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Better Public Services Require More Imagination Than Another Call for More Outsourcing

28/04/2013 11:47 BST | Updated 27/06/2013 10:12 BST

'Better Services for the Public - a roadmap for a revolution' was published last week by Policy Exchange. Supposedly, it sets out the road map for 'a radical shift of control from government, to people and communities'.

Actually, it reads more like a manifesto for wholesale outsourcing, particularly to the business sector - and large businesses at that. This is a stale argument.

I think the main problem is that it conflates 'public service reform' with an expansion of competition and 'markets'. And it presumes that an increased use of business sector and social sector providers will automatically lead to enhanced choice for service users, service improvement and better value for the taxpayers' money. 'Reform', can and does take many forms. It should be focused on improved outcomes rather an obsession with who delivers the service.

In reality, 'public service reform' does, can and has taken many forms over the years. And indeed, the 'public sector' (however one chooses to define it) has, in my view, consistently and successfully demonstrated its ability to reform and improve without necessarily outsourcing to the business sector. Co-design and co-production; employee and user co-ops; more cross-agency and sector collaboration; choice where this is feasible; and much more so do not require traditional outsourcing.

I also find the claims that the major blocks to public service reform are the public sector trade unions to be both unfair and wrong. The report challenges the right of trade unions to seek protection for their members, and conspicuously fails to recognise the many occasions when unions have worked with public, social and business sector employers to enact major changes for the benefit of service users. The failure to reform more and faster rests with a range of stakeholders including governments

The report would have the reader believe that opaqueness is predominant in the public sector and claims that opening services up to competition must and will lead to greater transparency. This is a ridiculous statement given that in reality and far too often, it is the case that providers and their public sector clients hide behind 'commercial in confidence'.

Yes - I agree that there is every reason to press for greater transparency and accountability irrespective of who provides publicly funded public services. So I would have been far more impressed had this report been pressing to: extend the Freedom of Information Act to all providers across all sectors; require all providers to give evidence when called to do so by political scrutiny bodies; and to be clear and open about ownership and business models. Conspicuously, however, the report steers clear of such recommendations.

In most cases where the public sector has introduced 'competition' into public service provision, there have not been and never will be 'real' markets. The process is much more akin to supply chain management than to market-based user choice. There are some limited exceptions such as elements of social care where the market is more akin to a retail one, but in the main, markets such as those in social care do require public sector management and regulation. The fact is that public services do not lend themselves to non-regulated free markets. That is why they are public services!

Of course some services such as telecommunications are not better in the public sector but only if and when properly regulated. However, this report is not about telecommunications.

An unbiased appraisal of the results of outsourcing of a whole range of public services will conclude that the outcome has been mixed, both in terms of quality and cost savings. This is not to argue that in the right circumstances, outsourcing cannot make a difference and add value. Far from it, and any public sector organisation considering outsourcing should approach the topic with an open mind and a good dose of pragmatism. New forms of business-public sector collaboration are required that do not build in inflexibility or which are based on inappropriate risk allocation.

Surely this report should have laid out the context in a more analytical approach and less biased manner, and noting that: increasingly, it is recognised that public services contribute more than a service to their users; they are more than just another consumer product; they have a wider public value and contribute to the well-being of society as whole, as well as their direct users; and that some of these services are regulatory whilst some are concerned with enforcement, so they are far from a being a consumer model.

When procuring public services from alternative providers, the best of the public sector typically takes into account a range of social, economic and environmental issues and seeks to maximise social value. This is played down and almost ignored in "Better Public Services".

The reality is that many social, economic and environmental problems and needs require collaboration and partnership between a number of providers and agencies from the public, social and business sectors. Consequently, there would be a real risk of greater fragmentation of services and provision if there were to be an emphasis on competition in preference to collaboration; and if providers were not required to collaborate. This aspect of public service is inadequately addressed in the report.

"Better Public Services" also grossly underplays the importance of the social sector and its contribution to public services. The sector can add social value in ways that the business and public sectors simply cannot. And it can partner with both the public and the business sectors. Also SMEs have a major role to play, especially if public procurement is to contribute to local economic growth. With that in mind, one needs to remember that the social sector's and SME's contributions are not best secured through cumbersome and expensive competition and contracting processes.

This report calls for a legal requirement for a 'purchaser-provider' split in every public service where there could be alternative providers. Ridiculous and absurd! This would be wholly impractical whilst at the same time, denying the right of organisations and places to make decisions which are most appropriate for them, their service users and the wider community. Even more ludicrous is the idea that quotas could be introduced (or is it 'imposed'?) to 'seed' a mixed economy. Such a move would undermine both localism and responsible commissioning and management. It would also stifle innovation and lead to a culture of 'compliance' rather than creativity and personal initiative. Surely the lessons of Compulsory Competitive Tendering (CCT) should have been learnt by now? I am surprised that these lessons and that the fact that most of the better business sector providers welcomed the demise of CCT are not acknowledged in the report.

Ironically if adopted these recommendations would potentially undermine constructive collaboration between the public, business and social sectors. It could lead to less positive and innovative outsourcing.

With a bold rhetoric flourish, "Better Public Services" asserts "the state's right to monopoly provision or to restrict people's choice of any provider must be legally swept away". Of course, for many services, choice works and is absolutely appropriate. However, this is no more a panacea than outsourcing. I wonder why the author and the report are so determined to open up more and more services to 'markets'? As I have argued previously in this article, many of these so-called 'markets' are not actually markets as we know them in retail and other sectors. For some services, there is no competitive supply market. And for others, a non-state solution may simply be inappropriate as, in a few rare instances, the report itself recognises.

The report does raise some important issues about the quality of commissioning and procurement. It makes the case for considering how and where to extend choice, though without much attention to personalisation, which is often possible without a choice of provider. These are to the reports credit - though more business sector procurement recruits may not be the right answer.

"Better Public Services" favours payments by results, although as the Work Programme has demonstrated, when applied incorrectly, these can lead to the wrong outcomes. They can also exclude the voluntary and wider social sector from bidding and playing their role. Again, I just wish that the report had opted for a pragmatic approach being preferable to a doctrinaire one. Excellent strategic commissioning, not a 'market based' ideology, should determine what should be delivered, how, on what terms and by whom.

The report rightly exposes the failure of successive government policies to explain why they have sought to introduce business and social sector providers - motivations including: a desire to enhance capacity; challenge state monopoly; offer individual and collective choice; tackle under-performance; or to drive down costs. A clearer and more consistent narrative is essential. New models are also needed. This is where intellectual energy needs to be applied rather than pushing for more traditional outsourcing.

However, this report does not provide such a narrative and nor does it address how the state will or should address failure if all or most services have been outsourced. The state can outsource delivery but it cannot outsource ultimate risk or accountability. Some services are too important to be allowed to fail, so some mechanism would be required to protect services for the public and to avoid a moral hazard situation.

We do need better public services - of that there is no doubt. However, I am not convinced that many of the prescriptions in "Better Public Services" will deliver them. Personally, I would prefer to see a more considered and above all, pragmatic approach - one that is focused on the needs and choices of service users and the wider communities, and is based on the pursuit of social value and public accountability. The ideological and policy drivers should be about securing social justice, community benefits and outcomes, accountability and above all citizens, their needs and aspirations.