Robert Armour argues arms-length organisations created by councils is a failed experiment
Unison, Scotland’s biggest public sector union, is claiming victory this week after Glasgow Council announced two of its biggest arms-length external organisations (Aleos) – Cordia and Community Safety Glasgow – were brought back in house.
Smelling blood, it is now calling for the council’s seven other Aleos to follow suit in a bid to reinstall the pay and conditions the 6,500 staff of these organisations have lost. While that might be a long time coming, we are now seeing the Aleo experiment coming to its natural end.
Glasgow always claimed the need for Aleos was because it was burdened by huge historical debt, a problem that it couldn’t avoid by virtue of the fact it was Scotland’s biggest council. So its solution was to jettison responsibility of the debt by creating these new set-ups.
Spurred on by the relative success of Glasgow Housing Association, which took on the council’s entire housing stock on the promise £1bn debt would be wiped out by the UK Treasury, council bosses began to believe relinquishing statutory responsibilities via Aleos would herald a new beginning.
But they didn’t. The boards of these Aleos and many like them, mostly have a top-heavy compliment of council officials as directors. In effect councils still run them but when it comes to things like equal pay awards they think it isn't the councils' responsibility. The reality is, they still are. So they've become mired in controversy and disputes, taking up time, cash and resources.
Even the council-run Aleos created to generate jobs and regenerate housing have failed miserably.
Take Riverside Inverclyde, an arm’s-length external organisation set up by Inverclyde Council and Scottish Enterprise in 2006 to carry out regeneration work and to create jobs in the locality. The organisation received £60m from Inverclyde Council, the Scottish government and Scottish Enterprise but an external review of its activities found that it had met only 7% of its target to find 2,600 people jobs and just 5% of its target to build 2,285 homes.
And let’s not forget Jobs and Business Glasgow (JBG), an Aleo of Glasgow City Council, which was forced to shed one third of its staff in 2016 and was subject to a police investigation for misspending millions of taxpayers’ cash.
As most Aleo's have charity status, the failure of this type of body has reflected badly on the majority of registered charities in Scotland. The third sector is quite naturally sceptical, not least because councils are using these organisations to avoid paying business rates.
In effect councils still run them but when it comes to things like equal pay awards they suddenly aren’t the councils' responsibility.
The public has a perception of what a charity is and if you were to ask them, I’m sure large companies controlled by local authorities providing services you pay with through your council tax would not be what they had in mind.
Charities are supposed to offer public benefit and be independent from government, yet often these agencies are neither. Aleos also siphon away funding from national government, lottery and trust funds which is designed for charities, not the public sector.
What is especially galling about this is that so much cash has been wasted on these pseudo-charities when genuine charities could have been doing the same work far better and more cost effectively.
Hopefully this Glasgow City Council move will be the start of a complete re-evalution of Aleo projects in every local authority in Scotland.