House – Public Policy Design
Blog: The Open Public Services White Paper – flattering to deceive?
The Open Public Services White Paper has finally been published. In February this year David Cameron heralded the beginning of the, ‘decisive end of the old-fashioned, top-down, take-what-you’re given model of public services.’ The White Paper elaborates further and identifies the need for increased diversity of provision, the importance of innovation and quality in public services, and the role for strong local authorities.
It is light on detail and firm policy positions. More disappointingly, the relationship between the Government’s public sector reform agenda and local economic growth is not explored at all. As the White Paper says, £42 billion was spent by local government on external contracts. Rather than thinking in terms of spending billions on the supplier base, Government should be shifting mindsets towards thinking about how these billions can be invested in local businesses, local neighbourhoods, local assets and local networks.
Managing for local outcomes is the key to establishing and maximising this relationship between public sector reform and local economic growth yet, as with the other good ideas in this White Paper, there is no real insight into the challenges and opportunities this new approach to managing contracts presents. There is frequent reference to the Localism Bill – why did this legislation not make it a duty, rather than a power, to include social and environmental criteria in public service contracts, thus making it a legal requirement to commission beyond cost?
My fear is the lack of detail at the policy level suggests, at best, a lack of coherence at the strategic level. Despite the many years of contestability in public services, the market remains immature. The White Paper itself suggests this: it both implicitly endorses the increased contestability over the past twenty years and highlights the drop in productivity in public sector performance since 1997. Reading this, why would anyone expect an extension of the ‘modernisation agenda’ to result in increased productivity?
An immature market will, by its own volition, bring neither innovative, high quality public service models to market, nor those that lead to investment in local organisations and neighbourhoods. Whether it is managing the supply chain, or commissioning beyond price for social and environmental value, current market structures and the wider macro-economic climate reinforce the commissioning bias towards large providers who can win contracts on price.
The Government’s intention to remove barriers to entry and exit represents the classic British liberalising approach to creating and managing markets – open them up and then disengage. Other countries, such as Germany and Japan, opt for a more strategic approach. Generally, they assess the number of organisations the market can bear and manage entry and exit accordingly. Once stable market share is achieved, strategic intervention by the government is withdrawn.
Diversity, innovation and recognition of the role for local government are all vital for the delivery of quality, responsive local services. However, without both the policy detail on how to manage markets for local public services, and the strategic awareness of why we must do so, this once in a generation opportunity to crack public sector reform will pass us by.
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