THE BLOG

Can Private Sector Methods Work in the Public Sector?

05/08/2013 10:23 BST | Updated 02/10/2013 10:12 BST

Many say the public sector is "unmanageable" by private-sector dictums because, first, "democratic accountability" requires working with transparency, and, second, "happiness or fairness" cannot be measured as simply as profit. Charitably, this accepts without analysis convenient arguments given by the ineffective part of the public-sector. Uncharitably, this is laziness disguised as science.

Private-sector products and services face the ultimate degree of scrutiny by consumers and the community. If Tesco's meat is not liked by consumers, it would go out of business. If its stores were not accepted by the local community it would not make the "profit" that many simplistically attribute as the end of all that the private-sector contributes. Going back to all the decisions that businesses make before selling, they probably face greater scrutiny by staff, management, directors and shareholders. By definition those decisions are crucial because the business' survival depends on them. Usually the public sector has no such existential threat affecting its "workings". In practice compliance with the Freedom of Information Act is the only legislative difference. Any familiarity with what passes for providing answers to questions posed under this Act would disabuse anyone of the notion that the public sector faces more than cosmetic scrutiny. Of course a lot of time in the public sector goes in so-called stakeholder consultation or examination of "policy" objectives or instruments. But that is a voluntary, cultural practice. More on this later.

Ask people in the private-sector if they can actually measure happiness or fairness, and they would show you that they do it day in and day out. Its consumers have to feel better-off to come back. They have to feel they have been treated fairly. That does not mean that someone who pays more cannot get a better service but that consumers accept up-front that service levels can be pegged to price paid. Apple measures intensively if its products made people happier; no wonder it keeps trying to bring out newer or simpler versions. M&S used to have a no-questions-asked returns policy; that anyone will say is more than fair.

The non-lazy and inconvenient answer for the public sector is to learn from the private-sector that approval of just two people matters - customers and shareholders. For that to happen sustainably clear targets to make customers satisfied so that either they come back again or recommend to others is crucial. Clarity means if necessary making trade-offs transparently between "stakeholders" and customers, between priority customers and less-priority customers. The Passport Office thus offers a "priority", paid-for service and can be measured on delivery, rather than hiding behind the cloak of public-sector complexity. Similarly, instead of seeing a government grant as the shareholder the public-sector should see satisfying tax-payers as its objective and have a clear target by which it would satisfy that. Can it say that like the BBC it has delivered better programmes than the private-sector? Or can it show like the Cabinet Office that its gov.uk web services are an improvement on what passed for government's internet contact with citizens? Imagine what would happen if each public-sector entity needed an annual vote of confidence by citizens, so that it faced what the private-sector faces all the time - threat to survival.

The public sector is noble in intent. The way to make it noble in practice is to crush its complexity by clear and simple customer and shareholder targets.