It seems extraordinary to me, that hot on the heels of conference having, so recently, resoundingly rejected the marketization of the NHS and the concept of outsourcing to “any willing provider” – Nick Clegg and Danny Alexander yet again embrace an approach to delivering public services in the Open Public Services White Paper that flies in the face of Lib Dem policy and values. What is deeply shocking to me and I am sure many of you, is the assertion in the introduction that:
We are not the first government to realise the power of open public services, others have tried it, for example social enterprise providers of community healthcare and the introduction of Academies in the last decade. But we are the first government to introduce these principles systematically across the entire public sector, and it is one of the fundamental areas of shared belief that brought together the two parties that form the Coalition Government. [Open Public Services 1.24 (my emphasis)]
Now, of course, as I pointed out to an astonished Federal Policy Committee a couple of weeks ago, there are aspects of this White Paper that I actually like, that no self respecting Lib Dem could argue with – and therein lies the rub. For those of us who reject its clear underlying philosophy – public good – private bad – we are confronted with the sound notion of localism – of people having more of a say in the services that are all too often “done unto them” – of an approach that in theory is all about empowerment. Involving service users more in both the design and development of their service has to be a good thing if it is more than a tick box exercise and doesn’t result in greater fragmentation of services for others.
So what’s not to like – and what am I getting my brightly coloured orange knickers in a twist about?
Well – how long have you got?! Firstly I urge you to go and read the white paper. It is long, turgid and repetitive – but is a must read for anyone who really cares about the future of public services in this country. As many commentators have pointed out, there isn’t that much new, it builds on New Labour’s equally Tory philosophy of “if it moves privatise it”.
What is different is the scale. Nothing, or almost nothing, is off limits. And frankly, if you take the philosophy to its logical conclusion, one wonders why even the police and security services are excluded.
So, firstly, I have a real problem with the underlying belief, namely that competition always drives up quality and drives down prices. This may be true when it comes to baked beans, but I challenge the idea that this is the case when it comes to delivering front line services, particularly to vulnerable people – when the choices in reality will be taken by the same “bureaucrats” this paper so decries, often people who have absolutely no clue about procurement.
The paper waxes lyrical about mutuals, social enterprises and the voluntary sector, but as Peter Holbrook, CEO of the Social Enterprise Coalition points out ‘We are concerned the proposed reforms will create an unequal playing field in which social enterprises are unable to compete with large private sector providers for public sector contract. Social enterprises often do not have the capital or scale required to compete with big private businesses in open markets.’ And third sector organisations, particularly small local ones, do not have the capital to take on “payment by results” contracts.
Secondly, the paper makes a bold claim that its reason d’être is to deliver –
…better services for less money, improve public service productivity and stimulate innovation to drive the wider growth of the UK economy. [Open Public Services 1.11.]
Really, and where is the evidence?
Thirdly, the notion that this is about increasing choice. Again this is based on the idea that choice is the Holy Grail that everyone desires. Actually what most people want is to know that there is a basic standard of quality that all public services meet and frankly why shouldn’t we all expect our schools, hospitals, social services, to be of a high quality. And this notion is made all the more ironic when it is being lauded at the same time as the local government is cutting the very advice services on school admissions established to help parents make their case while the government is currently consulting on getting rid of the duty to provide that service altogether!
And finally the notion, noble as it may be, that this is about putting “people in the driving seat, not politicians and bureaucrats”. Er……………last time I looked politicians and bureaucrats were people………or maybe I’m missing something? Yet again, for whatever bizarre reason, politicians are decrying the very democratic system that put them there.
Now, I quite understand that there will be fellow Lib Dems who write off my views as a hysterical outburst from a closet socialist…………I have to say very clearly my perspective is a pragmatic not an ideological one. As the former Chief Exec of my local authority said, the reason he wanted to keep services in house was because it was actually cheaper. And it’s not rocket science. If a private company takes on a service that is not based on mass production – the only way it can deliver the service and make a profit for its share holders is by either cutting terms and conditions or cutting quality. It also becomes less accountable (and I have personal experience of this). It can promise the earth during the procurement process and then not quite deliver. Unless there is a major failure no commissioner is going to go through the potentially expensive headache of pulling out of let’s say a 5 year contract.
So let’s flash forward to this brave new world. In local government we have a slimmed down core staff. Those who were formally managing the services are now commissioning them. The frontline workers have been outsourced to companies who will have to employ new managers to manage them (duplication or what?). Inevitably the staff who have been TUPE’d will find that at the earliest opportunity their new bosses will seek to replace them with staff on worse terms or conditions – something that applies whether that is a private company or a charity.
And where is my evidence I hear you cry? Well, having spent most of my life in public service I have quite a lot of experience. Not least in the now (thankfully) defunct Beds CC. Bedfordshire saw itself as a trail blazer in outsourcing virtually everything. Not only did it find itself the worst performing county council in the country, it ended up in a 10 year contract for virtually all the back office functions that it embarrassingly had to buy itself out of only a couple of years down the line because it was failing.
But for me the best (or worst) example of the impact of outsourcing was the school meals service. Information that was regarded as commercially confidential (a great wheeze for stopping any of us knowing exactly what is going on) showed that the reason the private cleaning company that had taken on the service could knock £1 million off the bill and still make a profit was because they were spending over a third less on food!
Tomorrow on Lib Dem Voice, I’ll share my solutions for improving public services.
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39 Comments
“As the former Chief Exec of my local authority said, the reason he wanted to keep services in house was because it was actually cheaper.”
If it cheaper in house (and of the right quality) it will stay there – whats the problem?
“If a private company takes on a service that is not based on mass production – the only way it can deliver the service and make a profit for its share holders is by either cutting terms and conditions or cutting quality”
No they can be more efficient – ie deliver the same outputs with less inputs
The contracts need to ensure that quality is kept up – apart from that what does it matter who delivers a service?
I am within local govt. There are a number of functions that could in my opinion be commissioned instead of directly delivered by LA’s. As a manager who has been involved with cross departmental issues I do see a lot of wastage particularly in terms of tackling staff issues, sickness management and clumsy working practices. However, there are also services where having a consistent member of staff dealing with a matter, being able to spend the time with that service user and having someone prepared to go “above and beyond” their role will make a huge positive impact to someone receiving that service. It is that well-being aspect that I think will be lost. We know for example that if we can put effort/ resources in early on when a child is say 5 he will have far better outcomes than if this is left till 8 or 10. However unless those making decision makers take into account the costs on other services were the problem left until he was 10, they may not appreciate the full value of that service implemented at 5.
I would like to see the public sector making better use of shared services. In my opinion from meetings I have attended part of the reason why this hasn’t been properly embraced has been as a result of self interest. If you are a senior manager looking to share services with that other LA and they have a senior manager too, then one of you is likely to be out of a job or in a less senior role. People can be very vocal about other peoples services though. I particularly think that the costs of IT in the public sector haven’t been properly scrutinised. I have worked at a number and all have used different systems, different procedures. I feel that this is the sort of area that could save costs in the public sector
At least you declared your own provider interest right near the end.
I voted for you for FPC last time out so there would be a diverse range of voices on it; don’t expect me to do the same next time now that you have revealed your true position.
Quoth Simon M – “what does it matter who delivers a service?” Why, Simon, it matters very much. A private sector provider, operating under market conditions and rules, does so according to its core function – maximise profit/ minimise loss. This is in stark contrast to market-free public services whose core function is to attend to the public’s needs and wellbeing. In addition, it’s perfectly clear that a revenue stream diverted into a private sector provider will result in profits, executive salaries and bonuses, and even shareholder dividend. Now, I dont know about you but knowing that some of the money and I and others pay in taxes (of all kinds) is going to enrich corporate entities set my teeth on edge, and puts an edge in my voice. Your original comment – what does it matter etc – indicates to me a certain disregard for the opinion of the general public, along the lines of ‘dont you worry your silly little head about these complex things’. So in short, it matters – and you’re wrong.
A wider point can be made here as well, with reference to the Open Public Services white paper. On page 8 of the document one sentence sticks out – “The rationale for this shift in power to people is simple: to provide people with the best possible services for the money spent.” Combine this with a previous sentence, “Public services should be open to a range of providers” and what you are left with this is: yes, you can have great local public services, wonderful parks and gardens, terrific sport facilities, top-notch health clinics, excellent schools, regular rubbish collections, and even well-maintained roads – just as long as someone can figure out a way to make a tidy profit out of it. Until then, well, just shuffle off back to your hovels and work on your CVs.
“yes, you can have great local public services, wonderful parks and gardens, terrific sport facilities, top-notch health clinics, excellent schools, regular rubbish collections, and even well-maintained roads – just as long as someone can figure out a way to make a tidy profit out of it.”
Well, what it more likely means is that you can have poor public services provided by a private pseudo-monopoly whose only priority is profit, and the closest you’ll get to having any say about how your taxes are spent is speaking to a customer “service” representative in a call centre in India.
Mike , your argument appears to be that you rather have a service more expensively by the public sector than cheaper by the private sector because someone might (gasp) make a profit. What an odd view.
Indeed – the whole idea of competition is there in the name – bidders compete to provide a service and the best is chosen – if and where that’s the public sector then it’s clear that the public sector is the best provider; where it’s not, why prefer second best or worse over another option that you’ve got?
Surely it is the quality of the service rather the ability of a private sector provider to cut the wages and conditions of staff in order to deliver a cheaper service that should matter. We want the best, not the cheapest. Libertarians like Simon fail to see that liberty is first and foremost about minimum oppression, not minimum government.
It would be a mistake to focus at the level of individual service providers in assessing these proposals.
Even assuming that alternative providers were to deliver services that were genuinely more efficient and effective rather than cheaper/poorer quality, the transaction costs and overheads associated with the proposed system are going to be enormous. There’s a proposal for a larger role for the Ombudsman, obligations to create sufficient provider diversity at local level (even when a basic understanding of industrial economics would indicate that that is going to be inefficient), systems of structured advocacy for those who can’t exercise choice, a system for dealing with a proposed mandatory right to redress, an enhanced role for regulators to enforce a wider range of newly specified minimum standards, a system for monitoring continuity arrangements, a range of mechanisms for involvement and consultation at a variety of spatial scales, requirements to publish cost data for all public procurement (presumably overriding any private contractors claim that such information is commercially confidential), etc. etc.
Put all that back in to the mix and the chances of any of this saving money, when judged from the perspective of the whole system, are rather less than certain. Labour’s Best Value system was rightly criticised for being a belt and braces approach in which service improvements came at a high price in terms of monitoring and inspection. The proposed system is just as problematic.
Of course, some of the individual initiatives might be good in themselves, regardless of how much money they save. But it would be good to be up front about that.
And that is to say nothing about the fact that the White Paper doesn’t provide any sort of convincing rationale for why all this is necessary. It’s attempted justification confuses very simple distinctions such as equality of opportunity and equality of outcome. It starts from the premise that this is all about equality of opportunity but never clarifies equality of which opportunities. And, anyway, it then goes on to set out a list of policy proposals that can in no obvious way be linked to comprehensively enhancing equality of opportunity along any dimension except for local areas having a greater right to shape what happens locally. Many of the proposals will increase local diversity as a result of local discretion, which will do the opposite of enhancing equality of opportunity in service provision for individual citizens. It ascribes all inequalities of social outcomes entirely to differences in public service quality, which is clearly nonsense. It doesn’t really say anything about how all this change is all supposed to be delivered when there is less money around. It doesn’t say anything about important issues such as how administrative justice is to be assured from new innovative providers with no track record in public service provision. And there are plenty more holes in it.
In fact, the whole thing is a complete jumble.
@Adrian
There’s clearly a balance to e struck. I could have super thick lemon scented refuse sacks dropped off every time my bins are emptied – that would be better; however saving money on emptying my bins leaves more left over for services I care more about – like maintaining the school buildings or preventing pot holes in the roads (I am afterall a Lib Dem!). It’s not just about cost, nor just about quality, but about value (social and political) for money.
So will these private companies be accountable via the FOI act, or will they be able to have secrecy, being private and all that? Will owners of private prisons bribe judges for longer and harsher sentences like in the US where private prisons are a big business? Will private police forces be fully accountable and open? Will the privatised welfare companies treat their “customers” with the utmost respect and care and put people before profit? What about the private military contractors who did such a bloody good job in Iraq (pun intended).
We’ve just seen the failure of the private sector in two different care home companies. Profit was indeed put before people. What will stop these providers of essential public services from stripping everything to the bone to maximise profit?
Sorry, call me an old fashioned dinosaur but I believe certain things are too essential, too important to be left to profit. I firmly believe in public service and the common good. There is a place for a strong private sector and profits to be made. But I also believe in an equally strong public sector where any profits are put back in the pot or invested further for the good of the people. Call me a socialist, I don’t care. You might call it that, I call it “making sure how much money one has in his pocket is not a barrier to one’s life or life chances.”
The one thing that Simon fails to mention is that public services are often not able to be put into a legally binding contract in an easy manner. In particular, they can’t be easily unwound if there is a change of government policy; instead substantial payments have to be made to buy them out. Most of those stories you hear about £200 to put a new notice up are true. It’s not simply becuse the contracts entered into aren’t good enough; it’s that they can’t be good enough to protect the public.
Simon may be happy with this. I never will be.
Andrew, super thick lemon scented refuse sacks would not necessarily be the best. Super thick refuse sacks collected by staff whose wages have to be topped up by benefits would not necessarily be the cheapest. I agree a balance has to be struck but it should never be at the expense of quality or at the cost of the weakest.
@Adrian
The Internet doubts your speculation that competition has left binmen with poverty salaries:
http://www.mysalary.co.uk/average-salary/Bin_Man_4360
I know I’m still being moderated.
How many of you posting here have had to live a life of poverty? The way some of you talk about poverty, I can tell you’ve never experienced it first hand. I see no evidence that you truly understand what it is like being dirt poor. The very fact you are willing to sell out our public services shows this to be true. You simply don’t understand that most working-class people such as myself would rather have our local hospital be brilliant rather than have more choice. We want our bins collected on a regular basis, and we don’t want to have to shop around to find the best price. Will you soon be making us “compare the market” for private police services?
How many people here have had to choose between heating your home or buying food in the winter? I could be wrong but in the 6 months or so I’ve been posting on here I have seen very little to show that LibDems who post have much experience with true poverty.
@Simon McGrath
“If it cheaper in house (and of the right quality) it will stay there – whats the problem?”
The white paper does not allow the status quo to persist. Indeed, section 5.4 says (on open commissioning):
“In those areas, commissioners should: consult on and be challenged by potential providers from all sectors on the future shape of service; seek and fully consider a minimum of three providers, from whichever sector, when they contract for services; and transparently link payment to results.”
also
My emphasis. At the election Cameron said “if you think that you can do a public service better than the current provider, we will allow you to do it” this is the new “right to challenge”. Note that it is not necessarily about cost, just if a provider happens to think it could do better. This will be a disaster with the lawyers of the big public service providers (eg Serco and Capita) trawling the country and demanding that they be given the right to provide council services.
“No they can be more efficient – ie deliver the same outputs with less inputs”
Indeed, and the public sector can be too. But, as we are finding with the NHS right now, the public sector will not be allowed to provide the service because that is deemed “anti-competitive”.
What will ensure that commissioners make the right choice? Well have a read of section 5.25 which I assume was put in as a joke:
hahahaha “independent” hahahaha surely this is a civil servant having a laugh?
The contracts need to ensure that quality is kept up – apart from that what does it matter who delivers a service?
Accountability. There is currently no requirement that private and voluntary sector organisations have board meetings in public – unlike public sector bodies. They are not subject to FoI either. This means that they could be making decisions on all kinds of working practices and business deals that would not be allowed in the public sector (say, dumping public waste off a West African coast? procuring consumables made in sweatshops in the far east? etc) and the public will not know about it. The only criteria – so you say – is that the quality of the service delivered here “is kept up”. Not good enough, in my book.
Andrew Tennant
“you declared your own provider interest….don’t expect me to (vote for you) … now that you have revealed your true position”
So you would drive everybody emplyed in the public sector out of the Lib Dems, would you? Along with all the “refugees from Labour”, who Clegg has already said should leave?
@adrian – I am not a libertarian.
“Surely it is the quality of the service rather the ability of a private sector provider to cut the wages and conditions of staff in order to deliver a cheaper service that should matter”
But under TUPE they cant cut the wages.
@squuedle “We want our bins collected on a regular basis, and we don’t want to have to shop around to find the best price. ”
You don’t have to shop around, the council does it for you to find the best deal (ie one which pays properly, has good quality and is cheapest)
@david Allen “Andrew Tennant
“you declared your own provider interest….don’t expect me to (vote for you) … now that you have revealed your true position”
So you would drive everybody emplyed in the public sector out of the Lib Dems, would you? Along with all the “refugees from Labour”, who Clegg has already said should leave?”
I think it may be Linda’s sitting on labour party committees rather than working in the public sector that andrew objects to
GPs are private – is this a problem? You can choose one (within some odd regulations) that suits you. Is this a problem? Should it be banned? If it is allowable, why shouldn’t other things be open to the private sector, under contract, and why shouldn’t we allow individuals to decide which provider to use, just as they choose their GP?
I work in a university. All universities are technically private (mine is a company limited by guarantee). But I don’t see why students should be forced to come to my university if others can offer better courses, more cheaply, or offer tuition in ways that work better for them. Should we force all students to go to their local state owned univ? Of course not.
There should not be an automatic presumption in favour public or private provision. We should use whatever works best.
Of course private provision is not always better than state provision. But similarly it is rubbish to claim that state provision is always better, nor to make bigoted statements that non-state providers only care about profit and state provision is entirely altruistic and devoted to the public good. Those simplistic communist style slogans do nothing to contribute to a reasonable debate about our public services.
If State services are superior then they should be easily able to prove themselves in an open and competitive process against any willing provider. I can see an essential debate as to how we make sure that competitive process is done properly to ensure that we do get the highest quality for money rather than merely the cash cheapest services.
But beyond that I can see no argument for defending pure state monopoly. Liberals should be favour of winning on merit. The state provision of services should be able to defend itself in fair competition. I can’t see how liberals can defend the automatic presumption of state monopoly.
@David Allen
Until very recently I worked in the public sector – I actively encouraged Lib Dem votes rather than chasing them away as you propose. Simon’s assessment is reasonably accurate – I wouldn’t vote for Linda again on the basis of her centralising illiberal bias, and her co-operation with an opposing party which is against both social and economic liberalism.
@Stephen W
Very well put – now why don’t some here get it?
It seems to me that those against are concerned that privatisation will be encouraged for the sale of it, or even forced due to some of the clauses shown above.
If we made sure that the bill merely gave councils freedom to determine which provider they used with no top down centralising restrictions in either direction, wouldn’t that satisfy everyone in our party?
That way it would give democratically elected councils the decision on what providor to use, and whether they did that rationally or ideologically then it would be up to their local voters to hold them to account for it.
Everyone happy with that?
@Daniel Henry – that would be fine if it were what was intended and were possible. But it isn’t. The proposals are to move as much power as possible away from local councis.
Re ‘ . . Those who were formally managing the services are now commissioning them . . ‘
‘Formerly is meant, I think?
@ Alex
Then it sounds like we need to make changes to the bill. First we need to get our party to agree with what we want from this bill and then make sure it don’t go through without our amendments.
Personally, I think we should be giving councils maximum power and responsibly with minimal restrictions. Perhaps a 2 year limit on contacts to prevent a council causing a mess that the next one can’t reverse.
Andrew, I’ll trump your internet survey of just two people filling in a salary amount who may or may not be refuse collectors against adverts for actual posts, like the one in the link, that seem to average £7.50 an hour. http://www.jobisjob.co.uk/okehampton-devon/gap-personnel/refuse-loader/job-offer-ygi6lj33ik7yd7xdxgp6imo3le
Simon, only a libertarian would believe in TUPE. My brother was TUPE’d and while his wages remained the same the company stopped replacing staff that left leaving him and his fellow workers with more to do. When vacancies were eventually filled they were filled by people on lower terms and conditions. Costs were cut at the expense of those working on the front line whose morale and sickness rates increased, whose benefit claims rose, and whose disposable income in the local economy fell. The only people who really gained were the shareholders.
That should have read – whose moreal fell and sickness rates increased while benefit claims rose,
morale not moreal.
Please, can we get away from this sterile debate of ‘is the public or is the private sector better?’ Both can fail. Both, unchallenged get complacent. That’s why it’s wrong to have either a public sector monopoly or a private sector one. Privatisation is where you have a private sector monopoly. Something Nick Clegg has rightly attacked.
Those in-house teams that are continually improving and making each pound of taxpayers’ money go further will have nothing to fear from competition. But if their overheads are increasing, and productivity falling, why should they be allowed to get away with that? Think of the people relying on services, often the most vulnerable in society – why let them suffer because somebody’s decided that public sector workers should be placed on a pedestal and go unchallenged?
Linda Jack is wrong to say that “frontline workers have been outsourced to companies who will have to employ new managers to manage them (duplication or what?)”. The best procurements involved integrated management teams and improved services.
@lee baker – but the aspiration behind the White Paper is to do away with in-house provision, regardless of whether it is efficient or not. It aims to enforce a purchaser provider split and for the provider arm to become an independent entity. In-house provision is to be consigned to history under this model.
“Please, can we get away from this sterile debate of ‘is the public or is the private sector better?’”
I don’t think the debate is that simple. The public v private competition is rather one-sided, isn’t it? It’s all very well to say that “those in-house teams that are continually improving and making each pound of taxpayers’ money go further will have nothing to fear from competition.” First of all, they may find themselves up against a private competitor who offers an artificially low price to get their foot in the door and get the in-house team disbanded, with the long term objective of driving down standards and costs and driving up prices and profits once the opposition has been dismantled. Secondly, even if the in-house team survive their first challenge, five years later the rules will have changed and the challenge can be carried out all over again.
It then gets to look like the competition between housing developers and their opponents. If a developer tries ten planning applications and loses nine times out of ten, then the developer has won. It’s much the same when the in-house provider tries to survive in “open public services”.
Like most, I have only had time to skim through the White Paper. The introduction, signed by Cameron and Clegg, is unexceptional. It speaks only of the need for more localism, greater efficiencies, increasing the voice of the citizen vs. the provider etc. The introduction does not specifically mention outsourcing as a preferable means of improving efficiency or quality of service, neither does it mention the false equality of rights when a multi-billion pound corporation is allowed, encouraged indeed, to demand an elected body outsource a service to a profit-making body.
The White Paper itself, authored by Oliver Letwin, is peppered, as other contributors have said, with assertions that place private providers above public providers, and choice of services for those who wish to exercise it, above quality of service for those who need it.
The content of the White Paper goes far beyond anything that was in the Coalition Agreement and nowhere in our Party’s Manifesto is there anything that could justify its theses. It is an entirely Conservative-inspired document, totally ideological and tendentious. You do not have to be on the so-called ‘left’ to see this – you only have to be a Liberal Democrat. So why, in Heaven’s name, is Danny Alexander, who does not have Ministerial responsibility for Oliver Letwin, quoted first in the Cabinet Office press release on the White Paper, and was on Radio 4 last week praising, inter-alia, the Academies programme which our Party is pledged to oppose.
Apart from associating our Party with all the neo-con ‘smaller state’ nonsense of the White Paper, Alexander knows that 90% of its provisions won’t affect his constituents, who receive Education, Health and Local Government services via the Scottish Government. One can only assume the Tories have offered him a nice safe seat in the Home Counties in 2015, because I can’t imagine him getting a Liberal Democrat nomination in a winnable seat (if there are any) in Scotland.
Some more thoughts:
http://alexsarchives.wordpress.com/2011/07/17/open-public-services-market-fundamentalism-with-a-thin-sugar-coating/
@alexmarsh – nope, you’re wrong, it’s not the end of the in-house provider. You can have a purchaser-provider split with an in-house team bidding for the work to deliver outcomes asked for by the local authority commissioners.
I know a good in-house highways team is thinking of becoming a mutual. That will keep the work in the hands of the people with local knowledge, and money will be re-invested back into the service. What’s not to like?
@davidallen, nope, you’re wrong, no bids are judged purely on price these days, the dark days of cost-cutting, cheap as chips private sector bids were rightly consigned to the dustbin of history when ‘Best Value’ replaced Compulsory Competitive Tendering. That’s not to say that there isn’t private sector failure, but there’s public sector failure everywhere to see too. The mindset that private sector people are evil maniacs waiting in the wings to destroy everything we love and hold dear is just daft.
@lee baker – you can certainly have the sort of arrangement you describe but I don’t think that once the in-house team has converted to an independent social enterprise it fits the conventional definition of “in-house” any longer.