From the TUC

Labour beginning to talk the talk on public service reform

11 Feb 2014, by in Public services

Back in January, FT journalist Janan Ganesh taunted Ed Miliband about his mysterious aversion to public sector reform. Referring to the Labour leader’s crusade against market concentration in the energy and finance sectors, Ganesh asked “if choice and competition are so desirable in the private sector, why is he averse to their presence in the public sector?”

Of course, there’s a clear political agenda behind the former Policy Exchange researcher’s attack but Ganesh asks a pertinent question. In his Hugo Young lecture last night, Ed Miliband went some way to answering it.

Policy details remain thin on the ground at this stage but there was much to welcome in the principles and values that emerged. Not least of which was the obvious rejoinder to Ganesh’s question that public services are not consumer goods, they are services that are ours by right and they come with a different set of expectations as a result: universal standards, equality of access, accountability, co-operation and collective good.

Public services serve a common good beyond the transaction with the individual service user, as the speech set out, “public services have always played an essential role in the fight against inequality and poverty”.

At the heart of this, is the public service user as citizen, not consumer.

At a time when David Cameron compares using public services with buying a mobile phone, it is refreshing to hear the Labour leader reject “market based-individualism which says we can simply transplant the principle of the private sector lock, stock and barrel into the public sector”. He is right that those that “conclude that market principles are a panacea” are “simply wrong” and through highlighting the absurdity of comparing choosing a café with his son’s school, he undermines the glib narrative that runs through the government’s Open Public Services agenda.

It is also good to see the myth of the efficiency of public service markets taken apart. From Free Schools to rail franchising, marketisation has led to inefficiency, with millions squandered on wasteful competition that provides little in the way of choice or value for money.

Research from Transport for Quality of Life calculates that privatisation has added an extra £1bn a year to the cost of running our railways, NHS administration costs doubled to around 12 per cent following quasi-market reforms of the early 90s and, while no data exists to quantify the costs of managing today’s NHS market, a look at the USA shows that the introduction of for-profit provision has increased administration costs by 30 per cent. Evidence collected by Children England shows that a recent procurement exercise for children’s centres in one top tier local authority incurred administrative costs of around £1m, shared between the local authority and just four of the children’s charities bidding for the contract, more than 20 per cent of the contract value.

No wonder then that, according to the Association of Public Service Excellence (APSE), many local authorities are “bringing a significant number and range of services back in-house in order to gain maximum value from decreasing resources”.  Their research found that the “need to improve efficiency and reduce service costs was the most cited reason for in-sourcing” by local authorities with around 59 per cent of respondents agreeing that this had been key. Advantages from in-house delivery cited by local authorities in the study included the reduction of “client monitoring and contract management time and costs”, “greater efficiency” and “greater flexibility”. More than 63 per cent of respondents said that they anticipated financial savings as a result of in-sourcing. APSE states that: “a key consideration for local authorities in bringing a service back in-house is the anticipation of financial savings, through more agile and flexible ways to manage local services.”

Ed Miliband is right to say that with a future Labour government facing massive fiscal challenges “it is all the more necessary to get every pound of value out of services” and a fresh approach to commissioning services, looking at a range of tools including grant-based partnerships and in-house delivery, must form part of any approach to ensuring best use of public resources.

The TUC has long argued for public service reform that gives a voice for local communities in the design and delivery of services. It is right to challenge “the unresponsive state” as Ed Miliband puts it and to address the “inequalities of power” that are the source of a growing disconnect between some public service providers and the communities they serve. And he was absolutely right to highlight government hypocrisy as they push through new legislation in the Care Bill that will make it harder for clinicians, patients and communities to have a say over the reconfiguration of NHS services.

So we welcome the commitment to empowering service users through greater ownership of information, the creation of self-supporting networks and the “presumption that decisions should be made by users and public servants together”.

Much is already taking place, particularly in local government, so often at the forefront of public service innovation. A survey of local authorities that we commissioned last year, pointed to a wealth of innovative approaches to citizen participation, such as the Area Action Partnerships in Durham. We drew a number of key lessons from the research, the need for a properly resourced and pro-active local council that had the capacity to support flexible, responsive and integrated services was crucial. Cuts and outsourcing were major obstacles to this. Proper resourcing and the retention of services are integral to making “co-production” work.

If Labour is determined to “make our public services open to the voices of those they are meant to serve” and to “throw the decision making structures open to people too”, we believe they need to go further.

For far too long, our public services have been outsourced to private contractors under the veil of ‘commercial confidentiality’, with little information on why services have been tendered out, what criteria was used to award contracts, how the quality of service is being measured and maintained, what profits are being made and what tax is being paid by those that have taken over large parts of our public services.

In their report on major contractors delivering public services, the National Audit Office states that “the transparency over the rewards contractors make is limited” and even where it exists “it is difficult to interpret”. They argue that more transparency is needed to “ensure that no one within the contractor can hide problems” and to require greater “public reporting and openness to public scrutiny”.

As public services are ours by right, it is only right that as citizens we have access to the full range of information. So we would like to see Ed Miliband going further than access to individual service user records. We want to see open book accounting in all public service contracts, Freedom of Information extended to all providers of services, the power for citizens to effectively hold contractors to account. Much of this has been helpfully set out in the Public Service Users Bill originated by the campaign group We Own It and recently promoted in Parliament by a group of cross-party MPs. This could form the basis for a whole new citizens’ contract that could underpin Labour’s approach to public service reform.

If empowering public service users is one part of the equation, then empowering those delivering the service is equally crucial to getting the right kind of reforms in place. If Labour wants these principles to be “welcomed by millions of public servants who work tirelessly to serve the public”, then it is essential that those workers are given their voice and their stake in the decision making process.

The Francis Report into the scandals at Mid-Staffordshire NHS Trust showed what can go badly wrong in dysfunctional public sector institutions. So it is crucial that Labour draws on the lessons and recommendations that came out in the wake of the review.

Among the government responses to the recommendations of the Francis Report was the recognition of the benefit of “strong and effective partnership working at a national, regional and, in particular, at a local level” in order to “deliver a cultural change so that staff feel able to raise issues of concern and know they will be listened to”. It made specific note of the need to support “trade union representatives who have a vital role to play in helping to establish and maintain a positive workplace environment, which has a direct impact on patient outcomes”.

The positive benefits of worker engagement in supporting service improvement and the trade union role within this could not be made clearer. From Belfast to Oxford and points in between, trade unions have played an integral role in working with employers to improve public services.

While some may wish to reflect self-indulgently about the scars on their back, the current Labour leadership would do well to consider carefully how they include public service workers in their plans. For too many, public service reform has been something done to them and not with them. Public service workers live for the public service ethos, but morale is at rock bottom following years of cuts, attacks on pay and pensions and endless top down restructuring. Ed Miliband needs to find a way to address this and talk to the workforce that will be delivering the changes we all want to see.

Devolving decision making to the local and regional level, pooling budgets and consolidating funding agreements over longer time frames will all help deliver flexibility and integration of services, as long as this isn’t yet another recipe for simply passing the buck for further spending cuts to local authorities.

But cultural change is as important, if not more important, than structural change and this will only come with the workforce on board. Ed Miliband probably knows this but he needs to be bolder and clearer about how this will be taken forward.

All this will work well with the public. Polling by the Fabian Society shows that the public were very sceptical of market-based reforms. 62 per cent thought that public services should be mainly or only provided by the government. Empowering service users and workers scored highly, with 70 per cent stating that increased user voice would improve services and 59 per cent wanting more decision-making power for staff.  This contrasts with just 40 per cent supporting increased use of the private sector and charities providing services.

Tellingly, the most popular responses associated with politicians’ use of the term ‘reform’ were privatisation, increased spending on reorganisation and deterioration of services.

Ed Miliband has his work cut out but this speech showed that Labour is heading in a useful direction.

One Response to Labour beginning to talk the talk on public service reform

  1. Ray Allott
    Feb 11th 2014, 5:46 pm

    All Labour has to do is say that they will return the NHS to the original form and purpose as set out by Labour in 1948 and tell the private sector that they have profited enough from our taxes.
    The same applies to the essential utilities stolen from the tax payer by Thatcher.