The Coalition gives birth to the Open Public Services White Paper

After a long and difficult gestation, at last the Open Public Services White Paper arrived today.

Its timing could not have been less auspicious. The gaze of the media was upon the House of Commons where the Secretary of State for Culture was being flayed by the leader of the Opposition who wanted to know why the Prime Minister was not there to answer questions on Hackgate – rather than at Canary Wharf launching the plan for Open Public Services to a friendlier audience assembled by the centre-right Reform think tank.

The coincidence of the Open Public Services White Paper with the news of the break-up of the Southern Cross care home chain was unfortunate.

The White Paper set out five principles of Open Public Serices:

Choice – Wherever possible we will increase choice.

Decentralisation – Power should be decentralised to the lowest appropriate level.

Diversity – Public services should be open to a range of providers.

Fairness – We will ensure fair access to public services.

Accountability – Public services should be accountable to users and taxpayers.

It is worth considering the parentage of the new White Paper on Open Public Service. In Public Services published by the Prime Minister’s Strategy Unit, the language was of:

- With horizontal pressure from competition and contestability

- And bottom up incentives of choice and voice

- Supported by improvements in capability and capacity

…to create a “Self improving System”

That was in January 2007 in the last months of Tony Blair’s government.

In some quarters today was seen as a (another) re-launch of the Big Society. The White Paper certainly. Interestingly the only use of the term was in relation to the Big Society Bank. While the White Paper place emphasis on the role of new entrants as providers – including charities and mutuals – the New Philosophy Capital think tank was blogging quite sceptically this afternoon. The chill wings of austerity are blowing through the third sector.

How significant is the White Paper? Time will tell. The Coalition is promising more meat on the bones in coming months.

Light touch or better regulation in social housing and beyond

This week in Inside Housing the new Chief Executive of the Tenant Services Authority tells us that he does not talk about “light touch regulation”.

It’s an excellent sound bite but I was wondering what the opposite of that is: heavy handed regulation? (To be fair, the TSA does not appear to plan to bring a big, clunking fist to social housing.)

It’s a pity that the term “better regulation” has gone out of fashion.

I had a certain fondness for the five principles of better regulation:

1) Proportionality
2) Accountability
3) Consistency
4) Transparency
5) Targeting

There is a real risk that the lack of regulation in the financial sector (or perhaps more accurately problems with what regulation there was) will lead to the rehabilitation of red tape.

Craig Dearden-Phillips wrote in the Guardian recently of his big worry that:

the main message of the credit crunch - that "markets don't work, we need more regulation" - is read across into other arenas like health, welfare reform, education. All areas where, pre-crunch, we were witnessing a rapid shift from 1970s statism to a more nuanced approach in which markets, competition and a diversity of providers are used to drive up standards

On the continent some thinkers used to talk about the “social market” as: the market where possible, the state where necessary. It would be good if in social housing (and public services generally) the regulators used the slogan: competition where possible, regulation where necessary.

I know it’s not snappy. But it is what is needed.

Universities and mergers – is less more?

This week the new Higher Education minister (and the man tipped to be Britain's first black Prime Minister) David Lammy asked universities: "Do you have the right number of institutions? In the commercial sector there would have to be many mergers over the next few decades – far more than we have seen in higher education. Could more be done to encourage that among universities?"

I am a merger skeptic - too often mergers are driven by efforts to build empires or enhance salaries - or even worse, driven by bureaucratic convenience. Whatever the motives, too often the benefits are exaggerated and the costs overlooked (ask the bosses at RBS who out-bid Barclays for ABN-AMRO).

Nevertheless, some mergers can make sense as a response to changing times and challenging economics. While consolidation of existing institutions may take place, is there a case for increasing the supply-side? That actual or threatened competition from potential entrants can surely raise quality is increasingly recognised in the pre-18 education marketplace.

Putting people into public services: better regulation and inspection

The National Consumer Council has launched a new, short report on Putting people into public services: better regulation and inspection (pdf available).

The report should be required reading for the new Oftenant in social housing. Indeed all regulators and inspectors should be asked to think about the issues raised.

The report warns of the danger that services are modelled on what satisfies regulators rather than the public.

The report’s vision is of a regulatory system that:

1) is organised for the benefit of the people who use services, not for the convenience of regulators and the regulated;

2) inextricably links efficiency, value for money and satisfactory outcomes for the people –specially as new and different providers enter the market;

3) builds on continuous conversation with service users and the public – starting from where people really are, rather than from assumptions of how they might think and behave;

4) makes the most of service users as the experts on what it feels like to receive a service; and

5) builds popular support for difficult regulatory decisions.

I would also add that wherever possible choice and competition should be used to drive improvement – rather than relying exclusively on regulation and inspection regimes. While the regulator and the inspector may ensure recognition of social benefits and costs, promote good practice and protect the vulnerable and poorly-informed, they are not so good at generating innovation, encouraging value-for-money and tailoring services around individual needs.

Are colleges open for business?

I have spent much of today trying to speak to colleges about them providing construction training for a client. While some FE colleges are enthusiastic and accessible, others offer unreturned emails, labyrinthine websites and ringing-out phones. I am lucky to escape the loop of one college’s telephone system.

It will be a challenge when they are assessed on their responsiveness to customers under the LSC’s Framework for Excellence.

Maybe choice and competition will sharpen up their act.

The rise and fall of Carter & Carter – issues raised by private sector provision of public services

Over my 14 years working with Further Education colleges, one of my particular interests has been the spectacular collapses of some colleges. These collapses have often offered other colleges useful lessons in how not to do things, as I have noted here. (They have also led to a series of knee-jerk reactions from certain quarters with the result that colleges find themselves badly tied up in red tape.) Recently we have seen a phenomenon of a major training provider worth (at one point) £500m implode.

Carter & Carter was a fast growing training provider with plans for further expansion. Some colleges considered partnerships or actually entered joint ventures with the training provider. Then things went wrong. The founder and chief executive died in a helicopter accident. Then the share prices fell, the bankers got twitchy and the auditors got busy. The Guardian has the full story.

The rise (and fall) of Carter & Carter poses issues of private sector involvement in public services. I suspect it has delayed the day when we see the private sector taking over a failing FE college. I personally favour a mixed economy in public services (and, more importantly, so does Gordon Brown according to the Financial Times) as a way of promoting choice, competition and innovation. But how does the funder and the regulator ensure a level playing field?

Interestingly outsourced contractors might be star-rated when providing welfare services according to Public Finance. Stretching the regulatory regime for the public sector over the private sector is certainly one option. However, a lighter but smarter regulation might be a lot helpful in allowing all public service providers to focus more on outcomes than compliance.

NHS at 60 – faltering progress on reform

The Economist has made content from its crystal ball gazing The World in 2008 available on the internet. It’s worth a look.

There is a fairly depressing prognosis for the NHS as it reaches the age of 60. The article notes that Gordon Brown lacks the enthusiasm for introducing the market forces of competition among health care providers. The article concludes:

It is hard for the public to feel confident about how Labour is handling the NHS when its staff are so dissatisfied. And one of their biggest gripes has been the threat of private health-care groups moving in on their territory. But there will be a long-term price to pay. For it is exactly that threat which has the potential to unleash real change in the NHS, as Mr Blair belatedly realised. His vision of turning the NHS into a publicly funded health-care market may have run into difficulties, but that reflected the resistance of the vested interests of its staff as well as ministerial incompetence. Under Mr Brown and his health secretary, Alan Johnson, genuine progress in transforming the NHS looks set to falter in 2008.

Vision, Brown and the market for think tanks

Last month Prospect magazine gave the “left-leaning” Institute of Public Policy Research the accolade of Think Tank of the Year. I see this as significant given IPPR’s closeness to New Labour and power – plus a government in search of the “vision thing”.

It is note-worthy that the IPPR has been thinking and promoting reform ideas quite distinct form the Blairite agenda of choice and competition. Public Finance has carried an article by Carey Oppenheim and Lisa Harker setting out a Brownite “narrative” of collaboration between users and producers.

The two IPPR staffers identify behind “personalisation” and “co-production”, two guiding principles:

The first is that people should have more opportunity to shape their own public services and should be better involved and informed. The notion is that ‘how’ public services are delivered is as important as ‘what’ they deliver. The second principle is that a transformation of outcomes will only come about if users of services are jointly involved with professionals in achieving changes in behaviour. This might sound pretty unradical but it is likely to change fundamentally the experience of using public services as a patient or parent.

That all makes sense.

But I would suggest that public services still require incentives to change, innovate, improve quality and reduce costs – in other words, there is a need for the disciplines of markets. Think tanks like Reform and the Social Market Foundation continue to develop ideas around choice and competition.

The NHS: gifts and markets - the need for both economies

Life has been busy so I have only just got round to reading last week's Society section of the Guardian. It carried an interesting article, Gift rap, by Paul Hodgkin about the role of gift economies in the health service.

I agreed with the main thrust of the article that altruistic and collaborative enterprises (such as support groups) have a vital role in NHS. Hodgkin is chief executive of Patient Opinion which is itself a good example of such gift enterprises. “Co-production” is likely to be a growing part of NHS activity in the future too.

What I disagreed with Hodgkin about was his casual rejection of "markets" in the NHS. He commented:

there are a number of reasons why the search for fully functioning markets in healthcare has little likelihood of success.

He went on:

First, markets within the public sector are zero sum - more hip replacements here means less chiropody there. Or put another way, the foundation trust's surplus tends to mirror my PCT's deficit.

But there will always be a choice between hip replacements and chiropody - unless resources are unlimited. Love it or loathe it, but the National Institute for Clinical Excellence is a way of making those decisions by setting entitlements. The market (or call it choice for patients and competition among providers) is a tool for resolving whether those treatments are at hospital A or hospital B or polyclinic C.

Hodgkin continued:

Second, the "goods" the market is trying to allocate are usually not desirable - unlike a holiday in the Maldives. No one aspires to go to hospital for a mastectomy. As consumers, patients can call some shots in a market. But their fears and anxieties are easy to exploit by suppliers (read doctors) inducing demand for ever "better" care.

I think that medical treatment is very desirable when you need it - even major surgery. The point about professionals over-treating is valid although incentive structures can be developed that address that risk. So doctors and/or hospitals are rewarded for healthy outcomes rather than simple throughput of treatments.

One of the biggest obstacles for markets is the imperfect information that patients have about alternative doctors, hospitals, etc. But Patient Opinion and similar initiatives are tackling that.

I believe that Hodgkin's article reflects are cultural weariness of "markets". We hear the word and imagine Del Boy selling three legged tights or City traders yelling "Sell, sell, sell" into their mobile phones. Perhaps there would be less prejudice against "markets" (and associated hostility to reform) if we spoke about decentralised decision making by patients (or parents or service users or whoever) rather centralised decision-making by planners and politicians.

Gordon Brown and public sector reform

The Brown government’s views on public sector reform are somewhat hard to discern although the pace of change in the NHS may soon be slower. However, there is an interesting debate on reform going on.

The Society section of the Guardian website is carrying both an article by a former Downing Street adviser and a selection of views on the role of choice in changing public services.

Although I see choice and competition in public services as a driver for improvement and efficiency, the cartoon above does amuse me.

Blair, Brown and public sector reform - diversity of providers

Last week's government's policy review document on Building on progress: Public services (pdf) included 11 references to a diversity of providers as well as a section entitled "Opening up supply".

But rewinding to last summer's Releasing the resources to meet the challenges ahead: value for money in the 2007 Comprehensive Spending Review (pdf) document published by (and concisely titled by) the Treasury last summer there was a list of the key elements of public service reform as:

1. establishing clear goals, national standards and accountability for performance;
2. devolving decision-making to the frontline and improving the capability and capacity of public servants;
3. engaging public service users and communities in the design, delivery and governance of public services; and
4. empowering users, including through the exercise of choice.

No mention of diversity of provision there. In 55 pages there is only one reference to "diversity and competition among providers" - in the Foreward by the Prime Minister and Chancellor of the Exchequer.

Does this mean anything? A lot? Perhaps not. It does cast some doubt on the suggestion that the velocity of reform will be sustained under a Brown premiership.

Regulation in the news: the NHS and social housing

Red tape is in the news this week.

According to the NHS Confederation, bureaucracy in the NHS is increasing with 56 bodies having a role in inspecting, assessing or monitoring the NHS. Is this necessary? (Report pdf available.)

With greater patient choice and more diversity of providers there should surely competition should replace regulation to some extent at least. Regulation should focus more promoting competition among providers (like OFCOM and other regulators) and disseminating information for “consumers”.

There is the on-going debate about regulation in social housing with the Cave review. This week Inside Housing has an interesting overview of the arguments from the various interested parties. (Sadly the article is not on the IH website.)

I strongly favour proposals for contestability and “choice based management” with the tenants able to exercise choice when their landlords fail them. This mechanism has been suggested by the Audit Commission in their submission to the Cave Review.

Further education colleges and choice

This week’s debate about Brighton & Hove City Council’s approach to over-subscribed schools (“lottery” to the media; “equal preference” to the Council; “random selection” to the experts) was interesting.

The issue has arisen from the need to manage fairly the challenges of schools choice. (I’d recommend the podcast on schools choice from Bristol University’s Centre for Market and Public Organisation for background on these kinds of issues.)

For a long time I've been waiting for the simple idea of choice arriving on the agenda of the further education sector. There is now lots of talk of “personalisation” and “contestability” (for the uninitiated - reducing barriers to entry for new providers). Recently “learner choice” has been spotted in the pipeline.

Yet since the creation of the Learning & Skills Council (and to some extent before) there has been pressure for mergers. While some mergers have made sense – particularly where well-managed colleges have effectively rescued weaker ones – others seem to have been driven by a belief in rationalisation and reducing to the sector to 150 or so colleges. There is a real risk that the scope for learner choice as well as the impetus for innovation and the possibility of meaningful benchmarking could be merged away.

Cave Review - HAs, self-regulation, contestability and a daft idea

Yesterday evening I was at the National Housing Federation's (NHF) conference for housing association board members. The evening plenary session was on the future regulation of HAs.

One of the speakers was Julian Ashbury who is a member of the Cave Review team on social housing regulation (covering regulation for HAs, council housing and, potentially, private sector involvement in social housing). He spoke about the issues for the Review in a personal capacity.

Ashbury was clearly lukewarm about the NHF’s core proposal of self-regulation. He likened self-regulation to the weak regulation by the medical profession and the Press Council – unchallenging and too “producer-friendly”. (He didn’t mention how the NHF’s espousal of self-regulation could be perceived by the stakeholders and critics of HAs.)

There was more positive talk of “co-regulation” – allowing a degree of self-regulation that is regulator-approved and externally validated. A bit vague but surely more reassuring for tenants (and voters in stock transfer ballots).

I was interested in Ashbury’s thoughts on “market-style incentives”. In particular, he suggested making poorly-performing HAs (and others) give up the management of stock to those who can manage it better. (I said something similar here the other day.) This is essentially “contestability” (the idea that performance can be improved by the credible threat of competition) although he did not use the term. There is nothing more powerful than the thought of losing “business” to make an organisation raise its game.

Ashbury (and James Tickell advises the NHF) recognised the role for residents in the framework. Interestingly he advocated a national voice for residents with a right to be consulted by the social housing regulator – something similar to Energywatch and Passenger Focus.

I should add Ashbury seemed to float one positively daft idea. Letting HAs charge more (less) rent if they get better (worse) satisfaction rates in tenant surveys. Does he not realise that residents might spot that, claim dissatisfaction and vote for lower rents?

I hope some of these ideas from Ashbury are shared and espoused by his colleague Martin Cave when he writes the Review report. Whatever happens, we are in for an interesting debate as well as potentially more freedom and flexibility for HAs and other social landlords – with greater reliance upon good governance and less on strict regulation.

Public services, the private sector and social enterprises

This week there have been two interesting articles on the role of the public, private and third sectors in delivering public services.

Stefan Stern in the FT suggests that private sector methods find their limits in the public sector:

People who choose careers in the public sector have usually done so because they want to provide a good service, not because they want to compete commercially with rival companies. The language of markets and "contestability" is lost on them. The management challenge is to raise performance without jeopardising that service ethos.

I think that Martin Narey's article about the prison service makes a strong argument against that. (See my blog post on this article.)

Tim Smit (chief executive and co-founder of the Eden Project) makes the case for social enterprise in the Guardian:

I think it's fantastically exciting, because we can do it and it works. I think social enterprise is the future model for organising our collective state assets.

I certainly agree with that – especially customer-directed mutually-owned organisations such as housing co-ops and community gateway associations.

More NHS patient choice - but voice too please

It was good to read last week’s announcement by the Department of Health that there would be a major extension of patient choice. (An analysis is available on the website of the think tank Reform.)

NHS patients needing “elective” treatment like a hip replacement can currently choose from four local hospitals, 34 foundation trusts and 15 independent sector providers. The Department of Health’s roll-out of choice means that by the summer there will be over 200 hospitals and treatment centres on offer to patients. Then by the end of 2008, patients will be able to choose from any hospital which meets NHS standards and costs.

The Department of Health is also creating a new website that will bring together information on all hospitals and treatment centres to empower patients to make more informed choices than ever before on their healthcare. This is vital to make choice informed and meaningful.

Linked with Payment By Results, these changes mean that the best providers will be encouraged to expand and shorten waiting lists. It’s a shame that these changes have come in so late and after so much money was injected in the NHS.

Having said that, as I have argued before, there is still a need for patient choice to be supplemented by voice – particularly in the areas where there are fewer hospitals. This can be seen from a map below from the Centre of Market and Public Organisation’s study of Choice: Will more choice improve outcomes in Education and Health Care (pdf available).

Public sector reform - Downing Street on choice, competition and contestability

If you have a spare half an hour, I would recommend that you read the Prime Minister’s Strategy Unit’s paper on Public Services. It was published last week but the media seemed to treat it (and the other three papers) as a footnote to the saga of the Prime Ministerial succession.

In fact the Policy Review paper sets out clearly the thinking in Downing Street (certainly No 10 – maybe not No 11) – although it is "not a statement of policy".

The papers rehearses the achievements and sets out the context (demographic, social, economic, etc). Then more interestingly observes:

But there are downsides to an over-reliance on top down performance management and funding alone, and so a new phase of public service reform has evolved

This seeks to:

- Combine top-down approaches of inspection, regulation and targets

- With horizontal pressure from competition and contestability

- And bottom up incentives of choice and voice

- Supported by improvements in capability and capacity

…to create a “Self improving System”

The paper links these to changes in the NHS and elsewhere. It makes a convincing case for choice, competition and contestability. It goes on to give examples from Sweden and other countries of where such reforms have (generally) worked.

It is noteworthy that in the paper there are hardly any (maybe no) examples of where inspection and regulation have managed to improve public services.

The NHS, EU competition rules and social enterprises

I had mixed feelings reading in the Financial Times that NHS services procured by PCTs etc are likely to become subject to EU single market and competition rules.

This should ensure that competition and contestability inject more innovation and value-for-money into our NHS. On the other hand, I would be disappointed if these rules prevented the Department of Health providing support to not-for-profit social enterprises run by professionals (and ideally with accountability to patients and communities).

Social enterprises are developing new and novel models of managing provision - they need support when up against BUPA, Nuffield etc.

Competition and public services: sin, prisons and the third sector

John D. Rockefeller once suggested "Competition is a sin.". It is certainly a dirty world for many people when it comes to public services. Therefore, it is particularly welcome that the Guardian Society section today carries an excellent article by Martin Narey – the former director-general of prisons and now chief executive of the children's charity Barnardo's.

Narey describes how he was converted from campaigning against private sector involvement in prisons to the recognising how competition can oblige providers of services to raise their game - or get replaced by those who can deliver.

He also makes a convincing case for the Third Sector’s potential in delivering public services and ask policy-makers for “a level playing field, a transparent tendering process, and to be given work when we can demonstrate that we deserve it”.

Reality TV, changing mindsets and NHS reform

I am no fan of Reality TV. But I am looking forward to next week’s Can Gerry Robinson fix the NHS? In the series broadcast on three consecutive nights from Monday January 8, the ex Granada CEO trouble-shoots at a hospital struggling to get its waiting list down.

The series has already caused a stir. “Business boss blames weak managers and 'collective inertia' as he attempts to transform a struggling hospital” reported the Observer. While we have all met one or two uninspiring “leaders” in (or from) the NHS, the series is about more than leadership issues.

In an interview with Open University, Gerry Robinson comments on the ease of changing NHS mindsets:

Oh much more difficult than it would have been in any commercial organisation because there is a sense in a commercial organisation of a commercial, you know, imperative. People know what the object of the exercise is, and by and large people working in commercial organisations, have worked all their lives in commercial organisations, and they know that you need to make things happen and you need to make it happen now, otherwise in business you run the risk of dying on the vine. The Health Service, you’re very protected, so you can take your time, you don’t have to change, it’s all very casual and very, very different; much, much slower than it would have been in almost even the worst run commercial organisations.

I would suggest that this points to the need to think about the environment that NHS organisations work in. In fact, increasingly hospitals have to adjust to a more “commercial” imperative – with patient choice and Payment By Results as well as competition from the independent sector. This is painful but I welcome a move from the old command-and-control bureaucracies. The NHS must become more responsive to patients and communities – rather than constantly directed by politicians and bureaucrats.

On a similar theme, the think tank Reform have published their latest survey of the NHS. There has been a lot of media coverage of the suggested debt write-off. But the report also stresses the need for continuing reform - using patient choice and competition to redesign services around the needs of patients. A message not inconsistent with Gerry Robinson experience.