Public services open for business

Back in January this year, it was reported that the Cabinet Office was planning radical changes to the way in which public services are delivered, with companies, charities and community groups invited to provide public services and banks and other financial institutions asked to help fund their operations. Some six months later, and after many rumours that the Government was having second thoughts, the Open Public Services White Paper has finally been published.

The long awaited publication was trailed as critical to reform in health, education, social care, welfare and housing and would affect all citizens. As David Cameron said at its launch yesterday, it should put power in people’s hands. It would be the end of big government, top down and "Whitehall knows best".

Oliver Letwin, Cabinet Office Minister, told Parliament that the White Paper “sets out the most radical programme of transparency for government and the public sector anywhere in the world. To unlock innovation, the White Paper commits the Government to diversity of provision, removing barriers to entry, stimulating entry by new types of provider, and unlocking new sources of capital.”

Closer examination of the proposals reveals that much of the Paper simply sets out changes that have already been announced or builds on initiatives which are already being implemented, such as the Community Rights under the Localism Bill, personal budgets for adult social care, and Community Budgets. However, there are some new ideas, as well as extension of existing practices.

Key principles

The Prime Minister explained that the Government’s approach was based on five fundamental principles. All have an effect on health trusts and local authorities, and offer challenges and opportunities to private and voluntary groups:

• Choice: Wherever possible, people will be given direct control over the services they use. The intention is to enshrine a right of choice into law (so the public do not need to put up with what they are given). The Ombudsman will play a new role as enforcer of choice, with Which? extending its role to be advocates in public services;
• Decentralisation: Continuing a wider government theme, power is to be held locally. Democracy will be offered on a "hyper local scale", with funding streams offered direct to local neighbourhood or parish councils. Local services should be opened up and the Government will consult with local authorities on locally commissioning services in areas such as planning, property and facilities management, back-office transactional services, and housing management; 
• Diversity: the stated desire is to open up to new providers. Diversity is to be the default setting and the State will need to justify why it runs a monopoly service. This will be quite a mindshift for services such as education, health, social care and housing; 
• Fair access: the State’s role will be to deliver fair access, fair funding and fair competition. The proposals aim to stimulate more openness and innovation in public services through new types of providers, such as applying the Foundation Trust model to other public services, and exploring extending different models of increased independence and a more diverse provider base – including employee mutuals and a greater role for voluntary and private sector providers. The Prime Minister has expressed a desire to see the poorest not left behind, but it will be fascinating to see how this is reflected if no-one steps forward in an area to challenge current providers to offer such choice or diversity of supply; and
• Accountability: the Prime Minister highlighted Payment by Results as one of the biggest levers of accountability, and there is to be consultation on extending this commissioning approach to other services, for example court and tribunal administration, payment processing, land and property information services, and immigration and visa administration. However, this is at a time when many public bodies still procure services on an input basis with few payment or other remedies in their contracts.
  Further emphasis was placed on transparency and the release of data. But key questions remain about how to ensure such data is accurate and whether the data is a true barometer of services especially if contract terms differ. There could be good reasons why one provider appears to do better than another - for example, the pricing of risk in a contract; the enforcement; the drafting of the key performance indicators, etc. Comparisons are ripe for dispute and confusion and the release of data without a defined context may distract from success, diversity and choice.
  

Procurement

One major issue for delivery will be the impact on procurement. There is much talk of opening the market; of opportunities for SMEs and third sector; of allowing service failure to drive up standards; not appointing large providers as the risk free option, and much more. However, without examining procurement choices locally these aspirations may not be met.

Providers often cite lack of transparency regarding potential TUPE liabilities associated with taking on a service as a barrier to competition, leading to them being unable to accurately price their bids, or choosing not to bid at all. The Government intends to review employment regulations to ensure that they are working effectively for both employees and employers, but in the meantime, public service commissioners are encouraged to disclose TUPE liabilities early on in the commissioning process or when the Right to Provide or Right to Challenge has been invoked.

What next?

There will now be a “listening period” over the summer, enabling a wide-ranging consultation with individuals, communities, public sector staff, providers and others with an interest in how public services are delivered.

This will be followed in November by details of how Departments will take forward ideas to implement open public services over the rest of this Parliament, including proposals for legislation. The parliamentary timetable means that any legislative changes will not become law for at least another 12 months, so would be unlikely to come into force until 2013.

But many of the proposals do not require new law and are already being put into place, such as Community Budgets and social investment. The White Paper provides further support for solutions such as the Local Integrated Services Trust (LIST) being pioneered by Bevan Brittan, which creates a common public sector purse and is an effective conduit for social investment.

Public bodies will already be reviewing their commissioning strategies and exploring how services can best be delivered, including opportunities for service transformation across the whole of their area. The Open Public Services White Paper introduces an increased expectation of choice, diversity and pluralism of provider which will need to be factored in. The Government is heralding this as the largest change to public services since the establishment of the Welfare State - its real impact will become clear as the detailed proposals emerge.