After the launch of its public services white paper the government needs to specify which services will be opened up and how competition will be put into effect
Yesterday’s ‘open public services’ white paper marks a potential watershed in the approach to the delivery of public services. Putting its principles into practice will take careful planning and while the challenges are significant, we believe that the public sector can unlock a unique opportunity to revolutionise and revitalise its culture, its services and its relationship with the population it serves.
The white paper lays out the principles that underpin a shift of power to citizens and staff in order to drive service improvements. For the government, ‘opening’ public services means enabling greater choice by those who use them and extending competition among those who provide them.
We have found real enthusiasm across the public, private and voluntary sectors for the proposed policy direction. What the government needs to do next is to specify which services are to be opened up and how the principle of competition will be put into effect. It needs to move quickly to translate its statement of intent into practice: That means publishing a comprehensive list of the services that are to be opened up to competition and the timetable for allowing potential new providers to bid.
Much of ‘open public services’ is concerned with giving the demand side - individuals and communities - more choice, voice and control in order to drive service improvement. This is a critical component of effective competition. Yet many of the early barriers to implementation are on the supply side rather than the demand side. In the white paper the government openly acknowledges the barriers that can deter many providers, inside and outside the public sector, from looking for innovative solutions or from competing to deliver services.
The white paper lists many areas for further consultation. Herer are just four key areas for immediate action on the supply side which we believe would move implementation a step closer:
The first step toward implementation is to build a stronger appetite within the public sector for the hard slog of real change to services. Service providers and commissioners will need to show the leadership to act on opportunities, drive innovation and make changes in the face of competing demands and be supported by their organisation in doing so. This means identifying leaders who can create a shared vision for the future and are supported by teams with the skills, knowledge and experience to build persuasive cases for change.
This must be mirrored by incentives and support from the centre of government – from No. 10, the Treasury and Cabinet Office – for radical provider and user-led change. The best leaders in the public sector will recognise that the right solution may be to withdraw from the direct provision of services and focus on commissioning services from a wider range of external providers.
Secondly, allowing providers to innovate can lead to fantastic results. This has already been proven in countless Whitehall pilot programmes. The real challenge now lies in turning local excellence into a sustainable national market for public services. In order to make this market work, government needs to tackle two critical aspects: helping to create new customers and helping to create new providers.
Only a fundamental re-organisation of the way people interact with service providers will give everyone – even the most vulnerable – access to excellent solutions. In the long term, government will need to create an environment where customers have the means to exercise their choice without huge cost or effort, be it through IT-based brokerage platforms or advocacy services. In the short term, local authorities or agencies will have to work closely with these new customers to ensure that increased choice doesn’t bypass those who need it most.
In a competitive environment, only the best will survive in the long term. The opening up of public services will therefore be a real threat to those public service providers that have failed to meet customer demands. Particularly at a local authority level, it will take leadership to ensure that commissioners don’t favour the same old solutions but allow new providers to enter a market that might eventually displace existing power structures.
Thirdly, at the national level any market-based reform brings with it the risk that an individual organisation will fail. Government needs to find the correct balance between giving up control to free up space for providers to deliver in new ways and the need for mechanisms to be in place to deal with failures should they occur. To reduce the risk of more general market failures, providers taking the first steps must believe that the rewards available to them are commensurate with the level of risk and effort required; any alteration to the scale, ambition or direction of proposals could see a failure to realise the significant potential locked within the public services.
And finally, any change brings with it upfront costs. Government must therefore indicate its willingness for public bodies to divert some of their scare resources to generating and refining new ideas and approaches. By making a commitment to long-term improvements over and above short-term cost reduction, the government will underline the real implications of the change in narrative away from the ‘age of austerity’ towards open public services. Cost reduction should no longer be the sole lens through which public services are examined and evaluated.
In addition, if we are to realise the ambition of diversity of provision across all sectors, specific technical areas including investment finance, asset ownership, implicit tax disadvantages and the treatment of VAT will need to be resolved in order to reduce barriers to entry. Any potential provider will, of course, also need to demonstrate how they will achieve long-term cost reductions and improve value for money. This is particularly true given the greater transparency and openness around costs which will increasingly turn the public into ‘armchair auditors’.
As always, setting out the strategy is the easy bit. The hard work will come when the ideals of the white paper are put into practice. I have no doubt that the direction of travel is correct and will lead to radical improvements in the services provided to citizens and the value obtained by tax payers.
Alan Downey is head of public sector business at KPMG
