Open Public Services - TUC briefing

Open Public Services White Paper - TUC response

Executive summary

October 2011

Introduction

• The TUC has issued a comprehensive response to the Open Public Services White Paper providing a detailed, evidence-based analysis of the proposals set out in the white paper and setting out the TUC's approach to public service reform.
• The TUC has serious concerns about the direction of government policy on public service reform and the paper makes this case with reference to a wide range of sectors and sources.
• A copy of our full response can be obtained by contacting Matt Dykes at mdykes@tuc.org.uk
• Key TUC concerns:
• The White Paper contains a number of key assertions with no supporting evidence and where all available evidence is either unclear or contradictory.
• Public services are not discretionary commodities. They are public goods that provide benefits to both individual service users and wider society, supporting community cohesion, local economies and the building blocks of our welfare state that was created to address years of market failure.
• 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.
• We do 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 austerity measures and the resulting squeeze on the economy is impacting most heavily on the poorest, most vulnerable and deprived, exacerbating inequality within and between communities. The government's focus on individualism and competition must be seen within this context.
• Spending cuts also mean that serious attempts at reform are utterly compromised as public authorities prioritise cost reduction. Many of these reforms will and are being used as a cover for the outsourcing of services and the implementation of spending cuts.
• Alternative provision by the voluntary sector or new models of employee ownership cannot be used as a cheap replacement for mainstream public services.
• The White Paper has no approach to developing the skills or capacity of the public service workforce and there is a complete absence of investment in or partnership with public sector workers and trade unions.

The government's approach to reform

Choice

• 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.
• The example of free schools being set up in mainly higher income areas, 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.
• 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.
• Strathclyde University[2] 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.'
• Ipsos/MORI[3] found 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'. Fairness was largely defined as a commitment to uniformity in standards.
• 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.'
• 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 through personal budgets is an effective route to achieving this. However, concerns remain about the employment of care workers, the quality of service and the potential impact on universal care services.
• Surveys by Community Care and UNISON[4] of 395 practitioners in adult social care and 645 mental health practitioners found an increase in bureaucracy and less time to work with users to support their self-assessment, a key part of personalisation. Support in principle was tempered by concerns over implementation, particularly where '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'.

Localism

• The TUC supports public service provision that engages and empowers local communities. However, the government's decentralisation agenda comprises accountability and equality of access and provision, particularly where power and resources are devolved to unaccountable and vaguely defined sub-local and neighbourhood structures or is outsourced to private providers.
• Localism will be undermined through the takeover of local services by large private operators with no regard to the local community.
• the Community Right to Challenge in the Localism Bill provides 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'

Diversity

• 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.
• 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'.
• 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'.
• Moves to larger contracting through shared services and economies of scale in procurement as well as the extension of payment by results will mean that only companies with the capacity to tender and sufficient working capital will be able to sustain themselves in the market.
• 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.' [6]
• 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, similar to that seen in the UK rail industry.
• 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'.
• Research shows the general public reject private models of public service delivery.
• Research in British Social Attitudes[8] 2009 found that 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.
• Research by IPPR and PriceWaterhouseCoopers[9]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.

Fairness

• 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 approaches are required.
• Without a sufficient framework in place to ensure equality of access and provision and mechanisms to mitigate the worst effects of local variation of services, vulnerable and marginalised groups will lose out to those with greater resources and a louder voice.
• The crucial role of a public service ethos in the promotion of equality has been a lesson won over many years. 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.
• Outsourcing of services to providers from the private and voluntary sectors potentially weakens the equalities framework, with alternative providers paying less regard to the statutory duty to promote equality.
• 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.

Accountability

• 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 created within health and education.
• 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.

Value for money

• The extension of contract culture across public services will escalate costs that have been seen to dramatically increase in quasi-market situations such as the health service and rail industry.
• 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' 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.'
• Professor Lindsey Davies, President of the Faculty of Public Health[11] 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.'
• Professor Allyson Pollock[12] 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. 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'

The public service workforce

• 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.
• Public service reform programmes in the devolved nations of the UK differ in that make explicit reference to workforce partnership. The Welsh Programme for Government[13] expresses a 'commitment to support and develop the public service workforce'. The Scottish Government's programme of reform commits to 'greater investment in the people who deliver services through enhanced workforce development and effective leadership'.
• 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.
• Evidence from Unite, UNISON and the 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

• MyCSP, the civil service pension administrator, is held up as a best practice example of a public service mutual in the white paper. A recent survey by PCS found that 95 per cent of staff opposes the move.
• 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 on Pensions and TUPE. It is unclear how the fairness principle applies to the public service workforce.

The TUC approach to reform

• 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.
• 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 re-design with employees and service users, there have been massive improvements in availability and use of recycling across the authority.
• 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'.
• 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.
• 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 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.

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

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

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

Community Care and UNISON, June 2010

The Localism Bill: decentralisation and local voluntary action, VSNW, 2011

Rehabilitation Works, Nicholson, Centre Forum, 2011

Realising the Potential of GB Rail, McNulty, May 2011

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

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

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

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

Professor Allyson Pollock, The Guardian, 24 September 2007

Programme for Government, Welsh government, 2011

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

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

The Value of Trade Union Involvement to Service Delivery, APSE, May 2010