Rethinking Public Service Reform - The ‘Public Value' Alternative

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Rethinking Public Service Reform - The 'Public Value' Alternative

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The problems of market-based approaches

There is no single market-based approach to public service reform. Instead a variety of techniques have been used since the early 1980s to make one or other section of the public sector operate more like the free market. Nevertheless, one significant fault line runs through the history and practice of these initiatives.

In the earliest days, the market-based approach was seen primarily as a way to cut costs and improve efficiency in public service delivery. However, a more sophisticated approach has developed since the 1980s and gathered pace since Labour came to power in 1997. In this approach, market-based approaches are promoted as a way to ensure that all citizens, no matter what their wealth or status, could have access to the high quality services available to the better off and better educated.

However, one of the most telling problems of the sophisticated market-based approach is that, despite its intentions to provide universal access to quality services, it has struggled to escape the problems that beset the simple approach. Universal access and quality have suffered under the more sophisticated approach in much the same way as they did under the simple approach.

Many would claim that, even if the more ambitious claims made by the sophisticated approach are flawed, market-based solutions do still offer more productive public services. In fact, this pamphlet presents a wealth of general and case study evidence to show that this is not the case.

In addition, while the market-based approach has held a strong grip over the imaginations of senior policy advisors and ministers for many years now, the wider public has never warmed to the approach. Polling data shows that while citizens expect their changing needs and demands to be met by public services, they also recognise that public services are different to private sector consumer goods and they appreciate the collective nature of public services.

The alternative: 'public value'

The public value approach is based on the notion that public services, like the private sector, create value but, unlike the private sector, this value cannot be simply reduced to financial profit and loss. The approach understands the public sector as generating a wide range of beneficial outcomes including: wider economic value; social and cultural value; fairness and equity, particularly with reference to vulnerable consumers; political and democratic value by encouraging debate, participation and engagement amongst citizens; and long-term sustainability of social and economic networks.

The approach suggests that public value can only be identified and assessed through a process of democratic engagement between service providers and service users. For most public value theorists, this means the establishment of forums within which providers and users set priorities and develop strategies for public service delivery.

Public value also recognises that public services come at a very great financial cost and it acknowledges that the taxpayer is a stakeholder in any public value negotiation and value for money must be a priority.

The approach is particularly attractive because it:

  • can improve the currently very low democratic legitimacy of public services
  • can address the 'delivery paradox' where user satisfaction with public services tends to remain static or even decline despite the fact that objective measures show improvements in service delivery
  • specifically and directly seeks to improve the responsiveness of public services to the wishes of users and citizens
  • recognises that public services operate in an environment of scarce resources and that vast demand means that there is a need for constant and open deliberation and negotiation with all users because there will always be losers as well as winners when any particular strategy for the delivery of a service is agreed
  • is not a 'one size fits all' model - it recognises that creating responsiveness and productivity requires a tailored response for each service.

However, there are problems with the public value approach as currently conceived. Most public value adherents tend to underestimate the role of public sector staff in not just delivering services but providing legitimacy for public services. This is a serious oversight for two reasons.

Firstly, the emphasis of public value models on complex deliberative processes to determine what users regard as public value for a particular service overlooks the less cumbersome, more precise and practical feedback that could be provided by those staff who engage in dialogue with service users on a daily basis.

Secondly, an important aim of the public value model is to legitimise public service change in the eyes of the public by engaging them in the process of change itself. The absence of staff from public value models ignores the very clear research findings that staff are actually the most effective legitimisers of change and of public services more generally in the eyes of users. Their role must, therefore, be central if this goal is to be achieved.

A further problem is the tendency amongst some public value theorists to link the approach to market-based models. If public value theory genuinely holds that core public goods can be delivered effectively by a market-based solution, then why bother proposing the public value approach in the first place? We need only design ever more sophisticated models of market-based delivery. In this case, public value becomes little more than a desirable extra which might help improve the accountability and public acceptance of market-based solutions.

In addition, this pamphlet argues in some detail that two-and-a-half decades of experience of market-based approaches and private sector involvement shows that this is precisely not the route to efficiency, fairness and accountability. The detriment to these goals is not incidental to the market-based approach but inherent.

With these fundamental qualifications in mind, it is proposed here that the public value approach needs to be enhanced by elaborating a series of core principles:

engagement with users to determine public service delivery strategies and implementation plans with a precise focus on identifying what public value 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 that 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.

Further research is undoubtedly required before a programme of public value pilots or trailblazers could be rolled out across public services in the UK. A comprehensive search for UK examples of public services that have engaged users and staff in designing delivery strategies and/or have managed to deliver highly productive and responsive services must be undertaken. This should then be followed by the establishment of a detailed set of operational principles and benchmarks for a public value approach.

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