Wednesday, 30 November 2011

Social Media and the Future of Higher Education

Social media are not going to enhance higher education- they are going to completely transform the relationship between student and teacher and shift the balance of power in the education system.
Social media such as Facebook have already changed many of the aspects of how we relate to other people, who we can form relationships with and the types of things we share with them. Many businesses are now using social media to interact with their customers in different ways and use them as brand ambassadors or answer their concerns and complaints in a much more direct way. Entertainers and writers are also using social media to interact with their public in more direct ways. The other day I got a direct tweet from an author whose books I read in repsonse to a tweet I made about the work of another author. That type of interaction would have been highly unlikely a few years ago.
The education industry ought to be at the forefront of embracing new technologies. Sadly this has not been the case and I think the reason for this is fear about how transformative and disruptive the technology is. However, HE institutions will have to use social media or suffer serious consequnces.
To illustrate why I think this will happen I will give the example of downloads and the music industry. In 1994 I participate in an amazing concert in London by the artist Todd Rundren. The concert tied in to his No World Order album, an interactive piece of music released on a computer disc and an interactive cd which aloowed the listener to make their own remixes of the material and control the mood tempo etc of the music. For those of you are, like me, social work professionals this could be looked at as a form of personalisation- the listener being in control rather the artist. Rundgren figured that new technology would completely change the balance of power and control between the producer and consumer and that neither artist nor publisher would be able to control how people experienced or distributed music. Rather than fight this, he embraced its potential. The concert itself was completely interactive with members of the audience being allowed on stage to dance and play instruments. At one of the shows in America he apparently decided to leave the stage for a while and be partof the audience while audience members ran the show- playing his songs.A little later before the emergence of Napster, he tried to interest record companies in releasing legal downloads. They refused point blank stating that it would interfere with their CD sales. Now of course there are no CD sales and most of these record companies are in bankrupcy or liquidation.
A similar fate faces many HE institutions if they do not start modernising now.
Two forces are currently facing HE in the UK. One is the threat of competition from the private sector who are going to be able to offer degrees. The other is a fall off of student numbers because of the high tuition fees which will be charged as a result of these fees being moved from a loan/taxpayer split to being completely financed by loans to the student. Social media can either offer a vehicle for the first threat or a way for Universities to stave off the second threat if they embrace it.
Currently higher edication is one of the few industries which operate in much the same way as it did in ancient Greece. Certainly, new technologies such as Blackboard have been introduced. However, they are always considered to be in support of traditional forms of learning rather than a replacement for them. Furthermore, the quality of the technology used in education is inferior to that which people enjoy in other areas of their lives. I know of lecturers who have successfully carried out much more lively debates with their students on Twitter than they have managed to in the discussuion forums on Blackboard. People are used to frictionless connectivity and so an interface which requires people to navigate through about 6 pages before finding that nobody is online is not going to be very popular.
Social media have the opportunity to connect educators instantly with their students and also connect them and their students to a wider body of authors, educators, students in other institutions and (for social workcourses) the wider public and people who use social services. They also have the ability to connect HE instituions with all of their former allumni and other partners such as employers, providers of placements etc. If a tool like Facebook or Twitter was offered to HE institutions for the first time they would proabably be willing to pay a lot of money for it. And yet these tools are available now and are completely free. Why are they not being taken advantage of?
The issue for many educators is the lack of control which they will have in these debates and discussions or what ultimately is done with the content if it is available to outside parties. However all of these outside parties are stakeholders of education and they have a legitimate right to take part in debates about good poractice without their participation being stagemanaged and controlled. Students also have the right to take advantage of the educational opportunities available to them through free interaction with others.
Certainly, there will be risks assocated with embracing new media. However, these risks are overwhelmingly trumped by the lost opportunities from not engaging with them.
For HE providers the greatest risk in the next 10 years will come from new private competitors. These competitors will not have the overheads which Universities currently have. They will be lean operations using high quality syndicated material delivered by podcasts and backed up with instant contact to tutors through mobiles and skype. Students will connect with and meet each other through social media. These institutions will focus their resources on aspects of the student experience which add value (flexibility, accessibility, interactivity) and ignore those aspects which are not perceived as adding value.
If you think this sounds far fetched then I suggest that you read the article 'Disrupting Higher Education' which appeared in Harvard Business Review July/August 2011 issue. It states: "State institutions are gradually being defunded by taxpayers. Liberal Arts Colleges are struggling for survival. Upstart for-profit colleges are, despite mis-steps on the rise." Essentially, the changes I am describing are already ocuring in the USA. Prestigious Ivy League Universities are able to retain their traditional approach but HE institutions which do not have their USPs are being overtaken by ditital-savvy alternatives. According to the article tuition fees are on a downward trajectory as these new hi- tech forms of education are much cheaper. I would suggest that the coalition Govt in the U.K. has deliberately transferred the burden of fees onto students so that they will drive prices down. This change is partnered with a liberalisation of who can actually provide HE. While fees remain high this will provide opportunities for private institutions to come in under existing market prices and still make profits.
Existing HE providers cannot afford to look on at social media and tut tut about loss of control,loss of privacy etc. Young people have already weighed up these issues and concluded that benefits outweigh the disadvantages. Consumers made a similar calculation in relation to music downloads and decided that they did not want their choice restricted, even though this often meant breaking the law before the advent of legal downloads.
It need not be a bad outcome, however, for our 'non-Ivy League' Universities. They do have real strengths in terms of their engagement with local communities and local industries, and in their reputation for social inclusion and expanding opportunities. However, they will need to build on these strengths by modernising how they do business, reducing costs, and embravcing technologoies which will enhance their students' experience of HE.
Social media will radically transform the relationship between lecturer and student. They will blur the boundary of where the classroom starts and finishes, who takes part in a student's educational experience and who holds the expertise and power. This is its stength and a challenge to engage with rather than something to fear.
I am very excited about this. I did, after all, go into education to help people to think for themselves and continue my own experience as a learner.
Every other aspect of our lives has changed radically as a result of technology-education just has some catching up to do-but the psychological changes and the change in power relationships will be more profound than the changes in technology.

Sunday, 13 November 2011

Mutualisation and Privitisation of the Public Services

David Cameron is quoted on the Independent website today as stating that he wants to take 1 million workers out of the public sector and into employee owned mutuals. Should we be afraid-very afraid- or is this a wonderful opportunity?
Well, in better times, under different circumstances it might be a good opportunity- However, in the present climate I am very skeptical.
The theory behind mutuals is that if workers are independent of large scale public bodies then they can be freed uo to be more creative and less cautious. Also, since the workers are essentially working for themselves they will be more committed and more willing to pitch in to get things done- relationships with service users will improve and sickness absence will go down. There are, apparently, examples of this happening.
However,there are a number of issues which should, rightly make employees cautious about any transfer of their employment rights.

1. Trust. The present Govt has been hostile towards the public sector-rhetoric about dependency cultures and gold-plated pensions reveal a cynicism about the public sector and the work which people in the public sector do.

2. Previous form on privitisation. Previous bouts of privitisation under the conservatives and new labour have been ways of achieving wage reductions by the back door. Services which are contracted out by local authorities such as home care are done so at hourly rates so low that they could only be achieved by paying the workers very low wages. By contracting out these services local Govt can avoid being accused of paying low wages since the workers are not on their payroll. The cost of human services is largely made up of labor costs so the only way of significantly reducing the cost of services is by paying workers less. Workers have some grounds for being suspicious that any transfer in employment will involve cutting back their pay and conditions.

3. The present economic situation. This is not a good time to be launching any type of business, mutual or otherwise whose main customer is the Government or customers who are paid for by the Government. In times of expansion, we might have confidence that there would be continued and/or increasing demand for our services. A period of contraction in the public sector as a result of swingeing cuts is not the best time to be starting any new venture- even if it is a continuation of an ecisting service. At the moment many voluntary sector and private sector providers are going to the wall. Not because they are inefficient or bloated but simply because public services are being pared back to the bone and then cut even more. The present eurozone crisis can only make things worse. The Government is making progress on the deficit and as it is still committed to deficit reduction worse cuts lie ahead.

4. Lack of security. Mutuals may intially win contracts to provide services but there is no guarantee that they will these contracts again when they come uo for renegotiation several years later. Workers may find that these lose out to another mutual or a private provider and find themselves forced to work for a new employer under poorer conditions. They could be moving into privitisation by the back door.

5. Lack of incentives. Running a private business such as a restaurant, a shop or samll manufacturing business involves high risk. A large percentage of businesses close down often with their owners losing everything they own. The only reason that people take on such a high risk is that if they are successful then they (and/or their shareholders)will reap large rewards. Public sector employment, by contrast is normally a low risk undertaking. The worst that can happen is that you are made redundant and hopefully you will find another job quickly. The only downside is that you are not paid very much. Social enterprises and mutuals offer the worst of both types of endeavour. They offer the high risks of private enterprise with the low returns of public sector employment. Owners of public interest companies (social enterprises) are not allowed to sell the business which they have built up at a profit or take out more than a certain amout out of the business relative to the turnover. I don't know what restrictions exist for mutuals but I doubt very much that they will receive any additional recompense for shouldering the added risk and responsibility or the worry and strain it will put on their families. Bankers get obscene profits for taking risks with other people's money. Public sector workers are expected to accept a pat on the back as reward for putting their own careers and finances on the line.

6. Lack of flexibility. If people in a public service form a mutual what do they do if they see a new way to grow their services or invest to improve how they deliver their services? I read a story recently about an employee owned mutual provider in the health service. The article suggested that they only had one months salary for all the workers in the bank at any one time. How can such an oirganisation invest in improving its business model to cope with change or expand what it offers? Private businesses can borrow money from banks or the stock market to expand or change their focus. What opportunities will there be for mutuals to raise money to grow and change? Will they be frozen in time, forced to continue in the same form as they were when they were first spun off, until the service they offer is no longer appropriate to the times? Maybe I don't fully understand mutuals but nothing I have read so far has answerted these questions for me.

7. Are mutuals and social enterprises the right business models for public services? I suspect the Government is pushing these models forward becuse they are considered more politically acceptable than outright privitisation. In taking this path the Government could be headed for even more trouble in the long term. Most people who work in health and social care have no aspiration to be business owners of any kind. They come to work because they enjoy working with people and there is nothing wrong with that.
Ministers are constantly trotting the example of the John Lewis partnership. The reason for this is that there are few co-operatives who are market leaders in their field. There are a growing number of successful companies who have more level structures and more democrative and participative types of management- but that is not the same as being employee owned.
I strongly suspect the mutualism agenda is a fig leaf of repectability for privitisation rather than a genuine belief that it is the best way forward.

Anyway- that was my slighly jaded take on mutuals and social enterprises. Its only a personal opinion and perhaps there is a lot I just don't know aboiut mutuals and social enterprises. I supect I probably know, more, however, than many of the poor public sector workers who will have to make decvisons about mocving their employment if Cameron gets his way.

Maybe I will be proved wrong and there will be lots of very happy people celebrating the day they got spun off from the council/NHS.What do you think?

Tuesday, 8 November 2011

Are you Part of the 'Dependency Culture'?

I read an interesting article in today's Financial Times. I am probably one of the few social workers who regularly reads this esteemed publication. My interest probably stems from two factors. Firstly, my background in accountancy and economics in a former existence. Secondly, I don't like reading newspapers that tell me what I ought to be thinking even if I might generally agree with what they are saying. This is the main reason why I don't tend to read the Guardian unless I have to.The FT sticks to the facts and when it does give an opinion it is based on logical analysis- not prejudice, preconceived ideas, or a desire to please a particular crowd.
Please read it sometime-you might be surpised.
Anyway the piece today is 'Benefit cuts set to carve a divisive path.' The article concerns the potential damage to local economies in the north by the Government's decision to cut back on incapacity benefit. It look at the system of medical testing, cuts to benefit and also the meagre chances of people whom have been on benefits for years of actually getting a job in hard pressed northern cities.The article is reasonably sympathetic and addresses some important elements of the incapacity benefit issue.
What I want to draw attention to specifically in this post is a comment by the Leader of Barnsley council in the article. He is paraphrased as saying that it is vital that the town 'moves away from a dependency culture where half the working population rely on the state, either as public sector workers or benfits claimants.'
Since the article uses parapharasing rather than direct quotes I can't be sure exactly how this was expressed by the council leader. However, the sentiment- that working for the public sector is equivalent to claiming benefits and that both are a form of dependency is one which I hear increasingly and one which makes me very angry. I don't just hear it from conservative politicians- I even hear people from the north who work for the public sector saying that we are too 'dependent' on the public sector for employment. Taking up a public sector job ought to be seen as a way of serving one's community- and indeed many people in public service very much see it that way. However, within this particular discourse it is seen as sign of fecklessness at best and moral turpitude at worst. The reason there are/were a lot of public sector jobs in the north partly came as a result of the previous Government deciding to relocate jobs out of London to save money and to provide employment in areas devastated by the loss of traditional industries at the hands of previous Tory governments. People who took up these posts did so in good faith and with an intention of doing a worthwhile job well. Working long hours as a nurse, a social worker or a civil servant is not a form of dependency.
We curently have a form of rhetoric which suggests that only people who work in the private sector represent the real economy. This is a distortion of the truth. From this point of view a barman is doing a worthwhile job whereas a nurse is a drain on the economy. The discourse which suggests that public sector employment is a form of dependency serves the political purpose of greasing the wheels for attacking people's pensions and conditions of employment. Advocates of discourse analysis regard speech as a form of action- it has a purpose beyond the actual surface meaning of the words.
With regard to benefit claimants- many people on incapacity benefit ended up on this benefit as a result of attempts by earlier governments to reduce unemployment figures by having them declared unfit for work. Having them now declared fit for work fits the new political purpose of reducing spending on benefits. Many very vulnerable people will experience a great deal of distress as they are treated as political footballs.
We can't control the messages that politicians send out in their rhetoric. We might want to challenge them, however, through letters pages and social media. What we certainly should not do is swallow the rhetoric and start using it ourselves.
Serving the public is something to be proud of and people who claim beneiofts ought ot be the subject of persecution. Neither deserve to be labelled as part of a 'dependency culture'.

Access to Social Networking is a Human Rights Issue

In my job as a social work lecturer I had a conversation the other day about Facebook and employment. Several of the students told me they had become aware of problems associated with use of Facebook and people's employment. One was a situation in which someone had made a comment which might have been seen to be critical of the persons employer. In this case the employer had not been mentioned on Facebook. I think the employer had a legitimate issue about it not being appropriate to put info about one's employment on Facebook. However, I think their response was disproportionate to the employee's error oif judgement. More concerning, was the fact that a number of people who work in social care are apparently being told that they should not have Facebbok accounts at all. A certain amount of caution and use of privacy settings is appropriate due to the nature of social work and the fact that making too much of one's own information publicly accessible is a potential risk for employees. There is also the fact that people should not discuss details of their work or their attitudes to it in a forum where they (and by extension their employer and/or service users) can be identified.
However, nothwithstanding the above, banning people from using Facebook and social networking is a serious violation of people's civil liberties and could have serious negative consequences for their ability to socialise and have a normal life outside work., As the number of people with Facebbok accounts mushrooms it is becoming a mainstream way of communicating with people. Facebook is a faster, easier and more effective way of communicating with friends than email, telephone or amy other communication platform. It allows people to talk in real time, share photos, share one's present location, arrange outings, share photos,inform large numbers of people news at the same time, share conversations and leave comments,and act as a portal to other platforms such as this blog. Even more importantly it allows all these things to be done at the same time with minimal hassle. It is genuinely frictionless communication. It has great potential for business and professional networking which so far has hardly been exploited. It is a better vehicle for sharing examples of good practice and promoting collaboration than any alternative conduits available in most businesses. On the commercial front many businesses are considering scaling down their websites in favour of using Facebook as main platform for building rlationships with their customers. For purely social purposes it allows people with similar interests to make new friends across countries and time zones and develop new communities electonically.
Much of the moral panic and technophobia surrounding Facebook relates to the perceived lack of privacy. These comments miss the point completely. Facebook is like any other form of communication- it can be as private or as public as you like. If you are standing in a busy street you can shout a message to everyone on the street or whisper a message to the person beside you. The analogy with a street, is I think very appropriate. Banning people from Facebook is like forbidding them to walk out on the street or go to the local pub. It is a form of digital house arrest. I find myself building closer links with people who use Facebook and find it more difficult to keep up with people who aren't. When people ask me about a trip or something I have been doing I find it slightly irritating that they haven't accessed the information I have put up electronically. The divide between people who use it and people who don't is going to become a new digital divide- with people who don't use social networking being more and more excluded. Being banned from social networking is a form of digital house arrest- you are banned from taking part in an important part of the social environment. It is in fact a denial of human rights to take part in the life of one's community.
Of course, eventually these social work/social care employers will have to capitulate- just as they had to in relation to accessing the internet at work. It is a shame, however, that parts of the sector has to start from a position of Luddism and fear- rather than a willingness to embrace the potential of powerful technologies.
Meanwhile I think it is just a matter of time before someone challenges the issue on a human rights basis.

Wednesday, 20 July 2011

Murdoch- Just How Gullible Are You

Murdoch Jr and Sr and Reb Brooks made their appearances in Parliament yesterday. Far from being the necktie party that many expected, the Murdoch's have come out of this with a soaraway share price and some sympathy for a kindly old man who got pied.
Lets examine some of the ridiculous ideas which have emerged from the not very penetrating questioning.
This man is paid £7 million dollars a year. He is not a figurehead president for life who is paid a retainer. He is CEO and manages the company day to day. He could not retain his position if he did not have the confidence of shareholders.
He has been regularly received in Downing Street by this and a string of previous Prime Ministers.
We got the impression from R Brooks that journalists can simply pay anyone (by cash or some other means not yet specified) bungs for information and the Editor does not know what sort of people are being paid or what they are being paid for.
This is a highly successful company with profits in the billions. If there was really such financial lax governance it would have been cleaned out in a few days.
Rupert murdoch said that News of the World is a tiny part of his whole company as if this is a valid reason why he did not get to know about the hacking.
In a properly run company no hazard or incidence of unsafe practice from a loose carpet to a dodgy smoke detector is too small to ignore. As the recent incidents have proven, illegal and bad practice in any part of your company can get you into serious trouble. This is why in any modern public or private organisation people at all levels report anything they have serious concerns about to their superiors.
The idea that Rupert Murdoch was having phone conversations with editors and nobody thought that it was worth mentioning cases of phone hacking beggars belief.
This is strict law is there to ensure the highest standards of ethics and governance are present in all parts of a company. No responsible corporation can afford to ignore this law or fail to seriously address any suggestion that they may be guilty of wrongdoing. Ignorance is no defence. The idea that News Corp executives have no scrutinised every detail of this case beggars belief. THEY ARE NOT AMATUERS!!!
No comment necessary.
In his evidence Murdoch Jr said that this was partly because if the matter had gone to court then they would have had to have paid several thousands of pounds in addition to the any pay out for the costs of the victims' solicitors. The Select Committee seemed to have accepted this. However, the whole point is that the victims did not have several hundreds of thousands of pounds legal fees because News International settled out of court. They are asking us to believe that they gave people money willingly for damages they did not sustain. We are being told that this was not hush money but rather, was a case of generosity or ignorance about what level of damages was reasonable.
James Murdoch said in his evidence that they did not carry out further investigation of phone hacking because they were assured by solicitors and by the Police that there was no need to investigate further.
This is plain ridiculous. It is not up to the Police or external solicitors to tell people that there are problems in their own company. Murdoch Senior made a number of references to external governance on ethics. Boards can only advise on issues that are brought to their atttention and Police only investigate after an offence has happened and it has come to their attention. The responsibility for what went on in this company is with the Managers.

Anyone who has ever had any contact with the media will know that this is nonsense. Even the most trivial story on a local rag is checked for legality.
Prepare for the revelation that it was the office cat wot did it.

The media attention has now refocussed on David Cameron. Much as I dislike Cameron's Govt, I don't think he has done anything that is worse than the previous 4 Prime Ministers in relation currying favour with the Murdoch media empire. In fact he has actually shown a willingness to split with the past and introduce transparency and acccountability. And this is of course this is why he will have to go- to make way for the next corporate appointee puppet.

Look at the Dow Jones. Shares in News Corp have rallied today. The invisible hand of the market understands what is happening. This would not be the case if shareholders really thought that the company was run by people who were senile or incompetent. Murdoch stock is up and Cameron stock is down and the credibility of our Police force and our Parliament have been shattered.

Sounds like good business.

Thursday, 23 June 2011

Public Sector Workers Need a New Type of Strike to Win Pensions Battle

Writing in The Times recently, Matthew Parish stated that public sector workers will not win the battle over changes to their pensions through striking. The basis for his view was the comments which readers have been posting on the end of online newspaper articles. I had noticed these postings myself. They are not very favourable to public sector workers. Of course people who write on newspaper websites are not necessarily representative of the wider public. However, large numbers of negative comments appear across websites representing a range of political opinions. Even articles on the Guardian website have negative postings. The coalition Government has been pumping out propaganda for ages about gold plated public pensions and it sems to have sunk into the popular consciousness. Contrast this with Greece. Their public sector workers have much more privileges than we do in the U.K. However, the population as a whole blame the Government and the banks for their problems. Please bear in mind that I am basing my observations only on news items. However, from what I can see workers in different sectors do not appear to gave turned on each other.
This lack of popular support in the U.K. is a major obstacle for public sector workers. A second obstacle is fear. Local authorities are likely to lose about a quarter of their workforces over the next four years. People are already experiencing wage freezes and are worried about their jobs. They may feel that poorer pension provision is better than no job. They may also feel that they cannot afford financially to take part in a protracted strike which may end up in defeat. Many other workers are concerned about the effect of public spending cuts on the people they work with and will not want to add to this by withdrawing services.
Then there is the Government's need to look tough. Ed Balls suggested that the Tories were spoiling for a fight and that public sector workers would be falling into a trap by striking. He is possibly right. However, he offers no suggestions for what public sector workers ought to do. Does he think they should just rollover and accept these attacks on their terms and conditions? The Labour party has no answers and no leadership for public sector workers. This is why I don't pay a political levy.
So- Is it hopeless? I would say definately not. However there needs to be new strategies.
Firstly, I feel there needs to be a change in accent to how the arguments are presented to the public. Changes in public sector pensions are just part of a larger attack on public services. This includes cuts in spending on health and social care, moves towards greater privitisation, ill-thought out health reforms and possible reductions in the responsibilities of local authorities. Unions need to make common cause with service users, patients, and the public at large. Protests on pensions needs to be part of a wider protest about cuts in services, protests against job losses etc.
Secondly, I feel that a new type of strike is needed. This would be a strike which does not have any of the chartacteristics of strikes as we know them. The type of strike I am suggesting would have no negative impacts on the public or service users. It would involve no loss of money for workers or any other type of loss. In fact, it would leave them better off. It would not require a ballot. It would not be illegal or break any laws. Anyone could join in-even people who were not in the public service or in the unions.It would however, have a very dramatic effect on the Government and the financial markets. It would result in front page headlines and send the Conservatives and their friends in the city into a spin.
So what is this strike and how would it work?
What I am suggesting is a strike on spending. One day a week every public sector worker in the country should refuse to spend any money other than their bus/train fare to work (or up to £5 worth of petrol), a pint of milk and a sandwich. We could call, this #spendingstrikethursday if we decided to do it on a Thursday. On this day public sector workers would not go shopping for clothes, groceries, books, haircuts, outings to cinema or restaurants, holiday bookings, online spending or anything else which is not essential for that day. Obviously rent, mortgage, utilities and anything on a direct debit would still be paid.
The effect of this spending strike would be a massive blow to the economic figures. The snow last winter was extimated to cost the economy £1.2 billion per day. A soending strike would have a similiar effect. Of course, some spending would just be delayed one day but much spending would not take place at all. For example nobody is going to order two days worth of coffees the next day and a lot of impulse purchases would not happen. Also,many impulse purchases would not take place. For workers the spending strike days allow them to save money to go into a war chest for their family to help get them through the recession or to save for something special. There would also be benfits for people's health from sweets and alcohol not purchased. Over time it may result in people changing lifestyle habits as they see that they can get through the day without buying lots of coffee or chocolate and that they can enjoy saving some money.
However, the biggest impact of the spending strike will be on on the Government and the city. The only thing which the coalition appear to be concerned about is how Britain is regarded by credit ratings agencies and the financial markets. A protracted spending strike of one or two days per week would blow a hole under the water in the Government's hopes for the kind of results which suggest an economic recovery. This would be front page in FT. It would also send Britain's retail and service sector (which makes up a very large part of the economy) into despair. There would be fear on the part of big business that people's habits would change permanaently and they would get less used to spending lots of money and being addicted to consumerism. Workers to wear badges stating that they were takimg part in the spending strike and they could call in at or phone places that they would normally spend money in that day to explain why they had withdrawn their purchasing power.
One possible objection to this plan would be that people might think that public sector workers were sabotaging the economy. However, the defense against this criticism is that public sector workers are just demonstrating what is going to happen when they lose their jobs or enter the retirement in poverty. Another objection is that people will not have the discipline not to spend. However, a spending strike involves a lot less hardship that going on normal strike.
Today's FT carries a story that the Bank of England is considering another round of quantitiative easing. This is a sign of desperation. It shows that Osborne's economic medicine is not working. Economic growth is in the doldrums. #spendingstrikethursday could push economic growth figures over the edge into double dip recession territory. The Government would fear it a lot more than a normal strike. Workers have nothing at all to lose. Anyone who supports public services can join in. It could become part of a wider protest against current Govt policies and form part of a move to unite workers in different sectors and industries against the politics of austerity. After all, an increase in public spending could involve increased investment in public sector construction projects and other measures to get people back into work- so there is something in it for proivate sector workers to join in and demand a change in course by the Government.
If you like this idea and think it has potential then tweet a link to this article, tweet about #spendingstrikethursday,suggest the idea to your union rep, talk about it on Facebook etc.
Please let me know what you think of this idea and leave a comment.

Sunday, 5 June 2011

Important Lesson From the Southern Cross care home crisis

The current crisis at Southern Cross is a cause for great concern and has been the subject of much debate. It has come at a time when there is huge concern about the health and social care sector being opened up to more competition,concern about the quality of care in residential care and hospitals and concern about NHS Hospital Trusts in financial crisis.
Unfortunately (though predictably) much of the debate about these important issues involves simplistic arguments about the unsuitability of applying the 'profit motive' to social care. These arguments ignore the fact that the majority of people involved in private sector social care (including most of the managers) are employees and never see any profit. Like their public sector counterparts they are likely to be motivated by wanting to provide a good service to the people they care for. Certainly, they could forced to cut corners by owners to save money- but this is equally true of people working for cash strapped public services.
There ARE reasons to be concerned about the private sector involvement in social care. However, to examine them requires a much more nuanced approach than that on display in some parts of the media.
The current problems with Southern Cross would appear to derive from the business model which the company has been saddled with since 2007.
Southern Cross was purchased in 2004 for £162 million by an American private equity firm called Blackstone. It was floated in 2007 on the stockmarket with a valuation of £423 million. The business model was called sale and leaseback. The company would sell off its valuable property assets, (ie the buildings which housed the care homes) to property investors. These investors apparently include the Qatar Investment Authority and other wealthy landlords who were guaranteed steeply rising returns. The careccompany would then lease back the properties from their rich landlords with 30 year leases which required them to pay ever increasing amounts of money in rent each year. This arrangement assumed that the demand for residential care would increase year on year and that local authorities would be willing to continue to pay increasing amounts of money for residential care.
The money that the company made from the property sales was used as finance for the purchase of additional care homes which were then in turn sold and leased back. As long as property values kept rising and there was the ongoing income from new residents the flow of money continued.
Blackstone made a 300% return on investment from this deal.Four executives at Southern Cross sold their entire holding of the company in December 2007 when the share price was £5.50 per share netting them personally a combined £35 million. The share price plunged just 6 months later and stood at £0.063 per share on 3rd June 2011.
Now the company cannot afford to go on paying the steep rents and local authorities are facing the prospect of having to rehome large numbers of vulnerable older in the event of a collapse.
The Southern Cross collapse was a result of high risk business strategy which had reaped huge profits for a small number of people and a private equity firm. The model was vulnerable to economic and political changes. In any case it would have been cheaper to have funded expansion from loans than from sale and leaseback of peperty.
The long term fallout from this is going to place a great deal of anxiety for vulnerable older people and their relatives, local authorities, council tax payers and current investors.
This is likely to be especially felt in the north east where the care home chain has a strong presence. So far central Govt has shown very little leadership. Their localism agenda seeming to allow them to bail out of any responsibility for anything which they consider to be a 'local' issue. But Southern Cross is not a local issue. It is a regional and a national issue. It requires a national solution and new strategies in dealing with issues of private sector involvement in public sector provision.
I believe the lessons from Southern Cross are as follows:
1. Private sector involvement is not a panacea for the high costs of providing decent health and social care.Research by the Financial Times (4th June 2011 p2)suggests that PFI intiatives are imposing unstainably high costs on a number of hospital trusts accross the country. PFI was once thought to be an easy way iof raising money for capital projects but it is now being realised that PFI schemes have huge long term cost implications.
There is currently thought being given to new methods of funding of services such as social impact bonds. The advocates of these funding mechanisms suggest that they will offer reduced risk to the public sector and benefits for investors. However, all of these funding models seem to work on the assumption that it is possible to simultaneously save public money and generate good returns for investors. How these two objectives can co-exist has never been explained to my satisfaction and I challenge anyone to explain how this can happen.
2. Greater regulation and oversight is needed of private involvement in health and social care. This is needed not just in oversight of the quality of care but also in the business models used by providers. The Govt is rightly seeking to reduce some of the pre-qualification checks required of small and medium entrprises in bidding for public sector work. These checks on financial solvency etc. are often far too onerous for people bidding for small pieces of short term work. However, for the long term commitment required of companies who are going to care for vulnerable people, a higher degree of scrutiny is needed. Central Govt needs to act so that the interests of the city for short term profit do not overide the needs of vulnerable people for high quality and secure care. The Southern Cross business model should not have been allowed to operate.
3. A greater understanding of business models and finance is needed for all people involved in social care from social workers to senior managers. As long as local and central Govt are responsible for care of older people they will have to keep a careful watch on who is providing care and how it is being provided. It is not good enough just assume that existing regulatory mechanisms are sufficient.
4. Providing services to the public sector is a high risk endeavour. Many local authority staff are being encouraged to set up social entrprises and co-ops at a time when public sector bodies are cash strapped. These workers should be aware of the risks of being in busiess and the hazards which political and economic change hold for suppliers to the public sector. The Southern Cross business model was built on assumptions about the continued flow of new customers and year on year rises in charges. These have turned out to be ill-founded assumptions.
5. The old adage about not investing in anything you don't understand should apply here. I doubt that so many investors would have put money into the Southern Cross flotation of they understood the business model or just how risky it was. It is likely that the investors included pension funds. British institutional investors seem to be asleep at the wheel a lot. The fact that the executives sold their entire holdings shortly after the flotation should have raised some eyebrows.
6. A greater degree of financial literacy is needed amongst academics and social care managers. As this blog has hopefully illustrated the issues behind the Southern Cross debacle are complex. The need for debate is not served by reducing the issues to the level of public sector=good vs private sector=bad. Involvement of the private sector in health and social care is undoubtedly here to stay. Arguments about the viability of desireability of individual situations needs to be based on their own merits and not on prejudice towards the business sector. Neither are the needs of vulnerable people well served by the view that the private sector is always more efficient or better value for money than public sector provision. Whatever benefits have been achieved in the past by using Southern Cross as a provider are likely to be outweighed by the costs of a bail-out or a disasterous bankrupcy situation.

Southern Cross, the problems associated with PFI and the fragile state of many social care providers in the current austerity period suggest that private sector involvement in social care involves high levels of risk for both Government and investors alike. It is certainly not a panacea or easy solution for covering the rising costs of social care. Critically, it can involve high risks for the most vulnerable people in our society.

Factual information for this post was obtained from articles by Simon Mundy, Sarah O'Conner, Sally Gainsbury, Nicholas Timmins, Sarah Gordon, Jim Pickard and Elizabeth Rigby in the Financial Times on 1st and 4th June 2011. Opinions are my own and do not necessarilly reflect those of any body whom I have worked for or been associated with now or in the past.

Wednesday, 11 May 2011

Data in Today's FT reveal that reduction in health and social care spending is a serious threat to the economy as a whole

A report in today (11/05/11) reveals that the UK economy is in more serious danger of stagnating than was earlier thought. This is because the most productive sectors are the one's which are contracting the most. Notably the financial services sector is deleveraging at a rapid rate due to the current risk averse climate and the need for retrenchment.
Of interest, however, is the role of the health and social care sector. The report on p3 shows that this sector grew at 28.9% in the 2000-2008 period. Although this slowed to growth of 8.6% in the last quarter of 2010 it was labelled by the FT as the most recession proof area of the economy. This will now however, have changed markedly in the light of public sector cuts with very rapid reductions in spend in social care and reduction in health care in real terms.
Signs that the service sector improved in the first qurter of 2011 are now thought to be due to last minute run off spending from Govt depts before the cuts.
Allied to this is the policy of reducing central control on how public services are managed, organised and measured. Many experienced managers have been lost from health and social care during recent rounds of cutbacks. Another article on p4 of the same FT raises doubts about whether a Govt can bring about rapid service transformation and cost reduction in an environment of reducing management infrasturcture. Service transformation and intelligent cost reduction (as opposed to indiscriminate salami slicing) require skills such as project management and lean management. They need good accurate data and good managers to drive forward innovation and change.
Anecdotal evidence suggests that waiting lists are increasing in the face of the removal of targets.
KPMG are quoted on p4 in a separate article as saying that companies which supply the public sector are on a 'knife edge'.
The Govt is in serious danger of failing in its programme of public sector reform and seriously damaging the economy in the process.

Monday, 21 March 2011

A Very Middle Class Recession

There is a very interesting article in today's (21st March 2011) Financial Times. It is about the so called 'squeezed middle' of the U.K. Specifically it uses the term 'Austerity Britain's ultimate losers'to describe middle class public sector workers in the north of England. It gives a case study of a Newcastle City Council worker who is having to re-apply for her current Policy job. Sadly I am very familiar with the situation of people like her. I am doing a regional job and daily meet people who are losing their job, having to re-apply for their job, having their job downgraded or who are simply worried and uncertain. Some local authorities have put all their staff on redundancy notice so that they can later decide who to actually make redundant. As you can imagine this will not be doing much for staff morale or indeed sonsumer confidence- more on that later. It is not just local authority jobs which are being lost.Regional bodies are going or shedding staff including most of the staff at Government Office North East (G.O.N.E.). Agencies are awash with highly skilled middle age public sector workers. There are few new private sector jobs which can mop up all these public sector employees. A public sector manager is going to be overqualified for a job at Starbucks.
Most of these workers will be people who have devoted their whole career to public service, some because it was the best use of their talents or seemed like a good career and many because they also care passionately about public service. Unfortunately their job worries are being compounded by a campaign in rags such as the Daily Mail to characterise such people as bureauocrats with 'non jobs'. This tactic- together with the campaign against 'gold plated' public sector pensions are part of a deliberate strategy by the coalition and thge right wing press to poison the general public against public sector workers and soften people up to prevent them resisting job cuts.
There is a particularly nasty element to it. In the early days of the colaition Norman Tebbit wrote a sinister piece in The Times (I think) in which he said that front line nurses and social workers who read The Express had nothing to fear. Rather it was The Guardian reading classes who should be afraid of the coming cuts. This is of course not altogether true. All parts of the public sector will face massive cuts in pay, stafffing and conditions. However, the present Government seems to reseve a particular scorn for the the white collar part of the public sector workforce. I am not a huge fan of The Guardian but I probably fit into the demographic that Tebbit wants to tackle- bleeeding heart middle class liberal types who are interested in social issues and who work in Government or not for profit. There is an element to this which is of a kind of class war of the right wing upper classes against the left wing middle classes.
If one was inclined towards conspiracy theories one might wonder whether these workers need to be eliminated because they represent an intellectual buffer zone between the front line and senior management and therefore could be a barrier to rampant privitisation. However, I think the real reason is proabably that the present Government are incredibly niaive and don't realise how difficult it is going to be to achieve the widescale reforms and transformation they want to bring about in the public sector without any kind of middle management and without many of the senior managers who are going.
There is a huge brain drain currently going on in the public sector with many experienced people leaving the workforce for good. Some are taking early retirement. I know of one council manager who is buying a newsagent and another who is buying a sandwich shop. Interestingly, I don't know any who are setting up businesses to supply the public sector.
In the north east the public sector crisis has major implications for the wider economy. In some North East towns public sector workers make up almost 50% of the workforce. People who think they may lose their jobs become very risk averse about big purchases such as a new car or recarpeting their house. When I work at home I get a new type of hawker round the doors- People from up-market kitchen showrooms, roofing contractors, you name it - selling door to door with special offers. They deserve points for trying to make sales but it also smacks of desperate times. In the north east much of the middle class is accounted for pubclic sector managers. As these people become worried about their finances it will spell bad news for the housing market and falling house prives will erode confidence even more.
The Thatcher Government devastated the working class communities of the north east. The coalition are hell bent on detroying the North East's middle class.

This is my first blog in about a year. I am going to write another soon about my experiences in the local Govt. sector over the past year. I promise it will be a lot more chearful than this one. I am going back to the higher education sector on 1st April and I am going to try to blog daily from then.