The 2020 Public Services Trust Blog

Another insightful article from Steve Richards in today’s Independent – arguing that ownership – as evidenced in recent debates over public service mutuals – will be at the centre of debates over public service futures.  I agree with him.  But I also agree that, within this broad sweep of good ideas, there are some tricky issues to be negotiated.

His article responds to an important speech given by Tessa Jowell this week, as part of a series of forward-looking speeches organised by Progress.  In it, the Minister developed the idea of mutualising the delivery of public services, but also of a new role for the state to encourage and enable other kinds of collaborative ownership of assets and resources.  A Commission on Ownership (chaired by Will Hutton) apparently follows, and a cross-party consensus seems to be emerging over the value of exploring these ideas at the least.

This is obviously of interest to us at the 2020 Public Services Trust.  We have been thinking hard about how new approaches to ownership could be reflected within a more engaged citizenry as a whole, and a potentially changed role for the state in educating, enabling and encouraging this engagement.  We are thinking about how the performance and quality of new collaborative institutions should be defined and accounted for; at what level; and how and why these models might represent a progressive alternative, rather than just tinkering around the edges.

Ben Lucas blogged last month about some of this – asking questions about funding, procurement, and actual reality of citizen engagement within delivery mutuals.  Legal status is important (might we be talking about private entities that would compete with established private sector providers, for example? Lots of possibilities here).  Funding is key (if one reason for mutualising is flexibility and freedom to invest and borrow, how can we make sure that current market conditions don’t make this too difficult?).  Quality and performance management are crucial.  The Minister mentioned in her Q & A that rolling back a good, effective mutual would (rightly) be extremely difficult.  But what about an ineffective organisation delivering poor quality services?

It will be exciting to work through some of these issues – especially if Steve Richards is right about the centrality of this emerging ‘politics of ownership’.  I think the next stage is understanding the values that underpin this nascent consensus.  We are now mostly talking about ownership and accountability as ends in themselves, but they are also means to getting at our vision for society and citizenship.  This is where the real politics is embedded (i.e. are mutuals a step towards a smaller state and a bigger society?  Or supported by a more active and regulatory state? Or a combination of the two?).   Hopefully we can make some ground on these issues – helping to articulate the options ahead for progressives.

Lots of reaction after the PBR, with the IFS doing the numbers and predicting ‘two parliaments of pain’.  Tax rises and spending cuts will make us worse off in real terms, and, most alarmingly, the Guardian relayed that “Labour began its second term in 2001 with spending on public services amounting to around 22% of national income, a figure that has risen to 26%. By 2013/14, it will have dropped back to 22% and potentially to 20% – the level Labour inherited from the Conservatives in 1997.”

It is difficult to know what to make of this. In one sense, the PBR makes even clearer what we have known for some time – that the ‘reform for reward’ equation for public services is over, and that some serious innovation and asset sweating will be needed to even maintain current service levels.  On the other hand, we know how much investment and targeted intervention has been required to pull public service standards up from the levels of the mid-1990s.   This is why a long-term vision for public services is so vital, and why radically cutting spending without one would be a mistake.

Although the main parties are yet to reveal the impact of their proposed cuts for the service frontline, others are taking guesses.  The think tank Reform have recently published a report arguing that ‘the public sector workforce needs to reduce by at least one million people’ – pointing out that the great majority of public sector workers are front-line staff, not the mysterious back office bureaucrats that are so often offered up for the slaughter.  For example, ‘of the 1.4 million people working in the NHS’ they work out that ‘just over 200,000 provide administrative support’.

This is certainly uncomfortable reading.  And looking across the Irish Sea gives cause to worry further.  Following deep cuts in public spending, workers across the public sector are considering industrial action over what they see as unfair drops in salary as a result of the actions of others.  A winter of discontent looms, and excruciatingly, all of this is taking place during the City’s bonus season.  The Financial Times has recently relaunched its ‘How to Spend It’ supplement, but most people will wonder whose money it is being spent.

It is difficult to make a case for long-termism during a time like this.  Even the Copenhagen summit has had trouble hogging the front pages – and that is about as long-term and sustainability focused as you can get.  In the Independent yesterday, Adrian Hamilton argued that, frankly, serious policy and election campaigning don’t mix.   His pithy article argues that an Americanisation of British politics (effectively professionalization, plus a culture of advertising and focus-groups) has created a culture of campaigning that is about ‘branding by association’ and ‘the creation of narratives’.

This culture is ‘the enemy of any productive debate about policy and its alternatives’.  And whether you agree that this is a modern phenomenon or not, the argument is persuasive.  Creating an un-falsifiable image – progress, development, say – makes it difficult for serious debate to happen.  But these serious debates – over the long-term needs and aspirations of our and future generations – are the most important of all.

There was very little change in the borrowing figures in yesterday’s Pre-Budget Report, which is impressive given the turmoil of the last year. The Treasury also estimated that the cost of bailing out the two state-backed banks will now only cost £10bn and £50bn as previously estimated and the Chancellor promised the markets that the deficit would be halved in four years. However, he ducked the decisions on where cuts would need to be made and spending for 2010-11 will surge ahead as planned.

Now although deficits look bad it has been relatively cheap to borrow since the start of the recession and we’re probably now entering the beginning of a period where the rate for government to borrow will normalise as the recession comes to an end, therefore becoming more expensive.

So if government going to go forward with spending as planned and borrow more in the near future, it’s probably a good idea to borrow now and lock it in while rates are low.

What unites innovation, flexibility, personalisation, incentives and results? They are all features of outcome commissioning. This morning 2020 PST launched Better Outcomes, a study examining the why, what, how and where of outcome commissioning. The report received a very warm response from Francis Maude MP, Shadow Chancellor for the Duchy of Lancashire, who said that it hit a “sweet spot” in current policy thinking.

Outcome commissioning is about raising the quality of public services by incentivising the achievement of outcomes through penalties and rewards, giving providers freedom to decide on the processes to use and making space for innovation and personalisation. Moreover, at a time when the fiscal situation in the UK is more and more constrained, outcome commissioning offers a way to boost quality without necessarily increasing the funding spent on inputs. In fact, by commissioning for outcomes, government avoids paying for services that do not achieve desired results. These features make outcome commissioning a very powerful tool.

Working on this project over the last year has been exhilarating. I have had the opportunity to collaborate with many talented, thoughtful individuals, and they have my heartfelt thanks. I hope our report will make a contribution to the collective effort to build a better future for Britain.