13 June 2008
The market-based approach to public services has failed to deliver better value or real accountability and should be replaced with a 'public value' model, according to a report for the Trades Union Congress.
Part of the TUC's Touchstone pamphlet series, Rethinking public service reform – the public value alternative claims that successive attempts to introduce market mechanisms into public services have often made worse the problems they were heralded as solving. It cites research that puts the value of public services delivered outside the public sector at £44bn.
The report, researched by Mick McAteer, says market initiatives are now more sophisticated than early models that simply aimed to deliver cash savings, but as ultimate risk cannot be transferred to the private sector, the public sector continues to pick up the tab when things go wrong.
It also suggests that increased choice can lead to greater inequality, while in some areas service quality remains low.
The report's vision for a public value approach to reform is one without 'recourse to the market and the private sector'.
TUC general secretary Brendan Barber said: 'Politicians of all parties now have a kneejerk preference for private sector solutions, and seem to have lost faith in the ability of public servants to deliver quality public services. Yet this ideology and prejudice is not based on any evidence that it works.'
Barber compared NHS Direct – 'one of the most innovative changes in health care' – which was developed within the public sector, with the collapse of the private London Underground maintenance contract held by Metronet. 'This is not to say that public services do not need to change or modernise, or that we should not be looking for value for money,' he added.
The report says a public value approach to public services should look beyond financial profit and loss, taking into account 'a wide range of beneficial outcomes'. These include social value, equity – particularly for vulnerable consumers – and participation by citizens.
'The approach suggests that public value can only be identified and assessed through a process of democratic engagement between service providers and service users,' it says.
Ann Rossiter, director of the Social Market Foundation, commenting on the report, said public value was delivered when priority was given to the final consumer of a service. But she insisted the private sector could deliver efficient public services.
'While markets cannot, as some free marketeers suggest, solve everything, it is wrong to suggest that they fail to deliver public services.'
There was a proven track record of the private sector delivering with the right framework and contractual arrangements, even though the private and public sector often had different objectives, she added.