By Judy Hirst | 1 December 2011
Can the government’s Open Public Services agenda succeed in a period of local authority budget cuts? Public Finance and Zurich Municipal hosted a round table to debate the possibilities
Reforming public services has been up there, as an aspiration and a mission statement, for more governments than most of us care to remember. Openness, choice, citizen-empowerment – Whitehall is littered with the detritus of ambitious public sector reform programmes, most of which have amounted to very little at all.
Tony Blair’s famous ‘scars on my back’ and David Cameron’s outbursts against ‘the enemies of enterprise’ are testimony to the difficulty of reinventing public services, or indeed doing anything much to disturb the status quo.
But needs must, and the drive to deliver ‘more for less’ in a sharply deteriorating fiscal climate has prompted this government to give public service reform yet another go.
In July, it published an Open public services white paper that argues for more choice, decentralisation and accountability, at local, neighbourhood and individual level. Launching the paper, the Prime Minister confirmed that a presumption would be made in favour of a range of providers and against local state monopolies.
Alongside this, and as part of the coalition’s wider reform agenda, ministers have vowed to promote voluntarism, social enterprises, mutuals (whether of the John Lewis variety or otherwise) and other Big Society ideals.
So, as the government moves closer to legislation on these proposals, what are the chances of its reform ambitions getting off the ground? Is trying to shake up public services harder or easier in a period of fiscal austerity – or, as some critics argue, just a cover for cuts?
And how far is there public buy-in for the smaller state, pro-business, localist agenda that the government wants to pursue? Just what are the risks?
To explore these and related questions Public Finance brought together some leading exponents of open public services and the Big Society along with key players from the public, communities and business sectors for a round table debate on Open public service: everybody’s business.
The event, hosted in association with Zurich Municipal, and chaired by local government expert Tony Travers, was held on November 7 at Church House, Westminster. Big society guru Phillip Blond and Labour peer and social theorist Maurice Glasman provided, respectively, their ‘Red Tory’ and ‘Blue Labour’ interpretations of what the big – or ‘good’ – society might mean.
Other keynote introductions were given by Clive Betts MP, chair of the Commons communities and local government select committee, Susan Anderson, public services director at the CBI, and Ben Page, director of Ipsos Mori. Patrick Lewis, of the John Lewis Partnership, who is a member of the Cabinet Office mutuals taskforce, and Steve Moore, chief executive of the Big Society Network, were among other high-profile participants present.
Page set the scene for the discussion by asking: ‘Is the public really ready for this big bold step forward? Does it actually want a diverse set of providers?’ In reality, the picture is complex, he said. ‘People are pretty evenly divided over whether the public or private sectors offer better value for money. Interestingly, they think the voluntary sector provides the most caring and empathetic services, but they want accountable public officials to make choices about who gets what.’
Polls show that the public still thinks the state is very important as a ‘provider of last resort’. But it is also ‘remarkably pragmatic’ about the alternatives and, in a climate of crisis and cuts, the public mood can rapidly shift, he said. ‘If it works, anything is on the table.’
Anderson believed that – despite the CBI downgrading its own growth forecasts that week – the government had it broadly right on its deficit reduction plans. ‘But without further progress on public sector reform, it’s not going to deliver those cost savings,’ she warned. Anderson expressed impatience at the slow pace of reform and urged the government to ‘get on with the difficult stuff’ – such as changes to procurement and pension rules, and re-engineering health and social care – rather than just running a few community budget pilots.
‘Everyone agrees they’re a good idea. Given the savings that could be made, it’s totally incomprehensible why it hasn’t happened yet,’ she said.
However all this diversification and opening up of public services does not come without risks, particularly when combined with major spending cuts. Recent scandals involving care homes, hospitals and most recently the UK Border Agency illustrate that no sector is immune. Zurich’s head of public services, Andrew Jepp suggested that in these challenging times the public sector had to ‘embrace and manage risk’ and move away from a blame culture. But what is an acceptable level of risk?
Dan Corry, chief executive of New Philanthropy Capital, and a former No 10 adviser, noted that different attitudes apply to public and private sector failure. In the former case ‘we may think they’re useless when they fail, but not that they’re fat cats siphoning off our money. With the Big Society, the worry is that the moment something terrible happens, ministers will overreact and reach for the dangerous dog legislation.’
Phillip Blond agreed. Despite being a champion of Big Society-style localism, he was very candid about the risks entailed. ‘The great danger with localism, is that a couple of failures can imperil the whole project. Whereas if something universal like a hospital service fails, we still support universality.’ With really ambitious projects like a mutual taking over a hospital, or attempts to deliver different budgets to one estate, there are potential ‘nightmare scenarios’, he said.
Paul O’Brien, chief executive of the Association for Public Service Excellence, questioned the Cabinet Office’s focus on mutuals. ‘Where’s the evidence-base for this?’ he asked. ‘There’s been hardly any impact assessment of co-operatives or mutuals. It’s like a science experiment that’s gone out of control.’
Jonathan Diggines, chair of the Community Development Finance Association, believed the answer to heightened risk was in better regulation. ‘If we’re going down the route of more private financing of public services, we’ve got to set the targets very carefully and have more regulation of performance,’ he argued. If services fail, more people need to be punished and sacked.
An interventionist line was also taken by John Tizard, director of the Centre for Public Sector Partnerships, who stressed that current regulation of social care, for example, pays insufficient attention to business models and due diligence. ‘We don’t want to stifle innovation, but we do need to align regulation with a market-based approach,’ he said.
But how did all this talk of more and better regulation square with the government’s focus on freeing up public services (not to mention its dedication to a bonfire of regulatory quangos)? Page noted that the public suffers from ‘cognitive polyphasia’ when it comes to public sector risk. ‘On the one hand it wants government to treat them like grown-ups, say over smoking or driving. But it also wants protection from service failure. It’s a brave politician who is prepared to confront all this.’
Matt Dykes, a policy officer at the Trades Union Congress, went further, claiming that the public simply ‘doesn’t trust the public sector’s ability to control the private sector, or commission from it. People want choice, but they also want fairness and universality.’ However Blond retorted that ‘universality ensures unfairness, that’s the conundrum. With services the same everywhere, they can’t meet individual needs. What we need are trusted vehicles to deliver variety, and we’ll get that by broadening out who commissions. That’s the only way to move beyond the old debates.’
Ian Mulheirn, director of the Social Market Foundation, developed this idea further. He said that when it comes to how services are delivered, there is a critical distinction between political and operational independence. ‘Devolving down to the lowest political unit just creates confusion. But commissioning centrally, with a very localised delivery structure that caters to individual need, could be the way forward.’ He cited the DWP’s Work Programme as a potential, though flawed, example of this, and suggested that personalised budgets – heavily promoted in the white paper – should be delivered in this way.
However, Clive Betts strongly disagreed. The communities and local government committee chair said the Work Programme was ‘a classic example of how not to do things’. When it came to commissioning, the DWP and the DCLG were ‘living on different planets’. And in any case, this ‘centralised localism’ was ‘simply a centralist institution with a little bit of leeway down the line for contractors and subcontractors’.
Betts also questioned the focus on devolving power and budgets to communities, at the expense of local authorities. ‘It begs the question of what a community is. Someone has to be accountable for public money, and if isn’t the local authority, then it will be central government, as in the free schools model. The first time anything goes wrong, everyone will be looking to central government to sort it out.’
Andy Sawford, director of the Local Government Information Unit, agreed that the Work Programme was ‘in no way a localist programme’. He also said that personalised budgets – though brilliant for many young, physically disabled people – could be very problematic for frail, elderly service-users. Research that the LGIU had conducted with Zurich Municipal showed that most councils had not seriously considered the risks associated with new community powers, such as the community right to buy and to challenge. A huge change in culture is going to be needed, he said, as authorities ‘emerge blinking into the light.’
This idea was underlined by Steve Moore, chief executive of the Big Society Network. ‘We haven’t yet had a debate in this country over re-shaping the state,’ he maintained – unlike in Canada, for example, which preceded its successful public service reforms in the 1990s with a long public discussion. ‘That’s why there’s such ambivalence and fear.’
Betts agreed that a cultural shift was needed, not least on the part of ‘Whitehall vested interests that are not letting go of their budgets’. In many other countries, the idea that one minister had to take personal responsibility for every social service tragedy was met with incredulity, he said. ‘There is too much centralised prescription, including within the Localism Bill, about how to run local affairs.’
He also felt we should detach decentralising initiatives, like Community Budgets, from the cuts agenda. ‘The brand is getting tarnished by this, when in fact there are some good wins to be made that will improve services as well as saving money.’
And there needed to be ‘real, democratically elected accountability, so that we don’t swap centralised silos at national level for silos at a local level’.
Other participants felt there was a wider issue to address about whether community organisations and small and medium businesses really can take advantage of open public services on a fair footing; and also whether the playing field is skewed too much against publicly run services. Ralph Michell, head of policy at the Association of Chief Executives of Voluntary Organisations, said his members often thought they could deliver local services better, and welcomed mechanisms that would let them do this. But from the chair, Tony Travers asked if local groups could really compete effectively in a world of over-prescriptive procurement and planning rules – and whether local authorities needed to manage the process.
Hilary Thompson, chief executive of the Office for Public Management, certainly thought so, and wanted more help for in-house services to compete effectively; while Tizard said the community right to challenge should be extended to include existing contractors.
Paul Emery, head of charities and voluntary organisations at Zurich Municipal, said that one answer to a lack of community capacity was to create local consortiums of organisations, especially around tendering. If anything, argued Andrew Jepp, there need to be a ‘tilted playing field’ that fostered smaller organisations. ‘But with the current level of staff cuts, do local authorities have the capacity to do this?’
The risk, warned Dan Corry, was that open public services will simply end up as ‘an oligopolistic set-up dominated by big prime contractors, with the risks thrown down to the small players.’
Meanwhile, Patrick Lewis had some cautionary words for all those, right across the political spectrum, looking to the ‘John Lewis model’. He said that although decentralisation and delegation is central to the John Lewis Partnership, they had learned over the years that ‘it’s unrealistic to think you can go the whole way. Commercially it’s simply not viable.’
Big organisations have an enormous advantage, said Lewis, and these days – using a model that sounds suspiciously like ‘centralised localism’ – their head-office ‘sets a framework that allows you to guide the organisation, and be accountable, but delegate downwards as much as possible. You have to be realistic about the space the local team can operate in.’
Not that these caveats did much to dampen the enthusiasm of either Phillip Blond or Maurice Glasman for their Big Society/good society visions of community-led public services. Both, in different ways, offered robust critiques of the political establishment. ‘They still don’t get it,’ said Blond. ‘They still don’t get the radical benefits of thinking beyond the local authority to deliver services.’
He said that in some respects, ‘the Big Society child had been born into the worst possible environment’, with harsh austerity measures undermining the infrastructure it needs. But the situation had been made worse by the government’s laissez-faire approach. ‘It thought the green shoots of the civic spring would just come forth of their own accord. In some places organisations have been able to take advantage of the Big Society Bank and other incentives, but in many areas they’ve just fallen through the cracks.’
Local authorities need to act as ‘a kind of iPhone for the Big Society, with voluntary, community and faith organisations providing the “apps”. The Big Society should develop a retail offering, with “shop fronts” in every area.’ Without joint ventures, shared risk and other new models for public sector contracting, open public services will just be ‘a complete stitch-up for the major suppliers, crowding out and squeezing the opposition,’ he said.
Glasman also had harsh words for politicians, including New Labour’s ‘very bad, overly managerial, one-size-fits-all form of universalism’. Past and present governments had relied too heavily on the financial services sector and on debt. ‘Accountability is too important to be left to the accountants,’ he said.
In contrast, the ‘Blue Labour’ concept of a good society – or the common good – was based on ideals of reciprocity, responsibility and relationships; a new ‘3Rs’. Organisationally, he was in favour of public service models based on funders, employees and users having an equal stake, with no single dominating interest.
Public services had to become much more responsive, said Glasman, who favours, as far as possible, drilling down to the regional and local level. Regional banks, for example – based on the German landesbanks – rather than one Big Society Bank, are his preferred method for financing local community development.
But how do we get from here, to where we want to be, asked Travers? A fair number of participants agreed on the intrinsic merits of putting communities in control of their own lives and services. Most could see the advantages in a wide variety of providers. But many queried whether, with public services and civil society in freefall – and charities and voluntary groups competing for dwindling funds – this really is the time for root and branch public service reform.
The Cabinet Office is about to find out.
Can the government’s Open Public Services agenda succeed in a period of local authority budget cuts? Public Finance and Zurich Municipal hosted a round table to debate the possibilities
Reforming public services has been up there, as an aspiration and a mission statement, for more governments than most of us care to remember. Openness, choice, citizen-empowerment – Whitehall is littered with the detritus of ambitious public sector reform programmes, most of which have amounted to very little at all. Tony Blair’s famous ‘scars on my back’ and David Cameron’s outbursts against ‘the enemies of enterprise’ are testimony to the difficulty of reinventing public services, or indeed doing anything much to disturb the status quo.
But needs must, and the drive to deliver ‘more for less’ in a sharply deteriorating fiscal climate has prompted this government to give public service reform yet another go.
In July, it published an Open public services white paper that argues for more choice, decentralisation and accountability, at local, neighbourhood and individual level. Launching the paper, the Prime Minister confirmed that a presumption would be made in favour of a range of providers and against local state monopolies.
Alongside this, and as part of the coalition’s wider reform agenda, ministers have vowed to promote voluntarism, social enterprises, mutuals (whether of the John Lewis variety or otherwise) and other Big Society ideals.
So, as the government moves closer to legislation on these proposals, what are the chances of its reform ambitions getting off the ground? Is trying to shake up public services harder or easier in a period of fiscal austerity – or, as some critics argue, just a cover for cuts?
And how far is there public buy-in for the smaller state, pro-business, localist agenda that the government wants to pursue? Just what are the risks?
To explore these and related questions Public Finance brought together some leading exponents of open public services and the Big Society along with key players from the public, communities and business sectors for a round table debate on Open public service: everybody’s business.
The event, hosted in association with Zurich Municipal, and chaired by local government expert Tony Travers, was held on November 7 at Church House, Westminster. Big society guru Phillip Blond and Labour peer and social theorist Maurice Glasman provided, respectively, their ‘Red Tory’ and ‘Blue Labour’ interpretations of what the big – or ‘good’ – society might mean.
Other keynote introductions were given by Clive Betts MP, chair of the Commons communities and local government select committee, Susan Anderson, public services director at the CBI, and Ben Page, director of Ipsos Mori. Patrick Lewis, of the John Lewis Partnership, who is a member of the Cabinet Office mutuals taskforce, and Steve Moore, chief executive of the Big Society Network, were among other high-profile participants present.
Page set the scene for the discussion by asking: ‘Is the public really ready for this big bold step forward? Does it actually want a diverse set of providers?’ In reality, the picture is complex, he said. ‘People are pretty evenly divided over whether the public or private sectors offer better value for money. Interestingly, they think the voluntary sector provides the most caring and empathetic services, but they want accountable public officials to make choices about who gets what.’
Polls show that the public still thinks the state is very important as a ‘provider of last resort’. But it is also ‘remarkably pragmatic’ about the alternatives and, in a climate of crisis and cuts, the public mood can rapidly shift, he said. ‘If it works, anything is on the table.’
Anderson believed that – despite the CBI downgrading its own growth forecasts that week – the government had it broadly right on its deficit reduction plans. ‘But without further progress on public sector reform, it’s not going to deliver those cost savings,’ she warned. Anderson expressed impatience at the slow pace of reform and urged the government to ‘get on with the difficult stuff’ – such as changes to procurement and pension rules, and re-engineering health and social care – rather than just running a few community budget pilots.
‘Everyone agrees they’re a good idea. Given the savings that could be made, it’s totally incomprehensible why it hasn’t happened yet,’ she said.
However all this diversification and opening up of public services does not come without risks, particularly when combined with major spending cuts. Recent scandals involving care homes, hospitals and most recently the UK Border Agency illustrate that no sector is immune. Zurich’s head of public services, Andrew Jepp suggested that in these challenging times the public sector had to ‘embrace and manage risk’ and move away from a blame culture. But what is an acceptable level of risk?
Dan Corry, chief executive of New Philanthropy Capital, and a former No 10 adviser, noted that different attitudes apply to public and private sector failure. In the former case ‘we may think they’re useless when they fail, but not that they’re fat cats siphoning off our money. With the Big Society, the worry is that the moment something terrible happens, ministers will overreact and reach for the dangerous dog legislation.’
Phillip Blond agreed. Despite being a champion of Big Society-style localism, he was very candid about the risks entailed. ‘The great danger with localism, is that a couple of failures can imperil the whole project. Whereas if something universal like a hospital service fails, we still support universality.’ With really ambitious projects like a mutual taking over a hospital, or attempts to deliver different budgets to one estate, there are potential ‘nightmare scenarios’, he said.
Paul O’Brien, chief executive of the Association for Public Service Excellence, questioned the Cabinet Office’s focus on mutuals. ‘Where’s the evidence-base for this?’ he asked. ‘There’s been hardly any impact assessment of co-operatives or mutuals. It’s like a science experiment that’s gone out of control.’
Jonathan Diggines, chair of the Community Development Finance Association, believed the answer to heightened risk was in better regulation. ‘If we’re going down the route of more private financing of public services, we’ve got to set the targets very carefully and have more regulation of performance,’ he argued. If services fail, more people need to be punished and sacked.
An interventionist line was also taken by John Tizard, director of the Centre for Public Sector Partnerships, who stressed that current regulation of social care, for example, pays insufficient attention to business models and due diligence. ‘We don’t want to stifle innovation, but we do need to align regulation with a market-based approach,’ he said.
But how did all this talk of more and better regulation square with the government’s focus on freeing up public services (not to mention its dedication to a bonfire of regulatory quangos)? Page noted that the public suffers from ‘cognitive polyphasia’ when it comes to public sector risk. ‘On the one hand it wants government to treat them like grown-ups, say over smoking or driving. But it also wants protection from service failure. It’s a brave politician who is prepared to confront all this.’
Matt Dykes, a policy officer at the Trades Union Congress, went further, claiming that the public simply ‘doesn’t trust the public sector’s ability to control the private sector, or commission from it. People want choice, but they also want fairness and universality.’ However Blond retorted that ‘universality ensures unfairness, that’s the conundrum. With services the same everywhere, they can’t meet individual needs. What we need are trusted vehicles to deliver variety, and we’ll get that by broadening out who commissions. That’s the only way to move beyond the old debates.’
Ian Mulheirn, director of the Social Market Foundation, developed this idea further. He said that when it comes to how services are delivered, there is a critical distinction between political and operational independence. ‘Devolving down to the lowest political unit just creates confusion. But commissioning centrally, with a very localised delivery structure that caters to individual need, could be the way forward.’ He cited the DWP’s Work Programme as a potential, though flawed, example of this, and suggested that personalised budgets – heavily promoted in the white paper – should be delivered in this way.
However, Clive Betts strongly disagreed. The communities and local government committee chair said the Work Programme was ‘a classic example of how not to do things’. When it came to commissioning, the DWP and the DCLG were ‘living on different planets’. And in any case, this ‘centralised localism’ was ‘simply a centralist institution with a little bit of leeway down the line for contractors and subcontractors’.
Betts also questioned the focus on devolving power and budgets to communities, at the expense of local authorities. ‘It begs the question of what a community is. Someone has to be accountable for public money, and if isn’t the local authority, then it will be central government, as in the free schools model. The first time anything goes wrong, everyone will be looking to central government to sort it out.’
Andy Sawford, director of the Local Government Information Unit, agreed that the Work Programme was ‘in no way a localist programme’. He also said that personalised budgets – though brilliant for many young, physically disabled people – could be very problematic for frail, elderly service-users. Research that the LGIU had conducted with Zurich Municipal showed that most councils had not seriously considered the risks associated with new community powers, such as the community right to buy and to challenge. A huge change in culture is going to be needed, he said, as authorities ‘emerge blinking into the light.’
This idea was underlined by Steve Moore, chief executive of the Big Society Network. ‘We haven’t yet had a debate in this country over re-shaping the state,’ he maintained – unlike in Canada, for example, which preceded its successful public service reforms in the 1990s with a long public discussion. ‘That’s why there’s such ambivalence and fear.’
Betts agreed that a cultural shift was needed, not least on the part of ‘Whitehall vested interests that are not letting go of their budgets’. In many other countries, the idea that one minister had to take personal responsibility for every social service tragedy was met with incredulity, he said. ‘There is too much centralised prescription, including within the Localism Bill, about how to run local affairs.’
He also felt we should detach decentralising initiatives, like Community Budgets, from the cuts agenda. ‘The brand is getting tarnished by this, when in fact there are some good wins to be made that will improve services as well as saving money.’
And there needed to be ‘real, democratically elected accountability, so that we don’t swap centralised silos at national level for silos at a local level’.
Other participants felt there was a wider issue to address about whether community organisations and small and medium businesses really can take advantage of open public services on a fair footing; and also whether the playing field is skewed too much against publicly run services. Ralph Michell, head of policy at the Association of Chief Executives of Voluntary Organisations, said his members often thought they could deliver local services better, and welcomed mechanisms that would let them do this. But from the chair, Tony Travers asked if local groups could really compete effectively in a world of over-prescriptive procurement and planning rules – and whether local authorities needed to manage the process.
Hilary Thompson, chief executive of the Office for Public Management, certainly thought so, and wanted more help for in-house services to compete effectively; while Tizard said the community right to challenge should be extended to include existing contractors.
Paul Emery, head of charities and voluntary organisations at Zurich Municipal, said that one answer to a lack of community capacity was to create local consortiums of organisations, especially around tendering. If anything, argued Andrew Jepp, there need to be a ‘tilted playing field’ that fostered smaller organisations. ‘But with the current level of staff cuts, do local authorities have the capacity to do this?’
The risk, warned Dan Corry, was that open public services will simply end up as ‘an oligopolistic set-up dominated by big prime contractors, with the risks thrown down to the small players.’
Meanwhile, Patrick Lewis had some cautionary words for all those, right across the political spectrum, looking to the ‘John Lewis model’. He said that although decentralisation and delegation is central to the John Lewis Partnership, they had learned over the years that ‘it’s unrealistic to think you can go the whole way. Commercially it’s simply not viable.’
Big organisations have an enormous advantage, said Lewis, and these days – using a model that sounds suspiciously like ‘centralised localism’ – their head-office ‘sets a framework that allows you to guide the organisation, and be accountable, but delegate downwards as much as possible. You have to be realistic about the space the local team can operate in.’
Not that these caveats did much to dampen the enthusiasm of either Phillip Blond or Maurice Glasman for their Big Society/good society visions of community-led public services. Both, in different ways, offered robust critiques of the political establishment. ‘They still don’t get it,’ said Blond. ‘They still don’t get the radical benefits of thinking beyond the local authority to deliver services.’
He said that in some respects, ‘the Big Society child had been born into the worst possible environment’, with harsh austerity measures undermining the infrastructure it needs. But the situation had been made worse by the government’s laissez-faire approach. ‘It thought the green shoots of the civic spring would just come forth of their own accord. In some places organisations have been able to take advantage of the Big Society Bank and other incentives, but in many areas they’ve just fallen through the cracks.’
Local authorities need to act as ‘a kind of iPhone for the Big Society, with voluntary, community and faith organisations providing the “apps”. The Big Society should develop a retail offering, with “shop fronts” in every area.’ Without joint ventures, shared risk and other new models for public sector contracting, open public services will just be ‘a complete stitch-up for the major suppliers, crowding out and squeezing the opposition,’ he said.
Glasman also had harsh words for politicians, including New Labour’s ‘very bad, overly managerial, one-size-fits-all form of universalism’. Past and present governments had relied too heavily on the financial services sector and on debt. ‘Accountability is too important to be left to the accountants,’ he said.
In contrast, the ‘Blue Labour’ concept of a good society – or the common good – was based on ideals of reciprocity, responsibility and relationships; a new ‘3Rs’. Organisationally, he was in favour of public service models based on funders, employees and users having an equal stake, with no single dominating interest.
Public services had to become much more responsive, said Glasman, who favours, as far as possible, drilling down to the regional and local level. Regional banks, for example – based on the German landesbanks – rather than one Big Society Bank, are his preferred method for financing local community development.
But how do we get from here, to where we want to be, asked Travers? A fair number of participants agreed on the intrinsic merits of putting communities in control of their own lives and services. Most could see the advantages in a wide variety of providers. But many queried whether, with public services and civil society in freefall – and charities and voluntary groups competing for dwindling funds – this really is the time for root and branch public service reform.
The Cabinet Office is about to find out.
