Diversity of service providers is not risky, Letwin tells PF

28 Jul 11
Oliver Letwin, the architect of the coalition’s public sector reform plans, has told Public Finance he 'utterly rejects' trade unions' claim that greater diversity of service providers could lead to more Southern Cross style collapses.
By Richard Johnstone | 28 July 2011

Oliver Letwin, the architect of the coalition’s public sector reform plans, has told Public Finance he 'utterly rejects' trade unions' claim that greater diversity of service providers could lead to more Southern Cross style collapses.

Speaking at an event last night, the Cabinet Office minister for government policy said that an increase in public service providers would lead to more choice that would be ‘better for everyone’.

He told the event, hosted by the Centreforum think-tank, that the reforms in the Open public services white paper were aimed at improving services for people who currently have no choice.

He said: ‘One of the key things is whether the public services that [people] rely on really operate in their best interests.’

The white paper, he said, ‘sets out a programme of action’ across government, including an increase in the number of suppliers for public services.

The plans were launched this month on the day that privately owned care home operator Southern Cross announced that it was going out of business and transferring the running of the homes to their owners.

Trade unions said the company's collapse showed that increased private sector involvement would be ‘a recipe for risky public services’.

However, Letwin said uncompetitive providers should suffer the consequences of failure, but not service users. Insisting that ‘no system of any kind has ever guaranteed the continuance of provision of every instance’, he said there was a ‘mythology’ that services provided by local authorities were ‘there forever’. Under the existing system, he told PF, ‘things close, and they close sometimes very suddenly and people are given no choice'.

He added that when Southern Cross first got into difficulty earlier this year, Health Secretary Andrew Lansley ‘personally invested a large amount of effort in making sure that action was taken which led to people being looked after properly and not being left to find a home’.

However, the government was taking steps to ensure that, in future, continuity of service would rely not on ministers but on ‘a regime that does it quite automatically’. In education, for example, failing schools will be taken over by successful ones, a move, Letwin argued, that ‘ensures not just continuity but the ability to have improvement’.

He added: ‘I think we can create greater continuity of service, and greater protection of vulnerable people being looked after by particular services, than there has been in the past. I utterly reject the proposition coming from some of the unions that this will somehow be a major problem. Actually, with real attention we can solve that problem and we can do better, in some cases, than the monopoly system.’

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