.

Two Overarching Empirical Themes 143 A. TWO OVERARCHING EMPIRICAL THEMES

In his notes on writing up qualitative research, Back encourages researchers to begin by thinking about the project’s ‘primal scene’, the moment when they realised ‘I am on to something’. The aim is to take the reader ‘to the place where the social action is going on’.1 Birmingham’s story has two ‘primal scenes’. These interactions encapsulate two overarching themes in the project’s empirical findings that are explored in further detail later in this chapter. Both interactions took place in Birmingham, shortly after the decision to transfer management of the prison to G4S in April 2011. However, the contrast between the two scenes could scarcely be starker. Researcher: NOMS Senior Manager:

Birmingham Senior Officer:

Do you think this competition has been a success? Yes it has. It’s been a clean process. Obviously the bidders that didn’t win weren’t pleased but everyone agrees that it was a fair process. We managed to avoid any leaks. Nobody knew until the Minister stood up in the House of Commons. That was a big achievement. We’ve proved to the private sector that the prisons market is worth investing in. Success? I dunno what they were trying to achieve. Four staff were sent off duty during the last ten days because they were crying and shaking uncontrollably. We sent another two off in the last week for alcohol related issues. You see everyone in the car park before work psyching themselves up, in tears, doing their best to come into work. If that’s what they wanted then I guess they’ve got it yeah. We’re broken. I don’t know any more.

The divergence in these responses reflects the different perspectives from which each individual had participated in, and experienced, the competition. The Officer had no knowledge of the manager’s high-level decision-making and no understanding about the purpose and process of competition, or its next steps. This is reflected in the Officer’s choice of words, which express feelings of hopelessness and futility. By contrast, the manager’s evaluation 1 L Back, ‘Take your reader there: some notes on writing qualitative research’ Durham University Department of Anthropology, ‘Writing on writing’ series.

144 Social Sustainability and Public Procurement of success bore no trace of the competition’s human impact, upon which the officer’s response focused. While both individuals were intimately involved in the process of competition, their worlds had remained entirely separate. This is the first overarching theme that emerges from the data collected at Birmingham: there was an almost total disconnection between the process of competition and the people it affected. The substance of the manager’s response is an interesting reflection of the priorities of the National Offender Management Service (NOMS). The manager’s focus upon the integrity of the process (‘clean’, fair and no leaks), and the capacity of such a process to build a dynamic prison market, comes at the expense of any consideration about whether the competition has laid solid foundations for the prison’s future improvement.2 It seems likely that this is partly a product of the ‘high stakes’ political context in which Birmingham was competed. The Government could not afford competition to flounder in another ‘traditional’ local prison, as it had at HMP Brixton in 2001. The Government needed to take on the Prison Officers’ Association (POA) and win; show its staff and private company bidders that it could be tough and commercially rigorous (see chapter one, section F). In such a context, it is not surprising that sight was lost of Birmingham’s real needs for cultural improvement and that Birmingham’s staff and managers came to feel ‘like pawns in a political game of chess’. As explored further below, the focus of NOMS’ staff and managers upon process over substance seems to be a result of a widespread organisational failure to properly understand, and appropriately mobilise, competition. A concern to ensure that the process was perceived to be sufficiently rigorous by private sector bidders, in order to protect NOMS from subsequent legal challenges, was allowed to become overbearing. It marginalised workforce issues which, as has been made clear in previous chapters, are pivotal to public service improvement. Notwithstanding recognition of the connection between service quality and the handling of workforce issues in official government policy,3 and the publication of over 30 documents containing principles, statements of practice and guidance on the inclusion of social matters in procurement (see chapter five and Table 1), this did not translate into tangible staff experiences. Echoing Labour’s criticisms of compulsory competitive tendering (CCT),4 this case study suggests that

2 The manager’s positive view of the integrity of the process and its capacity for market building seems undeserved in light of other data collected in the field, which is discussed below. It seems likely that this misjudgement is a further reflection of the lack of integration, between Birmingham, as the subject of the competition, and the process itself. 3 See Office of Government Commerce (OGC), Social Issues in Purchasing (London: OGC, 2006) 3 and ODPM, ‘Local Government Act 1999: Part 1—Best value and performance improvement’ ODPM circular 03/2003 (13 March 2003) 37. 4 ‘All too often the process of competition has become an end in itself, distracting attention from the services that are actually provided to local people. In short, CCT has provided a poor

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competition has become an end in itself (the second overarching theme in the Birmingham data). The policy is not operating in the way that politicians assume and sight of ‘the big picture’ has been lost. This is costly, distracting and damaging.

B. SOCIAL PROTECTION IN BIRMINGHAM’S PROCUREMENT PROCESS AND DOCUMENTATION

In light of the overview of procurement processes provided in chapter five (see also Figures 2 (p 229) and 3 (p 230)), and the overarching empirical themes highlighted above, this section analyses the extent to which workforce and human resources (HR) considerations played a role in the Birmingham competition. Part 1 covers the pre-procurement and specification stages while part 2 covers supplier selection, evaluation and award. Section C concludes by exploring staff experiences of competition.

1. Competition Design As was explained in chapter five, although the public procurement rules curtail a contracting authority’s discretion, there is significant scope for contracting authorities to take independent decisions within the rules’ framework. There is even more scope for discretion where the rules do not apply because, for example, the contract concerns a Part B service or the value of the contract falls below the financial threshold. Either way, even before a competition is launched, a contracting authority must make many important decisions about the procurement process that it will lead. Although the political announcement of the Birmingham competition was made in April 2009, the process did not begin officially until November 2009, when a notice ‘for custodial services and works at 5 prisons’ was lodged in the Official Journal of the European Union (OJEU). That notice contained two important decisions that NOMS had taken between April and November 2009 about the nature of the process that was to follow. First, the notice made clear that the competitive dialogue procedure would be used (discussed in section B.1.i) and second, the notice defined the subject matter of the contract as management of the whole prison, rather than particular facilities or services (discussed in section B.1.ii). Notwithstanding the importance of these decisions, they were taken before the NOMS procurement team was fully staffed. The prison competition unit manager arrived in March deal for employees, employers and local people. CCT will therefore be abolished’. Department of Environment, Transport and Regional Affairs, Modernising Local Government: Improving Local Services (London: HMSO, 1998).

146 Social Sustainability and Public Procurement 2010, after the OJEU notice had been published. Several of the team’s key members were appointed only a few months before the OJEU notice was published. Although many of the team had experience of running competitions in the private sector, their late appointments meant that they had little time to gain knowledge of NOMS, or the additional complexities of contracting for public services, before making fundamental decisions in respect of the Birmingham competition. i. Competitive Dialogue In contrast to previous competitions in the prison sector, in which the restricted procedure was used, it was decided that competitive dialogue would be used for the Birmingham competition. Competitive dialogue is a procedure whereby contracting authorities engage directly in dialogue with bidders, over a number of different sessions, with the aim of developing one or more solutions to meet their needs. On the basis of this dialogue, contracting authorities select the bidders that they wish to invite to submit a best and final offer (BAFO). Unlike more common, non-dialogic procedures (such as open and restricted competition), competitive dialogue is used where it is difficult for a contracting authority to identify, in advance, the technical means that should be used to achieve the desired service solution or which of several solutions would best meet the commissioner’s needs.5 The use of competitive dialogue in the Birmingham competition seemed objectively justifiable, on the basis of the complexity of the services that were sought. However, this procedural choice had a significant impact upon the course of the competition, which was not given adequate forethought within NOMS. First, the Public Sector Bid Unit (PSBU) had expected the restricted procedure to be used. The PSBU had constructed a local bid team (composed of local staff, managers and trade union representatives alongside national prison managers) with that procedure in mind. The withdrawal of the local team shortly after the OJEU notice, coupled with the dynamics of the subsequent dialogue process, had a significant negative impact upon staff perceptions, the implementation of information and consultation duties, and workforce morale (see section C). Second, competitive dialogue is more complex than its procedural alternatives. It almost inherently entails a more costly and lengthy process because bidders are required to develop their vision for the service incrementally, in light of feedback they receive from the contracting authority during dialogue sessions.6 These process dynamics

5 See S Arrowsmith and S Treumer (eds), Competitive Dialogue in EU Procurement (Cambridge: CUP, 2012). 6 OGC/HM Treasury, ‘Competitive Dialogue in 2008: OGC/HMT joint guidance on using the procedure’ 14–15. This often impedes small and medium enterprises from participating in the competition because they cannot afford the high process costs.

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make it important for contracting authorities to be competent commissioners. Commissioners must undertake more extensive preparation for competitive dialogue than is typically required for other competitive processes. As joint Office of Government Commerce (OGC) and HM Treasury guidance acknowledged, ‘The more structured nature of the (Competitive Dialogue) procurement process and restrictions on all parties at its later stages requires early, detailed and rigorous planning’.7 This is because ‘Bidders need to develop their final bids more completely under Competitive Dialogue than has been the case under most Negotiated procedures’.8 There was evidence that NOMS had not fully understood or evaluated the impacts of its procedural choices. Deficiencies in preparation—particularly of documents that ought to have been reasonably foreseeable (such as a survey of the existing fabric of the prison and a compendium of staff terms and conditions of employment)—caused multiple delays and work to be repeated. This increased costs for NOMS and bidders and prolonged the uncertainty and anxiety for Birmingham’s staff. There was a pervasive lack of cultural reflection upon what this sort of procurement meant for NOMS as an organisation. There was little evidence of joined-up thinking or any attempt to ‘align values, institutions and markets’.9 As a NOMS Senior Manager explained: What the Board seemed not to realise is that the idea and reality of competition are actually very different. There was no consideration about the level of resource, or appropriate balancing of resource. We haven’t thought about what competition means for us as an institution. There is lots of responsibility sitting with not many people who are not quite sure what competition means or how to deliver it. It is all a bit amateurish.

Despite the obvious HR implications of the Birmingham competition, the exercise did not feature in NOMS’ HR Business Plan. ii. Total Service Output Specification The second procurement decision that had been taken by November 2009 was that the subject matter of the procurement exercise was to be ‘custodial services’ for the whole of HMP Birmingham. This had two implications, which shaped the procurement process. The first is that the contract fell within Annex IB of Directive 2004/18EC,10 as services that are considered to be of greater local interest and less cross-border interest than those contracts that fall within Annex IA. 7

ibid, 12. ibid, 14. 9 T Brown, M Potoski and D van Slyke, ‘Managing public service contracts: aligning values, institutions and markets’ (2006) Public Administration Review 323. 10 By virtue of custodial services being placed within category 27: ‘other services’. 8

148 Social Sustainability and Public Procurement According to Article 21 of the Public Contracts Regulations 2006 (PC Regulations), this meant that the procurement process was subject solely to Article 23 (on equal access and avoiding the creation of unjustified obstacles to opening up procurement competition) and Article 35(4) (on contract award notices).11 Consequently, NOMS theoretically enjoyed some additional procedural flexibility (in, for example, not needing to justify its choice of the competitive dialogue procedure in the OJEU contract notice), albeit that in practice this additional latitude was not used by the Procurement Directorate. The procurement team proceeded instead on the assumption that the procurement rules applied in full and, in interview, none of the procurement staff appreciated the distinction between Part A and Part B services.12 This meant that the underlying Directive was given greater reach than would be anticipated on the basis of its wording alone. It may be that this was a deliberate policy decision, in light of the competition’s high legal and reputational stakes, but I did not find evidence to support such a hypothesis. It may instead be indicative of a lack of knowledge of the legal rules, unencumbered by their interpretation in policy documents. In any event, the characterisation of the Birmingham contract as a Part B, low cross-border interest service underscores the anachronistic nature of the distinction between Part A and Part B services, which was noted in chapter five. The most significant private sector players in the UK prisons market are companies that were originally established overseas. Serco and GEO Group were originally American firms, G4S has Danish origins and Sodexo was established in France. Prison services are thus hardly of limited crossborder interest. The distinction’s arbitrariness is also well illustrated by the Birmingham competition since had NOMS sought to identify and target Birmingham’s real problems in the tendering exercise (which, from the Inspectorate and other audit reports centred upon staff culture and numbers), those HR and management services would have fallen under Part A of the Directive. Had the competition been conceived differently, to target Birmingham’s specific problems, the process would have been subject to the full rigours of the procurement rules. The second implication of NOMS having defined the subject matter of the Birmingham competition as it did was that management of the whole prison, rather than specific (problematic) facilities or services, was put out to tender. By tendering for management of the entire prison, staffing problems became only one of many issues that tenderers had to address as part of the competition. Notwithstanding the centrality of staff–prisoner relationships to almost every aspect of prison life, the decision to contract 11

TFEU free movement provisions also still apply. Aspey found similarly low general knowledge of the procurement legal regime among procurement practitioners: E Aspey, ‘Labour considerations in EU procurement: a study of UK utilities’ (2012) 37(3) European Law Review 294. 12

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out the whole prison laid the foundations upon which staffing issues were enabled to become increasingly peripheral during the competition (see section C). This may have been exacerbated by the pressure in the procurement rules to express service specifications in output (performance and functional) terms (Regulations 9(6) and (7) of the PC Regulations). Where management of an entire prison is tendered, the procurement rules more readily accommodate specifications that stipulate what NOMS wants to achieve in terms of prisoner outcomes (for example, percentage of prisoners attending daily education or work, or percentage of prisoners passing mandatory drugs tests) than specifications that guarantee a particular type or level of employment protections and working practices for prison staff. It would have been easier to justify a more detailed examination of staffing issues within the procurement rules if HR and management services had been the focus of the tendering exercise. A total service output specification leaves prima facie greater discretion in the hands of the contractor to achieve the required service outcomes by whatever staffing and HR means it feels are demanded. This freedom can lead to innovation and good practice. However, it can equally lead to degradation, poor practice and non-performance. The advantage of contractor freedom, from a commissioner perspective, is that the contractor bears the (reputational and financial) risks for workforce changes. However, the contractor also stands to profit from those workforce changes. Indeed, in many instances workforce changes will be the only potential source of efficiencies for private companies that take over public services. This led Domberger and Jensen to suggest that it is uncertain whether the costs saved by contracting out only represent ‘wealth transfers’ from staff to private companies by virtue of salary reductions, rather than ‘genuine productivity gains’.13 The freedom that commissioners purport to enjoy, by devolving responsibility for services to private companies, may be more illusory than it seems. As the chaos with G4S over security staffing for the 2012 Olympics illustrates, if a contractor fails to deliver, the state bears ultimate responsibility and must step in to ensure that essential services are provided.14 Given the high political stakes of the Birmingham competition, it is unsurprising that NOMS’ relationship with G4S since management of HMP Birmingham was transferred to the company has been close and facilitative more than it has been independent and contractually assertive. This is not necessarily problematic, but it suggests a different relationship between commissioners and bidders

13 S Domberger and P Jensen, ‘Contracting out by the public sector: theory, evidence, prospects’ (1997) 13(4) Oxford Review of Economic Policy 67, 74. 14 Similarly in a prisons context, the Prison Service installed public sector management at privately managed Ashfield Young Offenders’ Institution in May 2002 because of concerns about staff safety and order.

150 Social Sustainability and Public Procurement than much of the free market thinking in public services presumes, and it risks inadequate scrutiny of the delivery of important public services. iii. Principles of Competition: COSOP and Ethical Walls Alongside the OJEU contract notice, the NOMS procurement team produced a statement of the ‘Principles of Competition’ for all bidders as part of the pre-qualification documentation. A revised second version was published in August 2010. As is discussed below, one of the most significant differences between the two versions of the Principles was decreased emphasis upon social protection. The Principles set out how conflicts of interest would be avoided (principally through the erection of ‘ethical walls’ and the signing of a conflicts of interest declaration) and how a level playing field would be created for the evaluation of public and private sector bids. In interview, the procurement team identified the Principles as controversial but crucial to the competition’s success. They were controversial because they imposed a mandatory uplift on the price of the public sector’s bid. This was to take account of costs that are normally subsumed within the broader public sector budget and so are not apparent from the account books of individual public institutions.15 Since private sector bids include these costs as a matter of course, such uplifts were crucial to level the playing field between the two sectors, without which the private sector was unlikely to engage. The NOMS procurement team partly attributed the failure of the 2001 competition at HMP Brixton to disagreement over the competition’s principles and a feeling, on the part of the private sector, that uplifts on the public sector’s bid were inadequate. Given the importance of the Principles, they are an interesting lens through which to examine the status of social protection in the competition. Notwithstanding the plethora of documentation that has been produced about how social matters can be addressed in procurement processes (see Table 1), the Principles made reference to only one of these documents, namely the Cabinet Office Statement of Practice on Staff Transfers in the Public Sector 2000 (COSOP). As will be recalled from chapter one (section E), COSOP enlarges TUPE’s scope of application in respect of

15 The following uplifts were applied: 6.5% to account for indirect costs such as shared services, headquarter functions and asset repair and replacement (increased to 6.6% in the August version of the Principles), bidding costs (calculated according to a formula which multiplied the total HMPS bidding costs for the competition [£1.1 million] by a win rate of three in five, and then divided by the particular contract term); a 2% ‘performance adjustment’ uplift to account for the risks of fines for contractual non-performance; and 3% uplift on the payroll direct cost, to account for the investment risk incurred by non-public ownership structures in financing their own pension scheme. The public sector was also required to include the cost of commercial insurance in their bid.

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public sector workers and obliges the new employer to offer a broadly comparable pension to transferring public sector staff (pensions normally falling outside the scope of TUPE). Calling for tenderers to comply with COSOP in formulating their bids might be seen as coming into tension with the European Commission’s reading of the public procurement rules. Since COSOP imposes obligations that are above the statutory minima, demanding compliance with these additional rules can be seen as an obstacle (albeit non-discriminatory) to the freedom of non-national putative tenderers to provide services by participating in the competition. The inclusion of COSOP in such an important document underscores the magnitude of the free movement obstacle that it presents since it suggests that compliance with COSOP is not merely a welcome additional extra, for which a small proportion of marks might be awarded, but rather that compliance is a fundamental prerequisite for engaging in the competition at all. However, the revision of the Principles for the second version of August 2010, and the absence of references to any other of the many relevant ‘social policy in procurement’ documents, cast a less positive light upon the status of social protection in the early stages of the Birmingham competition. Although COSOP was still referred to in the August version of the Principles, the prominence and extent of the coverage of pensions was reduced, from 10 paragraphs to four. The November Principles included an extract from COSOP that read: The government is committed to ensuring that the public sector is a good employer and a model contractor and client. The people employed in the public sector, directly and indirectly are its biggest asset and critical in developing modern, high quality, efficient responsive, customer focused and environmentally friendly public services.

This was omitted from the August version; a reflection, it seems likely, of the general political pressures that were being placed upon civil servants’ terms and conditions of employment through the Superannuation Act 2010 and the impending recommendations of the Independent Public Service Pensions Commission (see also chapter one, section E). The lack of references to any other of the many ‘social policy in procurement’ documents, and the decreased prominence of COSOP in the August 2010 Principles, provide evidence to suggest that NOMS, in both its employer and commissioner capacities, did not develop a vision of how it wanted its staff to be treated during and after the competition and did not properly consider the relationship between staff treatment and service improvement. The non-use of policy documents beyond COSOP in such an important procurement document also casts doubt upon the effectiveness of current practices in disseminating social policy in the procurement field. There are too many documents, drafted by too many different authors. Consequently, the guidance lacks coherence, clarity and ambition and is

152 Social Sustainability and Public Procurement not, it seems, sufficiently mainstreamed among commissioners. Indeed, in interview, members of the NOMS procurement team were seldom aware of the existence of these policy documents (although, for reasons that are explored below, in practice this may have led to the inclusion of more social matters than might otherwise have been the case).16 This underlines the importance of giving commissioning teams sufficient time and support to learn about the institutional context in which they work, particularly if they only have previous experience of working in the private sector. In light of the main research question of this project, the Principles have thus far been evaluated by reference to their treatment of social policy. However, the main purpose of the Principles, as identified by the NOMS procurement team, was to ensure that the competition was ‘clean’, in the sense of preventing the process being susceptible to a later legal challenge and winning the confidence of private sector bidders. As discussed in chapters one and four, staff perceptions of procedural fairness are important in mediating reactions to, and managing, workplace uncertainty and change. As such, the integrity of the process is a relevant object of enquiry from a social protection perspective. As explored further in section C below, Birmingham staff experienced the competitive process and, by extension, the system that administered it, as deliberately complex, dysfunctional, uncaring and unfair. This tainted the few constructive interactions that staff had with the process and delegitimised the competition’s outcome. The process, and institutional architecture, of competition thereby contributed to the damage that was caused by competition to Birmingham’s social capital and thus also Birmingham’s prospects for improvement. If the ‘cleanliness’ of the competition were evaluated against the modest aspiration of avoiding legal challenges to the process then, broadly speaking, the competition could be considered to be a success. Although litigation was not entirely avoided,17 the competition was not derailed by it. Yet, an evaluation of the competition against a more demanding conception of process integrity comes to a less favourable conclusion. While there was a focus within NOMS upon getting the process right (which came at the expense of managing workforce and service improvement issues—see section C), the ambitions of NOMS managers for a ‘clean’ process remained largely unfulfilled in practice. As will be seen, this was primarily because the measures that NOMS had taken had not been tested or integrated in a wider 16 The procurement team’s lack of knowledge about these policy documents may account for their ‘boldness’ in including social matters in subsequent procurement documents and their lack of awareness, in interview, about the inclusion of those matters being potentially incompatible with the procurement rules. 17 In March 2011, the POA brought proceedings against NOMS, in an attempt to prevent G4S from participating in the competition after the former Chief Executive of NOMS, Phil Wheatley, began working for the firm as a consultant: www.guardian.co.uk/society/2011/ mar/06/prison-officers-sue-private-jail-takeover.

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organisational sense to ensure that they were properly understood and functioned appropriately within NOMS’ operational structure. The most significant measure that the Principles brought about was the erection of ‘ethical walls’ within NOMS staff in order to more clearly distinguish between staff who were involved in commissioning and staff who were not. The hope was that these walls would avoid conflicts of interest and counteract any perception among private sector bidders that the PSBU would be able to gain privileged access to information. In practice, while not amounting to anything that was legally actionable, these ethical walls were less effective than they ought to have been. In interview, while NOMS staff generally understood on which side of an ethical wall they fell, they did not fully understand the underlying purpose of the walls. Consequently, as staff were unsure to whom they were permitted to talk and struggled to identify the outer limits of permissible topics of conversation, they felt anxious and it became more difficult to carry out everyday work: We should have worked through the impact of ethical walls. There wasn’t any guidance about the practicalities, what they actually mean in day-to-day terms. There was no code of conduct. As an organisation on the whole, we didn’t really get to grips with what they meant (NOMS Manager).

Echoing Mashaw’s example, appearance seemed to be more important than substance: Both the press and Congress are likely to be more interested that a government procurement officer went to lunch with a potential vendor than that she learned something at that lunch that might be crucial to the design of a request for a multimillion dollar computer system.18

Ethical walls had some similarly inhibitive operational impacts at establishment level (see section C, below). Difficulties with the practical operation of ethical walls were exacerbated by the lack of clear structural delineation between commissioners and non-commissioners. NOMS’ organisational structure had not been reconfigured in light of its competitive environment. Both versions of the Principles stated, for example, that: ‘The Human Resources organisation is exclusively public sector facing and has no dealings, direct or indirect, with any of the prospective bidders that have private, voluntary or hybrid bidders ownership structures’.19 In practice, that was not the case. Some HR experts sat on the commissioning side of the ethical wall and played an important role in setting HR parameters in procurement documentation and dialogue sessions. They also evaluated the HR components of bids.

18 J Mashaw, ‘The Fear of Discretion in Government Procurement’ (1991) Yale Law School Faculty Scholarship Series paper 1141. 19 Principle 6(d), Ministry of Justice, Principles of Competition, November 2009.

154 Social Sustainability and Public Procurement There are good reasons to encourage NOMS’ expertise to be used in this way, to the benefit of commissioning processes and outcomes. It makes sense for HR experts who have experience of the particularities of public sector prison workforces, and who have knowledge of the broader HR landscape in NOMS, to be involved in specifying HR needs and evaluating bidder performance. What made this set-up problematic was that, at that time, the PSBU also sat within the NOMS HR Directorate (see Figure 4, p 231). The HR Directorate thus housed a combination of commissioners, non-commissioners and a bidder. This created an unhelpful and confusing appearance. Inattention to NOMS’ structural configuration also resulted in ethical walls being placed within departments. This made it difficult for staff to predict where ethical walls should lie within their field of work and aggravated their feelings of uncertainty, to the detriment of the organisation’s ongoing activities. Managing the commissioner/bidder tension within the HR Directorate may have contributed to the lack of focus upon NOMS’ ongoing employer responsibilities. It seems likely that it played a role in causing the PSBU to inappropriately take responsibility for some of NOMS’ employer responsibilities at Birmingham, the result of which was added confusion and deepened perceptions of broken promises among Birmingham’s staff (see section C). As already suggested, these procedural and structural difficulties are a reflection of a broader problem with the Birmingham competition, namely a lack of appropriate reflection upon, and planning for, what competition meant for NOMS as an organisation. The procurement team was isolated, rather than integrated within NOMS. Necessary channels for communication and the sharing of expertise, particularly lessons learned from previous TUPE exercises, were not established. Roles were not delineated and responsibilities were not allocated. This allowed important (pro-social) functions to fall through the gaps. By way of example, since the procurement team saw their communication responsibilities as extending only to bidders, communication about the competition process to trade unions (that should have been delivered through the Employment Relations team) or to Birmingham’s staff (that should have been delivered through the HR Directorate) was virtually non-existent. Inadequate and inaccurate information was at the centre of many of the frustrations that Birmingham’s staff experienced during the competition (see section C). As is reflected throughout the discussion of the competition’s delivery (in section B.2), poor planning and inadequate integration of the procurement function within NOMS had a detrimental impact upon all stages of the competitive process. Competition was enabled to become an end in itself, unanchored in any social values and purposes, driving the organisation from a position of detachment, rather than being just one player in an integrated programme. Although NOMS was new to the Birmingham ‘type’ of competition, lessons must be learned for the future.

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2. Competition Delivery i. Pre-Qualification Questionnaire The deadline for receipt of requests to participate in dialogue was 4 January 2010. In order for a request to be considered, bidders had to complete a pre-qualification questionnaire (PQQ). This assessed the ‘economic and financial standing and the technical or professional ability’ of the potential providers. There were two phases to this assessment. The first assessed initial eligibility on the basis of the potential provider’s compliance with Regulation 23 of the PC Regulations. This provision mirrors the mandatory and discretionary grounds for tenderer exclusion that are found in Article 45 of Directive 2004/18/EC. Full advantage was taken of the discretionary grounds for tenderer exclusion in the Birmingham PQQ: tenderers were required to sign declarations that neither the mandatory nor discretionary grounds for ineligibility applied. These grounds touch upon staffing issues to the extent that they ensure a minimum level of acceptable business practice. They ask tenderers to guarantee, for example, that they have not committed an act of grave misconduct in the course of their business and that they have fulfilled their social security payment obligations. Provided that the eligibility stage was passed, a second concurrent phase of assessment evaluated the tenderer’s responses to more detailed questions. Table 2 provides an overview of the categories of information to which responses were requested and each category’s relative importance, as reflected by its evaluation weighting. It also summarises the workforce related elements in each PQQ section. This reveals that a total of 18 workforce related dimensions were included in the Birmingham PQQ. Workforce matters were most prevalent in Parts D (technical or professional ability) and E (additional project specific questions). While some workforce questions had a clear basis in the Directive’s text (most notably B3 and E13 on staff numbers based upon Articles 48(2) (e) and (g) of Directive 2004/18/EC), others (C6 [TUPE experience], D19 [confidential information management] and Part E) seemed to fall within Article 48(5) of the Directive only if that provision was fairly loosely interpreted.20 Article 48(5) provides that an economic operator’s ‘ability to provide the service … may be evaluated in particular with regard to their skills, efficiency, experience and reliability’. It is not entirely clear why, on a strict interpretation of ‘ability to provide the service’, a tenderer’s capabilities in staff performance management, for example, would be relevant to delivering custodial services. If a looser link between the tenderer’s technical

20 Albeit that since the service fell within Part B, the Authority was not strictly bound by this provision.

156 Social Sustainability and Public Procurement capabilities and service delivery satisfies Article 48(5),21 and it is accepted that a tenderer’s capabilities in staff performance management are relevant, it is not clear why an evaluation of other HR competences would not also be relevant. The inclusion of performance management methodology in the PQQ may suggest that NOMS considered this to be one of the most significant HR challenges for the new provider. However, its inclusion in the absence of more positive HR competences, once again reflects NOMS’ failure to develop a more holistic, sophisticated HR and workforce vision. More cynically, its inclusion might be evidence of NOMS’ real motivation for the Birmingham competition, namely back-door workforce reduction and discipline. The other most significant group of workforce matters in the PQQ concerned compliance with statutory minimum standards in respect of equality and health and safety.22 The inclusion of compliance clauses for health and safety standards in the Birmingham PQQ closely mirrored Brammer and Walker’s finding that UK sustainable procurement practice focused upon worker safety.23 The inclusion of compliance with non-discrimination legislation accords with Aspey’s study, which found that it was one of the three most commonly included legal compliance requirements (alongside minimum wages and maximum working hours).24 The questions posed in the PQQ closely followed the model guidance produced by the Department of the Environment in Circular 8/88 and the OGC in Make Equality Count, although no reference was made in the PQQ to any of this underlying policy. It is surprising that compliance with TUPE or COSOP was omitted, especially since both formed part of the Principles of Competition and compliance is called for even in early model PQQs produced by HM Treasury.25 As Aspey explained, ‘requiring compliance with national law is one of the lowest risk options for including labour considerations in procurement’.26 Arrowsmith has argued that such provisions can be justified by the need for procuring entities to disassociate themselves from criminal behaviour 21 The domestic implementation of Art 48(5) of the Directive, Reg 25 of the PC Regulations (at s (2)(a)), is more generous than Art 48(5) since it omits the direct link between service provision and a contractor’s abilities: ‘the economic operator’s technical ability, taking into account in particular that economic operator’s skills, efficiency, experience and reliability’. 22 Health and Safety at Work Act 1974; Management of Health and Safety at Work Regulations 1992; Race Relations Act 1976; Sex Discrimination Act 1975; Equal Pay Act 1970; Disability Discrimination Act 1995; and the Equality Act 2010. 23 Notwithstanding the environmental orientation of much of the sustainable procurement discourse, they found that employee health and safety was more commonly embedded than environmental practices: S Brammer and H Walker, ‘Sustainable procurement practice in the public sector: An international comparative study’ (2007) University of Bath School of Management Working Paper Series 16, 7. 24 Aspey, n 12, 7. 25 HM Treasury, ‘Central Unit on Procurement Guidance: No 59A Documentation: Model Appraisal Questionnaire’ (May 1992) 9. 26 Aspey, n 12, 7.

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and ensure that companies that do not comply with the law do not gain an unfair advantage over compliant companies.27 Both the equality and health and safety compliance clauses can be explained by reference to their particular governing legal regimes, which make NOMS residually liable after contractual vesting.28 It seems likely that the inclusion of these compliance clauses reflects a risk avoidance strategy more than it provides evidence of a positive vision being presented by NOMS of how the workforce ought to be treated by the new service provider. Perhaps most striking of all the workforce related matters in the PQQ was the inclusion of D14 and D15, namely commitment to corporate social responsibility (CSR) and ethical employment policy. Although the questions only call for a description of existing policies, rather than mandating their creation, their inclusion in the PQQ suggests that NOMS placed weight upon them. Moreover, potential providers were told that their response ‘should’, rather than merely ‘could’, include Ethical Trade Initiative (ETI) Base Code accreditation and Social Accountability 8000 (SA8000) accreditation. These are international auditable standards that are based upon international human rights law and international and national labour laws.29 Most provisions of the ETI Code and SA8000 can be seen as merely ensuring compliance with international minimum labour standards. However, principles 5, 6 and 8 of the ETI Code call for wages and working hours to meet industry benchmark standards (rather than merely national statutory minima)30 wherever those industry standards are more protective of employees. Principle 8 prohibits the avoidance of regular employment relationships through the use of ‘labour-only contracting, sub-contracting, or home-working arrangements’ or ‘excessive use of fixed-term contracts of employment’. This may provide employees with greater protection than

27 S Arrowsmith, Horizontal policies in public procurement: A taxonomy’ (2010) 10(2) Journal of Public Procurement 149, 153. 28 Under s 4 Health and Safety at Work Act 1974 persons with ‘control of premises’ ‘or of the means of access thereto or egress therefrom’ have a duty to ‘take such measures as it is reasonable for a person in his position to take to ensure, so far as is reasonably practicable, that the premises, all means of access thereto or egress therefrom available for use by persons using the premises, and any plant or substance in the premises or, as the case may be, provided for use there, is or are safe and without risks to health’. NOMS is likely to have sufficient control within s 3 to be liable under this provision. Special equality duties are placed upon public authorities. They must not do any act which constitutes discrimination in carrying out their functions (see, eg, s 19A Race Relations Act 1976). In including non-discrimination issues, NOMS is therefore seeking to prevent allegations of discrimination resulting from it contracting out services. 29 The ETI Base Code contains nine principles that cover a range of basic employment issues including, eg, freedom of association, the right to collective bargaining and safe working conditions. SA8000 sets out nine ‘social accountability requirements’. They closely mirror those found in the ETI Code although a number of internal policy requirements and management duties are included in SA8000 that are not found in the Code. 30 National Minimum Wage Act 1998 and Working Time Regulations 1998.

158 Social Sustainability and Public Procurement is currently required as a matter of domestic law.31 In calling for labour standards that are above statutory minima, and by inviting evidence of the tenderer’s commitment to CSR and ethical employment obligations beyond compliance with the Code and SA8000, an argument could be made that the PQQ goes further than a typical (European Commission friendly) reading of the procurement rules permits, since it calls for benefits that are, in strict terms, unconnected to the subject matter of the contract (see chapter five, section C.1). ii. Dialogue PQQ responses were evaluated from 4 January 2010. On 1 March 2010, the dialogue phase of the competition was opened by the issue of formal invitations to participate in dialogue (ITPDs) to the PSBU, G4S, Serco, Sodexo and GEO. Dialogue sessions ran between July and September 2010. Bids were composed on the basis of a custodial services specification (CSS) and insights that bidders obtained from the procurement team during dialogue sessions. There were two site visits by bidders to HMP Birmingham. This was too few and the visits were too cursory, which manifested itself in G4S’ Mobilisation, Transition and Transformation (MTT) team’s unfamiliarity with the prison’s layout and operation after the award decision. More significantly, it increased the risk of tenders being unrealistic in practice, because bidders were poorly informed about Birmingham’s operation and problems. The CSS described the service that NOMS required, along with outcome and output targets. It had 44 parts, covering matters ranging from custodial categorisation and allocation, to visitor services and programme delivery. It did not contain a specific section on workforce issues. No vision was provided of the ‘ideal’ prison officer or manager. Except for a brief mention in one of the outcome criteria in the residential services specification (‘positive staff–prisoner engagement is supported and maintained’), the CSS neither referred to staff–prisoner relationships nor attempted to elaborate upon their nature and purpose. It is difficult to specify exactly what constitutes the ‘right’ sort of staff–prisoner relationship. However, given that attempts have been made to describe the relationship between prison quality, prisoner perceptions of quality and staff attitudes and behaviour, not least (with NOMS’ support) by Liebling and colleagues,32 and given 31 See Reg 8 Fixed-term Employees (Prevention of Less Favourable Treatment) Regulations 2002, which provides that a fixed-term employee’s contract will become permanent if he has been employed for a period of four years or more and his employment under a fixed-term contract cannot be objectively justified. See also the Part-Time Workers (Prevention of Less Favourable Treatment) Regulations 2000. 32 See A Liebling (assisted by H Arnold), Prisons and their Moral Performance: A Study of Values, Quality and Prison Life, Clarendon Studies in Criminology (Oxford: OUP, 2004) and

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that NOMS regularly uses instruments that are based upon these academic endeavours as part of its audit processes, it is surprising that workforce issues and staff–prisoner relationships feature so little in the CSS. Her Majesty’s Inspectorate of Prisons (HMIP) and ‘Measuring the Quality of Prison Life’ (MQPL) exercises at Birmingham before the competition had repeatedly identified poor staff–prisoner relationships as central to the prison’s low performance. It does not seem that a sufficiently high level of quality was built into the specification in this respect. Dialogue sessions were held on property, Information and Communications Technology (ICT), MTT, legal, commercial and finance, health, education, innovation and betterment, TUPE and pensions. Two dialogue streams had workforce foci, namely MTT and TUPE/pensions. NOMS HR representatives attended some of these dialogue sessions along with advisers from the Government Actuary’s Department (GAD). GAD was responsible for certifying the broad comparability of pension provision in each of the bids (in line with COSOP and ‘Fair Deal’). The focus in both streams was upon communications and process management rather than particular workforce change measures. The Retention of Employment (RoE) model was briefly mooted by some of the bidders as an alternative to a TUPE transfer. However, NOMS chose not to pursue this model further, because of the legal risk that secondment would be considered a de facto TUPE transfer (see further chapter seven). There were two facets to the pension dialogue. The first concerned the definition of broad comparability and the second concerned the calculation of the potential shortfall that would arise from the bulk transfer costs out of the public sector pension scheme (the Principal Civil Service Pension Scheme). The former was particularly difficult in respect of ‘Pre-Fresh Start’ prison staff. These staff had joined the Prison Service before 1987 when a package of workforce change called ‘Fresh Start’ came into effect. They therefore had reserved rights and were entitled to a particularly generous pension scheme. The latter issue arose because COSOP entitled staff to choose between keeping their pre-existing accrued pension entitlement where it was or transferring it into a new G4S scheme. A shortfall would arise for the contractor because of the need to fund a new pension scheme and offer employees a higher than 1:1 transfer value to ensure that their pension benefit was broadly comparable. This shortfall was funded by NOMS rather than bidders and did not form part of the bid price.33 The procurement team and contractors had different views on what the transfer A Liebling, B Crewe and S Hulley, ‘Conceptualising and Measuring the Quality of Prison Life’ in D Gadd, S Karstedt and SF Messner (eds), The Sage Handbook of Criminological Research Methods (London: Sage, 2011). 33 It is therefore something that ought to be included in cost comparisons between public and private prisons.

160 Social Sustainability and Public Procurement value should be. It was difficult to estimate the number of staff who would transfer because, despite preferential transfer values, NOMS felt that the ‘mood in the staff camp’ was unpredictable. Both facets of the dialogue proved difficult and more time-consuming than NOMS had anticipated. NOMS did not have previous experience of explaining and costing COSOP and Fair Deal. Had this been better explored before the competition began, some of the delay and confusion around pensions might have been avoided. However, NOMS could not have anticipated the political changes that were made, or later (at Best and Final Offer stage) were attempted, to public sector pensions during the course of the competition. In June 2010, just before dialogue sessions began, the Government announced its decision to use the Consumer Prices Index (CPI), rather than the Retail Prices Index (RPI), as the measure of inflation for public sector pension increases from April 2011. Under RPI, the uprating figure for public sector pensions in 2010 would have been 4.6 per cent whereas under CPI, it was only 3.5 per cent. The Government argued that CPI better reflected everyday prices than RPI and that the measure would save taxpayers £6 billion by 2014. However, detailed guidance about this policy change was not available until October 2010, after the dialogue sessions had finished. Moreover, the legal validity of the Government’s decision was contested. Individual public service workers and some public service trade unions argued that CPI was not a proper measure of price inflation and that the Government had breached their legitimate expectations and its duty to promote equality of opportunity between men and women. The challenge proved unsuccessful but judgment was not handed down until December 2011 (after the Birmingham contract had vested in G4S).34 The Government’s untimely policy change cast another cloud of uncertainty and complexity over the competition. It led to the decision to ask bidders to produce two iterations of their bid during dialogue (only one had been planned), one not priced (submitted July 2010) and the other priced (submitted September 2010). This caused further cost and delay. Following evaluation of the priced bids between September and December 2010, GEO was removed from the competition. This coincided with further reform of civil service terms and conditions of employment. In December 2010, Parliament enacted the Superannuation Act 2010. This capped redundancy payments for civil servants under the Civil Service Compensation Scheme (CSCS), with the effect that many civil servants would receive less generous redundancy payments than they had previously. The Government had attempted to make similar changes in February 2010, but those amendments were quashed in judicial review proceedings

34 R(ota) The Staff Side of the Police Negotiating Board and others v The Secretary of State for Work and Pensions and others [2011] EWHC 3175 (Admin).

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brought by the Public and Commercial Services Union (PCS). Once again, the complexity of the competition was increased by the uncertain status of legal changes that the Government had made to public sector employment. PCS took judicial review again in The Public and Commercial Services Union v Minister for the Civil Service,35 arguing that the property rights of their members under Article 1 Protocol 1 of the European Convention on Human Rights had been breached by the CSCS reforms. Their challenge was dismissed in August 2011, after the decision to award the Birmingham contract to G4S had been taken, on the basis of costing that provided for reduced redundancy payments. iii. Best and Final Offer A third and final iteration of bids was produced by those companies invited to submit a best and final offer (BAFO) (PSBU, G4S, Serco and Sodexo). The invitation was issued on 13 December 2010 although detailed documents were not issued until 10 January 2011. The documents upon which bidders based their BAFOs comprised four volumes: (1) introduction, instructions and procurement process (with evaluation booklet); (2) bidders’ response requirements; (3) draft contract terms and conditions and contract schedules; and (4) virtual data room contents and information.36 These documents had been developed by NOMS in light of their discussions with bidders during dialogue sessions. The first volume contained guidance on three workforce matters: TUPE, apprenticeships and mobility clauses in senior manager contracts. The second volume covered ‘cultural change issues’, TUPE and pensions and CSR. The bidder’s staffing model was also covered in volume 2 but this was more relevant to price than quality, since the quality dimension of the evaluation was confined to checking that the bidder’s staffing levels were sufficiently realistic to operate a ‘core’ prison day.37 Out of the quality related workforce issues included in the BAFO documentation, TUPE and pensions received most coverage and greatest weighting in the evaluation framework (accounting for 15 per cent out of a total of 25 per cent available marks for ‘commercial, financial and legal’

35 The Public and Commercial Services Union v Minister for the Civil Service [2011] EWHC 2041 (QB). 36 BravoSolutions, and later Justice Community Network (Sharepoint) provided a secure electronic portal through which bidders could access all the competition documentation. Volume 4 contained a summary of the documents that had been uploaded to the portal. 37 The core prison day is a nationally defined daily activity timetable that provides a framework within which all prisons should operate. It prescribes, eg, the number of hours prisoners should be out of their cells each day.

162 Social Sustainability and Public Procurement matters).38 This is not surprising given the scale of potential legal liability for non-compliance and the significant impact that non-compliance would have upon bid costs. Indeed, most of the TUPE and pensions questions that were raised in the BAFO documentation sought to verify compliance with TUPE, and sought to indemnify or otherwise protect NOMS from liability arising from any TUPE breaches (by, for example, requiring compliance with various post-transfer HR reporting conditions). This was at the expense of any exploration of ‘softer’, less process driven HR issues, such as workforce information and consultation. Bidders were instructed that they had to comply with COSOP and Fair Deal, ‘to the extent that they are in force’ (volume 1 at 3.7). This reflected the uncertain status of the two policies at the time, as described above. Bidders were asked to produce a variant of their bid that priced for Fair Deal’s cessation, a cost that could have been avoided by better coordination between government departments. As before, compliance with COSOP and Fair Deal is significant from a procurement perspective, because both measures impose supra-statutory employment standards, which sit uncomfortably with the Commission’s understanding of permissible evaluation criteria within the procurement rules. The level of staff protection that COSOP and Fair Deal offered was tempered in two ways in the BAFO documentation. First, the guidance in volume 1 stated that it was possible not to offer a broadly comparable pension so long as the contractor proposed ‘other changes to the remuneration package to offset the degree of detriment likely to be suffered by those personnel’. This possibility does not appear in the wording of the Fair Deal policy. Second, volume 1 foresaw the possibility (which is not repeated in volume 2), subject to GAD approval, of offering staff redundancy terms that differed from those under the CSCS. This is surprising given that redundancy terms fall squarely within the scope of TUPE as terms that must be transferred across with the employee to the new service provider (subject only to an employer’s right to make changes for reasons unconnected with the transfer or for economic, technical or organisational reasons entailing changes to the workforce—as described in chapter one, section E). This seems to be evidence of COSOP and Fair Deal being perceived by the procurement team as providing a more flexible package of protection for staff than appears to be the case from the policies’ wording and than that which is understood by staff and trade union officials. Rather than only enhancing the protection that TUPE provides, COSOP appears to be have been understood by NOMS as enabling greater flexibility to make changes to terms and conditions of employment that would not be permitted under 38 One question was asked about ‘cultural change issues’ in the transformation element of MTT (worth 5% out of 35% of the total marks available for MTT). Employment related CSR accounted for 29% out of a total of 5% of marks which were available for CSR.

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TUPE alone. Although NOMS’ TUPE information and consultation obligations were acknowledged within the BAFO documentation,39 information and consultation did not operate effectively in practice (see section C). Moreover, their inclusion seemed somewhat artificial, since serious information and consultation could not be conducted until the competition had been concluded (due to its commercial sensitivities), by which time there was no room to respond to genuine consultation, because NOMS had already awarded the contract. These empirical findings pose challenges for the relationship between the public procurement rules and TUPE, which are considered further in chapters seven and eight. iv. Contract with G4S Bidders submitted their best and final offers on 7 February 2011. On 31 March 2011, the decision to award the Birmingham contract to G4S was announced by the Justice Secretary in Parliament, the process of bid evaluation having taken the NOMS procurement team just short of two months. The contract with G4S has a 15-year term and a value of £316.5 million.40 The terms and conditions of the contract span 240 pages, comprising 91 sections and 20 parts. This is supplemented by 35 schedules that cover, for example, the ‘Authority’s Requirements’ (NOMS’ specifications), ‘Contract Delivery Indicators’ and ‘Required Insurances’. The contract has been made publicly available in a redacted form.41 In substance, the contract is a reflection of the limitations to the process that underpinned its production (discussed above). It is a document that has been written by lawyers for litigation, without any apparent thought about how it might need to be used and understood by those who are responsible for delivering its content. While legally comprehensive, it lacks vision and aspiration. There is no sense in the contract’s content, except perhaps in schedule 2 (‘Contractor Proposals’) which is not publicly available, that this is a bespoke contractual solution to Birmingham’s problems. This is even reflected in the contract’s drafting, as redundant appendices which

39 Contractors were required to provide NOMS with information on ‘measures including their proposals for maintaining the status quo … or any changes to their terms and conditions … and any intention to declare redundancies, at such a time as will enable the transferor to perform the duty of consultation imposed by the regulation’. 40 Clause 34.2.4 provides that the contract cost is reviewable every five years in light of a benchmarking process conducted by NOMS that compares Birmingham’s costs to predetermined (but not publicly available) market cost ranges. The Justice Secretary stated that this contract price, together with that for the two other existing prisons in the competition (HMPs Buckley Hall and Doncaster), would deliver savings of £216 million over the lifetime of the three contracts. 41 See: online.contractsfinder.businesslink.gov.uk/Common/View%20Notice.aspx?site= 1000&lang=en¬iceid=249228&fs=true.

164 Social Sustainability and Public Procurement have been used in previous prison contracts, but which are not relevant to Birmingham, have not been removed. Even if the content of schedule 2 were visionary, transformative and attentive to workforce issues, the contract does not seem to oblige G4S to adhere to it. G4S’ fundamental obligation is to deliver NOMS’ requirements in the CSS (schedule 1 of the contract) which, as were described above, are far from aspirational or champion social sustainability. The primary staffing clauses of the CSS are found in 21.1.2 and 21.1.3 of the contract. They simply require G4S to provide ‘appropriately qualified and trained staff’ who will not ‘cause, contribute to or otherwise give rise to any breach’ by NOMS of its duties or powers under the Criminal Justice Act 1991. In the absence of any contractual obligation to deliver above CSS standards, it seems likely that G4S will deliver only those elements of its proposals in schedule 2 that will reduce the cost of delivering the CSS requirements. This may suggest that, in practice, the CSS was allowed to become a ceiling on service quality with the effect that cost reduction, rather than service improvement, was the true driving force of the Birmingham procurement process. Given that staff is the main source of ‘efficiency’ in public service delivery, this does not bode well for the workforce, especially in the absence of adequate provision for workforce protection in the rest of the contract. Workforce issues were addressed principally in parts 6 and 8 of the contract. Part 6 contains G4S’ ‘General Performance Obligations’, which amount to only one section (section 35), which covers equality and diversity. Part 8 (‘Staff and Personnel’) contains the greatest coverage of workforce issues within the contract. With the exception of one section on Fair Deal (which is returned to shortly), both parts 6 and 8 of the final contract entirely replicate the clauses that were included in the model terms and conditions with which NOMS provided bidders during BAFO (volume 3). The analysis above (at section B.2.iii) in respect of TUPE and pensions can therefore be repeated, in addition to two further observations. The first is that the contract reflects the emphasis that was placed upon non-discrimination legislation in the PQQ. Part 6 imposes compliance, monitoring and reporting obligations upon G4S. These obligations are bolstered by part 10 of the contract, which provides that NOMS may terminate the contract with G4S if ‘any Prohibited Equality and Diversity Act’ is committed. Equality and diversity therefore enjoy the strongest contractual protection of any workforce matters in the contract, although as has been observed in a report on competitive tendering in health and education services in Northern Ireland, inclusion in the contract does not matter unless steps are taken to ensure that contractors observe the condition after the contract has been awarded.42

42 The Northern Ireland Equal Opportunities Commission found that no steps had been taken in respect of compliance with anti-discrimination legislation so the relevant contract

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Second, although part 8 of the contract contains a number of important workforce related clauses (such as NOMS’ scrutiny of G4S’ choice of Director and Senior Management Team (SMT) members), most clauses address fairly minor matters, such as NOMS’ approval of G4S custodial staff uniforms (clause 41.2), or specific issues, such as an obligation upon G4S to provide staff with job descriptions (clause 41.9). Apprenticeships are covered fairly thoroughly (in clause 41.16), and G4S is obliged to ‘use reasonable endeavours to employ apprentices, and report to the Authority the numbers of apprentices employed and wider skills training provided, during the delivery of this Contract’. The potential positive social impact of this clause is however weakened by the exclusion of the majority of the prison’s workforce (Prison Custody Officers) from its scope of application. Overall therefore, part 8 of the contract reflects the same lack of social vision as already noted. The only workforce related clause of the contract, which differs from the model terms and conditions that NOMS provided during BAFO, concerns Fair Deal. Clause 42.2 provides that NOMS may, at any time, issue G4S with a Pension Reform Notice, notifying the company that Fair Deal has been abolished. The effect of this would be that the paragraphs of schedule 18 of the contract (‘TUPE, Employees and Pensions’), which oblige G4S to provide staff with membership of a broadly comparable pension scheme, would cease to apply. Although this clause does not oblige G4S to reduce their staff pensions if Fair Deal were abolished, in combination with clause 34.2.4, which provides for cost benchmarking every five years, that would be the practical impact of this clause. G4S would come under strong pressure to reduce pensions in order to demonstrate to NOMS that the contract continued to offer NOMS best value for money. In interview, NOMS staff explained that the rationale behind the clause was to ensure that the taxpayer benefited from any change in Fair Deal, rather than G4S. But, once again, inadequate thought was given to how the clause would be perceived by staff. Many staff struggled to understand why NOMS was entitled to ‘interfere’ with their relationship with G4S. They felt that NOMS had already ‘sold them down the river’ by awarding the contract to G4S and thereby sanctioning the (negative) staffing changes staff predicted that would entail. The prospect of NOMS (in effect) reducing their pensions after they had stopped working for the public sector ‘add[ed] insult to injury’. Had there been more joined-up thinking, NOMS could have included a clause that obliged G4S to continue to provide membership of a broadly comparable pension scheme, irrespective of any change to Fair Deal. This might have made the decision to award the Birmingham

provision was rendered ‘largely meaningless’: Report on Formal Investigation into Competitive Tendering in Health and Education Services in Northern Ireland (Belfast: EOCNI, 1996) 69.

166 Social Sustainability and Public Procurement contract to G4S less of a ‘bitter pill’ for staff to swallow and G4S might have inherited a less alienated workforce.

C. STAFF EXPERIENCES OF COMPETITION

The purpose of this section is twofold: first, to describe how the competition was experienced by Birmingham staff and second, to explore the impacts of that experience. The Senior Officer’s statement, in the primal scenes that introduced this chapter, was undoubtedly shaped by anger at NOMS’ award decision. However, it also reflected the experience of a twoyear process that had been beset by uncertainty. NOMS’ failure to prepare adequately for the Birmingham competition, by positioning it within its broader organisational context, as was described above, meant that staff did not understand the process, did not feel involved in it and had to endure that experience for twice as long as had been promised. While staff struggled to come to terms with the initial decision to compete Birmingham (see chapter one, section F), their greatest frustrations thereafter stemmed from incompetence in the commissioning process—a lack of information about, and involvement in, an unsustainably protracted process. Given that competence is a key ingredient of legitimacy, it is unsurprising that Birmingham’s staff experienced the process of competition as illegitimate and its outcome has proved difficult for staff to accept.43 Much of this social damage might have been avoided by more careful, ‘joined-up’ thinking on NOMS’ part. As previously explained, the public sector bid team began their work on the Birmingham bid expecting that the process would follow the procedure and timescale of previous competitions. A local bid development team (LBDT) was assembled and they developed a local communication strategy. Working from an office at the centre of the prison, the LBDT consulted staff about their visions for an improved publicly managed HMP Birmingham under the banner of ‘Our Bid—Our Future’. While there was some consternation among staff about the Governor’s choice of officers to join the LBDT (the suggestion being that the Governor had ‘handpicked’ only his favourite staff), and some staff reported feeling equally uninformed about the process after the LBDT’s disbandment, I gathered strong documentary and interview evidence that demonstrated that the LBDT was engaging effectively with staff. One LBDT member described the staff response as ‘phenomenal’. Between May and November 2009, staff submitted over 400 ideas and suggestions to the LBDT for Birmingham’s improvement.

43 A Bottoms and J Tankebe, ‘Beyond procedural justice: A dialogic approach to legitimacy in criminology’ (2012) 102 Journal of Criminal Law and Criminology 119.

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In January 2010, precipitated by a shift from the restricted process to competitive dialogue, members of the LBDT were told that they were no longer needed and that expert bid consultants, operating at national level within NOMS, would be employed in their place. Since the reasoning underpinning the decision to disband the team was not communicated to staff, the withdrawal of the local team and the change to the competition’s process and timetable caused significant confusion and suspicion. Members of the LBDT reported that this was a watershed in workforce engagement with the process: People started generating less ideas and the buy in started to fade. That’s when people started thinking that we were deliberately holding things back from them and the gap between us and staff widened. The delay was all to do with procurement. They didn’t realise how much was involved, how big a venture it is. They weren’t prepared for it.

Staff no longer felt that they had ownership of the bid. One officer commented: ‘They say that together everyone achieves more. We’re supposed to be a team, why shut staff out?’ Staff who had been members of the LBDT had to return to their posts within the prison and set aside the confidential information they had gained about the public sector bid. They received little support in reintegrating at work. Some members of the team were harassed by other members of staff: People would come up and say ‘if we don’t win the bid, we’ll kill you’. But it wasn’t really funny. We all felt responsible for the bid even though we stopped working on it before they started planning staffing levels.

Even if the NOMS procurement team had not been responsible for causing the LBDT to begin working on the bid on the assumption that a restricted procedure would be followed, NOMS as a whole was aware that a bid team was operating at Birmingham. Consequently, there is a case for saying that NOMS should have paused to give some thought to the likely HR implications of the LBDT’s withdrawal. In practice, the LBDT had been attempting (albeit fairly ineffectually for want of information) to plug a void in staff information about the logistics of the competitive process. It became likely that, with the disbandment of the LBDT, Birmingham staff would receive even less information about the process than before. Although well intentioned, in the longer term, the LBDT’s attempts to fill the information void that NOMS had created added to staff confusion about the process. By providing information that should have been provided by either NOMS as a commissioner, or NOMS as an employer, the LBDT muddied the waters between the public sector as commissioner, bidder and employer. The return of local POA branch members to their regular POA branch committee from the LBDT gave rise to some predictable, but increasingly problematic, staff perceptions about the quality of their representation.

168 Social Sustainability and Public Procurement The POA members who had sat on the LBDT could not share confidential information with their members. This angered some staff: ‘Their answer to everything, even what colour paper is the bid written on, is “I can’t tell you because it would jeopardise the bid”’. Staff felt that the branch officials they had elected had been ‘corrupted’ by participating in the process. Moreover, they were failing to communicate with staff in a language they could understand: ‘We get some information about the bid and stuff from the POA. But it’s not in normal language, you can’t really understand it. It’s in union speak’. Many staff had no confidence in their national POA representatives, members of the National Executive Committee,44 following their ‘monumental cock up’ over Workforce Modernisation (a package of workforce reform offered by NOMS in 2007 in return for a pay rise), which most staff perceived to be ‘the nail in Birmingham’s coffin’. The POA was torn between a position of principled non-engagement with competition processes, because of their objection to the policy, and the realities of what their membership in Birmingham were experiencing. The result was that staff felt that there was no one to ‘speak up’ for them locally or nationally. The shift to competitive dialogue and the disbandment of the LBDT gave rise to an even more pressing need for action by NOMS in its employer capacity. However, because of the failure to adequately integrate the procurement function within the rest of the organisation, the functions of ‘NOMS as employer’ continued to fall through the gaps, with increasingly detrimental impacts upon staff after the LBDT had been disbanded. NOMS did not provide the staff with any generic information about TUPE or Fair Deal while the competition was ongoing. Although TUPE ‘master classes’, with input from NOMS policy leads, GAD and Treasury solicitors had been organised by NOMS’ HR Directorate, neither the information nor its importance were cascaded locally. A factor contributing to this situation may have been the ‘hands off’ approach of the local Human Resources Business Partner (HRBP) (as one officer said: ‘I’ve got no idea who the HRBP is. It’s a fantasy job. No connection with the staff at all’), and an endemic over reliance upon written notices to staff distributed via the intranet, as the primary mechanism of staff communication.45 Notwithstanding these local obstacles to good information provision, the ineffectiveness of NOMS’ strategy was hardly surprising given that it coincided with the withdrawal of local HRBPs to be replaced by a national 44 As one Birmingham senior officer commented, ‘A lot of them [POA NEC members] are out of their depth in all of these high political negotiations. I mean you wouldn’t bring knives to a gun fight would you? We’ve been totally outmanoeuvred. Either that or they are in the pockets of politicians because they think that will help their next career move. Either way we’ve been stuffed’. 45 This contrasted sharply with the attitude of G4S, at least as it was reflected by conversations with the G4S MTT: ‘In our world, if information has only been communicated on the intranet, it hasn’t been properly communicated at all’.

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HR support group. In any event, NOMS’ communication strategy, to the extent that it can be said that there was one, was also inappropriate because, unlike previous competitions, NOMS had given advance notice that it would not re-absorb the SMT within NOMS (by sending them to other establishments or giving them work at headquarters). Consequently, as a member of the prison’s SMT, Birmingham’s HRBP would have transferred across to G4S. She was therefore not best placed to fulfil the whole of this HR role because, depending upon the competition’s outcome, she might have become too personally invested in the TUPE transfer. Misinformation about TUPE, often obtained through friends or from internet sources, proliferated among staff, which did little to settle their anxieties (see chapter seven). NOMS also failed to provide staff with timely and accurate information about the competition timeline and process, or any adequate explanation about ethical walls and the costing uplifts that were imposed upon the public sector bid in the Principles of Competition. A lack of information in respect of the latter two matters caused many staff to feel that they were being made to ‘fight a battle one-handed’. As a member of the LBDT commented: There has been a total disconnect between the business process and the people. The Authority is running the competition with a business head on and hasn’t put anything in place to help staff get to grips with it. Maybe it’s not for the Authority to do. Maybe it should have been NOMS sorting it out. The point is that nobody has done it.

Encounters with external participants in the competition, such as the Prison Governors’ Association (PGA), often did little to reassure staff: ‘The President of the PGA came to meet us today and told us that the bid decision has been put back until February [2011]—the head of the public sector bid didn’t even realise that’. This tended to bolster staff perceptions of NOMS’ incompetence and lack of care: ‘They don’t care about me or my family. If they did they would have got on and finished this whole process a long time ago. They’re playing with my future and my family’s future’ (Birmingham Prison Officer) or, more pessimistically, NOMS’ deliberate determination to ‘stitch up’ staff by stalling the process in order to take into account new (disadvantageous) staffing policy developments, such as the review of Fair Deal: ‘They’re delaying the process on purpose to get to the point when the review of civil service pensions will be announced’ (Birmingham Senior Officer). Members of Birmingham’s SMT were equally uninformed. Reflecting upon the competition, a member of the PSBU recognised that too little information was shared with Birmingham’s Governor during the competition: ‘The ethical walls in practice meant that the Governor wasn’t communicated with as much as he should have been. He really has been

170 Social Sustainability and Public Procurement stuck between a rock and a hard place’. Managers had to lead and manage staff through the competition, as well as keep the prison functioning, on the basis of limited or inaccurate information that was often first picked up informally through conversations with colleagues at other prisons and NOMS headquarters. The competition imposed a significant additional burden for managers, especially those in operational roles, who communicated with officers on a daily basis: It’s very hard to soak up staff concerns. It affects you. I try to care, support, and give as much information as I can, make their working lives easier and try to develop them for the future. It’s what we’re paid to do but it’s hard. It’s very hard to be a manager here now.

Staff perceived few managers to have managed this burden successfully. This was not surprising given the lack of support and information for managers during the competition, although there were also some pre-existing weaknesses in the SMT’s skill set (stemming in part, from a previous lack of support from NOMS),46 which seem likely to have played a role. The SMT often mistook information sharing for its more enriching counterpart—communication. As Sennett has argued: ‘Information-sharing is an exercise in definition and precision, whereas communication is as much about what is left unsaid as said; communication mines the realm of suggestion and connotation …; simple information sharing subtracts expression’.47 Several opportunities for staff communication, such as staff training days, were missed. Staff recognised the particular toll that this dysfunctional state of affairs was having upon good ‘communicating’ managers: One of our Governors is pretty good. He always has time for you, explains things as well as he can, and bothers to help us really understand what’s happening. But he is two or three years away from a heart attack. He’s aged ten years in the last two because of the bid. He can’t delegate. He takes on work which is well below his grade because he can’t rely on people below him.

The paucity of information, care and support gave rise to a process that was emotionally and psychologically burdensome for staff. They described the competition as ‘water torture’ and a ‘weight’ or ‘sword’ above their heads. Staff felt coerced into backing a bid (on pain of the public sector not being

46 The preface to HMIP’s inspection report of HMP Birmingham in 2000 urged NOMS to provide the prison’s governors with greater support: ‘The experience of the recently departed Governor has confirmed, yet again, that the rehabilitation of HMP Birmingham is beyond the capability of anyone in that position alone. It needs a Prison Service Headquarters Action Plan’. 47 R Sennett, Together: The Rituals, Pleasures and Politics of Cooperation (London: Penguin, 2012) 28.

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allowed to bid at all) about which they had negligible information and that had been produced during a process that they felt was incompetent: All the managers and the bid team keep saying is ‘trust us, we’ve got your best interests at heart’. So we have to pretend that we are wholeheartedly behind the bid, but we don’t have a clue what it is we’re behind! And we’re supposed to trust them when this thing has been going on all this time and so badly organised.

As one Birmingham prison officer described it, ‘Basically it’s been a case of keep your mouth shut, do as you are told and a bit more, and you might just be lucky to have a job’. NOMS was ‘flogging willing horses’ who were ‘scared’ to express themselves for fear of being ‘blacklisted’ as ‘Mr Negative’. A small number of staff were able to use the experience of competition positively, as an opportunity to rethink their lives: The bid has made me realise that we have greater potential and that actually we’re very skilled. I figure if you’re not that bothered about what happens with the bid then you realise that you’re not really totally committed to the job. That’s what I feel anyway. I’m planning on leaving next year to do something I’ve always wanted to do.

However, most staff responses were less positive, and varied along a spectrum that ranged from anger (‘they’ve had a gun to our head for nearly two years now. I wish they would just fucking pull the trigger’) to apathy (‘this place runs on the good will of staff. We’re all withdrawing that now’). Staff felt ‘out of control’. The prison’s occupational health professional noted a ‘big increase in occupational health issues since the bid’, with ‘many more staff just dropping by and asking for a quick five minutes’. Many staff described themselves as avoiding talking about the competition, or talking about it with colleagues only ‘indirectly’, masked by humour, for fear that ‘if [they] sat down and thought about it cold and clinically, about the effect on [their] family, Pandora’s Box would be opened and [they’d] be a mess’. This had tangible detrimental operational consequences. Staff sickness levels escalated for a short period following some of the announcements of process delays or missed procurement deadlines: ‘Just as you get closer to a resolution, they move the goalposts and staff morale takes another hit’. The motivation of staff who continued to attend work declined. As one Officer remarked: There are three types of officer in this jail. Those who do, those who do a bit and those who don’t. Because of this bid, those who do now just do a bit and those who just did a bit before do nothing.

There was a feeling of hopelessness and deflation: ‘There is no light at the end of the tunnel. We need a light at the end of the tunnel, no matter what colour it is’. This was reflected even in the appearances and habits of some staff: I’ve actually lost weight, not that that’s a bad thing necessarily but sometimes I come in here without shaving. I’d have never have done that before this bid. I wake up, feel sick and think why even bother shaving.

172 Social Sustainability and Public Procurement Many staff reported that the process had caused detrimental impacts upon their home and family relationships. As Wright Mills has acknowledged ‘private troubles’ are often a consequence of our social environment.48 Cooperation between staff, which had previously lubricated the cogs of the prison’s machine (albeit in some cases in ways that reflected the prison’s poor staff culture), began to erode and was displaced by individual self-interest: I don’t want to come into work any more and when I’m here I don’t want to do anything. If I do, I do it as slow as possible—it feels like a bit of payback for what they’re putting me through.

‘Infighting’ between groups of staff intensified as informal trust diminished. Staff perceived that it had become more difficult, even for well-liked junior managers, to get staff to extend their shifts to cover staffing shortfalls. The tone of the prison became ‘flatter’; ‘there [was] less banter, less give and take’. Many staff felt that this was bound to have had a detrimental impact upon staff–prisoner relationships. Some partly attributed the high number of self-inflicted prisoner deaths during 2010 to the competition process.49 The impacts of this erosion of cooperation intensified as the prison struggled to deliver its services in a context of ongoing, cumulative change and challenges. These included, for example, the closure of the Principal Officer rank in March 2010 (described by one officer as the Prison Service’s ‘genetic memory’), mandatory savings (and staff reductions) following the Spending Review, disturbances at various establishments throughout 2010 and later, during the transition period to G4S, the August 2011 riots in Birmingham, which were prompted partly by the death of three young Asian men just outside the prison’s walls. Staff described themselves as ‘a bottle of pop’ that was ‘ready to blow’ and the horse in a game of buckaroo: ‘It’s like a game of buckaroo. They keep piling it on and on us. And then at some point, the horse will buck and everything will fall off’. Declining morale and cooperation were symptoms of more fundamental damage to the prison’s workforce. While some staff overly romanticised their past working lives in the Prison Service, there was a predominant consensus that the competition marked a negative turning point in their careers and the Service. Many staff experienced the competition as de-professionalising. The process expressed a shift in their employer’s values, which empowered a flexible, short-term private sector employment model and stigmatised their stability and longevity. Compounded by NOMS’ inattention to staff information and consultation throughout the competition, the process appeared

48

C Wright Mills, The Sociological Imagination (Harmondsworth: Penguin, 1970). There were six self-inflicted deaths in Birmingham in 2010, compared with none in 2009, two in 2008 and 2007 and one in 2005 and 2006: www.gov.uk/government/publications/ safety-in-custody. 49

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to staff to deny the importance and value of contextual knowledge (‘jail craft’). It suggested that ‘anyone’ could do their job and that they were readily replaceable, over-priced ‘commodities’. Sennett’s ‘spectre of uselessness’ loomed large: ‘After they told us someone put as his employment status on Facebook “unemployable” and that said it all, it just broke my heart’. The competition forced a clear gap in staff minds between NOMS’ new ‘vision’ of custodial work and prison officers’ understandings of their work and value. Market language ‘hollowed out’ the service ethic of their work.50 Staff felt that the Prison Service had lost its ‘corporate identity’, that working for the Service was now ‘just a job’ rather than a career and ‘moral task’, and that ‘money rather than people now rule[d] the roost’. Although some staff had the ‘wrong’ professional identity, in that traits of the ‘traditional-cynic’ dominated the positive traits of the ‘traditionalprofessional’,51 and all staff had a clear interest in protecting their own jobs and interests, almost all staff felt that something valuable and worth protecting was being lost by the process of competition and privatisation. The prison’s ‘Investors in People’ sign, which was displayed at the prison’s gate, was described by staff as ‘a joke’. One officer imagined that the future of the Service would ‘look like Tesco, people will come and go’. Many talked about the return of the ‘turnkey prison officer’ or ‘robots with keys’, ‘deskilling the service to save money’. The competition destabilised the professional identities of many staff, exacerbating their feelings of insecurity, disappointment and betrayal. Even if the PSBU won the competition, staff predicted that their futures would be bleak at Birmingham, or indeed at any other public sector establishment: ‘One of our own POA reps has said that we might be better off private because the public sector staffing levels are so low! What does that tell you?’52 Some staff thought that NOMS would be able to use Birmingham as an example to generate the necessary leverage to ‘force through’ the rest of the changes it wanted to make: ‘Even if we stay public, they [NOMS] win. They will hang up Birmingham’s corpse to show everyone else, as if to say “now, do any of you want some?”’ Although some staff continued to feel that there were positive differences about working in the public sector, which imbued them with greater legitimacy than their private sector

50 A Patterson and P Pinch, ‘Hollowing out the local state: compulsory competitive tendering and the restructuring of British public sector services’ (1995) 27 Environment and Planning 1437. 51 Terms taken from B Crewe, A Liebling and S Hulley, ‘Staff culture, use of authority and prisoner quality of life in public and private sector prisons’ (2011) 44(1) Australian and New Zealand Journal of Criminology 94. 52 Michael Spurr, Chief Executive of NOMS subsequently confirmed that the PSBU’s bid for Birmingham had lower staffing levels than G4S’ bid. See Committee on Public Accounts, Restructuring the National Offender Management Service, Thirty-fifth Report (HC 2012–13, 717) oral evidence 18, Q132.

174 Social Sustainability and Public Procurement counterparts (most significantly a pride in their civil servant status: ‘wearing the Crown on my shoulder’), changes in the public sector led others to re-evaluate their ideas about the differences between the two sectors (‘I thought I was working for the government, an honest form. Turns out it’s just the same as working for a private business now’) and, in some cases, reflect less negatively upon the prospects of working in the private sector (‘the bid has been massively unprofessional. I mean you wouldn’t be treated like this in a private sector takeover even’). The staff’s struggle to realign their values and professional orientation intensified following the announcement in April 2011 that the prison would be managed by G4S from October. Staff were unprepared for the decision, partly because the SMT had avoided even discussing what might happen if the PSBU did not win the bid, the Governor having taken the view that staff did not need further distracting and worrying by the competition. As a member of the NOMS MTT team commented: Not winning was not even discussed with staff. The Governor took that decision and I think that has turned out to be problematic. You need to structure staff expectations. NOMS needed to have some input and assist the Governor but it didn’t do so.

Many members of staff were uncharacteristically visibly distressed during the weeks following the award decision: ‘I’ve seen more grown men crying over the last couple of weeks than I’ve ever seen in my life’. Staff continued to feel unsupported by the national POA. The national strike ballot called in May 2011 was a telling reflection of the relationship between the national union and its Birmingham branch. The ballot paper asked members to indicate whether they would take industrial action in response to the ‘threat of privatisation at Birmingham’. For staff, this only underlined how out of touch and time the national POA were. There was no longer a ‘threat’ in Birmingham—it was a ‘done deal’. Despite assurances that had been made by the LBDT and later, the PSBU, that there were sufficient jobs at other public sector establishments for all excess Birmingham staff to be redeployed, there were few opportunities for staff to transfer out of the prison. All other public sector prisons were seeking to shed staff or at least freeze recruitment in order to meet their mandatory savings targets. NOMS decided that HMPS vacancies for low-grade managers would not be advertised until after HMP Birmingham had been transferred to G4S. Birmingham’s staff was also excluded from participating in the Voluntary Early Departure Scheme (VEDS) of May 2011. From interviews with NOMS managers it appears that these decisions were taken because of the potential legal consequences that might have arisen from TUPE by allowing staff to transfer to another prison or take voluntary redundancy. This tension between TUPE and good employment

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practice is explored further in chapters seven and eight but its effect was to ‘close the door on any hope’ for many staff. Some staff felt that the decisions were the consequence of an ‘obsessive negativity across the Service for Birmingham staff’. Together with NOMS’ initial refusal to award long service medals to those members of staff who were just short of the required service total, the foreclosure of early exit or transfer possibilities increased the sense of betrayal that many members of staff felt: I’m used to the Winson Green way of having a knife stuck in your back but now they’re sticking it between your eyes. A year ago we’d never have thought about taking a package and leaving but now all I want to do it take it and go, after forty years in the job.

One manager described the situation as: ‘We’re openly saying we don’t care about you, sticking two fingers up and saying people will go’. Deficiencies in information and staff support continued. Despite the award decision being communicated to staff on 31 March 2011, staff did not receive any information about TUPE or Fair Deal from NOMS until 6–15 April 2011. When the sessions were delivered, their content was criticised by staff as inadequate. They felt that their fairly predictable questions (about, for example, the Fair Deal review, the status of the batons they carried and the impact of Fair Deal upon the reserved rights of pre-Fresh Start staff) were not properly answered by the NOMS HR staff who delivered the session. It seems that this was partly because NOMS had not delivered the session in collaboration with G4S, and partly because of a lack of institutional learning by NOMS from previous TUPE transfer exercises. Although some of their questions were in fact fairly complex, staff experiences of the TUPE sessions exacerbated their negative reflections upon NOMS as an employer: We don’t know stuff because it’s never happened before. But why isn’t this stuff looked into and sorted before the contract even started to be bid for? You wouldn’t go to the bank for a loan without sorting your paperwork. They’re making it up as they go along. The meeting wasn’t that helpful. They can’t answer your questions. All they keep saying is ‘I’ll take that question back and find out the answer’. But they’ve had two years to get themselves ready and find out. And if they don’t know, why didn’t they send the right person who actually knows what they are on about in the first place. Anyway they weren’t writing our questions down. They don’t really care. So yeah, it was a waste of time really and we’re no further forward.

The experience led a Birmingham manager to remark that, ‘As sad and shocking as it sounds I think G4S are probably better planned and more concerned about the impact of this on staff than NOMS’, and a prison officer to comment, ‘Bring it on I say. It will be nice to work for a decent employer for a change’.

176 Social Sustainability and Public Procurement Thus, notwithstanding some elements of ‘technical care’ for workforce issues in the procurement documentation (as described above), competition was experienced by Birmingham’s staff as illegitimate, demoralising and de-professionalising. There was an at least partly avoidable conflict between the competition’s process requirements, its aims and objectives (reform), and fairness, or care, for the employees who were affected. By failing to sufficiently reflect upon, prepare for and holistically coordinate the process of competition, NOMS had led a process-driven competition that had displaced fair staff treatment and had marginalised day to day and post-transfer workforce issues. As a Birmingham Prison Officer said: ‘They [NOMS] have forgotten that there are people at the end of this’. There are at least three reasons why this is problematic, and these are explored further in chapter eight. First, if the view is taken that employment law and HR practices should give expression to a respect for human dignity, the experience of Birmingham’s staff is normatively deficient. Second, the impact of such a normatively deficient experience potentially extends beyond Birmingham’s workforce to affect other public service workers to the detriment of existing strengths in the public sector employment model. And finally, the consequence of such an experience for Birmingham was that a bitter, demotivated and traumatised workforce was inherited by G4S in October 2011. While staff at Birmingham were arguably ‘culpable’ in culturally resisting reform, as well as bringing about or colluding with an unacceptable culture in the first place, many were willing to participate in the required improvement processes and, as in any prison, some had been doing outstanding work all along. The problem of how to challenge a workforce, overcome resistance and then secure their willing cooperation with a future management agenda had never been satisfactorily considered by ministers or NOMS. A socially impoverished competition process had sown seeds that were likely to hinder Birmingham’s improvement. It was unsurprising that, soon after G4S took over management of the prison in October 2011, a cell door key was ‘lost’ (suspected to have been taken deliberately by a prison officer), forcing the company to relock the prison at a cost of £415,000.53

53

See: www.bbc.co.uk/news/uk-england-birmingham-15404588.

7 Competition in Action: Social Sustainability and TUPE

T

HE SECOND SOURCE of social protection within a competitive tendering exercise is the Transfer of Undertakings (Protection of Employment) Regulations (TUPE). TUPE protects staff by transferring the employment relationship, with its existing terms and conditions, to the new service provider. In principle, members of staff retain their jobs and terms and conditions. As I argued in chapter one, the high level of social protection that TUPE appears to offer does not necessarily materialise in practice. This may be exacerbated when a TUPE transfer arises from a procurement process. As has already partly emerged from the empirical findings in chapter six, contracting authorities can become entangled in the procedural complexities of the procurement rules, with the result that social policy is marginalised. In such a context, TUPE protections may operate even less effectively. This chapter explores the effectiveness of TUPE as a source of social protection in the context of the Birmingham competition. Empirical evidence is presented about how TUPE was understood by Birmingham staff, how the Regulations were mobilised by NOMS and G4S, how they interacted with the Public Contracts Regulations 2006 (PC Regulations) and how this affected the prison and its staff.

A. TUPE DURING THE PROCUREMENT PROCESS

Chapter six examined the Birmingham procurement documents with a view to evaluating their social policy coverage. That examination revealed that social policy was confined in most of the documents to fairly mechanical compliance with TUPE and the Cabinet Office Statement of Practice on Staff Transfers in the Public Sector 2000 (COSOP: the Code that supplements TUPE in the public sector most importantly by providing transferring public sector staff with some pension protection—see further chapter one). At the initiative of one of the competition’s private sector bidders, NOMS briefly considered an alternative model of managing the workforce consequences of private sector involvement in the delivery of public services,

178 Social Sustainability and TUPE namely the Retention of Employment model (RoE). This model has been used by the Department of Health to cover staff employed in NHS Trusts in England that have engaged in Private Finance Initiative (PFI) arrangements. Typical PFI contracts in the NHS have excluded provision of clinical services. This means that clinical members of hospital staff normally have remained public sector employees, notwithstanding the PFI arrangement with the NHS and Department of Health. However, since private operators were made responsible for providing non-clinical services under most PFI arrangements, the employment contracts of existing non-clinical NHS staff ordinarily transferred across under TUPE to the PFI contract holder. Where the RoE model displaced TUPE, the effect was that ancillary, non-clinical staff (such as cleaners and caterers) were seconded, rather than transferred, to the new private contractor. They thereby remained NHS employees, albeit that they worked under the day to day supervision of the private contractor that had taken responsibility for managing and delivering nonclinical services.1 The advantage of the RoE model for staff is that their relationships with their employer remain intact. Any organisational changes the PFI contract holder wants to make must therefore be made within existing public sector constraints and consultation arrangements. UNISON has argued that the result of this is likely to be that fewer public sector jobs are lost. The RoE model has not found broad support however, and has been used only in a few PFI contracts, all of which have been in the NHS. This may be because it creates confusion about who the employer is in practice and may be difficult for the public sector to administer, since it requires ongoing collaboration with the PFI provider. It is also partly because of concerns that have been raised about the compatibility of RoE with TUPE. To fall within the scope of TUPE, there must be a ‘transfer of an undertaking’. This term has an autonomous legal definition that comprises two components. First, there must be a legal transfer—that is an asset-based transaction such as a sale, merger or service outsourcing—as distinct from a transaction involving shares.2 Second, there must be a transfer on the facts: what has been transferred must be significant enough to still be considered ‘an economic identity that retains its identity’. The Court of Justice of the European Union (CJEU) has approached this second limb of the transfer definition in at least three different ways, none of which has been without its difficulties.3 However, given that ancillary services are labour, rather than asset, based, and seconded 1

See: www.unison.org.uk/acrobat/B935.pdf. See Brookes v Borough Care Services Ltd and CLS Care Services [1998] IRLR 636 and C-29/91 Dr Sophie Redmond Stichting v Bartol [1992] IRLR 366. 3 The three main approaches to the definition of transfer that can be identified from the case law are (1) the Spijkers criteria: consider all the facts characterising the transaction; (2) the labour law approach: similarity of activity; and (3) the commercial approach: economic entity. See further C Barnard, EC Employment Law, 3rd edn (Oxford: OUP, 2006) 636–44. 2

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RoE staff work under the day to day supervision of PFI managers, it seems likely that the CJEU would consider that there had been a relevant TUPE transfer, notwithstanding the RoE arrangements that had been put in place or the wishes of employees to remain employed by the NHS.4 On this basis, it is argued that RoE arrangements are likely to be considered de facto TUPE transfers and, for the same reasons, NOMS declined to explore further any alternatives to a TUPE transfer. Notwithstanding this discussion of RoE between NOMS and some bidders, and the incorporation of TUPE/COSOP compliance clauses into some of the contract documents, in the early stages of the Birmingham competition, the most striking feature about TUPE was its relative absence from everyday conversations and staff communications both from the prison’s management and from NOMS. NOMS’ inattention to TUPE and COSOP might be seen as surprising, given the organisation’s lack of experience of managing TUPE transfers of Birmingham’s scale, although it was consistent with its approach to the rest of the procurement process. The lack of discussion about TUPE among staff was less surprising given the lack of information provided by NOMS and that most staff at Birmingham had only worked within the public sector. In any event, in common with some cynicism in the market,5 many staff doubted the Government’s determination to see the competition through to its end. The Government’s willingness to allow management to be taken from the public sector (and thus for a TUPE transfer to arise) was even more strongly doubted. As already noted in chapters one and three, Birmingham had some things in common with the stalled competition at HMP Brixton in 2001: both prisons were traditional, city centre, local prisons with difficult industrial relations histories. The disbelief among staff in the seriousness of the process made TUPE less of an immediate concern for most staff. While the local bid development team (LBDT) remained operational, Birmingham’s staff focused its efforts upon contributing to a successful public sector bid. Their underlying perception was that they would suffer greater detriment to their working and contractual conditions if the private sector won the competition: PCOs [private sector prison officers] and HMP [public sector] officers are totally different. I don’t know what the pay difference is exactly but I know they’re paid less because they’re not civil servants. They’re not constables and so aren’t allowed to carry batons. We’re a proud service. They just get people in as cheaply

4 See C-392/92 Christel Schmidt v Spar und Leihkasse der früheren Ämter Bordesholm, Kiel und Cronshagen [1994] ECR I-1311; Dines v Initial Health Care Services [1993] IRLR 321, EAT 340; and C-13/95 Süzen (Ayse) v Zehnacker Gebäudereinigung GmbH [1997] ECR I-1259. 5 As noted by R Harding, ‘Private Prisons’ in M Tonry and J Petersilia (eds), Crime and Justice: A Review of Research vol 28 (Chicago: University of Chicago Press, 2001).

180 Social Sustainability and TUPE as they can—stacking shelves in Tesco one minute and then in here the next. Yeah I wouldn’t want to work for the private sector. They wouldn’t pay us sick and they’d get rid of most of us because we’re too expensive. Experience costs, it’s like I said, you get what you pay for.

Since the TUPE Regulations are supposed to prevent such detriment from occurring, staff members implicitly doubted the Regulations’ protective effects. When the LBDT disbanded, members of staff perceived the stakes to have been raised. As their involvement with developing the public sector bid declined, and their knowledge of the process diminished, discussions around TUPE became more common. Staff became more fatalistic about their future working lives and so the Regulations began to assume greater importance. Some suggested that the competitive process had been changed (from restricted to competitive dialogue) deliberately to favour private sector bids and thus force a TUPE transfer: ‘They [NOMS] know exactly what they are doing. They are clever. They know exactly what they want and how to do it’. Another Prison Officer said: ‘Birmingham is seen as the jail to break, get your conformist staff and break the POA. Shock the system into submission. The competition itself is just a smokescreen to screw staff’. Informally acquired knowledge of TUPE began to increase. This knowledge was mostly obtained from colleagues and the internet. Members of staff frequently felt unable and unwilling to share their concerns with partners or family at home, either because they wished to protect them from worry, or because they didn’t think they would understand. The ‘vagueness’ or ‘fluidity’ of the Regulations began to be noted by some Senior Officers and Junior Managers: ‘TUPE is a fluid law; it can be interpreted in many different ways’. Where knowledge of TUPE was at its most accurate (mostly among management grades) some staff were able to identify the source of ‘fluidity’ in TUPE as economic, technical or organisational reasons (ETOR) found in Regulation 4(5). This relates to the second pillar of protection that TUPE provides to employees: an employee is protected against dismissal by both the transferor and transferee, subject to the employer’s right to dismiss the employee for reasons which are either unconnected with the transfer, or for economic, technical or organisational reasons that entail changes to the workforce. There is no statutory definition of ‘ETOR’ or ‘connection with the transfer’. The relevant case law suggests that ETOR is a fairly narrow concept, requiring change to the workforce either in terms of number or job function.6 However, the scope of the ETOR definition remains uncertain and (fairly) untested. Moreover, there seems to be a feasible legal argument that ‘connection with the transfer’ extends to approximately one year

6

Berriman v Delabole Slate Ltd [1985] IRLR 305 (CA).

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after transfer.7 This means that transferred rights and obligations may only remain strongly binding upon the new employer for one year after transfer, although such a narrow interpretation of the Regulations is not reflected in the relevant Department for Business, Innovation & Skills guidance.8 This made it difficult for Birmingham’s staff to understand the protection TUPE provided. A minority of staff foresaw a transfer to the private sector as having little significant impact upon their working lives and identified TUPE as the means by which that would be secured. However, although most members of staff tended to display a limited or inaccurate understanding of TUPE, the majority considered the Regulations to offer fairly weak protection. As one Officer remarked: ‘Basically what they’re saying is your job and money might be safe, but in the same breath, it might not be. What the hell does that mean? How do I explain that to my wife and kids?’ There was a common belief among those who knew about the existence of TUPE that its protection lasted only a year at most. Within this range, many thought that the protection was much shorter term, lasting only a few weeks or months. Some thought that the protection lasted only while they were NOMS employees. According to this view, TUPE protection would cease when the competition transition period (Mobilisation, Transition and Transformation (MTT)) ended and the prison transferred to G4S in October 2011. Staff knowledge of pension protection was generally even more limited than their understanding of TUPE. None of my Birmingham interviewees were aware of COSOP or Fair Deal. A few thought that their pensions were partially protected but they inaccurately attributed the source of this protection to TUPE rather than COSOP: ‘I think pensions are protected yeah. But not for long and they can change all that too for operational reasons’. Most members of staff felt that any protection that TUPE or COSOP provided could be easily circumvented by a multinational firm experienced in undertaking TUPE transfers. One Officer described TUPE as being ‘not worth the paper it’s written on’ and thought that the private operator ‘can change everything after six or twelve months’. Others foresaw a more gradual erosion of their employment benefits but (inaccurately) thought that TUPE would protect everyone’s job: ‘Basically our contracts are watertight so they can’t get rid of us. But we’ll get a pay freeze for four or five years if we go private to make our wages the same as PCOs, but that’s it’. Birmingham’s staff predicted that TUPE would afford them less effective protection in the context of a procurement process that they considered

7

S Deakin and G Morris, Labour Law, 5th edn (Oxford: Hart Publishing, 2009) 209. See: www.berr.gov.uk/files/file20761.pdf, 14. There is also case law against such an interpretation of the Regulations. See London Metropolitan University v Sackur (2006) UKEAT/0286/06/ZT where a contractual variation two years after transfer was considered to be still connected with the transfer. 8

182 Social Sustainability and TUPE either to be NOMS’ mechanism to deliberately ‘sell off’ staff to the private sector, or that reflected such incompetence and lack of care for staff that any protection that the Regulations might otherwise have been able to offer, would be negated. Either way, the manner in which staff felt they had been treated during the procurement exercise, was extrapolated and taken as a likely indicator of the way that staffing issues would be managed under TUPE. In the words of one Officer: TUPE still lets the private sector come in and change things as long as they can think of an operational reason. That’ll be pretty easy for a company like Serco, and NOMS certainly won’t stand in their way. Just look at how they are treating us now.

The low level of knowledge about TUPE and perceptions of its (in)effectiveness among members of staff were reflected in some of their reactions to the announcement that the contract to manage HMP Birmingham had been awarded to G4S. A senior Officer recalled how as soon as the announcement had been made to award the contract to G4S, a junior colleague immediately left to go to the bank and extend his loan: ‘He thought he would be out of a job then and there. He didn’t have a clue what it all meant’.

B. TUPE AFTER THE AWARD DECISION

As explained in chapter six, deficiencies in information and staff support around TUPE continued after the announcement of the decision to award the Birmingham contract to G4S. NOMS had not envisaged the need for a NOMS MTT team, having thought that the transition would be led by the prison’s Senior Management Team (SMT). This was always an unrealistic plan, given the SMT’s inexperience in leading organisational change and their personal involvement (and vulnerabilities) in the TUPE transfer. Birmingham managers felt that NOMS and G4S were not communicating well and reported that this extended to NOMS preventing G4S coming into the prison as quickly as Birmingham’s SMT wanted. By contrast, a member of the NOMS procurement team suggested that NOMS had pressed G4S to give staff information within the first few weeks after the award decision, but G4S reportedly refused on the basis that they needed to complete a due diligence process to verify NOMS’ TUPE and HR information. Whoever was responsible, staff did not receive any face to face information about TUPE until a week after the announcement and they did not receive detailed information about G4S’ TUPE measures until the end of May 2011. Although NOMS had to respect a 10-day standstill period (known as Alcatel)9 from its contract award decision date before the contract with G4S could be signed, since the 9 C-81/98 Alcatel Austria AG and Others v Bundesministerium für Wissenschaft und Verkehr [1999] ECR I-07671.

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TUPE session that NOMS delivered did not contain information about G4S’ TUPE measures, there was no procurement impediment to this session being delivered much sooner after the contract award announcement. Beyond issues of timing, the content of the TUPE session was felt to be confusing and inadequate by many staff (see chapter six, section C). Staff were confused by the apparently ‘voluntary’ message of TUPE (that they were free to object to the transfer across to G4S) in the absence of any realistic alternative given that such an objection would be treated as a resignation, without any entitlement to redundancy compensation: It makes no sense. I never asked or agreed to it, I signed a contract to work for the Prison Service. Why are they allowed to break their contract with me and not give me anything for it? I don’t have a choice do I?

As a NOMS HR manager predicted, the uncertainty and involuntariness of TUPE was an even ‘harder pitch to sell’ in the absence of a certain ‘sweetener’ on pensions, because of the contested status of Fair Deal. Other content in NOMS’ TUPE session seemed to reflect the same lack of preparation and considered reflection that had been a feature of the procurement process. NOMS had not, for example, given adequate thought to the likely points of contention that would arise about terms and conditions of employment. NOMS’ HR team had not thought about the broader HR issues that might be subsumed within the staff’s questions about the contractual status of particular workforce norms. The issue of batons provides a particularly good illustration of this. NOMS had provided Birmingham’s prison officers with batons (carried in all public sector establishments) in return for which each officer had foregone his or her footwear allowance. Was it a term of a prison officer’s employment contract that she or he be allowed to carry batons? Or was it merely a workforce custom to which no contractual effect attached? The significance of these questions from a TUPE perspective is that TUPE only imposes additional obligations upon the transferee employer (G4S) to justify any changes it makes to the terms and conditions of employment of transferring staff. Consequently, G4S would be less constrained in making changes to its policy on batons if an officer’s entitlement to carry a baton amounted only to a workplace practice or custom, falling short of an implied term of an officer’s contract. Since private prison officers do not typically carry batons, ownership of batons, along with an officer’s entitlement to continue to carry one post transfer to G4S, was always likely to have been a source of tension between NOMS and staff. Indeed, had previous TUPE experience within NOMS been drawn upon properly, NOMS could have predicted that this issue would arise and that it would easily predominate without careful management. Subsumed within this question about the contractual status of batons, lurked a different HR concern for the staff, which demanded a more

184 Social Sustainability and TUPE sophisticated, thoughtful strategy than NOMS ultimately provided (see below). The importance that members of staff placed upon the issue of batons was in part symptomatic of some of the negative features of Birmingham’s culture. One of a G4S Manager’s first impressions of the prison was that ‘staff clung to their staves [batons]’, signalling antagonistic and oppositional relationships between staff and prisoners. However, it was also an expression of Birmingham’s staff wanting to retain their professional ‘HMP’ Prison Officer status. Many had experienced the competition process as de-professionalising. In their view, it had ‘tarred’ them with a wholly negative ‘brush’, which many felt was unjustified in light of some of the things that they continued to feel they did better than the private sector. Most staff could still identify differences between themselves and Private Custody Officers (PCOs) and argued that prisoners also knew the difference and (mis)behaved accordingly. The right of Birmingham staff to carry batons was a visible sign of difference between themselves and PCOs, who were seen as lacking the skills, experience and respect from prisoners of public sector officers. The retention of batons was just as important as maintaining pay in the ‘classification struggle’ that Birmingham’s staff were experiencing. Buried within questions about the contractual status of batons, staff were looking for NOMS to provide a sense of continuity in their worth and the public service orientation of their work. In practice, NOMS fell short in providing staff with support in either of these domains. The second ‘hidden’ issue of occupational values and professional orientation did not appear to be recognised by NOMS at all. While NOMS recognised the first contractual issue on batons, it proved unable or unwilling to answer the staff’s questions. Whether something amounts to a term or condition of employment is a difficult legal question in its own right. However, the difficulty of making such a determination was compounded by the complexity and documentary chaos of the contracts of employment of most members of staff. Complexity was partly unavoidable given the long-standing nature of many of the employment relationships with NOMS. Nonetheless, contractual complexity was significantly exacerbated by NOMS’ chronic lack of order in its employment affairs. The chaos of documentation was such that NOMS had difficulty (in response to a POA challenge during the competition) in identifying even the basic terms of a prison officer’s employment (such as notice periods, working hours and applicable collective agreements), the details of which employees are entitled to receive in a written statement under section 1 of the Employment Rights Act 1996. This issue ought to have been identified sooner and worked upon during the procurement process. The consequence of its omission at Birmingham was that NOMS simply handed over all HR policy documents to G4S (including hundreds of Prison Service orders and instructions), passing the burden (and risk) to G4S of identifying what amounted to a term and

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condition of the transferred workforce’s employment contracts. Providing similar evidence of inattention to workforce matters during the competition on the part of NOMS, G4S inherited unsustainably high levels of leave and time off in lieu (TOIL) that were owed to staff. This was because any workforce restructuring was put on hold at the prison during the competition. While the Governor’s obligations to make efficiency savings were ongoing, resulting in staff being redeployed, dismissed for medical inefficiency or made redundant, their posts were left vacant, without reallocation. By the end of the competition, there was a mismatch between how the prison’s workforce should be theoretically deployed (ie, minimum number of staff, working in which area) and the number of staff who were in practice available. Consequently, while the prison remained working to its old theoretical staffing models, it became difficult for staff to obtain leave and the prison’s managers became increasingly reliant upon staff to extend their shifts or come into work on rest days, for which staff received further TOIL. TUPE became a shield behind which NOMS could hide and with which NOMS could deflect its ongoing responsibilities to Birmingham’s workforce as both their transferor employer during the MTT and the organisation that had commissioned the G4S contract. NOMS’ approach in this respect contributed to the frustration with which Birmingham staff reacted to the TUPE session since, in tandem with NOMS’ response of ‘we’ll get back to you on that’, NOMS responded to staff queries by stating that it fell to G4S to take a view on that particular matter. But G4S did not give any indication of its ‘TUPE measures’ until the joint G4S and NOMS ‘road shows’ that began on 25 May 2011, and even these sessions did not answer many of the workforce’s (subsumed) concerns that centred upon non-contractual, workplace practices and values. Had NOMS used the procurement process to develop a clear, conscious vision of how it wanted its workforce to be treated during and post transition to G4S, it would have been better placed to provide the early reassurance that staff felt they needed. Even in the absence of such a vision, the existing social protection clauses in the contract, and the social protection evaluation criteria that had been used during the competition, could have been deployed by NOMS to try to allay some staff fears and bolster perceptions of care. Once again, this sort of initiative was not forthcoming because of the disintegration of NOMS’ HR and procurement functions and NOMS’ lack of understanding of, through lack of exposure on the ground to, the staff’s real concerns. As one Prison Officer described it: Them at NOMS don’t wait to face us do they? Because then they’d have to see what it’s been like to work here when all of this is happening, not knowing if you’ll have a job at the end of it. It’s much harder to screw someone over to their face. I know. You can’t screw one of these [prisoners] over here and hide in an office when you work the landings. You have to face them honestly, do what’s

186 Social Sustainability and TUPE right. That’s all we want. Come and see the world from our perspective and be straight with us, just for once.

There had been significant discussion about another Voluntary Early Departure Scheme (VEDS) for staff from NOMS before the transition to G4S in October 2011. Many staff, especially those with long service were hoping to take voluntary redundancy. Few of those eligible (management grades) had opted to take the package that had been offered in December 2010 because the competition award decision was still awaited and most members of staff felt that the scheme provided insufficient financial inducement, especially given the poor re-employment prospects inside or outside the public sector in the existing economic climate. A notice to staff issued on 12 May 2011 announced another VEDS package for management grades and Principal Officers (including Developing Prison Service Managers (DPSMs)).10 However, all Birmingham staff were considered ineligible: ‘Staff at HMP Birmingham are not eligible to apply following the announcement made by the Secretary of State for Justice on 31 March that it will be run by G4S Plc’. The formal reason given for this exclusion was that Birmingham staff would not be able to work their three months’ notice by the transfer date.11 In the alternative, NOMS argued that it would be wrong for it to allow a mass staff exodus because of the position in which that would place G4S in October. This was reflected in the content of a letter from the Chief Executive of NOMS, Michael Spurr, to Governing Governors. He argued that, ‘decisions on future staffing levels at Birmingham are properly for G4S to take—not for NOMS to anticipate’.12 However, from interviews with NOMS HR managers, the underlying legal reason for NOMS’ stance was the risk of litigation. This risk arose because someone who took the package might argue that they had been unfairly dismissed in connection with the transfer within the meaning of Regulation 7. If that argument were successful, the employee would be entitled to compensation from NOMS for unfair dismissal and would transfer across as an employee to G4S within Regulations 4(1) and (3). This exposed a tension between TUPE and good employment practice. Good employment practice, as outlined in Cabinet Office and Council of Civil Service Unions’ ‘Protocol for Handling Surplus Staff Situations’ for example, would seek to minimise the impact of business reorganisation by maximising opportunities for redeployment and voluntary exit schemes.

10 DPSMs were a group of staff that were the substantive grade of Principal Officers but had chosen to develop as junior managers in light of the closure of their rank. 11 PGA circular ‘Birmingham TUPE Bulletin 1’ (21 June 2011). 12 Letter dated 23 June 2011 from Michael Spurr, Chief Executive of NOMS to Governing Governors, Deputy Directors of Custody, NEMC and Heads of Group in response to a PGA circular of 21 June 2011.

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The suggestion was made by some NOMS HR staff that VEDS was not financially viable at Birmingham, since a reduction in staff numbers transferring could not be reflected in the contract price. As the NOMS procurement team members clarified in interview, this was not true as a contract mechanism was in place to allow such flexibility. However, this was not properly understood outside the Procurement Directorate, another damaging consequence of too little joined-up thinking. Many involved in the competition felt that the exclusion of Birmingham staff from VEDS was an unnecessary mistake. Many staff would have appreciated the option of finishing their careers ‘with dignity’, without the stress, and for some the ‘humiliation’, in the sense of not having a real choice, of going through a TUPE transfer. The first formal G4S information event occurred in late May 2011 when a series of joint G4S and NOMS ‘road shows’ were held. By this stage, G4S had composed its interim statement of TUPE measures, which included details of the changes they proposed to make to the organisational structure of the prison’s workforce and the extent of the likely redundancy consequences. As of 31 May, one hundred and twenty-three full-time posts were identified as ‘at risk’ on the basis of staffing numbers. Of those posts at risk, 47.5 per cent were workshop instructors, 40 per cent were in facilities management, 35.3 per cent were Operational Support Grade staff (OSGs), 16.4 per cent were administrative grades, 16 per cent were management grades and 11.9 per cent were prison officers.13 The scale of potential redundancies underscored the wide scope for the transferee employer to make changes to the workforce that complied with TUPE. However, the redundancy numbers came as a relief to many officers, and G4S’ stated need for a few additional senior officers was received as positive news by those officers who sought promotion. Despite having among the lowest percentage of roles at risk, concern became greatest among management grades. As an Officer described: ‘Yeah it is weird. It’s like most of the stress has moved up off the landings to all the suits [managers]. They’re all panicking now’. Although managers had greatest personal access to G4S and, by comparison with other staff groups, the most detailed knowledge of TUPE protections, they felt increasingly vulnerable. They felt

13 Unfortunately, there was a slight inaccuracy in the numbers that G4S initially provided (121.4 roles at risk rather than 123). Staff also noted that G4S had ‘dropped a few clangers’ with regard to their proposed core prison day: no dinner was scheduled to be served on Fridays for example. Proof-reading errors and inconsistencies in staffing numbers were all seized upon by staff. It was surprising how much these relatively small errors knocked staff confidence in the competence of their new employer, although this is consistent with the literature that has highlighted the connection between legitimacy and competence. See A Bottoms and J Tankebe, ‘Beyond procedural justice: A dialogic approach to legitimacy in criminology’ (2012) 102 Journal of Criminal Law and Criminology 119 and T Tyler, Why People Obey the Law (New Jersey: Princeton University Press, 2006).

188 Social Sustainability and TUPE most strongly associated with the prison’s public sector ‘failure’ and, if the competition had been about changing Birmingham’s culture, many doubted their future role in the prison under G4S, irrespective of any TUPE protections. The foreclosure of voluntary redundancy options prior to transfer to G4S and a national freeze on recruitment for junior managers caused many managers to describe themselves as ‘backed into a corner’. One Junior Manager said: ‘Whichever way you look at it, we’re screwed’. The tension between TUPE protections and the use of procurement to bring about culture change was most strongly illustrated in the departure of the Governing Governor in June 2011. Local POA committee members had made it clear that in their view, Birmingham’s future did not have a place for the same Governing Governor. NOMS had, at least informally, conveyed a similar message. It had asked G4S to notify it of the identity of its SMT, thereby perhaps suggesting that it would be different from the existing team. Moreover, it had accepted the Governor’s application to fill a vacancy at another establishment.14 G4S seemed to envisage that their Transition Director would become the new Birmingham Director from October. Despite occupying one of the only posts in the prison that would remain identical after transfer of the prison’s management to G4S, and that could not therefore fall within the ‘ETOR’ exception, the Governing Governor left Birmingham at the beginning of June 2011.15 Insecurity among the remaining SMT was manifested in increasingly competitive and insular behaviours. The SMT was described by operational prison staff as having ‘disappeared into their own little world’, producing a ‘dangerous management gap’ during a period when internal and external pressures (not least the 2011 summer riots) most strongly called for competent leadership. Having learned of the contract award decision, Birmingham’s prisoners increasingly developed unrealistic positive expectations about the scale and immediacy of changes under G4S. During the MTT period, prisoners regularly tested the boundaries of the staff’s de-escalation skills and patience by, for example, setting off fire alarms. G4S’ road show information indicated that there was scope for some staff to transfer their employment from Birmingham to nearby HMP Oakwood, the new build prison for which G4S had been awarded the management contract. If staff chose to avail themselves of this option, they would only continue to receive their current employment benefits for two years. Thereafter, they would be moved onto standard G4S terms. Guidance

14 In interview, the Governor said that he applied for the post after he was told by the Public Sector Bid Unit (PSBU) that they wanted to bring in a new Governor as part of their bid. 15 He was replaced by another public sector governor, who was originally charged only with overseeing the rest of the MTT process until October but was invited to stay on at Birmingham, transferring to G4S’ employment when he was appointed Director in October 2011.

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about TUPE that had been issued by NOMS (‘Next Steps—Additional HR Information’) explicitly foresaw this possibility: ‘the new employer may offer you the opportunity to accept their own terms and conditions of employment on or after the transfer date’. The compatibility of this guidance, and G4S’ Oakwood scheme, with TUPE is unclear. There is CJEU case law that appears to prohibit any changes to the terms and conditions of employment of transferring staff, even where the changes are small and employees consent to the variation. This is because the Court has considered TUPE’s rules to be a matter of public policy, and thus mandatory in nature.16 A more recent case, Delahaye, appears to increase the scope for contractual variation by the transferee employer. It suggests that even contractual changes that are connected with the transfer are permitted so long as they are not substantial.17 However, even taken at its broadest, this case law might not accommodate the breadth of NOMS’ statement and the magnitude of the contractual changes to which members of staff are able to agree after two years of service at HMP Oakwood. The same tension is thus exposed as arose in respect of VEDS, between offering staff alternatives to redundancy, through redeployment, and holding employers to account to TUPE’s default rule that all staff should retain their jobs and original terms and conditions. The final key TUPE milestone during the transition phase to G4S was a series of staff pension meetings. These occurred in late June 2011 and were convened primarily by the Government Actuary’s Department (GAD) but included input from both NOMS and G4S.18 Staff appeared reassured by these meetings and the written information that was provided was comprehensive. Most of their residual concerns were in respect of the long-term security of G4S’ pension pot and whether they should bulk transfer across their accrued pension into the G4S scheme. These were personal decisions though, and did not reflect any deficiency in information from GAD. Nevertheless, in common with confusion about the ‘voluntariness’ of their move across to G4S employment in the absence of any realistic alternative under TUPE (see above), members of staff felt that the change in their civil service status was out of their control and not of their making. They could not understand why they could be made to leave the Principal Civil Service Pension Scheme. This confusion and frustration increased as a result of NOMS’ decision that any changes made to public service pensions following Lord Hutton’s review should be implemented by G4S. This was notwithstanding the fact that any such changes would arise only after staff

16 See C-324/86 Daddy’s Dance Hall [1988] ECR 739 and C-209/91 Rask and Christensen v ISS Kantineservice [1992] ECR I-5755. 17 C-425/02 Delahaye [2004] ECR I-10823. 18 GAD is responsible for certifying the broad comparability of future pension provision for ‘Fair Deal’ purposes.

190 Social Sustainability and TUPE had transferred into G4S’ employment. This residual public sector control strongly conflicts with the TUPE model, which holds that at the point of transfer there is a comprehensive shift from one employer to another. It also undermines the justification for the exclusion of staff from their previous public sector pension scheme. As one Prison Officer stated: We’ve been lied to, treated like outcasts, just shit on really and then, just as we are starting to get our heads round stuff, thinking yeah I might be okay and anyway it can’t get any worse, they shaft us again, stab us in the back, when we won’t even be working for them any more. How the hell can they do that? You’d think they might have just given us an inch, but no.

C. TUPE AND THE PUBLIC PROCUREMENT RULES: UNEASY BEDFELLOWS?

Despite the inclusion of TUPE and COSOP compliance clauses in the Birmingham procurement documentation TUPE, and the manner in which its rules were deployed, did not provide the high level of protection that might have been anticipated from the face of the Regulations or the high level of reassurance for staff that might be expected. The TUPE model offered Birmingham’s staff little reassurance, principally because of the absence of any realistic alternative should they not wish to transfer, the difficulty of identifying the terms of their contracts that attracted TUPE protections and the width and poorly defined nature of the ‘ETOR’ exception. The complexity and breadth of ETOR was understood by staff to qualify the default rule to such an extent that the protective potential of the Regulations was significantly undermined and, for some staff, rendered almost meaningless. Since TUPE did not call into question G4S’ prerogative to restructure and dismiss staff, the TUPE default rule was perceived to be readily displaceable. For most staff, the Regulations meant only that G4S probably could not dismiss the entire body of staff, and that the degradation of their terms and conditions of employment would be gradual, rather than immediate, following the October 2011 transfer. TUPE also failed to protect non-contractual entitlements and norms that were nevertheless important to staff in defining their working lives and identities. The complexity of TUPE alone presents a significant communications challenge for those who are responsible for explaining and implementing it. The evidence that has been presented from Birmingham underlines how important and difficult it is to communicate effectively. The challenge was heightened in this instance because of ongoing changes to public sector employment, the absence of any precedent and the poor groundwork that had been laid by non-HR NOMS staff during the procurement process. While the increased protection of pensions for public sector staff through COSOP might have previously ‘sweetened’ the TUPE message, the uncertain

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status of Fair Deal and the provision made for pension ‘claw back’ if Fair Deal was abolished after the contract had vested, meant that there was much less positive mileage in pensions for NOMS HR staff to make use of. The impact of Fair Deal upon the Birmingham competition ought to have been more carefully managed from a holistic workforce perspective, both between government departments and within the NOMS procurement team. But even controlling for the impact of these matters that were out of NOMS’ HR team’s hands, the staff’s experiences of TUPE were poor. As one Prison Officer explained: ‘Whatever decisions we’ve made, we’ve made them blind and that’s not fucking fair’. The Birmingham case study has also provided evidence to suggest that TUPE’s effectiveness is further limited by a public procurement transfer context. First, when a TUPE transfer results from a procurement exercise, the communications challenge around TUPE is increased, particularly where the procurement process has been poorly handled from a staff perspective. Birmingham staff perceived their treatment during the competition to be unfair and extrapolated from that experience that their future treatment during the TUPE transfer would also be unfair. As Lazarus explained, the ‘anticipatory period’, the period prior to a TUPE transfer (in Birmingham’s case, the two-year procurement process) ‘is a period in which cues about what is to follow and what can be done to cope with it are sought and evaluated’.19 The Employment Related Services Association has recognised the interrelationship between the procurement and TUPE phases. As their good practice guidance states: ‘Every aspect of commissioning, from setting programme budgets and specifications through procurement processes to contract management will have an impact on the ability of providers to handle TUPE (and broader employment issues) well’.20 The ‘anticipatory cues’ that Birmingham’s staff had taken from the competition about NOMS’ motivations, competence and care for staff were far from positive. And as described in chapter six, NOMS had not put in place a strong social vision in its procurement documentation and process that would be likely to assist its staff and G4S with most effectively implementing TUPE. In such a context, NOMS HR Managers were fighting an uphill battle to make TUPE work well. Second, there is an uncomfortable relationship between procurement’s aims of cultural transformation and cost reduction and TUPE’s protective effects, which caused staff who were all in part responsible for the ‘failure’ of the prison to be retained on their existing terms and conditions of employment. There was particular tension between the two in respect of Birmingham’s managers. Gadd has underlined the influence of a prison’s

19 20

R Lazarus, Psychological Stress and the Coping Process (New York: McGraw Hill, 1966) 31. See: ersa.org.uk/media/news/ersa-unveils-ten-point-plan-supply-chains.

192 Social Sustainability and TUPE SMT upon the success or failure of that institution.21 Yet under TUPE, in principle those managers all transfer across to run the establishment for their new employer. Although this provides a sense of continuity and retained understanding of the organisation’s history, it may impede the new provider in delivering the changes that it feels are necessary to improve the service. From the perspective of Birmingham’s staff, the retention of their SMT after the prison’s transfer to G4S contributed to their frustrations arising from a sense of inertia. Staff wanted to move forward and embrace sensible change but felt held back by managers who were ‘stagnant’ and ‘lacked credibility’ because they still had ‘their HMP hats on’. There was a feeling that the SMT was merely ‘public sector incompetence dressed up in G4S clothing’.22 Third, an odd interplay may occur between TUPE and procurement processes, which is absent from transfers between private sector entities. This arises because in public procurement processes, contracting authorities have an interest in examining staffing issues from at least two perspectives: (1) from a procurement perspective in terms of cost to justify the economic rationality of their award decision; and (2) in light of the authority’s ongoing ultimate responsibility for service provision, to ensure that the required minimum services will not be defaulted upon for want of adequate staff. A similar level of interest in the staffing arrangements of the new service provider or business owner does not generally arise in the private sector because private parties enjoy greater contractual freedom. Unencumbered by the additional restraints that the public procurement rules impose upon the public sector, private parties are free to choose their contracting partner on any (irrational or rational) basis. In theory, there is thus no need for private parties to scrutinise the staffing arrangements of its putative contracting partner. Similarly, since a private party will not have liability, and thus the same degree of long-term interest in the company that has been sold, or the service that it has outsourced, it is, in theory at least, less likely to be concerned about staffing issues than its public sector counterpart. The additional interest that public sector contracting authorities take in respect of staffing matters can generate the perception among staff of that authority having a greater degree of responsibility for the staffing changes that the new service provider takes. In Birmingham, staff noted the artificiality of one branch of NOMS—its procurement team—sanctioning the bid and thereby also approving its HR components, and another branch of NOMS—its HR team—saying that it was not for NOMS to involve itself

21 See V Gadd, ‘Characteristics and Working Practices of Effective Senior Management Teams in Public Sector Prisons’ (unpublished thesis to be submitted shortly in fulfilment of a PhD in criminology at the Institute of Criminology, University of Cambridge, 2014). 22 A Liebling et al, ‘Birmingham Prison: A Benchmark Study, One Year On’ (Cambridge University Prisons Research Centre, February 2013).

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in, or pre-empt, the workforce changes that G4S would make. Given that workforce changes would be essential to make the bid financially viable for G4S, although consultation processes would need to be followed, it was highly unlikely that there would be any significant deviation from G4S’ original workforce plans. Staff therefore felt that their exclusion from VEDS, and NOMS’ only limited offers of redeployment at other public sector establishments, were particularly disingenuous and were made, some members of staff suggested, with a view to maximising redundancies. In this respect, it would seem that TUPE had an adverse impact upon the process from a staff perspective, by limiting their opportunities for alternatives to transferring to G4S. The risk that any redundancy would be considered to be a dismissal for an unlawful transfer-related reason, such that the relevant employees would have been deemed to have been employed immediately before the transfer, dissuaded NOMS from taking greater responsibility for the workforce restructuring that it knew would occur and had sanctioned (by selecting G4S’ bid). Although this interpretation of TUPE was intended to protect staff by stopping employers avoiding TUPE by dismissing staff shortly before transfer, in practice its effects were experienced by staff negatively, as overly protective. In light of this empirical evidence, there seems to be a case for reappraising TUPE, and more carefully considering its relationship with the public procurement rules. It is to this issue of reform that chapter eight now turns.

8 Reintegrating the Market in Society: Conclusions and Principles for More Socially Sustainable Public Procurement Exercises A. A SOCIO-LEGAL CRITIQUE OF PUBLIC PROCUREMENT

1. The Mismatch Between Competition in Theory and Practice As explored in chapter four, the Government promises that competition will ‘empower’ its staff to deliver cheaper, more innovative, higher quality public services. The Secretary of State for Justice reflected positively upon the Birmingham process, arguing that it demonstrated that ‘competition can deliver innovation, efficiency and better value for money for the taxpayer—but also that it can do so without compromising standards’.1 Yet it is clear from the empirical evidence presented in chapters six and seven that competition does not (at least always) yield such positive fruits in practice. There appears to be a gap between the Government’s abstract beliefs in competition and the outcomes that it is capable of delivering, and the empirical realities of competition. Following a process that cost £5.84 million,2 the Birmingham competition produced a contract between the Government and G4S with a value of £316.5 million that is impenetrable to all but lawyers in its length and language, which is more focused upon NOMS’ needs than prisoner needs,3 and which lacks vision and ambition for future service improvement and the important role of the workforce in delivering it. Promises of innovation and transformation on G4S’ part might be contained in schedule 2 of the contract (‘Contractor Proposals’). However, since this information is considered commercially confidential it is unavailable and so impossible to take account of, and equally impossible for the public to hold G4S to account 1

Ministry of Justice, ‘Prisons competition outcome’ press release (31 March 2011). Prison Reform Trust, ‘Bromley Briefings Prison Factfile’ (December 2011) 72. 3 C Stacey, ‘The marketization of the criminal justice system: who is the customer?’ (2012) 59 Probation Journal 406. 2

A Socio-Legal Critique of Public Procurement 195 for it. In any event, the contract is such that NOMS’ minimum service standards and the delivery price are G4S’ primary obligations rather than commitments as to how the company will improve Birmingham; commitments that may or may not be contained in schedule 2. Similarly, although the contract contains some workforce related clauses, compliance with predetermined standards was only called for in respect of the legal framework on non-discrimination, the Transfer of Undertakings (Protection of Employment) Regulations (TUPE) and, to the extent that it continues to be in force, the Cabinet Office Statement of Practice on Staff Transfers in the Public Sector 2000 (COSOP). The contract emphasised G4S’ obligation to meet minimum legal standards, which would ensure that NOMS avoided incurring any legal liability, more than it advanced a positive vision of the role and treatment of its workforce. In the context of a contract that leaves such discretion to the contractor about how it will bridge the gap between the contract price on the one hand, and delivery of the minimum required service standards on the other, the prospects for service improvements that are anything other than cost driven, seem narrowed. Furthermore, since jobs and employment benefits account for the greatest proportion of a public service’s costs, in the absence of any social policy ‘counterweight’ in the terms of the privatisation contract, the principal impact of competitive processes in public services is likely to be reduced staffing levels and employment benefits.4 Both of these are problematic prospects. If by obliging a contractor to deliver only minimum specified services it will deliver just those aspects of its improvement plans that will generate profit or reduce cost, particular challenges are raised for public services. This is because public services are delivered not just because of their essential (rather than profitable) nature, but also because they produce indivisible gains, which are enjoyed by the wider population. The functions of imprisonment, for example, extend beyond containment in fulfilment of a court order, to encompass rehabilitating activities. This is because in the longer term, such ‘additional’ services should decrease offending rates and thereby improve, inter alia, social order and public safety. In the absence of more ambitious terms in public contracts there is a risk that, where profit and public benefit do not coincide, private service providers will overlook these indivisible and unquantifiable gains. Unless specific provision is made for it in the contract, to the extent that NOMS’ minimum

4 One of the few studies to provide insight into the sources of financial savings made by the private sector in the prisons field was undertaken by HM Prison Service in the late 1990s. It found that around half of the cost reductions came from having fewer staff per prisoner and the other half came from lower average unit costs: I Park, ‘Review of Comparative Costs and Performance of Privately and Publicly Operated Prisons 1998–99’, Home Office Statistical Bulletin 6/00 (London: Home Office, 23 March 2000) Annexes C and E.

196 Reintegrating the Market in Society standards do not represent the ‘right’ or ‘best’ thing to do from a global public perspective, contractors have no incentive to go beyond them. This is well illustrated by an example that was given in an interview with a public sector prison Governor (who did not work at Birmingham). He recounted visiting a private prison and asking its Director what the difference was between the public and private sectors. The Director told him to go to his visits hall and then phone him and describe what he saw. The Governor did as instructed, and listed every item he could see which, he noticed, unlike common practice in the public sector, did not include a play area for visiting children. In response, the Director read to the Governor the visits section of the prison’s service specification. There was not a single item in the visits hall that exceeded the requirements in the contract. Since NOMS had not obliged the prison to provide a children’s play area, it had not done so. This example illustrates the risk of public contracts becoming caps on public service improvement, rather than being springboards for positive transformation as the Government would portray them. Such insight underscores the importance of getting the contract right (and thus the high stakes of public contracting) and the importance of suffusing public contracts with public values. The latter should narrow the possibilities for contractors to do the ‘profitable thing’ over the ‘right thing’ for society as a whole. There may be difficulties in articulating these values and in mobilising them in ways that are tangible and legally enforceable. The response to such a concern is, however, twofold. First, such an articulation struggle is probably a worthwhile exercise for any public organisation’s development. Just as conceptual ambiguity can block or frustrate contact with the empirical world in a research context,5 lack of a shared understanding of an organisation’s core aims and values can render an organisation’s activities less effective than might otherwise be the case. Deficiencies in NOMS’ internal reflections upon what the new Birmingham ‘style’ of competition meant for it as an organisation resulted in significant additional process complexity and adverse staff impact. Second, even if public values cannot always be articulated in a completely concrete, enforceable manner, there seems to be a case for their inclusion. The value of a contract is not confined to its legal enforceability, but lies also in the parameters that it sets for the relationship between the parties. Although contracts are legal documents, they are also relational (see further section B). Payment by results has useful potential to help incentivise contractors to do the ‘right thing’ but it requires a very sophisticated understanding of ‘what matters’ in public services, how you measure and evidence it, and how you control and manage the effects of financial incentives upon aspects of the service that are not incentive linked.

5

H Blumer, ‘What is wrong with social theory?’ (1954) 18 American Sociological Review 3, 9.

A Socio-Legal Critique of Public Procurement 197 If the principal impact of competitive processes in public services is likely to be reduced staffing levels and employment benefits, then the second sense in which this is problematic is that competition, as it is currently politically presented (see chapter four), seems an unnecessary, disingenuous and illegitimate mechanism by which to bring about such changes. This is because even within the normal employment law framework, an employer enjoys significant discretion to restructure his workforce in order to improve his business. The argument might thus be made that if competition is really about making workforce changes, there exists sufficient and more appropriate potential for NOMS to bring about the necessary staffing changes itself, without the cost, time, risk and potential ineffectiveness of a competition process. Although staff benefit from some additional employment protection in a competition context by virtue of TUPE, this case study, in common with previous studies (see chapter two, section C), suggests that the Regulations operate less protectively in practice. Consequently, competition appears to be able to create circumstances in which workforce changes are forced upon staff, more than staff are genuinely involved and consulted. This negates, or at least undermines, an employer’s usual obligations of more genuine (albeit still relatively modest) staff involvement in organisational change, which apply in, for example, straightforward redundancy situations. The use of competition policies to bring about ‘back door’ workforce changes seems illegitimate. In any event, if the principal impact of competitive processes is reduced staffing levels and employment benefits, then this is not an enlightened redistribution of public money. In the prison sector the ability of prisoners easily to access knowledgeable staff, and the professional use of authority by staff, increase prisoner quality of life. They secure the legitimacy and safety of the establishment and its rehabilitation prospects. The most significant weaknesses of the private sector model are in policing and control. Private custodial staff tend to under-use their power in a way that maintains ‘thin’ positive relationships with prisoners (polite and courteous rather than showing full interpersonal and organisational respect), but which are at the expense of safety and control.6 This arises in part because of the well-documented problems in the private sector related to low staffing levels, high turnover and staff inexperience.7 Adequate staffing levels and

6 B Crewe, A Liebling and S Hulley, ‘Staff culture, use of authority and prisoner quality of life in public and private sector prisons’ (2011) 44(1) Australian and New Zealand Journal of Criminology 94; A Liebling, B Crewe and S Hulley, ‘Values and practices in public and private sector prisons: a summary of key findings from an evaluation’ (2011) 196 Prison Service Journal 55; and B Crewe, ‘Depth, weight, tightness: revisiting the pains of imprisonment’ (2011) 13(5) Punishment & Society 509. 7 P Moyle, ‘Private prison research in Queensland, Australia: a case study of Borallon Correctional Center 1991’ (1995) 35(1) British Journal of Criminology 34; A James et al, Privatizing Prisons: Rhetoric and Reality (London: Sage, 1997); National Audit Office, The

198 Reintegrating the Market in Society sufficiently generous terms and conditions of employment, which recognise the importance and professionalism of prison work, are of benefit to a prison’s culture and effectiveness. They are vital to securing both the core custodial aim of imprisonment and its broader ‘indivisible’ benefits. Beyond the Birmingham contract, the two-year process that led to its construction can be seen as a ‘product’ of the competition, worthy of evaluation in its own right. Despite NOMS’ emphasis upon the procedural aspects of competition (over its substantive aims), there were significant deficiencies in NOMS’ procedural competence. The process was excessively long (falling far short of the Government’s aspiration to complete ‘all but the most complex procurement processes within 120 days’),8 poorly communicated, inadequately improvement-orientated, and not integrated within NOMS’ other functions and operational developments. The Government has recognised the detrimental impact that such processes have upon the cost and potential effectiveness of competition policies.9 Protracted procurement exercises in which contracting authorities have unclear or unambitious aspirations and lack the skills to communicate confidently with private sector bidders, are costly. They reduce market participation, and the competitiveness (on cost and quality), of public service markets. They produce poor contracts: a mundane framework of basic competences and an emphasis on cost over quality, which displace opportunities for meaningful innovation and transformation. Once written, such contracts are difficult and expensive to alter.10 NOMS’ entanglement in process over substance in the Birmingham contract contributed to the social and cultural impoverishment that was experienced by both the prison’s staff and prisoners. NOMS’ limited attentiveness to social policy took the form of ‘technical care’ in the contract documentation (principally TUPE and COSOP compliance clauses), conveying a superficial and inadequate form of respect and recognition for staff and their expertise. The few examples of more far-reaching social policy implementation during the process appear to have been included more inadvertently than as part of a deliberate social vision. In any event, Operational Performance of PFI Prisons: Report by the Comptroller and Auditor General (HC 2002–03, 700); and HMIP, ‘Report on a Full Announced Inspection of HMP Rye Hill’ 11–15 June 2007. 8 The Government refers to this as ‘lean sourcing’: Government Procurement, ‘Government Sourcing: A New Approach Using LEAN’ (2012). 9 Cabinet Office, ‘Radical package unveiled to support business and promote growth’ (20 November 2011): www.gov.uk/government/news/radical-package-unveiled-to-supportbusiness-and-promote-growth. 10 Not least because changes to existing service contracts can trigger the need for a contracting authority to run a completely new procurement process. See C-454/06 Pressetext and K Hartlev and M Liljenbøl, ‘Changes to existing contracts under the EU public procurement rules and the drafting of review clauses to avoid the need for a new tender’ (2013) 2 Public Procurement Law Review 51.

A Socio-Legal Critique of Public Procurement 199 the consideration of these social matters was not shared with staff and so did not provide reassurance. This reflects the disintegration of NOMS’ procurement team with other NOMS functions, and a general failure on the part of NOMS’ mangers and ministers to realise that the manner in which something is delivered can be just as important as what is delivered.11 The Birmingham case study provides evidence of the erosion of cooperation and the three social deficits (low institutional loyalty, diminished informal trust and weakened institutional knowledge) that Sennett described as arising from the new capitalist model, of which competitive tendering is a feature (see chapter two, section A.1). The process of competition was experienced by staff as commodifying and humiliating. As Sennett explained, when a ‘servant has no choice’ and ‘when the master shows no recognition’, he is humiliated.12 Humiliation disempowered staff and, in their eyes, delegitimised NOMS. It de-professionalised the work that staff undertook, appearing to deny both their importance to the prison’s functioning, and the ‘moral’ dimension of their service as part of the criminal justice system. Everything staff had come to understand as certain was devalued and made uncertain. This bred ontological insecurity: as Young has described it a ‘chaos of reward’ and a ‘chaos of identity’.13 While some staff recognised that the prison had workforce problems, for which staff intransigence was in part responsible, they felt that their wholesale stigmatisation, which subjecting the whole prison to competition through such a difficult process appeared to covey, was unjustified: Yes it’s true we’ve got people here who have taken the piss with sick. And yes we did vote against Workforce Modernisation, but so did other places. Why have they tarred us all with the same brush? There has always been good work happening here but it’s never been recognised. They’re chucking the baby out with the bathwater.

Staff reacted with a mixture of anger, sadness and bewilderment but in almost all cases, staff reactions were far from the ‘empowerment’ that the Government claims arises from competitive processes. This destabilised the prison and, at times, particularly around the time of the riots that occurred across cities in the UK during the summer of 2011, raised risks of instability and disorder. This has also been the experience of competition in prisons elsewhere.14 11 On procedural justice and legitimacy see J Jackson et al, ‘Legitimacy and procedural justice in prisons’ (2010) 191 Prison Service Journal 4 and A Bottoms and J Tankebe, ‘Beyond procedural justice: A dialogic approach to legitimacy in criminal justice’ (2012) 102 Journal of Criminal Law and Criminology 119. 12 R Sennett, Together: The Rituals, Pleasures and Politics of Cooperation (London: Penguin, 2012) 152. 13 J Young, The Vertigo of Late Modernity (London: Sage, 2007) 35. 14 J Rynne, R Harding and R Wortley, ‘Market testing and prison riots: how public sector commercialization contributed to a prison riot’ (2008) 7(1) Criminology & Public Policy 117.

200 Reintegrating the Market in Society Some of the process’s detrimental impacts upon Birmingham’s social capital suggest that competition, even when ‘well’ delivered, can cause significant damage to the strengths that arise from the public sector employment model. Job security, stable employee relations through unionisation,15 and centralised terms and conditions have bred ‘deep’, long-term, predictable relationships between public sector staff and their employers. Relationships are confident and dependable. Staff knowledge of, and commitment to, their employing organisation are strong. Cooperation is emphasised over competition and as Sennett has argued, although ‘efficiency and rigidity do not equate, cooperation is more supple’.16 A cooperative workforce, in Sennett’s sense, has increased the flexibility and reliability of public service delivery. While the public sector employment model is not without its problems, competition in public services appears to erode, or risks eroding, some of the strengths of the public sector. It shortens the organisation’s time frame (to the maximum length of the service contract and, where privatised, the patience of the new managing company’s shareholders) and confuses the organisation’s goals while simultaneously disembedding staff from within it. The increased uncertainty of staff about their occupational futures and the values of their employing organisation were experienced at Birmingham as de-professionalising. They caused the staff to become less clear and positive about their role and collective function and transformed a career and vocation, which called for the judicious exercise of professional autonomy and skills, into ‘just a job’. Collective interests and social institutions (especially the local Prison Officers’ Association (POA) branch) began to fragment and diminish in importance. Bonds of trust and loyalty between staff deteriorated and social relations became more superficial. The self-serving, isolated individual of Giddens’s modernity took centre stage. These negative impacts upon social capital were compounded at Birmingham by NOMS’ poor management of the competition process. Although it seems likely that G4S would have inherited some workforce problems stemming from the competition per se, the company appears to have inherited greater workforce problems than were necessary because of deficiencies in the manner in which the competition was undertaken. As a longstanding member of the Birmingham Independent Monitoring Board (IMB) recognised: We hope the Prison Service has learned from the experience of staff at Birmingham, and that no other prison up for privatisation will be subject to such

15 Of those employed in the public sector in 2006, 60% said they were members of a trade union, while in the private sector only 16% of employees were union members: B Millard and A Machin, ‘Characteristics of public sector workers’ (2007) 1(5) Economic and Labour Market Review 46, 48. 16 Sennett, Together: The Rituals, Pleasures and Politics of Cooperation, n 12, 69.

A Socio-Legal Critique of Public Procurement 201 a lengthy process and delays in announcements. We would also like to think that there is now much more consultation with staff, including an explanation of what privatisation actually means.17

In his first inspection of HMP Birmingham after the prison’s transfer to G4S, though noting some improvements, HM Chief Inspector of Prisons, Nick Hardwick, commented: ‘It can also be said now that the process of privatisation, which went on over a number of years, took far too long and the uncertainty it created was damaging’.18 On returning to HMP Birmingham in December 2012, one year after transfer, as part of Cambridge University’s Institute of Criminology’s research team, the effects of the social and cultural damage that had been inflicted by the competition were still palpable.19 In spite of the careful attention that was given to equality issues in the management contract with G4S (relative to other staffing matters), and equality issues being one of the few HR issues that the old prison administration appeared from staff interviews and from the prison’s internal documentation to have managed fairly successfully,20 all female, and almost all black and minority ethnic (BME) members of the original Senior Management Team (SMT), had left the prison’s staff by December 2012.21 At the same time, NOMS’ decision to hand over a chaos of documentation to G4S, and offer little assistance in identifying what amounted to terms and conditions of their staff’s contracts, was continuing to cause ongoing difficulties between the prison’s leadership and the local POA branch. G4S had agreed to a pay increase for its staff at Birmingham, but only in return for staff agreeing to be bound by G4S’ absence management policies. In common with G4S’ scheme that enabled staff to transfer to HMP Oakwood in return for accepting G4S terms and conditions after two years, the compatibility of the condition for this pay increase the Court of Justice of the European Union’s (CJEU) TUPE case law is not certain.22 Although (in December 2012) G4S continued to recognise the POA as the relevant bargaining representative for the prison’s workforce, the POA local committee members were struggling to come to terms with the new employment landscape and free themselves from the legacy of ‘broken 17

B Bradbury, ‘How Birmingham went G4S’ (2012) 105 Independent Monitor 12, 13. HMIP, Report on Announced Inspection of HMP Birmingham (March 2012). 19 A Liebling et al, ‘Birmingham Prison: a benchmark study, one year on—key findings’ (Cambridge University Prisons Research Centre, February 2013). 20 The public sector employs more women, older workers (50 years+) and part-time workers: Millard and Machin, n 15. 21 The disproportionate impacts of public service privatisation upon females have also been noted in other jurisdictions: A Zollner, ‘Women’s Rights Under Privatization: The Example of Bulgaria, Poland, Russia and the Ukraine’ in E Ulrich von Weizsäcker, O Young and M Finger (eds), Limits to Privatization: How to Avoid Too Much of a Good Thing (London: Earthscan, 2006). 22 C-324/86 Daddy’s Dance Hall [1988] ECR 739. 18

202 Reintegrating the Market in Society promises’ that they felt had been left by NOMS. A lack of leadership during the competition meant that the staff and the POA committee members had ‘closed in’ and developed their own account of the ‘new G4S world’ and the process that had created it. This included considerable denial or lack of understanding of past flaws in the culture and quality of the prison, and insufficient confidence in, or understanding of, the new G4S model. G4S’ insistence that staff wear name badges with both their first and surnames on them had become a testing ground for the new G4S administration. Such name badges are commonplace in the private sector but are not typical of the public sector, traditionally because of staff opposition to them. This opposition has been nominally because of staff concerns about their personal security and privacy, but it can also be seen as a feature of ‘traditional-cynical’ occupational culture, rather than the best of public sector working culture, the ‘traditional-professional’.23 Although the POA National Executive Committee’s management of the Government’s privatisation proposals ought to have taught the local POA committee an important lesson about choosing to fight the ‘right’ battles (those most important for staff), members of the local branch still appeared not to have learnt that lesson. The local POA’s chairman described the name badge issue as ‘the ditch he wanted to die in’. Given that there were so many other significant ongoing workforce issues—not least an unexpected wave of senior officer redundancies (because the prison’s SMT had not read their contract with NOMS before making a number of appointments), dismissals for medical inefficiency and pressure from G4S to replace Prison Service policies with their own—such an impassioned response from the local POA about name badges seemed misplaced. It raises some concerns about the quality of staff representation and underlines the importance of NOMS taking its employer obligations seriously during the competition and subsequently as contract managers. If one of the unspoken aims of prison privatisation has been to reduce the power of the POA, NOMS arguably had an even more pressing ethical responsibility to ‘plug the gap’ in effective staff representation, by imposing ‘gold standard’ employment practices upon G4S in the contract and by practising those same high standards in supporting the workforce throughout the competition. Yet, as described in chapters six and seven, such support was not forthcoming. In a survey conducted by the Cambridge Prison Research Centre of 126 staff members at HMP Birmingham in December 2012, staff overall ‘quality of life’ had decreased significantly from 5.52 in December 2011 (n=165) to 4.47.24 For all staff, their ‘relationship with the organisation’ had decreased substantially from 3.12 to 2.51, as had their ‘commitment’

23 24

Drawing on Crewe, Liebling and Hulley, n 6. p < .001; significance is based on two-tailed T tests.

A Socio-Legal Critique of Public Procurement 203 from 3.64 to 3.13. Feelings of ‘safety, control and security’ had decreased significantly from 2.69 to 2.00.25 This was having a negative impact upon the relationships that we observed between staff and prisoners. Staff had orientated themselves defensively, in an attempt to avoid the risks that they perceived to be present to their physical, economic and emotional security. ‘Survival values’26 predominated and we observed the ‘silo effect’ of operational staff consciously withdrawing from the wing landings and their colleagues into the psychological safety of their offices and their own insularity. In this context, a ‘grandiose’ concept of selfhood27 filled the space of reality. Prison officers focused upon themselves, and their own feelings, to the detriment of their work and prisoner needs. As Sennett has explained, a ‘person dwelling in this self-absorbed state is going to feel anxiety when reality intrudes, a threatened loss of self rather than an enrichment of self’.28 In the absence of adequate protective reassurance from NOMS, by having paid attention to staff interests and concerns during the competition, staff reduced their anxiety by restoring feelings of control through avoiding prisoners and the challenges of exercising ‘dynamic authority’.29 Staff preferred either to adhere strictly to the rules (rather than exercising their discretion more ‘dynamically’ in light of organisational goals and global prisoner interests), or to delegate power inappropriately and dangerously to some prisoners on their wings. This self-centred withdrawal was reflected in the deterioration of survey scores on ‘traditional culture’ (a negative orientation towards prisoners and managers) and ‘punitiveness’ (feelings of cynicism and resentment towards prisoners) among uniformed staff (from 2.61 to 2.19 and 2.59 to 2.49 respectively). It seemed to explain the statistically significant decrease in ‘policing and security’30 that was reported through prisoners’ surveys and that was historically one of Birmingham’s strengths, from 3.13 in December

25 For further on dimension scoring see A Liebling, B Schmidt, B Crewe, K Auty, R Armstrong, T Akoensi, D Kant, A Ludlow and A Ievins, ‘Birmingham Prison: the Transition from Public to Private Sector and its Impact on Staff and Prisoner Quality of Life – a Three Year Study’ (under review with MOJ). 26 C Matheson, ‘The motivation of public sector employees: an outline of six orientations to work’ (2012) 44 Administration & Society 207, 215. 27 This is a psychoanalytical term that describes a state of mind whereby an individual positions himself at the centre of the world and expels what is unpleasurable and preserves what is pleasurable. The term originates from the work of Heinz Kohut in The Analysis of the Self (New York: International Universities Press, 1971). 28 Sennett, Together: The Rituals, Pleasures and Politics of Cooperation, n 12, 166–67, 184 and 186–87. 29 On the concept of dynamic authority see A Liebling, ‘Distinctions and distinctiveness in the work of prison officers: legitimacy and authority revisited’ (2011) 8(6) European Journal of Criminology 484. 30 Examples of poor practice in this dimension include lax use of discretion by staff to appease prisoners, poor surveillance and intelligence gathering by staff and naive staff attitudes to prisoner behaviour.

204 Reintegrating the Market in Society 2011 to 2.97 in December 2012 (n=142, p