Civic markets – a revolutionary new public service model?
I have just spoken at an event hosted by the Public Management and Policy Association. As the topic was public service reform I had to wrestle with a way of describing the Coalition’s strategy. So what you are about to read is at least new even if it isn’t original or well-developed.
I decided to label the Coalition’s emerging model for public services as ‘civic markets’. This describes the attempt to bind together a strategy for civic renewal (the Big Society) with a more traditional right of centre (accelerated New Labour) faith in market mechanisms.
In essence this means that more of the public sector will be opened up to competition among purchasers and providers but a variety of mechanisms will be used to try to ensure a stronger civic element to these markets. The mechanisms include:
- Offering communities the chance to be purchasers and providers of public services – for example free schools
- Expanding the scope for individuals to be in charge of purchasing services – for example through the expansion of personal budgets into health care
- Outsourcing more public sector work and encouraging more third sector organisations to bid for public service contracts
- Encouraging the emergence of hybrid services which combine public subsidy with volunteer effort, for example libraries which are largely staffed by volunteers
- Seeking to turn parts of the public sector into semi-autonomous social enterprises, for example GP purchasing consortia
- Giving the public a stronger voice in direct accountability and decision making, for example election of police chiefs, community veto on public service closures and an enhanced role for localities in developing their own local housing schemes
- Encouraging civil servants to get out to the front line and work with community groups so that they become, in David Cameron’s phrase, ’civic servants’.
There are a number of issues which a model of civic markets needs to address:
- Coherence – these examples describe a wide varieties of models of ‘civicness’- from new forms of accountability to shifting services from the public to the community sphere. How do these fit together and could they conflict?
- Efficiency – are civic markets the best way to achieve efficiencies?
- Capacity – does society overall have the capacity to be the partner Government wants it to be?
- Equity – as capacity is very unevenly distributed will privileged communities simply be much better placed to reap the benefits of civic markets?
- Co-ordination – with elected police chiefs, GP social enterprises, free schools, community vetoes, where does overall place shaping and strategic planning fit (if at all)? Given the patchy nature of existing local collaboration and leadership, does this matter?
- Accountability – where does accountability sit in this system, and what will happen when things go wrong?
The speech went down OK with questions which sought to develop the ideas rather than contradict them. So relying as usual on the intelligent comments of my readers I might elaborate on some of this later in the week.
Civic markets have a lot in common with vision for public services developed by the 2020 Public Services Trust here at the RSA but there are also important differences. So these are bewildering times for public service commentators and advisers, our thinking needs quickly to catch up with the scale and pace of change in Government policy.
Why are Scottish schools falling behind?
Research that suggests Scottish schools have fallen behind those in England since devolution is challenging to critics of public service reform.
The research by the Scottish-based Centre for Public Policy for Regions is pretty damning of the political management of schools arguing, firstly, that since devolution Scotland has fallen behind England in terms of secondary school attainment, and, secondly, that not only do Scottish pupils have substantially more spent on them than their English counterparts, but budgets could be substantially reduced without any impact on outcomes.
Scottish schools are not the only example of poor public service performance in devolved administrations. A similar story of higher expenditure but worse outcomes can be told about the gulf between NHS waiting times in Wales and in England.
Given that the Scottish and Welsh Governments have both made much of their rejection of the English model of public service reform, especially its use of greater contestability among providers and choices for patients, the facts offer three different explanations:
1. The English approach to reform is right and the ideological unwillingness of Scotland and Wales to pursue some form of this approach has cost its citizens dear.
2. Scottish and Welsh politicians have chosen different outcomes to those prioritised by the English. While they may be doing worse and costing more in relation to the things English ministers care about – exam performance and waiting lists, for example – they are doing much better in relation to other outcomes.
3. The reason for worse performance in Scotland and Wales since devolution are to do with some other factor than reform.
I won’t pretend that I don’t find the first explanation the most likely. But I am very interested to hear if there are other interpretations.
Public services – still not getting real
What with the recession and Northern Ireland, not to mention Jade Goody and Julie Myerson, not much attention will be paid to what will seem to many people as yet another Government paper on public service reform (by the way, has anyone yet written the inevitable Goody-Myerson comparison: on the one hand the ignorant untalented, lumpen Goody who is enduring media intrusion in her dying hours in order to provide financial security for her children, on the other, the fragrant, highly intelligent, middle-class Myerson who seems to be encouraging media intrusion into her family in order that she can sell more books, sorry that should read ‘expose the scourge of skunk’).
There’s nothing wrong with the announcements Brown will be making today. A greater reliance on user satisfaction is a good way of balancing the need for accountability with the scope for local discretion. But it is hard to avoid the impression of superficiality. Public service reform is facing some major system challenges and I sense a question mark hanging over the fundamental trajectory of reform. There are more Academies but more of them also complain that they are losing the autonomy that makes them different. In the NHS the Darzi recommendation for integrated care trusts is hard to reconcile with the internal market. It could be that this represents a carefully calibrated middle way between contestability and cohesion, between autonomy and accountability, but if so I haven’t yet heard any minister describe it that way or explore the kinds of challenges such a strategy involves.
On the other hand, and here I am a cracked record, there is no sign that ministers have even begun to face up to the spending problems that will kick in just after the next General Election. Indeed there appears to be a conspiracy of silence between the two major parties. Labour doesn’t want to talk about public debt or add to the bad news, the Conservatives don’t want to look as though they are planning cuts. So both parties will shy away from addressing the scale of the problem while secretly planning for the big squeeze.
For the Conservatives too are in la la land when it comes to public spending. Their highest profile public service reform – based on the Swedish model – is to allow parents to draw down what is essentially a voucher to use to set up their own schools. The problem with this policy is that while supporting new entrants the Conservative Government will also have to support existing schools so they can fight back or at least manage decline. So, as with all policies that seek to increase diversity and contestability in a quasi-market, extra capacity will need to be funded (this is what New Labour controversially had to do when it was encouraging the private sector into NHS treatment).
Generally it is assumed that you need the market to have about 20% extra capacity in order to allow new entrants in while supporting existing providers. But the Conservative policy is supposed to be enacted in the middle of a huge public spending squeeze. As public service jobs and services are being cut back left, right and centre can we really imagine a Tory spokesman defending spending an extra 20% on surplus school places just to invigorate the market, especially when the system already contains such diversity and where there are other cheaper routes to bring in new providers?
Peter Mandelson – industrial policy and public service reform
Speaking here on Wednesday night Peter Mandelson made the case for an activist industrial policy. The question, he argued, was not whether Government policy engages with industry – inevitably, in a hundred and one ways, it does – it is whether that engagement is appropriate and effective. Peter put particular emphasis on looking in the round at how Government shapes the environment for business. It was a comprehensive and subtle speech and I hope that business voices will take up Peter’s invitation to debate these issues constructively.
Since the speech, the Government has intimated that it would be willing to provide support to the ailing UK car industry, probably in the form of long term loans. Government can’t avoid judgements about what are strategic industries. This was underlined by the contrast between the responses to the car industry and the collapse of Woolworths; ‘something must be done’ in the former case; ’bowing to the inevitable’ in the latter. Governments have to pick winners in the sense of identifying those industries which are strategically important, which genuinely need help now and which have a strong chance of being able to prosper in the longer term. What Government has to avoid is picking losers, or as Peter put it, losers picking Government.
But if money is to be made available to back industry I hope it won’t just be big sums for big companies and sectors. The Government should also be creating a major investment fund for social enterprises, especially those focussed on the urgent task of a fundamental re-imagining of core public services. More specifically, we need innovation that enables the public sector to deliver better outcomes with the same (or fewer) resources, by better mobilising the capacity of civic society. As I said to Peter on Wednesday, achieving a step change in public service productivity is vital not only to public welfare but also to national competitiveness.
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