Open Public Services White Paper - TUC Response

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Section one

Executive summary

The case for public services

Public services are not discretionary commodities. They are public goods that provide benefits to both individual service users and wider society.

The TUC believes that the founding principles of public services, namely universal access, delivery according to need, services free at the point of use, and services delivered for the public good rather than for profit should be at the heart of any model of service delivery.

It is our view that through its democratic accountability, unique funding mechanism and long-term integrated approach, the public sector is best placed to provide public services that meet the criteria above.

The case for public service reform

Public services need to change and develop over time to meet the needs of our changing demography, to respond to new expectations, to deal with local needs and to harness technological and other innovations.

Public resources are finite and under increasing pressure as the economy struggles to recover from the global crash. Providing high quality, flexible services, whilst guaranteeing universal and fair access is a major challenge.

The TUC supports reform that improves delivery and creates services
that are responsive to communities by engaging service users, staff and commissioning authorities through negotiation and agreement within a
public sector framework.

This entails serious investment in the quality of the public service workforce, ensuring the best possible working conditions and training in order to build the expertise and commitment required to carry through genuine innovation and reform by public service workers.

The government's approach

The TUC rejects the individual consumer approach to public services promoted in the White Paper. The government's stated preference that 'power over the public services that people use as individuals should go to those individuals' fails to understand the collective nature and ethos of public services.

The TUC does not support the White Paper's assertion that indiscriminately opening public services to multiple providers is the 'only way' to improve quality. Indeed, we believe that the effect is likely to be the opposite
in practice, with quality driven down by the effects of marketisation
and competition.

Market-based approaches to public service reform have generally failed to deliver promised improvements, with privatised public services characterised by market concentration, reduced accountability, detrimental impacts on the conditions of public service workers and high profile project failures bailed out by the taxpayer.

The Prime Minister and Deputy Prime Minister's depiction of those who oppose the government's market-based approach, including vast sections of the public and the public services workforce, as 'conspiring to keep our society less free, less fair and less united' is patronising and offensive.

The government's five key principles for public service reform; choice, decentralisation, diversity, fairness and accountability will be compromised by the escalation of privatisation and outsourcing in an open market, where services will be handed to national and multinational private providers with reduced accountability and responsiveness to local need.

The form of personalisation and choice based on the individualist approach of the White Paper potentially leads to inequality. Those who are more informed and empowered and those with greater social capital and power will inevitably have greater leverage over public services than others.

Choice is presented as a panacea, to be pursued at the expense of other priorities that are in fact higher priorities for the general public. Evidence from opinion polling has consistently shown that people prioritise the availability of good quality local services over 'choice'. People want to know that their local public services are good quality and responsive to their needs. Service users value choice about the nature of the service they receive from their provider. But choice between different kinds of provider is not a priority, particularly where this conflicts with other aspects such as security, consistency and
fair access.

Service users will be faced with a complex range of competing service providers, covering a range of different organisational forms with different forms of accountability. Navigating this landscape will be particularly problematic for service users with complex and multiple needs dependent on a number of different providers, where integrated and holistic remedies and treatment paths are required.

Competition is seen as the best way to increase provider diversity and to achieve service improvement. However, experience suggests that public services markets are highly concentrated, with complex and fragmented supply chains inhibiting flexibility and joined up services. Collaborative approaches to service improvement and the sharing of expertise and best practice will be impeded by the extension of harmful competition within health, education and other public service markets. The extension of contract culture across public services will escalate transaction costs that have been seen to dramatically increase in quasi-market situations such as the health service and rail industry.

The government places overt focus on structural change and the break-up of public sector institutions. There is much less focus on effecting change to the practices of public service workers or the relationships between public service professionals and service users.

Public service quality relies heavily on the professionalism and empowerment of public service workers, as the White Paper acknowledges. However, unlike models of public service reform promoted in Wales and Scotland, the White Paper pays no regard to investment in the skills and capacity of the public sector workforce. No reference is made to partnership with public service professionals. Empowerment of public service workers is referenced only in regard to a flawed programme of mutualisation, which to date has been characterised by top down management restructuring in the face of widespread opposition from public service workers. Existing limited protections of public service workers facing the outsourcing of their jobs is under threat as the government withdraws the two-tier code and reviews Fair Deal of Pensions and TUPE. It is unclear how the fairness principle applies to the public
service workforce.

Accountability will be compromised as the democratic institutions of the state withdraw and are replaced by providers from alternative sectors. Providers from the private and voluntary sector will be outside of the scope of the Freedom of Information Act and lines of accountability will be complex and managed through contract compliance rather than direct accountability to elected representatives and democratic institutions. Democratic accountability is also weakened across many of the new governance structures in place,
e.g. Health and Wellbeing Boards.

The TUC approach to reform

While the government argues that opening up public services to the market is 'the only way to deliver the improvements that people demand', there is a wealth of evidence to suggest that in-house delivery of public services has proved particularly effective in improving quality, meeting user needs and achieving value for money.

There is scope to achieve innovative and sustainable reform within a public sector framework, whereby accountability to democratic institutions is balanced with mechanisms for engaging the community and service users and where the public sector workforce plays a fundamental role in the consultation and negotiation process with commissioners and users of services.

Trade unions can play a key role in facilitating worker engagement, empowering employees to play a role in the decision making process and breaking down institutional resistance and unlocking staff expertise.

Research into the role trade unions can play in public service reform showed that the majority of more than 200 local authority respondents stated that trade unions had played a positive role. The main outcomes and improvements achieved included 'improved efficiency, cost savings, better quality services and/or service redesign and improved staff motivation and morale'.

The TUC model for public service reform incorporates the following elements:

  • engagement with users to determine public service delivery strategies and implementation plans with a precise focus on identifying what public service users and the wider community want a service to generate
  • a commitment to deliberation and negotiation in identifying that
    public value
  • a recognition that any conception of public value must involve not just
    what a service should deliver but also how it can be delivered in a
    cost-effective way
  • the development of public service delivery strategies and implementation plans that uphold the founding principles of public services, namely universal access, delivery according to need, services free at the point of use, and services delivered for the public good rather than for profit
  • the development of public service delivery strategies and implementation plans that preserve the organisational integrity of public services and which value collaboration and integration over competition and fragmentation
  • full engagement with public service staff in the determination of strategies and implementation plans
  • the establishment of robust feedback mechanisms for staff and users during the implementation and delivery phase of any strategy.
Section two

Introduction

The TUC is the voice of Britain at work. We represent 55 affiliated unions with more than six million members. The TUC campaigns for a fair deal at work and for social justice at home and abroad.

This response builds on the TUC's previous submissions to the Modernising Commissioning Green Paper, the call for evidence on public service reform
and the TUC report Civil Society and Public Services: collaboration not competition. This response has been informed by consultation with
TUC-affiliated unions representing workers in the public and not-for-profit sectors through the Public Services Liaison Group (PSLG).

The TUC has serious concerns about the way that the consultation on the White Paper has been conducted. The timescales for consultation on the Green Paper and call for evidence informing the White Paper were both less than half the minimum period recommended by the Code of Practice on Consultation[1]. Furthermore, the current consultation, held over the summer recess, offered limited scope for response through its online format and prescriptive questions that constrained the wider debate.

The TUC believes the White Paper is of critical importance and we have therefore taken the opportunity to set out our thinking in detail, exploring
the full range of issues arising from the government's proposals and
policy initiatives.

The TUC has serious concerns about the overall policy direction set out in the White Paper and many of the initiatives set out within it. We are also concerned at the lack of evidence provided for the significant assertions in the White Paper. This submission addresses these concerns through a critical analysis of the government's approach and a focus on the alternative approach to public services favoured by the TUC, based on evidence from a wide range of sources.

Structure of the response

The White Paper sets out five key principles guiding the government's public service reforms:

  • choice
  • decentralisation
  • diversity
  • fairness
  • accountability.

In this response we set out to critically examine the impact of the proposed reforms against each of these principles.

In addition, we include an additional four principles against which we assess the potential impact of the government's reforms:

  • quality
  • value for money
  • valuing and empowering employees
  • valuing and empowering communities.

In so doing, we will articulate our own approach to reform based on a model that we believe best meets the core criteria of public services:

  • universal access and promotion of equality
  • delivery according to need
  • services for free at the point of use
  • high quality services
  • services delivered for public good not for profit
  • democratic accountability.
Section three

The case for public service reform

In this section we set out to:

  • outline the key areas of debate around public service delivery and the case for reform.
Making the case for public services

In the White Paper, the government makes clear its commitment to an individual consumer approach to public services: 'Our preference is that power over the public services that people use as individuals should go to those individuals wherever possible. No-one knows an individual's preferences better than they do, and while some people may need extra help to choose the services they want, at the centre of our vision is the belief that people should be trusted to choose the best services for themselves rather than being forced to accept choices determined by others.'[2]

While framed within the language of individual empowerment, this telling passage clearly illustrates the government's failure to understand the nature or ethos of public services.

When launching the Open Public Services White Paper, the Prime Minister compared public services to the purchase of a mobile phone. But unlike mobile phones, public services are not discretionary commodities. They are public goods that provide benefits not only to individual service users but to society as a whole. Public service delivery entails citizens' rights and equality of access and provision. Public services carry a range of social imperatives and expectations clearly differ from those that govern consumer decisions.

Public services, from our National Health Service (NHS) to local authorities do not just provide key services to people but play a fundamental role in social cohesion, binding our communities together, securing long-term investment and support for local economies and providing the building blocks of the welfare state that was created, let it not be forgotten, to address decades of market failure. Years of unaccountable, top down, arbitrary services provided by charities and businesses left large parts of the population without the services, protection and security that the modern welfare state provides. It is this market failure that led to the very creation of the welfare state in the first place, to head back in the direction of private and charitable provision displays a fundamental misunderstanding of the very purpose of public services.

This is why public services and the workers who deliver them continue
to be held in such esteem and trust by the general public, as surveys
continually show. Hostility to privatisation of public services does not necessarily reflect widespread ideological opposition among the British public but an understanding that what makes our public services work is the adherence to core principles, at the forefront of which are universal access, fairness and security.

In the foreword to the White Paper, David Cameron and Nick Clegg describe those who oppose the government's plans to marketise public services, including vast sections of the public and the public services workforce, as 'conspiring to keep our society less free, less fair and less united'[3]. This patronising and offensive labelling disguises what appears to be their ideological conviction, displayed throughout the White Paper, that the market is the only way to improve services.

The TUC also objects to the tone of language applied to public servants in the White Paper and by Ministers elsewhere. The use of caricatures of 'bureaucrats' and 'enemies of enterprise' fails to recognise the dedication, hard work and expertise that exist within the public service workforce and the added value those workers create. From nurses to climate scientists, there is a wealth of specialism and knowledge across the public sector that is a public asset that should be highly valued and regarded with respect. The depiction of adversarial relationships between service users and public sector professionals is misleading and unhelpful.

The TUC believes that the founding principles of public services, namely universal access and the promotion of equality, delivery according to need, services free at the point of use, and high quality services delivered for the public good rather than for profit should be at the heart of any model of service delivery.

It is our view that through its democratic accountability, unique funding mechanism and long term integrated approach, the public sector is best placed to provide public services that meet the
criteria above.

The case for public service reform

Public services need to change and develop over time in order to meet the needs of our changing demography, respond to new expectations, deal with local needs and harness technological and other innovations.

Public resources are finite and under increasing pressure as the economy struggles to recover from the global crash. Providing high quality, flexible services whilst guaranteeing universal and fair access is a major challenge.

But we are concerned that the approach set out by the government is driven not by these priorities but an ideological agenda aimed at expanding a free market for public services.

The TUC believes that this approach will lead to inequality for service users, public resources transferred to the private ownership, increased rewards for shareholders and executive pay while choice and resources will be consolidated in the hands of an empowered minority. It is highly improbable that 'the poorest will be at the front of the queue'[4] as the White Paper nobly asserts.

Market-based approaches to public service reform have generally failed to deliver promised improvements, with privatised public services characterised by market concentration, reduced accountability, detrimental impacts on the conditions of public service workers and high profile project failures bailed out by the taxpayer.

Public service users value access, equity, reliability and a social ethos in the provision of their public services. These values tend to take precedence over provider choice. Service users understand the difference between public services and the private provision of consumer goods and have different expectations
of each.

Effective and sustainable improvements in outcomes are achieved through the shared endeavour of citizens and service providers. The TUC supports reform that improves delivery and creates services that are responsive to communities by engaging service users, staff and commissioning authorities through negotiation and agreement within a public sector framework.

This entails serious investment in the quality of the public service workforce, ensuring the best possible working conditions and training in order to build the expertise and commitment required to carry through genuine innovation and reform led by public service workers.

Through its programme of reforms, the government places overt focus on structural change and the break-up of public sector institutions. There is much less focus on effecting change to the practices of public service workers or the relationships between public service professionals and service users. Given the nature of public services, the prioritisation of reforms to structures rather than people and their relationships signals the government's misunderstanding of the challenges facing public services, the means to improving those services
and the social outcomes that might be derived from a greater focus on the interactions between the workforce, service users and their communities.

The government's reform agenda must also be seen within the context of its programme of unprecedented cuts to public spending which undermine any serious attempts to improve service delivery and implement genuine and sustainable reform.


Section four

The government's principles
of reform

In this section we set out to:

  • critically analyse each of the five principles for modernising public services, set out in the White Paper
  • outline the government's stated approach under each principle and assess what impact this might have on service provision, service users and their communities and public service workers.
Principle One: 'Wherever possible we will increase choice'

The White Paper says:

The government correctly identifies that people want to have a greater say
in how public services are run. The White Paper contends that public
services need to be 'responsive to people's demands if they are to retain people's trust.'[5]

It is argued that choice will be increased 'by giving people direct control over the services they use.'[6]

This is to be achieved through a combination of increased access to information, personal budgets, increasing competition between providers and a regulatory focus on choice.

Our analysis:

The TUC supports choice for public service users and staff where it adds genuine value, allowing citizens to use services in the way that benefits them the most and allowing staff to work to develop responsive services. For example, we support the use of personal budgets where they are appropriate for the service user and are backed by specialist support and guidance.

What choices do people want?

Experience of the choice agenda in public services to date shows that 'the public are too often simply offered a choice between providers that all offer the same limited service instead of a service that really meets their needs and that they can shape.'[7]

Research by Strathclyde University into public attitudes found that the principle of choice over service provision was supported but that there was widespread antipathy to private enterprise delivering public services, concluding that 'demand for choice is a demand for good (and diverse) publicly provided services.'[8]

Choice is often presented as a panacea, to be pursued at the expense of other priorities that are in fact higher priorities for the general public. Evidence from opinion polling has consistently shown that people prioritise the availability of good quality local services over 'choice'. People want to know that their local public services are good quality and responsive to their needs. Service users value choice about the nature of the service they receive from their provider. But choice between different kinds of provider is not a priority, particularly where this conflicts with other aspects such as simplicity, convenience, access and reliability.

Research by Ipsos/MORI shows that people's key priority for public services
is 'ensuring that a good basic standard of services is available locally'.
Within this basic standard, the two main priorities identified by the public
are for 'fairness' and good 'customer service standards'. While people want, in principle, a greater say in public services, 'local control, personalisation
and choice are seen as less vital as ends in themselves'. According to the research findings, the public regard these principles as important but 'if
they have to make trade-offs then they prioritise core service standards over these principles.'[9]

Fairness was particularly valued as a principle of public service delivery. This was largely defined as a commitment to uniformity in standards. Ipsos/MORI found that: '63 per cent of the public think that standards of public services should be the same everywhere in Britain, with just 20 per cent preferring greater local decision making.'[10]

The TUC shares this view. Whilst choice is welcome in certain circumstances, it should be balanced with the need to ensure the key principles of public service. Reducing public service delivery to individual consumer choice endangers principles of universality and equity.

Is provider choice 'the only way' to improvement?

The White Paper appears to use a very narrow definition of how to empower service users. The focus on choice of providers as the central pillar of empowerment ignores other ways in which people might want to be involved in their public services, for instance by working with the staff team in a service to make it more responsive to users' needs. These ideas are explored further
in the final section of this paper where we set our alternative vision for
public services.

The TUC supports choice within a public sector framework, something
that appears to have been largely ignored in the White Paper. Many local authorities have worked hard to offer citizens choices about how they use services, for example:

  • Oldham Metropolitan Borough Council brought its waste collection services in-house following a record of poor performance by private sector contractors. Among other improvements, the services have been re-designed to focus on the council's vision of 'voice and choice' involving people in the way services are delivered, with waste services increasingly seen as 'mechanisms of engaging with service users and tailoring services, particularly collection schedules'.
  • Fife Council found that insourcing their buildings and gas servicing and repairs offered greater flexibility resulting in an alternative delivery model that provided 'more flexible appointment times for tenants'.
  • Redcar and Cleveland Council found that partnership with private contractors had failed to deliver an effective customer relations service. Insourcing enabled cost savings, greater flexibility and integration with other services, such as libraries, to provide a more innovative and responsive service that met people's needs. This has resulted in 95 per cent customer satisfaction rating and a 22 per cent improvement in resolution of problems within 24 hours at ward level.
  • In response to poor contractor performance and customer complaints,
    North Tyneside Council brought its recycling service in-house and
    through communication and redesign with employees and service users, there have been massive improvements in availability and use of recycling across the authority. [11]

Choice versus universality

The form of personalisation and choice outlined in the White Paper potentially leads to inequality. Those who are more informed and empowered, those with greater social capital and those with more power will inevitably have greater leverage over public services than others.

This leads to choice at the expense of consistent standards and equality of access. If a school is failing, parents cannot necessarily exercise the choice to move their children to another school if they lack resources such as time, money and education.

It is right that service users should have a say in the design and delivery of public services. However, as public goods, the provision of public services should be designed in a way that also meets wider social objectives and balances need across local communities and within finite resources. Choice based on the individual consumer can conflict with these imperatives.

Does choice enforce competition?

The TUC has serious concerns that choice can become a means of enforcing competition in public services. It is evident from the White Paper that choice is closely aligned to the diversity of providers that the government seeks to promote. This is particularly evident in the government's proposed reforms of the NHS, where Any Qualified Provider (AQP) will be used to open up NHS services to multiple providers. The Chair of the British Medical Association's GP Committee, Dr Lawrence Buckman, has said that AQP amounts to 'enforced competition'[12].

Sometimes competition and increasing private involvement can mean that a policy drive towards choice can in fact have the opposite effect. Again, AQP is a useful example, where experts are warning that large private providers will crowd out smaller voluntary sector providers and undercut the NHS. The ultimate outcome could be that other providers are not able to compete with private providers operating loss-leaders until they dominate the market. The result of this pattern could be less choice for patients, rather than more. Although the government has said that price competition in the NHS has been ruled out, the NHS Operating Framework still allows providers to offer services 'at less than the published mandatory tariff price'.

Is choice always an option?

The White Paper does not make clear how the government's choice agenda extends to those functions of government that do not immediately provide customer services to individual members of the public. As Prospect points out in its response to the White Paper: 'on what basis would individuals be able to judge how much environmental protection, R&D, or forensic science to fund? How would they ensure industrial or consumer safety? Further, how would this approach apply to services that are not used by individuals but serve broader societal needs, for example in the justice sector?'[13]

Will enforced competition through the choice agenda entail the break- up of public services in order to make it easier to open up markets? Prospect point out that competition and choice is difficult to apply to complex services which are provided to very long time horizons, such as forestry management or climate science. Applying competition and choice to such services may leave them: 'dissected into distinct contractual packages' with the real danger that 'services could emerge from the commissioning process as much less than the sum of their parts'.[14]

What do personal budgets mean for choice?

The TUC strongly supports mechanisms that enable disabled and elderly people and their carers to live independent lives with dignity and power
over their own lives. In principle, personalisation is an effective route to achieving this.

However, personal budgets and direct payments also raise a number of concerns about the employment of care workers, the quality of service and the potential impact on universal care services.

Where care workers are employed by disabled people under the personalisation policy, there is little clarity or awareness about the full extent of employer responsibilities and liabilities - who has responsibility for sick pay, holiday pay, maternity pay, employers' liability insurance, unfair dismissal and other issues? This leads to concerns about collective representation, pay rates, pension rights and career development.

Given the context of cuts to public spending, there is also a danger of disabled and elderly people being made responsible for making cuts to their own services or for negotiating the impact of cuts on the services they buy with
their budgets.

The use of personal budgets to drive competition between public sector
and other providers raises concerns that private competitors may cherry
pick services or undercut on price leaving existing high quality provision,
for instance in the NHS or local government, at risk of reduced funding
and closure.

Fluctuating demand will also make workforce planning and resource management within the service more problematic, leading to reductions
in investment in training and professional development as well as
potential inefficiency.

The response to personal budgets from health professionals is particularly instructive, given their experience and understanding of frontline delivery and their commitment to care quality. Surveys in the sector suggest that support for personal choice is high, with many seeing empowerment through choice as forming part of a successful treatment path in itself.

However, there are serious concerns about the lack of evidence linking choice through personal budgeting to improved outcomes, the potential use of NHS funding being diverted to non-evidence based provision from outside of the health service and the capacity of users to make informed choices that best use limited resources. Additional concerns were raised about the increase administration and bureaucracy associated with personal budgets acting as a barrier to personal care.

A survey of 395 practitioners in adult social care found that more than two-thirds of social workers felt that personal budgets had led to an increase in bureaucracy and a similar number were finding less time to work with users to support their self-assessment, a key part of personalisation.[15]

A survey of 645 mental health practitioners found that while there was considerable support for the principle, there was much less enthusiasm for implementation. The survey found that: 'professionals believe their service users are already sufficiently involved in decisions about their health. They are yet to be convinced that practical application of personal health budgets will benefit patient care'.[16]

Among GPs and psychologists there was concern around the 'absence of empirical evidence that patient choice delivered through the use of personal health budgets improves health outcomes'. While among social workers, community psychiatric nurses and occupational therapists there were worries that 'bureaucracy will subsume the benefits' with the 'administration associated with assessment, planning and management could reduce face-to-face therapeutic time with patients'.[17] Again, bureaucracy involved in managing the market will impact negatively on the quality of care.

The TUC believes that personal budgets, rather than direct payments, could be used so that people who want to continue to rely on council-run services have a right to spend their personal budgets that way. Many people, especially elderly people, do not want to become employers and they should have the choice not to. Some unions have also suggested that - possibly except for the minority of disabled people who would want to run everything themselves - disabled people could have a personal budget that could be spent on council services or services designed and managed by the individual disabled person, but with the council being the employer of the people recruited.

As with other areas of public service, it is our view that service user and patient choice can be supported within a public sector framework, based on partnership between public service professionals and users without the need for wasteful and counter-productive marketisation.

Principle Two: 'Public services should be decentralised to the lowest appropriate level'

The White Paper says:

In order to ensure that people are closer to decision-making, 'power should be decentralised to the lowest appropriate level'.[18]

This will be achieved through new local governance structures such as elected police commissioners, the creation of sub-local structures such as neighbourhood forums, local referenda, a limited range of co-commissioning on a sub-local basis, the devolution of some areas of commissioning to local authorities and powers to 'challenge' local service provision.

Our analysis:

The range of policy initiatives grouped together through the government's 'localism' agenda potentially undermines local democratic structures as resources and services become outsourced to less accountable private and third sector providers and as other powers are devolved to either unrepresentative sub-local groups or, in many cases, are concentrated further at a national level.

The extension of commissioning and outsourcing could have the reverse effect of localism, by removing many services from local accountability as they become handed over to larger national and multi-national private providers.

The government's 'localism' agenda also provides opportunities for the capture of local civic decision-making by unaccountable and minority vested interests. From the promotion of business interests in neighbourhood forums to the outsourcing of services through the Right to Challenge, the government's prescriptions for decentralisation divert power and resources away from accountable and democratic public control to unaccountable groups, many of which will not be located within or representative of the local community.

For example, the TUC believes that the Community Right to Challenge in the Localism Bill provides inadequate safeguards against narrow interest groups targeting specific services with insufficient regard for the community as a whole or the interest of service users. There are insufficient means to ensure that, through a subsequent procurement process, service delivery would not be handed to non-local or private sector providers. As Voluntary Sector North West fear, this could well: 'provide a superficially accountable mechanism for the dismantling of the local state that simply paves the way for private sector takeover'.[19]

The TUC welcomes the identification of local community assets. However, despite the rhetoric, there are few safeguards within the Community Right to Buy, beyond the moratorium regarded as too limited by most community groups[20], to stop the transfer of community assets into private hands through sale in an open market.

Proposed reforms will further remove many schools and health services from local and regional governance structures, leaving them ultimately accountable either directly to central government, in the event of failure, or otherwise to executives or senior staff, boards or governing bodies and the interests of corporate or other sponsors.

The situation in education is particularly acute but also confused. The crucial role of local authorities in strategic management, e.g. admissions, and the provision of a range of support services to all schools, e.g. SEN pupils, will be undermined as resources are diverted to the increasing numbers of academies and free schools opting out.

As an increasing number of higher performing schools move to academy status with the incentive of receiving direct funding to pay for support services, local authorities will be left with a smaller funding pot to provide support services for those schools in the locality with disproportionately greater needs. As such, not only is local accountability and strategic management weakened but loss of funding threatens to further undermine the ability of the local authority to respond to local need.

What is more, the Secretary of State is acquiring greater powers to direct local authorities to close schools and open all new schools as free schools and academies, increasing central government's management of schooling at a local level. This confusion between localist rhetoric and centralising powers is also evident in the implementation of the new National Curriculum which free schools will be exempt from.

Central government directions issued to local authorities on the provision of council newssheets, festive celebrations and bin collection indicates that this confusion is not confined to the Department for Education alone.

Additional powers for local authorities will be undermined by savage cuts imposed on their budgets. The principle of a 'general power of competence' for local authorities is one which the TUC supports. However, coming at the same time as unprecedented cuts to local authority budgets, the benefit of the new powers will not be felt by local authorities who might struggle even to conduct their statutory functions. As the Chair of the Local Government
Association (LGA) has said, the scale of the cuts, frontloaded into
the first year of the Spending Review settlement period, 'stifles opportunities for innovation'.[21]

Principle Three: 'Public services should be open to a range of providers'

The White Paper says:

The government contends that 'the only way' to improve public services is to ensure that 'wherever possible, public services should be open to a range of providers competing to offer a better service'.[22]

The White Paper states that 'services can be provided by the public sector, voluntary and community sector or the private sector'.[23]

The market for public services will be stimulated through 'breaking down barriers, whether financial or regulatory', ensuring 'a level playing field' between providers from different sectors and enabling new providers to 'come in and challenge services'.[24]

Our analysis:

The TUC does not support the White Paper's assertion that indiscriminately opening public services to multiple providers is the only way to improve quality. Indeed, we believe that the effect is likely to be the opposite in practice, with quality driven down by the effects of marketisation and competition. The government's focus on a diversity of providers ignores the unique ability of the public sector to provide services in line with the key priorities of equity, access, quality and accountability.

The White Paper states that the government is 'breaking down barriers, whether regulatory or financial, so that a diverse range of providers
can deliver the public services people want'. However, surveys
show that the general public is largely hostile to the role of private enterprise in delivering public service and ambivalent about the participation of charities.

Do people want a greater range of providers?

Research shows while choice as a principle was widely supported respondents rejected private models of public service delivery. 57 per cent oppose
business running hospitals (compared to 22 per cent supporting), 55 per
cent opposed businesses running schools (compared to 19 per cent supporting) and 43 per cent opposing businesses delivering social care (compared to
31 per cent supporting). Respondents were equally divided over the role of charities in education and hospitals but largely supported charity provision in social care. [26]

A YouGov survey found that 73 per cent of voters disagreed or strongly disagreed with more competition within the NHS, while another survey found that 89 per cent of the public thought that 'public services should be run by the government or local authorities, rather than by private companies'. [27]

Research by IPPR and PriceWaterhouseCoopers (PWC) found that
94 per cent believe that national or local government or public service providers should be mainly responsible for providing health care, 93 per cent believe that different state agencies should be responsible for running local schools and 93 per cent believe that national or local government or public professionals should be responsible for keeping the streets safe.[28]

Does diversity mean privatisation?

Alternative providers, particularly from the charity, community and voluntary sector can play a key role in plugging gaps and providing niche services, often to excluded and hard to reach client groups. These services should be commissioned in a way that augments public service delivery and encourages partnership between organisations and the communities they serve. But the fundamental market approach promoted by the government will have the opposite effect, outsourcing public services to a market in which third sector organisations will compete at a disadvantage with large private operators who already dominate the market.

This is particularly true when economies of scale dictate that greater efficiencies can be derived when a number of competing enterprises are brought together under a smaller number of 'super-providers'. What is more, the private sector's ability to ability to undercut smaller organisations and take an initial loss to gain a market leading position provides significant competitive advantage over those third sector organisations bidding for contracts.

Market-based solutions have negative impacts on diversity, as larger organisations, particularly from the private sector, can use their access to finance, economies of scale and capacity to tender across regions to dominate markets. Evidence shows that across the EU, liberalised public services are characterised by the transfer of ownership from public to private but with very few new providers.

The three year PIQUE research project looking at liberalised public service markets in four sectors across six countries in the EU concluded that liberalisation 'entailed a shift from a full or predominantly public to a predominantly private ownership structure on the market'. However they also found that the liberalisation process was 'more successful with regard to changing ownership structures than creating competitive market structures'.[29]

The Audit Commission has highlighted the problems with public service markets, pointing out that: 'competition does not always work well even in private sector markets and there are additional complexities for public services' including 'lack of diversity, in supply, caused by monopoly, high market concentration among suppliers or geographical remoteness'.[30]

This is increasingly the case in the UK where, according to research by UNISON: 'the public services industry is being controlled by ever fewer businesses, whose influence is ever greater'.[31]

High transaction costs, economies of scale, mergers and acquisitions and incumbency advantage have been factors in the high levels of concentration seen in UK public service markets.

The Office for Fair Trading (OFT) has described how competition is weakened 'if the incumbent is in a privileged position when it comes to re-tendering of a particular contract' and when 'repeated selection of the same firm increases incumbency advantages'. What is more, the OFT points out that anticipation of such an outcome means that these suppliers: 'have an incentive to reduce their price when a new requirement is first put out to tender in the expectation of little competition and higher profits in the future'.[32]

The growth of public sector procurement and the move to larger contracts
over longer periods of time has stimulated growth in mergers and acquisitions. UNISON research has shown high levels of concentration in markets for facilities management, social care, waste management, healthcare, leisure
and housing[33].

The detrimental impacts of concentration can be particularly felt in the housing sector, as housing associations have gone through a comprehensive programme of restructuring in recent years, with some the products of the mergers of as many as five mid-tier associations, including those set up to
serve a particularly local purpose. This has resulted in some housing associations: 'losing touch with their founding ethos, their membership, their geographical focus'.[34]

Another problem identified by UNISON's research is that: 'the buying and selling of public infrastructure assets and service concessions, which most notably characterises private equity involvement in public services', means that 'public bodies can have no certainty about which organisations they are working with or their long term objectives'.[35]

Much of the proposed new reforms will consolidate market concentration as they favour the larger, mainly private sector, operators. Shared services, payment by results and personal budgets will necessitate providers with economies of scale and access to capital and cash flow, leaving civil society organisations and smaller operators at a disadvantage.

For example, in assessing the potential for introducing payment by results in offender rehabilitation programmes, Centre Forum found that: 'The working capital requirements of a PbR system will cause problems for Small and Medium Sized Enterprises (SMEs) and the third sector in bidding for contracts. This problem is not necessarily alleviated by use of large prime contractors, who will still seek to pass risk and the working capital requirements down to the SMEs and the voluntary sector providers.'[36]

The government's aim to increase access for smaller providers is inconsistent, with calls for greater efficiencies in public procurement. The Secretary of State for Communities and Local Government Eric Pickles has exhorted local authorities to 'join forces and bulk buy'[37], which would work against the stated aim of opening up the market to smaller providers.

Fears of corporate 'entryism' are also heightened by increasing evidence of Community and Voluntary Organisations and private sector operators bidding for public service contracts in partnership. Remploy and Balfour Beatty's partnership on the Work Programme and Nacro's joint bid with Group 4 Securicor to run prison services are two examples of the blurring of
boundaries between charity and corporate interests that both hinders the role of charities and increases the use of private for-profit companies in the delivery of public services.

This approach is also being actively promoted by the government. Minister for the Cabinet Office, Francis Maude, has encouraged employee-owned mutuals to undertake 'joint ventures' with 'partner organisations' such as management or IT consultants and private capital in order to provide
a service.[38]

This has also been the case with social enterprises. With no legal definition, a number of organisational structures available and a variety of interpretations the concept of social enterprise is particularly open to flexible use by the private sector.

As one respondent to a survey by the Centre for Public Policy and Health at the University of Durham put it: 'We have to acknowledge that professional marketeers in the private sector are pretty good at their job, and that if social enterprise is the future, then a huge amount of private companies are going to become social enterprises, so they're part of the future. And I am concerned that the concept is so flimsy that there's no way of keeping out the imposters as it were.'[39]

In a report commissioned by the Department of Trade and Industry's (DTI) Social Enterprise Unit, the opportunities afforded to private sector businesses through partnerships with social enterprise are made clear. Benefits that accrue to the private sector include the way that 'social enterprises can help commercial business partners develop their markets, especially in doing business with the public sector and in gaining access to local communities' and how 'business leaders can use their social enterprise partner to act like a 'translator' - allowing them to communicate effectively with hard-to-reach audiences, particularly at a local community level.'

One company, Accenture, found that the benefit of partnership
with the Community Action Network was evident 'in the way it has been able to use CAN to enhance its chances of winning a public sector contract'. [40]

The case of Ealing Community Transport (ECT) is instructive. ECT was one of the largest social enterprises in the UK, evolving from providing community transport, into a business with a multi-million pound turnover and interests in a range of trading sectors, including waste management, rail and healthcare recycling which grew to account for 80 per cent of its turnover. In June 2008, ECT Recycling was bought by the for-profit May Gurney construction company. Other divisions of ECT were disposed of, or separated from the parent group, leaving ECT to focus on its core transport operations. This restructuring thus allowed assets held for the interest of the community to be transferred into private hands, despite the fact that ECT was registered as a community interest company.

A report from the Third Sector Research Centre (TSRC) suggests that the vast majority of the 62,000 organisations designated as social enterprises under the definition used by the Office for Civil Society lack an asset lock preventing the sale of the business to a profit-making company. This means that they would not qualify for the 'Social Enterprise Mark', the quality mark promoted by the Social Enterprise Coalition that shows a business is a social enterprise.[41]
This does little to assuage concerns about the potential for the transfer of public assets and services into private companies under the government's
existing proposals.

Early indications from this government is that outsourcing in the health service and through the government's Work Programme leads to private sector organisations taking the lion's share of the market.

Of the 18 preferred bidders for 40 prime contracts in the Work Programme, the voluntary sector was awarded two. The public sector got one, and 15 went to the private sector, including SERCO, A4E and G4S. The two voluntary sector consortia that won bids were effectively voluntary/private partnerships.

When NHS Surrey came to award preferred bidder status for the delivery of its community health care services, the contract was awarded to private provider, Assura Medical Ltd, 75 per cent owned by the Virgin Group and not too much lauded NHS social enterprise spin out and 'Big Society Award' winner, Central
Surrey Health.

What does the market mean for civil society?

Increasing the role of community and voluntary organisations in mainstream public service delivery potentially inhibits their important role in providing independent advocacy and campaigning in response to clients, as groups increasingly tailor their activity to meet contract requirements. There is a real danger that this leads to mission drift and compromised independence.

The process of service commissioning and procurement has had a distorting effect on the voluntary sector for some time. This process had intensified as competition grows for shrinking resources.

In a working paper of July 2010, the TSRC identified six key impacts on the shape and direction of third sector organisations:

  • compromised independence
  • mission drift
  • loss of innovation
  • worsening employment conditions
  • deteriorating inter-organisational relationships
  • polarisation within the sector.[42]

Mission drift and compromised independence are significant risks. A survey by the Charity Commission found that only a quarter of charities providing public services agreed that they are free to make decisions without pressure to conform to the wishes of funders, compared to nearly three fifths of charities that did not deliver public services. This led the Commission to conclude that: 'charities that deliver public services are significantly less likely to agree that their charitable activities are determined by their mission rather than by
funding opportunities'.[43]

This dilemma is summed up in a report commissioned by the Institute for Voluntary Action Research (IVAR) where the authors found that, although evidence was variable, overall the impact of public service delivery was that: 'Some organisations have been drawn by the availability of funding away from community development and community responsiveness towards delivery of public services and services designed externally rather than in direct response to local need ... in making this shift, their potential to act as agents
of community change or as advocate for local people has been diminished.'[44]

The problem is intensified for smaller, niche organisations that often struggle to engage with the commissioning process. Many of these niche operators will be dependent on other organisations sub-contracting their services, many of which will be private sector or larger charity organisations imposing tougher commissioning regimes.

The National Coalition for Independent Action (NCIA) asserts that: 'The primary role and purpose of voluntary organisations in civil society is to strengthen our democracy through diversity and pluralism, by providing a haven and test-bed for new thinking, for community action and ways to fill gaps in services and support to people, while maintain a platform for social action. Within this mix, the role of the sector in holding to account state agencies and interests through advocacy, campaigning and dissent, where needed, remains crucial.'[45]

Arguably, much of this is increasingly being lost through the diminishing capacity of the sector to deliver due to a combination of funding cuts and an increasing dependence on contracts for public service delivery.

What do the reforms mean for joined up services?

Reforms outlined in the White Paper will lead to a fragmented patchwork of service providers. Already in education there is a confusing array of different models with complex lines of accountability that are proving increasingly difficult for citizens to navigate.

There is particular potential for problems in dealing with multiple and complex needs, where clear strategic direction and oversight is needed to join up services and ensured that the service users affected are properly supported.

Fragmentation will prevent effective collaboration and partnership between service providers within and across local authority boundaries. As increasing numbers of providers opt out of integrated public sector provision, such as with free schools and academies leaving local authority support, there is no framework for collaboration or sharing resources, expertise or best practice. In a competitive market, it is not in providers' interests to collaborate.

Fragmentation in some areas of public service can lead to significant safety and other risks to the public.

The government's proposals to abolish the role of schools in linking in with local strategies designed to improve the wider well-being of pupils (e.g. the links with Children's Trusts) provoked widespread criticism that this would weaken the duties of schools in promoting a more holistic approach to education and health at the local level. These duties were originally introduced as a result of the Laming Report following the death of Victoria Climbie. There was a very real concern that these changes would sacrifice the wellbeing and welfare of children and young people in the government's attempts to give greater autonomy and freedom to individual schools. We therefore welcome the fact that the government has responded to pressure from unions and others and reversed its decision, removing this stipulation from the Bill.

Evidence from Denmark where commissioning and delivery of fire services has already been decoupled and often used as an example for the UK to follow shows that fire fatalities are higher than in the UK. The statistics for fire deaths clearly indicate that in Denmark, there are 1.38 deaths per 100,000 persons, compared to the UK figure, which is 0.82 per 100,000 persons. This means that in the country where commissioning and delivery of fire and rescue services have already been separated, you are more significantly more likely to die in a fire than you are in the UK.

What do mutuals mean for public workers and public services?

The White Paper includes a significant focus on the development of mutuals in public services. The TUC welcomes a greater role for employees and citizens in decision-making and the design and implementation of public services. However, driving out more public service functions to the market through public service mutuals creates further fragmentation, leaves mutuals and service vulnerable to competition and takeover by private sector competitors and potentially worsens working conditions and job security for public
sector workers.

The White Paper states that the government is: 'giving public sector staff new rights to form new mutuals and bid to take over the services they deliver, empowering millions of public sector staff to become their own bosses'. It is claimed that this will 'free up the often untapped entrepreneurial and innovative drive of public sector professionals' therefore 'driving up quality'. Avoiding prescriptive models, the government states that mutual structures will be driven by the 'users of services and employees' but will include 'wholly employee-led, multi-stakeholder and mutual joint venture models.'[46]

The TUC supports greater moves to empower public service workers and forge closer relationships between service users and public sector professionals. However, we maintain a number of concerns about the mutuals agenda in terms of its aims, its practical implementation and its potential consequences for public services.

We have heard on numerous occasions that mutuals improve performance management, encourage innovation, increase productivity and reduce absenteeism. While these are still the early stages in the mutuals roll out, it is worth tempering these claims until there is a more robust evidence base.

In looking at the evidence of employee-led spin outs so far, the Public Administration Select Committee (PASC) reported that it was 'unable to corroborate' these claims and that 'too much of the discussion is still hypothetical and anecdotal'[47]. The TSRC report on social enterprise spin-outs from the NHS found an 'absence of a convincing body of evidence that such organisations can consistently deliver the expected innovation and efficiencies in health provision'[48], the Department of Health's (DOH) own findings are that 'the benefits of the social enterprise model are not always clear, not only to potential commissioners, but also to staff and stakeholders'[49]. The most systematic review of the evidence base for the effects of mutuals and co-ops delivering public services, undertaken by the Association of Public Service Excellence (APSE), found 'a paucity of evidence informing the current claims over the performance of co-ops and mutuals in delivering public services'.[50]

While it may be the case that benefits can accrue, particularly when
a number of conditions are met, assertions made within the White Paper are clearly based on aspiration and speculation rather than firm evidence.

Another important point to consider is the relationship between employee-ownership and employee-engagement or participation.

The Employee Ownership Association (EOA) states that evidence suggests that the: 'clearest benefit from employee ownership is when employee-owners have more say in the running of the company. What is less clear is the extent to which employee ownership inevitably leads to increased employee participation in decision-making'.[51]

Based on studies from the UK, USA and Sweden, they found that 'employee ownership and engagement ... are not necessarily correlated'[52] and that in several cases there had been no increase in employee participation or following an initial period of enthusiasm participation decreased over time.

This should caution us against glib assumptions that the structural change leads us to promised goals. It also leads us back to the question, if employee participation is where benefit is derived, are there not models for enhancing employee participation within an in-house model?

According to research by the Office for Public Management (OPM)[53], the potential benefits derived from employee ownership models, e.g. innovation, efficiency and creativity, only work where there is genuine employee ownership and buy-in. This process cannot be driven from the top.

The central role that staff buy-in plays in the success of co-operative models has been echoed by organisations like Co-ops UK as well as the government. Nick Hurd, Minister for Civil Society assured us that 'the government will not seek to dictate what is best for employees'[54].

Historical and international evidence indicates that co-ops work where they are a product of workers and/or service users combining to meet a specific need. It is bottom-up approach driven by specific local needs and conditions.

Experience from unions suggests that, contrary to the government's claims, moves towards mutuals and other social enterprise models have mainly been led by management rather than staff, and workers have felt under pressure to support the change. This has particularly been the case where options have been limited and the move towards social enterprise has been pitched as a means to avoiding cuts and redundancies.

Evidence from Unite, UNISON and CSP suggests that in the vast majority of cases where staff in the health service have been balloted, the majority have chosen to remain within the NHS. In many cases the results have been emphatic, as the following table indicates:

Percentage of Primary Care Trust staff voting against the transfer

In some cases, such as Greenwich, Sandwell and Shropshire, these overwhelming votes against transfer have led to a change of course and the retention of services within the NHS. However, in other cases, such as Mid Essex and Cornwall, the views of the staff have been ignored and the move to social enterprise status has been driven ahead regardless.

This demonstrates a worrying trend within areas of public service such as the NHS, where the drive for social enterprise and 'employee-ownership' has been driven from the top down against staff interests. In many cases, staff engagement has been peripheral or skewed in favour of an outsourcing option, with ballots or staff surveys precluding in-house or NHS options.

The White Paper cites MyCSP as an exemplar mutual spinning out from the civil service. However, there has been minimal consultation or negotiation with the workforce or union and PCS members at MyCSP have been so hostile to the move that industrial action was held in July of this year. Feedback from unions working in areas earmarked for the 20 or so Pathfinder Mutuals has been similar. In nearly every case, the drive has been from management. In many cases, there has been very little or no consultation with staff and even less with the unions.

Suffice to say, we are not confident that so far this process has been employee-driven or that it has followed best practice in terms of employee-engagement and consultation.

Allied to the concerns about staff buy-in, is the issue of the structures
and governance that the new crop of public service mutuals will adopt.
There remains a degree of ambiguity around the terms 'mutual' and
'co-operative' and the government, for its own reasons, is keen to avoid a prescriptive definition.

This has led to a number of organisations being promoted as mutuals that the TUC and others in the co-operative sector would not regard as a mutual or a co-op. The case of MyCSP is one example. This has been a top down creation based on a joint venture with a private partner to be selected from Xafinity, Capita, JLT and Wipro. Circle Healthcare is another operator extolled as a model of employee ownership by the government, despite its majority ownership by private investors.

We need to be sure that what we are creating will be genuine co-operatives, with real worker ownership, representation and participation built into its structures. We may not wish to be prescriptive about exact structures but some principles of governance would be useful. The Co-operative's seven principles[55] might be a good place to start.

The cases of MyCSP and Circle Healthcare do little to calm people's fears of this agenda being a Trojan horse for privatisation or corporate entryism. How do we ensure that the market doesn't end up being dominated by those private providers? How do we ensure that fledgling mutuals are able to survive and compete? How do we ensure that successful mutuals are not bought out by those private companies?

Following the NHS Surrey's award of preferred provider status to the 75 per cent Virgin-owned Assura Medical Limited over the flagship social enterprise Central Surrey Health, the Social Enterprise Coalition issued the following statement: 'It is not enough for government to open up markets; it needs to create fair markets that benefit society. Some of the financial criteria used in contracts create an unequal playing field in which social enterprises are unable to compete because they may not have the same financial backing as private sector providers. Unless swift action is taken to address this we will see social enterprises and mutuals lose out to the private sector.'[56]

The White Paper makes no reference to contract lock-ins, asset
locks or any other measures to safeguard provision by mutuals and
co-operatives.

Workers transferred into mutuals will be taking on huge risk, not least of which the risk of failure in the open market. TUPE coverage will provide some cover for those transferred, although new entrants will suffer from the abolition of the two tier code and the potential loss of fair deal for pensions.

Pensions remain a key issue. Some of the early spin-outs from the NHS were contracted through the use of specific contracts which enabled workers to retain their NHS pensions but there is a danger that this approach will not be sustained for future roll-outs.

What's more, evidence suggests that competition in the market for public services nearly always leads to a squeeze on terms and conditions, particularly with mutual employees possibly out of national bargaining arrangements.

APSE found that 'in order for both co-ops and mutuals to add value to public service delivery there is a need for a complex configuration of local conditions to be in place' including 'contract lock-in', 'buy-in from staff' and 'support, advocacy and expert advice'.[57]

While the White Paper makes reference to mentoring and support as part of the Mutuals Support Programme and Enterprise Incubator Unit, there is no reference to how commissioning will be used to support and protect fledgling mutuals. Nor is there reference to mechanisms for ensuring staff buy-in.

The TUC believes that when considering mutualisation of public services, the following areas need to be looked at further:

  • Consultation - how can we ensure that the agenda is employee driven?
  • Commissioning - how can we do ensure that open competition does not lead solely to privatisation?
  • Governance - what exactly do we mean by the terms 'mutual' and 'co-operative' and how can we ensure genuine employee (or multi-stakeholder) ownership and participation?
  • Safeguarding - how do we protect public assets from private takeover?
  • Employment standards - how do stop the race to the bottom?
Principle Four: 'We will ensure fair access to public services'

The White Paper says:

The government acknowledges that its approach to reform carries the 'risk of exacerbating current inequalities' enabling those with 'time, financial resources or capacity to operate as sophisticated consumers' to 'hoard opportunities and resources for themselves'.[58]

The White Paper therefore cites 'fair access' as one of its key principles, although there is less detail on how this is to be achieved. Disparate initiatives include the introduction of a Pupil Premium for disadvantaged pupils in school, the recruitment of community organisers, targets for the appointment of women onto the boards of public bodies and building the capacity of disabled people to run for election to local office.

Our analysis:

In a joint article[59] to coincide with the publication of the White Paper, the Chief Secretary to the Treasury Danny Alexander and Minister for Government Policy Oliver Letwin argued that the White Paper would attempt to reform public services to 'deliver equal access and opportunity for the people that rely on them.' The article had a strong focus on fairness and equality, but the TUC is not convinced that the proposals in the White Paper will tackle inequality. Indeed, it is highly likely that they will have the opposite effect, increasing inequality and entrenching disadvantage.

Does choice deliver fairness?

Navigating the complex provider landscape and making best use of available information in order to secure the best outcomes will be more feasible for those individuals and communities with the social capital, resources and power to lever the best results. Differences between communities are likely to be intensified. Low income and vulnerable people will be at a disadvantage.

Decentralisation and competition risk further fragmentation and differentiation of services and service quality based on location, i.e. the postcode lottery. This will exacerbate and exaggerate differences in service quality. Driven by the demands of individual service users in a location, inequality in outcomes between more empowered and prosperous communities and marginalised low income neighbourhoods are likely to increase. Postcode variations will also lead to service tourism, with wealthier individuals able to travel to find the best services, and those who don't have the resources to do so left to rely on overstretched local services.

The example of free schools being set up in mainly higher income areas[60], serving those communities most adept at securing their interests, shows how apparent freedom and choice may have unintended adverse impacts on wider social goals, such as equity and justice.

There are other fears of growing inequality within education. The reduction in the ability of local authorities to coordinate and manage admissions policy and the slimming down of the Admissions Code will impact on vulnerable pupils and schools in disadvantaged areas.

The Chief Schools Adjudicator has warned against weakening statutory guidance in the Admissions Code, saying that there is a danger that we 'simplify it to such an extent where it becomes a useless document.'[61] Based on experience to date, there also remain significant concerns that vulnerable groups (e.g. SEN pupils) will not be given equal access to academies and
free schools.

The TUC has concerns that the new Admissions Code does not address the central challenge that implementing a fair admissions process is a highly complicated matter which requires a coordinated approach by the local authority. By removing the requirement for schools to consult with the local authority, expansion in one school might hit others as pupils move elsewhere with little warning, taking 'per pupil' funding with them. This will seriously impact on the education of children in struggling schools, largely located in disadvantaged areas.

The Association of School and College Leaders (ASCL) claims that: 'allowing 'popular' schools to expand will do nothing to improve social mobility. It will create sink schools in many areas of deprivation and hit hardest those children whose parents do not or cannot take an interest in their education. Those schools left with the most challenging pupils, who need the most intensive support, will suffer a slow spiral of decline and their pupils will lose out on life chances. The effect will be another generation of haves and have-nots.'[62]

Experience in the fire service shows that decentralisation and the loss of national core standards has led to weakening of standards across the country. The replacement of the 1985 national standards for fire cover with standards set through Integrated Risk Management Plans by local brigades, has led to both a weakening of the standards and increased variation of services between regions so that 'identical cities have different standards of emergency response and villages have different standards of emergency response depending on where in the country they are located, not depending on the type of risk'.[63]

What do spending cuts mean for fairness?

Cuts to public services and to benefits and changes to the welfare system are already exacerbating inequalities. For instance, a House of Commons
library report found that more than 70 per cent of the income raised by
direct tax and benefit changes announced in the 2010 Budget will come from women taxpayers.

Women are also more reliant on public services and more women are employed within public services. Cuts to services are disproportionately impacting on women as the TUC and Women's Budget Group have
previously highlighted:

  • Women are more likely to lose their jobs as the majority (65 per cent) of public sector workers are women.
  • Women will lose more in cuts to benefits. Shadow Minister for Women, Yvette Cooper MP has shown that of the £8bn net revenue to be raised by financial year 2014-15, nearly £6bn will be from women, in contrast with just over £2bn from men.[64]
  • Women will be hardest hit by cuts to public services. The Women's Budget Group has shown that the groups that will suffer the greatest reduction in their standard of living due to cuts in public services are lone parents and single pensioners, the majority of whom are women.[65]
  • Women are the majority of those providing unpaid care[66] so are likely to be the ones picking up the pieces as social care services are cut.

TUC research has found that cuts will hit the poorest 10 per cent in society 13 times harder than the richest 10 per cent[67].

The Institute for Fiscal Studies (IFS) estimates that an additional 400,000 children will fall into relative poverty within the lifetime of the current parliament as a result of falling incomes, cuts to childcare and the government's changes to tax and benefits.[68]

Cuts to community and voluntary organisations mean that support and advocacy from the third sector is dwindling at a time when those services are most in demand. 97 per cent of respondents to a London Voluntary Service Council (LVSC) survey reported that their communities were still suffering the effects of the recession, 70 per cent reported an increased demand for their services and 75 per cent were not confident of meeting this demand now or in the future.[69]

What does the market mean for fairness?

The crucial role of a public service ethos in the promotion of equality has been a lesson won over many years. A commitment to equality includes understanding that outcomes may often require upfront costs - as in the provision of access adjustments for disabled people or support for people returning from mental health problems. Private provision may not have this ethos or understanding and, unless firm commitments to continuing the equality agenda are built into and monitored through the commissioning process, achieving fairness and equality objectives risks being seriously
set back.

It is also likely that private providers will cherry-pick the easier to deal with and more profitable services and client groups, leaving an under-resourced public sector to deal with more complex and expensive needs and more challenging services and service users.

Those with complex and multiple needs will also suffer from the fragmentation represented by the White Paper.

Do the reforms help enforce fairness?

Increased outsourcing of public services to private and voluntary sector providers means that increasingly large areas of public service delivery will have less regard to the arrangements that public sector providers have developed to meet their statutory duties to promote equality. While the provider remains liable to the legal obligation to tackle discrimination and promote equality in the public service they are responsible for, but may not have the expertise or resources to carry out these duties. This renders them liable to legal action and more importantly weakens progress towards the equality objectives.

The TUC also has concerns that a greater role for some community and voluntary organisations in the provision of public services that conflicts may arise between their mission statement, where it may be based on specific faith or belief systems, and the promotion of equality and fairness. An example might be where certain faith groups play a less rigorous role in the promotion of lesbian, gay, bisexual and trans (LGBT) equality and the tackling of homophobia in schools. The award of a pupil support contract to the Catholic Children's Society in Richmond-Upon-Thames raises some of these fears. Another example that caused concern was the award of the contract for delivery of support services for trafficked women to the Salvation Army, where we believe there are potential conflicts with their mission statement.

New regulatory structures established to promote fair access, e.g. the Office for Fair Access for higher education, will be under-resourced and lack the power to hold providers to account.

Properly resourced, thorough and timely Human Rights and Equality Impact Assessments should be at the heart of all commissioning decisions. The government has already faced criticism for the failure to conduct proper
impact assessments of their policies, most notably the 'emergency budget' of June 2010.

The principles of fairness should also apply to the public service workforce. Trade unions are champions for fairness and equality in the workplace and as well as in the community as a whole. Any programme of public service reform on a national or local level should be based on full consultation with the public sector workforce and the trade unions that represent them.

Principle Five: 'Public services should be accountable to users and to taxpayers'

The White Paper says:

The White Paper is clear that the 'principle of accountability and responsiveness should extend to all organisations in receipt of public
funds'. Providers should be 'held to account by citizens and their
elected representatives'.[70]

Accountability mechanisms may vary across services but will built on the principles of increasing 'choice, transparency and voice'.[71]

This will be effected by empowering public service consumers with performance data and other information about providers, providing new platforms for sub-local and neighbourhood engagement as outlined in the Localism Bill, 'scrutiny and oversight' by local elected representatives and regulation through agencies such as the Care Quality Commission.

Our analysis:

How accountable is the market?

These reforms will lead to large parts of public services opting out of local and national democratic accountability. The market for public services will see a growing split between public service providers and the democratic institutions that fund them and are ultimately responsible.

New providers might be accountable to the commissioning authority through the terms of commissioning and procurement. However this is made problematic through lack of resources, which constrains contract management capacity within commissioning authorities and leads to power imbalances between client and provider, particularly in large, high profile and valuable service areas that may be deemed too big to fail.

New providers will also be accountable to a narrow range of customers,
to their shareholders and boards and, often, to larger parent companies,
many of which may be overseas. Within these complex lines of accountability, it is unclear which takes precedence. It is likely all of these groups will
have greater oversight and leverage of public service providers than
councillors democratically elected by local communities to represent and promote their interests.

Similar confusion in accountability may also arise on a local level in health services, for example where GPs will act as budget holders as well as practitioners within clinical commissioning groups.

What are the impacts of new accountability structures?

Accountability deficits will also be created within many of the new structures established by these reforms. The new Health and Wellbeing Boards which will be used to scrutinise NHS decision making at a local level will have only one democratically elected representative on a board of 8 to 10 people. Foundation Trusts and Clinical Commissioning Groups will be required to hold their meetings in public (although even these requirements are weak), but private providers will not be subject to the same requirements.

Free schools and academies will be out of LEA control, with no representation from local councillors on their boards of governors. Furthermore, the provisions of the Academies Act largely limits the rights of consultation for parents, the local community and the workforce with regard to the decision taken by schools to transfer to academy status and there is also no need to consult the local authority before opening a new academy. This means that it can be nigh impossible for parents, communities and staff to safeguard maintained school status if the headteacher and governing body unilaterally decide to go ahead with this.

The Education Bill has also stifled accountability with regard to the type of new schools that local communities might opt for if they were given the opportunity to have a consultative voice on this. New powers given to the Secretary of State in the Bill will, in effect, enable him to dictate that all new schools are either an academy or a free school rather than a maintained school linked to the local authority.

The Bill also introduces a number of changes in relation to the school admissions procedures which further weakens accountability to the local community. These changes remove the requirement on LAs to establish an admission forum for their area and also weaken the strategic role of the Schools Adjudicator.

The TUC has serious concerns about the effect of the abolition of the Audit Commission and the outsourcing of local authority audit functions to the market on accountability. The audit market in the UK is particularly concentrated, dominated by four large auditors who have recently been condemned by the Financial Reporting Council's Professional Oversight Board for the lowering of ethical standards and conflicts of interest arising from their commercial practices, which sees 75 per cent of revenue derived from consultancy with audit clients. The Audit Commission was created during the last Conservative administration to ensure that public audit was not wholly placed in the hands of private sector companies whose control and
governance is unrestricted by the democratic process. It is our view that the abolition of the Commission represents a risk to probity and independence in public auditing.

Is there more or less transparency?

The government's commitment to increase the amount of available public service performance data is to be welcomed. But there remain limits to what information will be available in an outsourced market. The Freedom of Information Act may be extended to Academy Schools and Foundation Trusts but remains off-limit for charities and private providers. The commitment to increasing transparency is compromised by the government's stated objective of reducing the regulatory burden on business.

The government appears to see the availability of information in itself as a panacea. Simply making information available does not necessarily make services better. Citizens need to have the resources and social capital to make use of that information to influence services. Those who do are likely to be those with high social and financial capital, leading to a lopsided kind of accountability that does not respond to those who do not have as loud a voice.

What role do elected representatives play?

The White Paper recognises that the state both locally and nationally needs to protect the interests of the wider community, a 'responsibility on behalf of all citizens'. But this appears to be largely confined to systems of financial accountability and auditing. There remains little to ensure that elected representatives can hold providers to account in terms of quality and fairness and what interventions might be made by public bodies to address the performance of outsourced providers.


Section five

Additional principles

In this section we set out to:

  • identify additional principles that we believe should form part of a programme of public service reform, namely:
  • quality
  • value for money
  • valuing and empowering employees
  • valuing and empowering communities
  • consider how the government's stated approach will impact on each
    these principles.
Quality

The White Paper says:

The White Paper states that the government's public service reforms aim 'to make sure that everyone has access to the best public services, and that the best becomes better still.'[72] The assertion is made that 'open public services are the only way to deliver the improvements that people demand'.[73]

In order to drive up quality, the government places its faith in a combination of market mechanisms: licensing, competition, information and price transparency and consumer watchdogs.

Our analysis:

Evidence suggests that the market has often contributed to the decline in public service quality and reduced the capacity for whole system approaches to quality improvement across public services.

In a three year study of providers in areas of liberalised and privatised public services in six EU member states, researchers contrasted the European Commission claim that liberalisation and privatisation 'significantly contributed to improving the quality, choice and efficiency', stating instead that the consequences were 'contentious and partly contradictory', with improvements in some areas but 'deterioration in others' including 'certain quality aspects'.[74]

Referring specifically to outsourcing in the NHS, the Office for Public Management (OPM) found that 'little hard evidence is available to suggest that outsourcing impacts positively on the value for money or quality of care in services.'[75]

Evidence suggests that outsourcing and marketisation has negative impacts on quality in the following ways:

The proposals within the White Paper will impact on quality in the
following ways:

Cost-cutting

Once outsourced, the providers of services are motivated by twin aims of fulfilling service obligations in accordance with the specific terms of the contract and cost reduction in order to improve margins. The latter is particularly true for private providers looking to maximise profits and provide shareholder dividends.

European research has found that 'public-service providers in liberalised markets often combine a rise in productivity with lower labour costs by paying lower wages or using atypical forms of employment (often in combination with outsourcing and the creation of independent subsidiaries)' going on to state that 'often, however, cost reductions have been based on worsening employment and working conditions, which more than once have had a negative effect on quality'.[76]

Examples of this have been seen in the UK's health and social care sectors. The widespread contracting out of hospital cleaning services has resulted in staff reductions, poor terms and conditions and under-investment in training and equipment, resulting in a fall in hospital cleanliness that has been linked with the rise in Hospital Acquired Infections.[77]

Reports into social care sector have found a sector 'struggling already to provide services of sufficiently high quality' and failing to 'recruit, train and develop care workers ... to meet new demands and ways of working'.[78] This became shockingly evident in the case of Winterbourne View[79], raising very real fears about standards in the sector. A Commission for Social Care Inspection (CSCI) report found that when it came to providing care for older people in care homes, and home care services, private sector providers were more likely not to meet minimum national standards.[80]

Short-termism

Cost-cutting pressures are particularly apparent where services are commissioned over short periods. As contracts draw to a close, outsourced providers have less incentive to properly resource a service particularly where this service may become the responsibility of a rival provider and where relations with the commissioning body are no longer a main priority.

UNISON research found that these factors can mean that that assets decline in quality, that IT and other infrastructure is not invested in
and that staff are not adequately trained' and that 'staff are allowed to leave towards the end of a contract period - at the expense of service users, with inexperienced or too few staff to service the needs of clients.'[81]

Inflexibility

A serious problem with business outsourcing contracts is that they can prevent commissioning authorities acting flexibly to changing environments to maintain and improve quality.

Experience with outsourced services suggests that providers deliver according to prescriptive contract specifications, which means that they are unable to respond effectively to changing circumstances and service user needs as they vary over time. In many cases, variations of contract to meet changing service requirements leads to expensive penalties and other additional costs for the commissioning authority.

In their report on local government insourcing, APSE found that local authority contracts: 'often carry premium 'penalties' should a client wish to change the way in which a service is delivered carrying minimum pricing arrangements which bind the local authority client into either set minimal financial arrangements or expensive contract variation clauses'.[82]

For example, when looking at Strategic Service Delivery Partnerships (SSPs) the Audit Commission warned that: 'Councils and their contractors will be unable to predict how the political and financial environment will change over the duration of the SSP and in some circumstances SSPs may reduce the flexibility of the council in responding to these changes.'[83] UNISON's research found that: 'public sector clients found an absence of partnership ethos where there were no financial incentives rewarding this built into the contracts.'[84]

Researchers also found concerns within local government that compulsory tendering: 'engendered short-term, low-trust relationships between principals and agents. Having won the work, contractors had good reason to minimize their efforts consistent with compliance'.[85]

School catering contracts have been shown to provide barriers to improving quality in response to customer needs. For example, long term contracts, with complex supply chains, in the London boroughs of Merton and Islington have prevented the authorities from opting for healthier school meal options due to inflexibility within the contracts and prohibitively expensive costs for variation of service, Scolarest.[86]

Reduced customer service

The PIQUE study into the impacts of privatisation on quality and productivity in public services found that while companies in public service markets have allocated increasing resources to advertising and customer relations, particularly through the extension of call centres, 'other forms of customer contact, such as walk-in customer-service centres, have been cut back if not altogether eliminated.'

According to the report: 'measures to enhance quality seem to be confined to areas where they do not conflict with the aim of cutting costs and employment, while quality aspects that require additional labour resources have often been compromised'.[87] The study concluded that 'quality aspects that depend on substantial labour input, such as patient care or bus driving, have suffered as
a result.'[88]

Fragmentation

There are a number of risks to continuity and quality of service associated with the proposed reforms. Key risks include the potential to undermine the universality of provision, with multiple providers and competition leading to disjointed services and the most vulnerable service users being pushed to the back of the queue.

There is a particular potential for problems in dealing with multiple and complex needs, where clear strategic direction and oversight is needed to join up services and ensured that the service users affected are properly supported.

For instance, an individual with mental health, housing and drug use issues could find themselves having to navigate a complex terrain of public, private and voluntary sector providers and there is a risk that communication and joining up between providers will fail.

Furthermore, quality issues for different public service providers are often inter-related. A reduction in service in one area can have significant impacts on another, a situation that will be worsened as service provision becomes fragmented within and between public service areas. A clear example of this is the increase of 'bed-blocking' within the NHS as a result of reductions in home help and other social care services by local authorities.[89]

Reduced regulation and quality control

Marketisation has led to fragmentation both in public service delivery and, as a result, in the regulation of those services. As the PIQUE researchers found: 'the focus of regulation has shifted from governing the whole process of service provision to regulating particular aspects of the service supply chain or to partially controlling outcome'.[90]

Regulation of service and quality control is now left to a combination of the use of licensing and monitoring by independent regulatory authorities in order to ensure minimum standards, as well as the ability of commissioning authorities to maintain quality through contract compliance.

The role of independent regulation is often frustrated through under-resourcing of regulatory bodies, increasing fragmentation of delivery through multiple service providers and, at times, conflicting responsibilities.

The White Paper requires all publicly-funded providers to register with an appropriate regulator while at the same time ensuring that providers are 'not over-burdened by onerous rules and inspection regimes'[91]. However, as the Select Committee report on the Care Quality Commission found, the prioritisation of registration and a light touch inspection regime led to the regulator 'taking its eye off the ball'[92] , as the inquiries into mid-Staffordshire and Winterbourne View revealed. The TUC has concerns that a combination of under-resourcing and fear of 'burdening' providers with inspection regimes will lead to continuing shortfalls in effective regulation through inspection.

The ability of authorities to use commissioning and contract compliance to enhance quality depends on a number of factors. Key to this is the quality of information that is available to the commissioning authorities and their ability to enforce conditions of contract. In large and complex areas of service delivery such as health and social care, monitoring quality of service is problematic necessitating a focus on a range of agreed outputs.

Economists researching this model argue that an arm's length relationship between the commissioning authority and the service provider creates a condition of 'imperfect information' relative to the complexity of the service being provided. In general, it is found that 'the harder performance is to monitor and the more complex the service being provided, the less well a principal-agent relationship performs compared with vertical integration'.[93]

As public spending cuts bite and authorities search for increasing efficiencies from downsized contract management resources handling an increasing range of outsources services, this relationship will become even more problematic.

What's more, as commissioners seek economies of scale and public service markets become dominated by large private providers, the ability of commissioning authorities to enforce conditions or cancel contracts is compromised, particularly when a service is seen as too big or valuable to fail. We have seen how social care for thousands of older people was jeopardised by the failure of Southern Cross. A private sector failure became a national public service crisis. It is therefore particularly concerning that the White Paper claims that adult social care is an area of commissioning that 'the wider public sector has much to learn from' and, indeed, ironic that the White Paper was launched on the day that the closing down of Southern Cross was announced.

Reduced investment

Increased fragmentation across public services is likely to lead to a variety of standards in terms of internal quality assurance and governance of standards.

Accreditation may provide minimum thresholds but cost pressures are likely to drive down investment in continuous professional development, training and other quality assurance processes.

The free entry and exit of providers to the public service market raises the prospect of constant upheaval and uncertainty for service users and for the workers who deliver public services. A key example of this is the 'any qualified provider' model proposed for the NHS, where providers will compete to provide services without any guarantee of work and will therefore be unlikely to invest properly in workforce planning and training.

Researchers have found that privatisation of public services across the EU has led to wide variation in the provision of training and professional development. In the UK, it was found that training remained open to outsourced staff in the health sector but on more limited terms than for core staff. Furthermore, privatisation of utilities markets had 'an overall negative effect on training provision, because training was among the first areas in which the new private owners cut costs'.[94] The report states that this helped create a skills shortage due to insufficient new entrants being available to replenish an ageing workforce.

Value for money

The White Paper says:

The government asserts that: 'opening public services to competition and providing more freedom to innovate will improve the choices available to service users, as well as delivering better value for money for the taxpayer'.[95]

Our analysis:

As pressure mounts on public finances, it is imperative that public service reform delivers better value for money for the taxpayer. The TUC supports this objective but we believe that the White Paper's proposals will achieve the opposite effect.

Not only will large scale marketisation lead to the additional costs associated with private sector delivery in public services but the process of reform itself is creating escalating costs at a time when public institutions are looking to make huge savings. It has been estimated that NHS reform will cost £3bn to implement and that it costs £5m to set up a free school.

The government's assertion that 'by making public services more open, we will ... provide better value for taxpayers' money'[96] is based on the premise that a combination of competition and consumer choice will lead to greater efficiencies and cost savings.

However, the claim that private delivery of public services always improves value for money is widely contested. Evidence from outsourcing and privatisation of public services suggests that in many cases additional costs are incurred and, increasingly, public sector organisations are looking to in-source services in order to achieve better value for money and greater efficiency.

The Financial Times recently published[97] an analysis of private supply of public services which concluded that the private sector was 'not yet better or cheaper' than the public sector. The FT also drew attention to the controversial role of management consultants in promoting outsourcing and in charging high fees to public clients.

There are an increasing number of high profile examples of where private sector involvement in public service delivery has led to waste, inefficiency and deteriorating quality.

A key example from the fire service is the role played by consultants and private providers in the FiReControl project, which aimed to close 46 fire control rooms in England and replace them with nine regional control centres. As the National Audit Office (NAO) report put it: 'the implementation of FiReControl was heavily reliant on consultants and interim staff, who contributed around half the Department's project team at a cost of £68.6mn, over three-quarters of the total spend on the national team supporting the project. PA Consulting was contracted to provide consultancy services at a cost of £42mn to the end of March 2011'. In addition, the EADS private firm failed to deliver the technology necessary to allow the new control rooms to communicate effectively beyond a few square miles.[98] The project was rightly dubbed by the Public Accounts Committee (PAC) as 'one of the worst cases of project failure' they had seen in many years.[99]

Outsourcing and marketisation can increase cost and inefficiency in two main ways. First, increased fees and charges are incurred by private and third sector organisations. Second, marketisation brings additional transaction costs associated with the tendering, contract management and monitoring process.

On-costs

The assumption is often made that the private sector will be able to generate investment that may be beyond the scope of constrained public budgets. However, on-costs and fees incurred by the private sector significantly increases costs that have to be met by the taxpayer, 'savings in capital expenditure are at the expense of increased revenue spending'.[100]

In terms of attracting private investment into the public sector, there is already significant experience of private sector involvement through the use of Public Private Partnerships (PPP) and Private Finance Initiatives (PFI).

Evidence from a number of sources makes it clear that PPP and PFI do not always deliver better outcomes for service users, employees and taxpayers than direct public provision would. For instance, a 2009 GMB study of 641 PFI projects found that British taxpayers are locked into £250bn of payments on PFI assets worth only a quarter of that sum (£64bn) - a debt equivalent to £8,400 for every taxpayer.

A recent PAC report[102] on the financing of PFI in the credit crisis demonstrated the shortcomings of the public sector's reliance on PFI for infrastructure funding. Restricted bank lending during the credit crunch affected the viability of PFI projects with a combined investment value of more than £13bn, according to the PAC. Banks increased the cost of financing PFI projects by around 33 per cent and this increase is now locked in for the life of the projects. At the very time when the public sector is subject to severe cuts, the high costs of PFI will continue to be felt over the next 30 years.

Analysis of the first 12 PFI hospitals shows that there is much higher cost incurred by the public sector because of the use of private sector funding. The additional cost just on those 12 hospitals is an extra £60m a year. This equates to 20-25 per cent of those NHS trusts' annual income[103]. This study concludes that: 'If this experience is generalized across the entire PFI programme ... then the extra costs of private finance for the signed PFI capital programme in hospitals worth £8.67bn is about £480m every year'.[104]

A sample of PFI schemes (excluding NHS projects) concluded that the current weighted average cost of private sector capital on PFI projects is 1-3 percentage points higher than public sector borrowing[105]. Another analysis of a sample of projects found that PFI/PPP financing was 11.2-18.5 per cent of the project costs compared to 3-3.5 per cent annual interest on publicly financed projects.[106]

Transaction costs

As well as additional expense incurred through private sector on-costs, the complex process of marketisation, contract management, evaluation and monitoring creates additional transaction costs for the taxpayer.

The OFT observed that 'evaluating bids is costly, in particular where the buyer's needs are complex and requirements cannot be specified in a simple way'[107] and a related point was made by the Audit Commission, which noted that 'at least some' of the apparent savings claimed for Compulsory Competitive Tendering 'were offset by the costs associated with managing competitive processes.'[108]

In a complex area of public services such as health, these costs could be significant. Commenting on the government's planned reforms of the NHS, Professor Lindsey Davies, President of the Faculty of Public Health comments that: 'if the system succeeds there will be more public money committed to transaction costs in the health services. With the signing of contracts between GP, NHS and public health commissioners and providers, and settling invoices, management costs are likely to increase. As services transfer from one provider to another, more tax payers' money will be spent on legal and financial advice and not on direct patient care or preventive public health services.'[109]

Where traditionally the NHS had compared favourably with other international health systems in terms of its low administrative costs, Professor Allyson Pollock points out that 'quasi-market reforms' in the 1990s that introduced the model of purchaser-provider split, underpinned by a series of contracts for care, led to 'an increase in administrative costs from 5-12 per cent' and a marked fall in the ratio between nurses and administrative staff.[110] Pollock estimates that 'billions of pounds, probably approaching 20 per cent of annual NHS funds - estimated to be £20bn in England in a year - are being squandered on what are called the transaction costs of the market'.[111]

Sir Roy McNulty's report into value for money on the UK rail industry, found that the fragmentation of rail following privatisation led to a situation where: 'multiple industry players, together with misaligned incentives ... has made it difficult to secure co-operative effort at operational interfaces, or active industry engagement in cross-industry activities which need to be undertaken for the common good'.[112] The RMT estimate that 'this has resulted in almost £1bn a year leaking out of the industry caused byprivate sector borrowing costs, numerous interfaces and dividend payments to shareholders'[113]. It is our fear that a similarly complex and misaligned industrial structure will come to characterize large sections of public service resulting in similar inefficiency and dysfunction.

How do we achieve social value?

The TUC welcomes the government's intention to ensure that councils 'have the flexibility and freedom to consider overall value rather than only cost in their spending decisions'. However, the combination of spending cuts and the drive to achieving greater efficiencies and economies of scale in public procurement, means that this objective will be particularly difficult to achieve, with councils under extreme pressure to meet conflicting priorities.

Outsourcing services to providers from the private sector that do not include social values in their mission or form part of a national or multinational operations inherently reduces public authorities' capacity to further broader social and economic goals.

The best way to ensure social value is front and centre in the delivery of services is to retain them within accountable public authorities that have the creation of local or national social value as a core purpose.

Valuing and empowering employees

The White Paper says:

'The government is committed to opening up public sector monopolies
and challenging old models of service delivery to drive improvement across public services. This will be achieved by giving greater autonomy to existing public sector professionals and enabling independent organisations to
provide services'.[114]

Our analysis:

The public sector workforce is integral to achieving high quality public services and should be at the heart of any reforms. The TUC welcomes the government's acknowledgement of this in the White Paper, which makes the explicit connection between improving quality and empowering staff and giving employees a greater say in the design and delivery of services. We are concerned, however, that the effect of the reforms set out in the paper will in fact be a driving down of terms and conditions, a lack of investment in training, and a breaking up of national collective bargaining arrangements.

The White Paper has a limited vision of what valuing employees consists of, focussed on voice and service design, with a particular reference to public service mutuals. As well as providing a greater voice and role for staff, the TUC believes that part of valuing and empowering the public sector workforce is to ensure the best possible conditions of employment.

What does the market mean for conditions of employment?

There is a wealth of evidence to suggest that outsourcing of public services to private and third sector providers has a detrimental impact on workers' conditions of employment and this has serious long term impacts on service quality. The downward pressure on workers' pay and conditions arising from outsourcing is likely to worsen, as the government moves away from protection for public servants with the abolition of the two tier code and potential threats to Fair Deal on pensions. As employers increasingly navigate around TUPE protection and with minimum safeguards in place for new entrants, there are serious concerns about the impact on the public sector workforce resulting from the government's reforms.

There is a range of impacts on the workforce arising from the outsourcing of public services including reduced employment, reduced pay and access to pensions, work intensification, increased use of fixed term and non-traditional employment and the reduction and fragmentation of collective bargaining coverage. Due to protection offered by TUPE under certain conditions, these impacts adversely affect new entrants, leading to inequality in working conditions often between workers undertaking similar work.

Evidence from the EU shows that providers engaged in liberalised public service markets have encountered cost pressures from the market, the regulator, the funding authority, or the profit interests of the new private shareholders. These case studies showed that despite the fact that some companies have still managed to increase prices in liberalised public-service markets, all of them have responded to liberalisation and privatisation by cutting costs. This has mainly been done on three levels: investment in
cost-saving technology, reorganisation (concentration and outsourcing)
and the reductionof labour costs by means of staff cuts, lower wages and increasing workloads.[115]

This study also found that the restructuring of public services led to
the fragmentation of labour relations which means that: 'bargaining systems are divided and coverage becomes less comprehensive, the number and variety of actor increases and the wage differentials grow'.[116]

The report concludes that: 'overall, the case studies show that in many cases the main company objective, i.e. the reduction of production costs, has been reached at the cost of workers, many of whom have experienced liberalisation and privatisation primarily as a worsening of employment and working conditions. This has been achieved by a far-reaching fragmentation of labour standards.'[117]

The decline in collective bargaining coverage between the mid-1980s and the mid-2000s was noticeably sharper in industries that had been privatised during this period than in either the private or public sectors, as new providers reacted to market conditions.[118] Not only does this potentially weaken employment conditions for public service and increase inequalities between workers doing similar work in different localities but it also adds to increasing inefficiency and waste as bargaining mechanisms are replicated across and within local areas.

What has happened to outsourced public service workers in the UK?

Research commissioned by the TUC in 2008 showed that there were an estimated 400,000 employees working in the private care homes sector. Many of the front line carers are paid the National Minimum Wage (NMW) , which provides an annual salary of approximately £10,000 pa. This compares with the lowest rate for a care assistant employed by a local authority of £14,000k, suggesting that any perceived efficiency gains are derived mainly from paring wage bills.[119]

Research by the Prison Service Pay Review Body in 2006 showed that at virtually every grade of prison officer, pay and benefits in the private prison sector fell a long way behind those in the public sector. The average basic pay with benefits of a prison officer in the public sector, for example, had a 61 per cent lead over their counterpart in the private prison sector. For support grades this lead was 23 per cent, for senior officers a 68 per cent lead. In fact, there is a public sector lead in every grade apart from senior managers at director or governor level where the private sector has managed to achieve a 26 per cent lead in pay and benefits over their public service counterparts.[120] This suggests that private providers have competed on cost through downward pressure on workers' wages and conditions, with the exception of executive remuneration. A pattern seen across privatised public services.

Analysis of the Labour Force Survey (LFS) by Landman Economics shows that job tenure is consistently shorter and working hours longer within private providers compared to public sector counterparts in a range of public service industries, including prisons, health, childcare and social welfare. Providers from the community and voluntary sector could be found somewhere in between. The researchers argue that short job tenure and longer working hours might be associated 'a priori with lower quality of service provision' and the fact this is more common the private sector 'raises clear worries about the quality of public services outsourced to the private sector compared with those provided in-house'.[121]

While TUPE provides some protection to staff transferred to outsourced providers, there is no coverage for workers in the case of a transfer of share ownership, including private equity buy outs. What's more, evidence shows that private equity ownership often leads to reduced conditions for workers.

A study by Birmingham Business School and the University of Bologna revealed that in comparison to a control group, job losses at UK private equity owned companies were 7 per cent higher one year after takeover and rose to 23 per cent higher after four years, mirroring similar findings by World Economic Forum research in the USA. The Centre for Management Buy Out Research and Nottingham University Business School found that buy-out firms had significantly lower annual wage growth than non-buy-out firms. The study also revealed that the larger the company, the greater the downward pressure on wages.[122]

What is happening to the voluntary and charity workforce?

The situation in the private sector mirrors that of the voluntary sector. Evidence from UNISON and Unite suggests that even in the relative boom years for the sector in 2005-2007, price competition was driving down funding and staff pay and benefits. This has been intensified recently as spending cuts begin to bite and contracts become renegotiated.

Evidence suggests that several organisations are either suspending or abolishing incremental pay progression or are considering it and that many more are looking for new flexibilities in terms and conditions in a sector that is not known for over-generous pay - at least at the lower levels.[123]

The Charity Pulse staff survey indicates growing dissatisfaction among the charity workforce. It found that the numbers reporting increased workloads, worsening work life balance, worsening pay and reduced job security had increased significantly from 2007-2011. The CIPD reported that 23 per cent of charity staff were seeking new jobs compared to 17 per cent in the public sector and 19 per cent in the private sector.[124]

Other research evidence indicates that third sector organisations are responding to the increasing need to compete for service delivery contracts by reducing staff, cutting terms and conditions and that smaller organisations are finding it increasingly hard to survive.[125]

How do we empower employees?

One of the ironies of the current arguments around employee empowerment and public service mutuals is that it is the very market-based reforms proposed by this and previous administrations that are contributing to the low morale, alienation and staff dissatisfaction that they seek to address. The targets, monitoring, performance indicators and accounting that the government dismiss as stifling red tape and bureaucracy are, as Professor Steve Davies argues: 'a result of introducing markets into public services or attempting
to replicate them with various measures and targets that stand in for
the market.'[126]

Surveys with NHS staff show disenchantment with market-based approaches to health service reform. Respondents to an Ipsos MORI survey outlined their idealised version of working for the NHS which encapsulated 'the vision or philosophy that the NHS offered 'healthcare for all, free at the point of delivery', that those who worked for the NHS enjoyed a vocation or calling, when patient care was the focus of all activity and, importantly, there was
job security.'

This contrasted with views of working within the contemporary health service, perceived as: 'defined and run according to business procedures, characterised by language borrowed from the commercial world, where financial management and the setting of targets are the focal point for measuring success. Democratic ideals are considered to have been exchanged, they think, for a competitive marketplace where the management of costs determines the type of care a patient receives and raises the spectre of job insecurity. This new world has, in their experience, been subject to endless change, operating to an agenda that appears to have been politicised, and where a fresh initiative (with no rationale) is imposed regularly.'[127]

It is unclear how further marketisation of public services will help 'liberate' public service employees from the prioritisation of targets and business interests that currently frustrate and alienate so many.

Threats to existing protections

TUPE Regulations 2006 include vital protections for employees who are transferred to new employers as a result of outsourcing of public services. The TUC does not agree that existing TUPE Regulations act as a barrier to reform. Rather the aim of the TUPE Regulations and the Acquired Rights Directive (2001/23/EC) on which the 2006 Regulations are based is to facilitate restructuring in a manner which safeguards the terms and conditions of affected staff and to avoid potential disputes relating to contracting out.

The Regulations ensure that the workplace representatives for affected employees are informed about potential transfers and consulted about related measures. They also safeguard the pay and conditions of staff that are transferred and limit the ability of existing and future employers to take a selective and potentially discriminatory approach to which staff are transferred. The Regulations and Directive have also played an important
role in avoiding competition between contractors on the basis of lower pay
and conditions.

However it is a matter of serious regret to the TUC that the TUPE Regulations do not provide protection for new employees hired to work on outsourced services. There is a wealth of evidence which demonstrates that outsourcing of public services to private and third sector providers has a detrimental impact on workers' conditions of employment in the longer term and this has serious long term impacts on service quality. The removal of the two tier code is likely to amplify these problems.

The government's announcement of a review of the Fair Deal provisions for pensions would also remove some of the minimal guarantees that workers could rely on in outsourcing situations. The Fair Deal policy established in 2000 requires the maintenance of comparable pension provision for workers who deliver outsourced public services. The Hutton Commission's interim report stated that these provisions make it more difficult for private and third sector organisations to provide public services, although no evidence was provided to support this assertion. The specific issue of Fair Deal was the subject of a government consultation in spring 2011, with the outcome still to be decided.

The TUC believes that the retention of the Fair Deal protections is essential to prevent a race to the bottom in outsourced public services. There is understandably considerable anxiety among unions about the future of Fair Deal, particularly given the abolition of the two tier code which provides similar protections on terms and conditions for new employees in contracted out public services.

If Fair Deal does not continue there will not be a level playing field and any private sector contractor would be able to undercut an in-house bid on pension costs alone. It is also worth noting that removal of Fair Deal would undoubtedly lead many contractors to close their 'broadly comparable' pension arrangements, thus worsening pension arrangements for many,
usually poorly paid, private sector employees who had formerly been public sector workers.

The White Paper records comments from some providers about lack of clarity as to when the TUPE Regulations apply. The TUC believes that the TUPE Regulations should apply in all circumstances where businesses or services are contracted out. However, we recognise that the adoption of the 'service provision changes' in 2006 which clarified that TUPE applies to groupings of employees who are contracted in or out, removed significant uncertainties over the application of the legislation. The number of legal cases relating to the application of the TUPE Regulations has fallen dramatically as a result of these provisions. They have therefore led to a significant reduction in legal costs for contractors, public services and employees alike.

The TUC however acknowledges that lack of transparency relating to obligations which transfer is not in the interest of contractors or transferred staff. We therefore support the disclosure of TUPE liabilities at an early stage. This information should not only be provided to potential contractors.
It should be provided to recognised unions, ideally before it is released to potential contractors. This would enable trade unions to check the accuracy
of the information, relating to contractual terms and conditions, collective agreements and potential and on-going Employment Tribunal claims or
other forms of litigation, thereby reducing the prospect of disputes following any transfer.

Finally the TUC will participate in any future consultations on TUPE provisions as part of the Employment Law Review. We recognise that the scope for weakening the protections contained in the Regulations is extremely limited given the requirements of EU law. However we will argue that the existing Regulations should be enhanced to ensure that future contracting out and restructuring does not result in a diminution in employees' pay and conditions or a growth in income inequality.

Valuing and empowering communities

The White Paper says:

The government states that its aim is to 'ensure better-quality services that are more responsive to individual and community needs' and it recognises the value of community engagement when it states that It is important that 'everyone has a voice in our democratic institutions, civil society and
local communities'.[128]

Our analysis:

The TUC agrees with the White Paper's stated intention of putting people in the 'driving seat'. However, it is our view that the combination of narrowly defined notions of choice and accountability based on an individual consumer model and the drive to open up public service markets will lead to fragmentation, inequality and a decline in democratic accountability.

Everyone uses and benefits from public services in some way. Improving public services and making them more responsive to the public necessitates a collective approach. It is our view that public service reform should be based on models of community engagement - some of which is touched upon in the White Paper - but that this is best achieved through well-resourced, accountable and flexible services that can best be derived from a public
sector framework.

The TUC agrees with Gannon and Lawson when they state that:
'co-production has the potential to succeed where a simplistic choice agenda has failed. Involving users as collaborators rather than consumers enables them to shape services in line with their needs and priorities, and has the potential to overcome the sense of disconnection that has proved so problematic for the politics of public service renewal.'[129]

We believe that this approach is most effective through collaborative model between service users, community organisations, public service workers and commissioning authorities within a framework of public sector accountability. In the TUC report Rethinking Public Service Reform we described this approach as the 'enhanced public value' model. This model meets the government's intentions to shift power towards communities and enhances efficiency and flexibility but avoids the harmful and expensive fragmentation and complexity caused by further outsourcing and marketisation.

The TUC welcomes the government's intention to enhance participatory budgeting through Neighbourhood Community Budgets. However, success depends on well trained and fully resourced public authorities and capacity developed within communities. Experience of participatory budgeting so far shows that it works within a broader programme of community engagement and on specific and local projects. It is unclear how effectively this can be rolled out when public budgets, particularly in local authorities, are undergoing massive cuts.

There is also no obvious rationale as to why participatory budgeting and service design cannot be undertaken within a public sector framework. Retaining services in-house enables more flexible, holistic and accountable solutions, with power resting jointly in the hands of the public authority and citizens, without diversion of power and resources to unaccountable private and voluntary sector providers.


Section six

The TUC vision for public
service reform

  • In this section we set out to:
  • outline a TUC agenda for public service reform
  • identify how quality, value and innovation can be promoted through a public sector led model of reform
  • promote a model of 'enhanced public value' based on negotiation and co-production
  • identify the value that trade unions bring to this process.

The TUC approach to reform

While the government argues that opening up public services to the market is 'the only way to deliver the improvements that people demand', there is a wealth of evidence to suggest that in-house delivery of public services has proved particularly effective in improving quality, meeting user needs and achieving value for money.

We stated at the outset of this paper that that the public sector is best placed to provide public services that accord with the founding principles of public services, namely universal access, delivery according to need, services free at the point of use, and quality services delivered for the public good rather than for profit. Maintaining public services within the public sector is the most effective way to ensure accountability between those services and the democratic institutions that govern them.

In-house options for public service reform can provide better value for money, increase democratic accountability, better engage and empower staff, while ensuring collective approaches to community engagement in the co-design
of services.

Quality

Research by APSE[130], looked at more than 50 examples of where local authorities had brought services back in house delivering benefits including greater accountability, enhanced performance, more flexibility and increased public satisfaction. The main reason cited for bringing services back in house was poor contractor performance. In addition, authorities found that dealing with contractors absorbed a great deal of senior officers' and elected councillors' time. Using the example of school catering, APSE's report highlights a number of examples where services brought back in house went on to be innovative and successful.

In all the case studies featured by APSE, benefits accrued to the insourcing authorities through closer alignment with local need, greater control over strategy and delivery and responsiveness to local and national developments. As a result, performance increased in every case. In one example, the London borough of Southwark saw the resident satisfaction rating for its street and estate cleaning service leap from 30-70 per cent as a result of taken services back in-house.

In a follow up report this year, APSE found that the need to improve service quality (42.9 per cent), the need for a more flexible service (31.7 per cent) and user and client dissatisfaction (27 per cent) were key reasons behind decisions to bring services back into local authority provision.[131]

Feedback from in-sourcing local authorities suggests that services provided directly 'can be a useful means to provide more cohesive, responsive and flexible local services enabling quicker efficiency gains to be reaped from transformative and innovative approaches to service delivery' offering local authorities 'the flexibility to respond rapidly to changing policies and circumstances, without being tied in to contracts that can be expensive
to alter'.[132]

Clearly, outsourcing public services is not the only way to improve quality.

Value for money

Research by APSE found that the 'need to improve efficiency and reduce service costs' was the most cited reason for in-sourcing' by local authorities with 58.7 per cent of respondents agreeing that this had been key.[133]

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.'[134]

Empowering employees

The chief mechanism for empowering employees outlined in the White Paper, is the government's aim to enable workers to spin out from the public sector through the formation of new employee-owned mutuals.

Further analysis of these proposals is contained in a separate part of this response. The TUC supports the principle of greater employee engagement and participation but we believe that mutuals spinning out of the public sector will exacerbate the fragmentation of public services, expose public service workers and services to a market in which large private sector providers are likely to dominate and that mutuals are currently being driven through as part of a top down management restructuring process with little consultation or support from the workforce.

What is more, the TUC believes that genuine employee participation does not automatically follow structural changes to employee-ownership models and that elements of employee participation can be promoted within in an in-house model of delivery without the need for harmful marketisation and fragmentation of public services.

A key question needs to be asked, one articulated by Professor Steve Davies of Cardiff University: 'if innovation, responsiveness, user-focussed services and flexibilities are seen as characteristics valued in the mutual sector, what scope exists for their introduction or expansion in the public sector?'[135]

The idea that public services can only be improved through outsourcing to new providers rests on the assumption that public sector organisations are incapable of flexibility or change. There are also misplaced assumptions that employee engagement can only be effected through the formation of employee-ownership structures, despite research showing no automatic correlation between the two[136]. Evidence across a range of public sector bodies shows this to be untrue and that models of employee engagement can be enabled through in-house reforms.

Co-op Trust Schools have demonstrated that the principles of mutualism can be applied to schools while remaining within an integrated, publically accountable and democratically accountable education system.

Research in the NHS has shown that, while there was much improvement to be made in terms of effecting employee engagement, where healthcare workers had higher levels of direct involvement in decision-making there were: 'high levels of role clarity, loyalty, innovation and cooperation with co-workers which, in turn have been related to quality of patient care.'[137]

The case of Newcastle City Council's transformation programme shows how employees, through their union UNISON, managed not only to resist privatisation of services but worked in partnership with councillors and management to successfully procure an in-house bid that delivered savings of over £24m and significantly improved performance. Unions were instrumental to the success of in-house reforms that managed to deliver improvements and helped manage some of the negative impacts, e.g. 25 per cent staff reduction, through negotiated settlements.[138]

Trade unions can play a key role in facilitating worker engagement, empowering employees to play a role in the decision making process and breaking down institutional resistance and unlocking staff expertise.

APSE's research into the role trade unions can play in public service reform showed that the majority of more than 200 local authority respondents stated that trade unions had played a positive role. The main outcomes and improvements achieved included 'improved efficiency, cost savings, better quality services and/or service redesign and improved staff motivation and morale'.[139]

Case studies featured in the research included public service unions working with local authorities to:

  • deliver more 'person-centred care' to residents and better job satisfaction for staff in care homes in Belfast
  • develop an in-house approach to sharing services in Lincolnshire that offered a cost-effective alternative to outsourcing
  • remodel Oxford Council's finance and HR, releasing £4m annual savings while protecting relocated or redeployed staff
  • build Care4you, an award winning service for older people delivered by Sheffield City Council employees.

Accountable services that engage with communities

There is a compelling case that in many situations there is disconnect between public service providers and the communities they serve. This accountability deficit creates problems such as increasing public scepticism about the decision making of public service professionals, a widening gap between public perception of service quality and objective criteria used to measure improvements and a lack of responsiveness to locally determined need. While public sector-delivered services have essential links to democratic institutions, more should be done to build links with service users and communities.

The TUC supports a model of reform that improves delivery and creates services that are responsive to communities by engaging service users, staff and commissioning authorities through a collaborative model of negotiation and agreement within a public sector framework.

This model meets the government's intentions to shift power towards communities and enhances efficiency and flexibility but avoids the harmful
and expensive fragmentation and complexity caused by further outsourcing and marketisation.

There is scope to achieve this within a public sector framework, whereby accountability to democratic institutions is balanced with mechanisms for engaging the community and service users and where the public sector workforce plays a fundamental role in the consultation and negotiation process with commissioners and users of services.

The 'enhanced public value' approach is based on a process of consultation and negotiation between service users, the workforce and the commissioning bodies to identify priorities, strategy and service implementation that best meets the needs of the community, within the context of restricted public resources. In this way, services are commissioned in a way that meets local need but balances this with the broader needs of the community, the prioritisation of scarce resources and the promotion of public value.

In the report Rethinking Public Service Reform Mick McAteer identifies three key benefits derived from this approach in that it has to:

  • balance the interests of the public realm and the market
  • consider individuals to be citizens, not just consumers, and thus balance the interests of communities and individuals
  • consider wider social concerns, not just narrow financial concerns.

In this way, public service reform can be driven from within a democratically accountable and joined up public sector framework. Furthermore, through placing the public sector workforce at the heart of the process alongside communities, it is able to restore links between providers and users thereby addressing the accountability deficit and restoring legitimacy to public services. What is more, staff involvement ensures that implementation of service delivery is more closely aligned with higher level strategy.

While this model has not been tested across the whole public sector, there are case studies of similar approaches undertaken that provide some very positive outcomes. The 'Time of Our Lives' project in Bristol City Council, the approach taken to service improvements in Newcastle City Council[140]
and the (formerly) Inland Revenue's 'Our Time' project[141] all demonstrate a consultative process including public sector workers, through their recognised trade unions, employers and service users that provided benefits to the workforce and community, driving through public service reform from within.

Public service reform in Wales and Scotland

Alternative models based on collaboration rather than competition also form the basis for public service reform in the devolved nations of the UK.

In their agenda for public service reform, the Welsh government states: 'The model, which we have opted for, seeks to maximise efficiency gains through the scale economies of more effective co-operation and coordination between agencies across the whole of the public sector, not excluding the independent, voluntary and private sectors. By using co-ordination rather than competition, users and producers of public services are enabled to be on the same side. As a consequence, the best outcomes are obtained when those who use and those who provide services work together in collaboration'.[142]

In the foreword to the Programme for Government, Carwyn Jones, First Minister for Wales states that 'an emphasis on social, economic and environmental well-being for people and communities, embodying values of fairness and social justice' will be the basis for their approach to public services. Essential to this is a 'commitment to support and develop the public service workforce'.[143]

In response to recommendations arising from the Christie Commission, the Scottish government has developed its programme for public service reform based on the following four pillars:

  • a decisive shift towards prevention
  • greater integration of public services at a local level, driven by better partnership, collaboration and effective local delivery
  • greater investment in the people who deliver services through enhanced workforce development and effective leadership
  • a sharp focus on improving performance, through greater transparency, innovation and use of digital technology.[144]

The Scottish government commits to the principles of co-production stating that: 'We will empower local communities and local service providers to work together to develop practical solutions that make best use of all the
resources available'.[145]

In both the Welsh and Scottish models, explicit reference is made to partnership with the workforce and the development of the professional capacity of public service workers. Collaboration and dialogue with trade unions representing the public service workforce has played a major role in the development of these programmes.

In summary, the TUC model for public service reform incorporates the following elements:

  • engagement with users to determine public service delivery strategies and implementation plans with a precise focus on identifying what public service users and the wider community want a service to generate
  • a commitment to deliberation and negotiation in identifying that
    public value
  • a recognition that any conception of public value must involve not just
    what a service should deliver but also how it can be delivered in a
    cost-effective way
  • the development of public service delivery strategies and implementation plans that uphold the founding principles of public services, namely universal access, delivery according to need, services free at the point of use, and services delivered for the public good rather than for profit
  • the development of public service delivery strategies and implementation plans that preserve the organisational integrity of public services and which value collaboration and integration over competition and fragmentation
  • full engagement with public service staff in the determination of strategies and implementation plans
  • the establishment of robust feedback mechanisms for staff and users during the implementation and delivery phase of any strategy.

Through this approach, civil society will play an important role in the commissioning of services that meet community need but through a process of partnership with the public sector, including the workforce.

The TUC believes that the relationship between communities, through Community and Voluntary Organisations (CVOs) or, in some cases, social enterprises and the public sector can be beneficial. These benefits are derived in two main ways. First, civil society organisations are often able to engage with hard to reach clients and communities that may be beyond the scope of the public and private sector. As such, they are positioned to provide added-value, niche services in partnership with the public sector. Second, CVOs are able to represent and articulate the needs of service users and clients, facilitating greater engagement between public service providers and the communities they serve. Enhancing the capacity and role of civil society in these areas is essential to improving public service delivery.

It may well be that through this process, elements of public service delivery are commissioned in a way that provides scope for CVOs and other organisations to provide niche services, building on the valuable work already performed by organisations like Mind, Age UK, the Terrence Higgins Trust, the Alzheimer's Society and the Stroke Association.

But this should be achieved through a process of negotiation and partnership between CVOs and public service providers, according to the principles outlined above.

Gannon and Lawson explain co-production as: 'service stakeholders working together to create or improve a service by making it both more innovative and fairer. It is about the formation of a space in which meaningful dialogue between government, management, staff and users can maximise innovation and ensure consensus on all levels of provision from commissioning right down to frontline service delivery'[146]

In so doing community engagement becomes a mainstream process, without the needless adversarial implications of the current government proposals. And this too removes the need for arbitrary proportions of services to be outsourced and eliminates the threat to public service delivery caused by fragmentation and marketisation.



www.bis.gov.uk/files/file47158.pdf

Open Public Services White Paper, HM government, July 2011

Ibid

Ibid

Ibid

Ibid

[7] 'Co-production: the modernisation of public services by staff and users', Gannon and Lawson, Compass, 2008

[8] 'Do people want choice and diversity in public services?', Curtice and Heath, British Social Attitudes, 2009

[9] 'What do people want, need and expect from public services', Ipsos MORI/RSA projects, 2010

[10] Ibid

All case studies taken from Insourcing update, APSE, June 2011

[12] 'Choice plans are enforced competition, say GPs', 22 July 2011, Health Service Journal

[13] Prospect submission to Open Public Services White Paper, September 2011

Ibid

Community Care and UNISON, June 2010

Facing up to the Challenges of Personal Health Budgets, Mental Health Network,
NHS Confederation

Ibid

The Localism Bill, decentralisation and Local Voluntary Action, Briefing Paper 50,
VSNW, 2010

www.bbc.co.uk/news/uk-politics-11840648

Open Public Services White Paper, HM government, 2011

Ibid

Open Public Services White Paper, HM government, 2011

Ibid

'Do people want choice and diversity in public services?', Curtice and Heath, British Social Attitudes, 2009

Rethinking Public Service Reform, TUC, 2008

Capable Communities: Towards Citizen-Powered Public Services, IPPR and PWC 2010

Privatisation of public services and the impact on quality, employment and productivity, PIQUE, 2009

Healthy Markets, Audit Commission, 2007

The rise of the public services industry, Gosling, UNISON 2008

Assessing the impact of public sector procurement on competition, OFT, 2004

The rise of the public services industry, Gosling, UNISON 2008

Semi-privatized empires, Walker, Public 2007 quoted in UNISON 2008

The rise of the public services industry, Gosling, UNISON 2008

Rehabilitation Works, Nicholson, Centre Forum, 2011

Smarter procurement in local government could save up to £450 per household, Eric Pickles, Conservative Home, June 2011

Civil Service World, 27 January 2011

Social Enterprise and the NHS: Changing patterns of ownership and accountability, University of Durham 2007

Match Winners: a guide to collaboration between social enterprise and private sector business, DTI 2005

Third Sector, 'We must have a clear definition, says Social Enterprise Coalition',
28 September 2010

'The Third Sector delivering public services: an evidence review', TSRC Working Paper 20, July 2010

Stand and Deliver: The Future for Charities Delivering Public Services, Charity
Commission 2007

Servants of the Community or Agents of Government?, Cairns, Harris, Hutchison, IVAR 2006

Public Services and Privatisation, NCIA 2010

Open Public Services White Paper, HM government, 2010

Public Services and the Third Sector: Rhetoric and Reality, PASC,July 2008

Social enterprise spin-outs from the English health service: a Right to Request but was anyone listening?, TSRC Working Paper 52. January 2011

Leading the way through social enterprise DOH, March 2010

Proof of delivery? A review of the role of co-ops and mutuals in public service provision, APSE, August 2011

The employee ownership effect: a review of evidence, Matrix Evidence, March 2010

Ibid

New Models of Public Service Ownership: a guide to commission, policy and practice, OPM, August 2010

Hansard, 7 June 2011

Proof of delivery? A review of the role of co-ops and mutuals in public service provision, APSE, August 2011

Open Public Services White Paper, HM government, 2011

www.huffingtonpost.co.uk/danny-alexander/our-society-is-blighted_b_89562...

'Free schools built in mainly middle class and wealthy areas', The Guardian, 31 August 2011

House of Commons Library (2011) Education Bill (Research Paper 11/14), February 2011

Admissions code proposals will not improve life chances, ASCL, 27 May 2011

It's about time: why emergency response times matter to firefighters and the public,
FBU, 2010

www.tuc.org.uk/extras/genderimpactofthecuts.pdf

www.yvettecooper.com/women-bear-brunt-of-budget-cuts

www.wbg.org.uk/RRB_Reports_4_1653541019.pdf

Where the money goes - how we benefit from public services, TUC, September 2010

'400,000 children will fall into relative poverty by 2015', The Guardian, 11 October 2011

LVSC 'The Big Squeeze 2010: The Recession, Londoners and the Voluntary and Community Groups Who Serve Them', May 2010

Open Public Services White Paper, HM government, 2011

Ibid

Open Public Services White Paper, HM government, 2011

Ibid

Privatisation of public services and the impact on quality, employment and productivity, PIQUE, 2009

Driven by dogma? Outsourcing in the health service, OPM, 2008

Privatisation of public services and the impact on quality, employment and productivity, PIQUE, 2009

Hospital Contract Cleaning and Infection Control, an independent report from Steve Davies of Cardiff University commissioned by UNISON, January 2005

Time to care? An overview of home care services for older people in England, CSCI,
October 2006

www.bbc.co.uk/news/uk-13548222

CSCI, The State of Social Care in England 2005-06

The rise of the public services industry,Paul Gosling, UNISON, September 2008

Insourcing update, APSE, June 2011

For better, for worse: the use of strategic service-delivery partnerships, Audit Commission, January 2008

The rise of the public services industry Paul Gosling, UNISON, September 2008

From competition to collaboration in public service delivery: A new agenda for research, Entwistle and Martin, Public Administration 2005.

'Private deals block Jamie's school dinners', The Guardian, 25 April 2005

Privatisation of public services and the impact on quality, employment and productivity, PIQUE, 2009

Ibid

'Bed blocking on the rise as care cuts leave elderly stuck in hospital', The Guardian,
4 January 2011

Privatisation of public services and the impact on quality, employment and productivity, PIQUE, 2009

Open Public Services White Paper, HM government, July 2011

www.bbc.co.uk/news/health-14902565

The Shrinking State, Howard Reed, Landman Economics, March 2011

Privatisation of public services and the impact on quality, employment and productivity, PIQUE, 2009

Open Public Services White Paper, HM government, July 2011

Open Public Services White Paper, HM government, 2011

[97]FT, 18 October 2010, 'Private sector 'not yet better or cheaper''

NAO, The Failure of the FiReControl Project, 2011 p.23-24

House of Commons Committee of Public Accounts, The Failure of the FiReControl Project, 2011 p.3

The Rise of the Public Services industry, Gosling, September 2008

GMB, December 2009

HoC PAC, 2010, Financing PFI projects in the credit crisis and the Treasury's response

The rise of the public services industry, Gosling, September 2008

The cost of using private finance to build, finance and operate hospitals, Shaoul, Stafford and Stapleton, April 2008

Arthur Andersen and Enterprise LSE, Value for Money Drivers in the Private Finance Initiative, January 2000

Gaffney D, Pollock A, Price D, Shaoul J, 'The Private Finance Initiative: PFI in the NHS - Is there an Economic Case?'British Medical Journal, vol 319, pp 116-9, 1999

Healthy Competition: how councils can use competition and contestability to improve services, Audit Commission, November 2007

Assessing the impact of public sector procurement on competition, OFT, September 2004

The British Labour Government's Reform of the National Health Service, Journal of Public Health Policy, 2001

Professor Lindsey Davies, FPH, February 2011, Journal of Health Policy

Professor Allyson Pollock, The Guardian, 24 September 2007

Realising the potential of GB Rail, McNulty, May 2011

Paying for privatisation, RMT, May 2011

Open Public Services White Paper, HM government, July 2011

Privatisation of public services and the impact on quality, employment and productivity, PIQUE, 2009

Ibid

Privatisation of public services and the impact on quality, employment and productivity, PIQUE, 2009

Brown, William, Alex Bryson and John Forth (2009) 'Competition and retreat from collective bargaining'

Rethinking Public Service Reform, McAteer, TUC 2008

'Privately Managed Custodial Services', Prison Pay Review Body 2006

The Shrinking State, Howard Reed, Landman Economics, March 2011

The rise of the public services industry,Paul Gosling, UNISON, September 2008

'Government policy, recession and the voluntary sector', Steve Davies, University of Cardiff 2009

'Worse pay, better management', Third Sector, 12 July 2011

False Economy? The costs of contracting and workforce insecurity in the voluntary sector, Dr Ian Cunningham, University of Strathclyde, and Professor Philip James, Oxford Brookes University

Mutual Benefit? Steve Davies, Cardiff University, 2011

What matters to staff in the NHS, Ipsos MORI, June 2008

Open Public Services White Paper, HM government, July 2011

Co-production: the modernisation of public services by staff and users, Gannon and Lawson, Compass, 2008

[130]Insourcing: a guide to bringing local authority services back in-house, APSE, 2009

Insourcing Update, APSE, June 2011

Ibid

Ibid

Ibid

Mutual Benefit?, Steve Davies, Cardiff University, 2011

The Employee Ownership Effect, Matrix Evidence, 2010

West M et al (2005) Working Together: Staff involvement and organisational performance in the NHS, unpublished report. Birmingham: Aston Business School

Public service reform but not as we know it, Hilary Wainwright, 2009

The value of trade union involvement to service delivery, APSE, May 2010

Public service reform but not as we know it, Wainwright and Little 2009

Rethinking public service reform, TUC 2008

Making the connections: delivering better services for Wales, Welsh government, 2004

Programme for Government, Welsh government, 2011

Renewing Scotland's Public Services: Priorities for Reform in Response to the Christie Commission, Scottish government, 2011

Renewing Scotland's Public Services: Priorities for Reform in Response to the Christie Commission, Scottish government, 2011

Co-production: the modernisation of public services by staff and users, Gannon and Lawson, Compass, 2008

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