History repeating

The government’s revolutionary open public services white paper actually covered some very familiar ground. The coalition should learn from its predecessor’s mistakes, says Patrick Watson in EducationInvestor (September 2011)

July’s Open Public Services white paper promised more choice, more accountability, more diversity and fairer access to services. Two reactions sprang immediately to my mind. The first was, what’s not to like from a plan that offers such clear benefits for consumers and suppliers alike? The second, though, was a strong sense of déjà vu.

We have, after all, heard all this before. The previous Labour government committed itself to public services reform. Centrally driven reforms, aimed at moving services from poor to adequate, were supposed to be followed by bottom-up ones, which would personalise services and deliver more choice. But something got lost in translation. If the poetry, in politics, lies in generating ideas, then the prose lies in delivering them, and for all its talk Labour ended up with half-baked reforms with producer interests still firmly entrenched. One has to ask, then, will these coalition reforms be any different?

Some of the proposals are certainly eye-catching. Every adult receiving social care will have an individual, personal budget by 2013. Also on the cards are personal budgets for those with chronic health problems, for children with special needs, and those in housing for vulnerable people. Funding will follow the pupil in schools, the student in further education, the child in care and the patient in the NHS. Consumers will be empowered to choose where the money is spent.

In order to improve access, the government will introduce a pupil premium, offering extra funding for pupils from disadvantaged backgrounds, with the money available increasing over time. There will be easier access to data, too, so that people can make informed choices about services. Crucially, there will be a new system of redress, provided through the beefed-up powers of ombudsmen, who will step in when choice is denied. In short, the reforms envisage putting the needs of the consumer of the service first.

So far, so good. But these reforms will come to nothing if the government fails to open up the supply side, encouraging entry from both the private and not for profit sectors. That means removing barriers to market entry, while simultaneously ensuring that the market is seen to be both fair and transparent. In this respect, the previous government failed to deliver. Labour, indeed, went so far as to ignore a blue print for change it had itself commissioned from PwC in 2006, ‘Overarching Report on Children’s Services Markets’.

This report has as much relevance today as it did at the time, and its findings could help this government to get its reform proposals off the drawing board. It found that some local authorities were neither meeting the needs of children and parents, nor delivering value-for-money’, and listed a number of barriers to effective market operation. These included a lack of transparency on costs; a shortage of experienced commissioners; limited dialogue between suppliers and commissioners; inconsistent application of national policies; and, “crucially, conflicting roles of local authorities acting as both commissioner and provider”.

Six years on, an Ofsted report published this August – ‘An evaluation of approaches to commissioning young people’s services’ – echoed some of the PWC report’s findings. The regulator found that only two local authorities “systematically managed commissioning as a strategic process… and took into account the full range of alternative providers”. In other words, most local authorities do not even consider the option of an alternative provider, and whether they could offer an improved service.

Even when local authorities do choose to outsource, they can bring services back in-house at a whim, without the need to market test or to demonstrate best value. This inflexibility increases the risks for alternative providers, and so limits the development of a diversified supply market. It also makes it harder to secure value for money for taxpayers.

If the reforms outlined by the white paper are to succeed, the government must combine strong leadership with incentives for those who reform, and sanctions for those who don’t. Simply issuing guidance is not enough: guidance can be ignored with impunity, and local authorities have a vested interest in keeping services in–house.

The key to changing this lies in the transformation of local commissioning and procurement practices. The government must drop its reluctance to become involved in market management. If the coalition is to deliver on its reforms it must ensure a clear distinction between those who commission services and those who provide them. If it doesn’t, it is doomed to repeat the mistakes of its predecessor.

Patrick Watson is managing director of Montrose Public Affairs Consultants, which specialises in education and skills policy. He also runs the education blog montrose42


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