The content of the 'leaked' CBI–Francis Maude meeting minutes, which suggested that the government was not intent on the wholesale outsourcing of public services and in particular not to the private sector, should not have surprised anyone.
Of course, it would seem that some commentators, some providers and some in the investment community were surprised! This was naive.
The government has consistently made it clear that it wishes to see more public services delivered by social enterprises including mutuals created by staff 'spinning out from the public sector', the voluntary and community sector as well as the private sector.
Even the prime minister in his now infamous Daily Telegraph article a few weeks ago was clear that some public services would always have to remain managed within the public sector. In reality, of course, whatever the government’s ideological disposition it was never going to contract all services or anywhere that proportion to the private sector.
The claim, that outsourcing will usually result in savings in excess of twenty per cent, is highly questionable. It is based on some early examples of such outsourcing when there was much more inefficiency in the public sector than is more common now. There are and will be examples of these benefits even accompanied with service improvement but this is not the universal experience of public service outsourcing.
Cost and price should not be the only considerations for a public agency. Service quality, employment standards, performance and financial transparency and accountability as well as user choice should be also taken into account. The private sector has to recognise this and develop business models that address these factors; and enable it to support and partner the third sector and social enterprise organisations.
The long awaited government White Paper on the future of public services is going to have to address some key issues:
- will local authorities be able to make their own decisions on the service delivery models that they wish to adopt – anything else would be contrary to the spirit of 'localism'
- the same question applies to other bodies such as the NHS, police authorities, etc.
- will there be a strong promotion of more user choice; what about co-payments and self-funding; and what about equity and equality of access
- which services might move from being public services to being services provided in regulated markets (think telephones or utilities)
- how in open competitive procurement can decisions be skewed towards one sector in preference to another; and how will the 'right to provide' and 'right to challenge supply' fit into the procurement processes and a commitment to competition
- what mechanisms and resources will be made available to build third sector and social enterprise capacity
- how will the private sector be encouraged and perhaps incentivised to adopt new models including greater risk sharing with clients; more partnerships with the third sector and social enterprises as well as the public sector; and an acceptance of greater transparency and accountability
- can public sector procurement be improved within the EU regulatory framework; and public sector commissioning and procurement capacity
- will the government emphasise quality, innovation and service redesign ahead of low cost/price
- will the government recognise the correlation between good employment standards including talent and personal development and service quality
I believe that there will be a greater degree of pluralism in public services over the next five years. There will be more but also different forms of private sector involvement. There certainly will be a significant growth in service delivery from the voluntary and community sector, the wider third sector, social enterprises, and user and employee led co-operatives. Many will continue to be managed within the public sector. And of course there will be variants on and permutations of these.
However, the future of public services must not become a race to cheapness or so market orientated that the wider public value and contribution of public services is lost.
There has to be more reform. There needs to be more innovation and experimentation. There will be local variation. Services must be efficient especially when money is tight; they must also be responsive to their users and greater choice – whether at individual or neighbourhood level - is desirable for some but not all services. But let no one conflate outsourcing with reform – the former can contribute to the latter when the conditions are right but in itself it does not lead to reform and reform can be achieved in many other ways including directly managed 'in house' services.
The challenges for suppliers to change especially private sector providers and the third sectors are even greater than that for the public sector. The public and public sector clients will have different expectations of providers, their services and behaviours.. Consequently the next period will be fascinating.
The White Paper is awaited with great anticipation by many. When we see it we will understand better the government’s intent, appetite for change and most importantly its commitment to quality public services that represent the values of a compassionate and fair society. It will also test the commitment of providers.
John Tizard is director of the Centre for Public Service Partnerships
