Current discussions over the role of health watchdog Monitor should be widened to include reforms to regulation also covering education and social care
There is a clear and compelling need for a robust but democratic regulatory system covering health, education and social care services that focuses as much on commercial regulation as it does service standards.
Recent disclosures at Winterbourne View and the precarious state of Southern Cross are but two reasons for such an approach. Further, the onward (and inevitable) journey towards a greater role for private, third and social enterprise sectors in public service delivery, coupled with the dramatic growth in personalised budgets and self-funding, reinforces this need.
Both the government announcements following the ‘pause’ phase in the NHS reforms and the impending public services white paper will encourage more competition – with more services outsourced or contracted in some way to the third and private sectors.
Services such as health, social care and education must be based on a public service ethos and deliver public value not just for their individual users but also the wider society. They should ensure equality of opportunity, fairness and equity. Regulation has to recognise, value and protect these attributes and it must ensure that commissioners and providers are fully accountable for delivering public value.
It naturally follows that while regulators must be both able and empowered to ensure professional and service standards, they must also have powers to undertake financial and commercial due diligence on providers and their owners. As in financial services, only ‘approved’ persons should be allowed to own or sit on boards as well as manage critical services such as care homes.
Regulators should be able to prevent the sale, change in ownership or radical changes to the business model of the public service business without the agreement of the regulator, commissioner and service users or their representatives.
In addition, they must have powers: to require appropriate levels of capitalisation; to remove directors; to prevent companies and other providers from operating in certain markets; prevent anti-competitive behaviour; and, where necessary, to set up industry-based, self-funded insurance schemes to protect the public sector from having to fund rescues and survival programmes.
Different public service markets are at different states of maturity – and as the significance, risks and nature of various public services differ, so too will the style and nature of effective, responsive and proportionate regulation. Regulation must not discourage new entrants – particularly SMEs and third sector organisations but, equally, such bodies cannot be exempted from scrutiny.
Unrestrained ‘free markets’ are not appropriate for many public services. Accordingly, where government aims to introduce competition, markets should be managed through regulation in a manner proportionate to the potential risks and in order to secure wider policy goals – for example collaboration between services.
Regulation must be adequately resourced and applied with equal rigour to all providers including the public sector. It should be applied in a manner that enables personalisation of service, innovation and the right balance between quality assurance and overhead expenditure. It must also allow providers to make reasonable and proportional financial returns whilst having flexibility to manage the services and their organisations. And it must also avoid being bureaucratic and an impediment to new market entrants and smaller suppliers.
In the NHS it is important for the regulator to have the duty to ensure a fair opportunity for public service provision to flourish too. Indeed, it is desirable and inevitable that the public sector will continue to be the major supplier of health care. It must not be allowed to become the provider of last resort or the provider of those services that others do not wish to ‘cherry pick’.
The regulator will need to be able to challenge government attempts to tilt the ‘playing field’ against the public sector. Similar arrangements will be needed to promote the interests of social enterprises and the third sector if they are to be able to deliver an increasing proportion of public services.
It is critical that the new version of Monitor has the powers I have described and that similar powers are granted to regulators for social care and education services.
Let’s be clear that regulation is not and should not be seen to be a substitute for effective commissioning, which is fundamentally important. Indeed, it is commissioners that should determine what is provided, and by whom, or if there should be personalised budgets with users purchasing their own services. Commissioners therefore need to work closely with the regulators but be separate from them, and indeed commissioners themselves should be subject to regulation.
There is one further dimension to public service regulation that needs to be addressed and that is the democratic accountability that must pervade. This requires regulators to be ultimately accountable to politicians but independent of commissioner and provider interests, and immune from political interference. This means that their position and integrity needs to be enshrined in legislation.
There must also be transparency and public accountability. Therefore, we need a debate on how providers can be required to publish and be subject to scrutiny on:
- details of their ownership – who, their legal status, where registered and based, previous track record and wider business interests
- their commercial model(s) – for example, the expected rate of return on investment, and the approach to ownership or leasing of premises (and if the latter, from whom, etc.)
- the remuneration of senior executives and shareholder payments
- key contractual terms
- financial and operational performance
- any critical issues relating to the provider’s business interests elsewhere or in other markets and/or jurisdictions
We need to determine the appropriate regulatory arrangements to verify this information and ensure that it is available in an accessible form to the public, staff and service users.
Regulators should include service users and/or their representatives on their boards, and engage staff and their unions in their work. They should also work closely with commissioners and policy makers. Above all, however, regulators must have a duty to put service users and the public interest first and foremost, and to ensure that public services flourish – for the benefit of the public.
