Public v private isn’t the issue – what’s best is key

Published in the London Evening Standard (February 22nd, 2011)

The facts speak for themselves. Elderly patients starved to death in hospital. Families spending a lifetime on benefits. Desperate parents driven to dump disabled children on the state. Fewer children on free school meals going to Oxbridge than from just one private school. Three-quarters of inmates at prisons re-offending again within a year.

The litany of failure is damning. For all the extra money poured into public services in recent years, still they fail too many of the people most in need. The middle classes thrive while those less fortunate crash through the cracks in the system.

Despite this – or perhaps because of this – we remain shackled by a stifling conservatism when it comes to public service reform. Britons seem to want to keep the public sector locked in the past, unlike elsewhere in Europe, instead of opening it up to the forces that have transformed other parts of the economy. So private involvement in the health sector is seen as heretical. And sacking bad teachers is seen as sacrilegious.

Governments of various hues have tried to grapple with these issues but all too often acted like special forces on covert operations, hiding their true intentions as they launched incursions. Now David Cameron has made an unequivocal declaration that he aims to release the iron grip of state control on all public services, unleashing fierce competition and breaking inert monopolies.

This is a potentially massive moment. Think of the furore over a few free schools. Now multiply it tenfold. This could define the coalition government far more than the spending cuts. If the Prime Minister delivers on his pledge, every arm of the state will have to prove its worth or face the challenge of rival providers. The post-war settlement will be replaced by a market-led vision more in tune with the modern age.

Unlike many, I welcome these moves. Like Mr Cameron, as the father of a child with profound disabilities I have seen how a rigid political dogma of statist certainty lead to the closure of scores of special schools, destroying centres of excellence and depriving parents of the choice they wanted. So few remain that we ended up looking at places more than two hours’ drive away from our home.

More recently, I have seen the liberating power of winning some control of the money spent by the state on our daughter’s 24-hour needs. Suddenly we are free to choose who cares for her and comes into our home. Sometimes we use public providers, sometimes private. While far from perfect, it has led to better – and often much cheaper – services.

This is a glimpse of the future: public services decentralised and determined by users. The use of personalised budgets, for example, can achieve dramatic benefits even in the most extreme
circumstances: one study in London found they helped bring the most hardcore homeless in from the streets by giving them control of their own circumstances.

Meanwhile, technology is forcing collaboration and empowering consumers, making it easier to deliver information, carry out comparisons and share opinions. These are the forces shaping the world, and public services are powerless to withstand them. Once there was a fuss over opening up telephone services; today, it is over prising open health care and education.

Do you remember the huge debate over council outsourcing? No, thought not. Now nearly half of all local authority spending goes to private providers, a figure set to rise still further with the spending cuts. A report commissioned by the previous government found that the emergence of a “public service industry” had led to savings of between 10 and 30 per cent “with no adverse effect, and sometimes an improvement, in service quality”.

But talk is easy. For this vision to succeed, there needs to be more boldness from the Government, so that private firms can make profits from free schools and the middle-class stranglehold on the planning system is ripped apart to help new businesses and charities. And there will be tough choices: will politicians let hospitals close so that resources can be concentrated on home-based care for long-term conditions, as must happen with an ageing population? Six should close in London alone, say analysts.

There will be strident opposition from unions, whose own monopolies are threatened, and political rivals. But the biggest danger to the Downing Street idealists comes from the enemy within: the civil servants who must turn Mr Cameron’s words into action.

There is, for example, no point in converting public monopolies into private monopolies. But the procurement system is so cumbersome, the bidding process so expensive, the compliance culture so daunting that a handful of the same giant firms win every contract.

In the US, one in four federal contracts must go to small and medium-sized firms; in Britain, where they make up 99% of businesses, a recent sample found that in one month they won just 4% of Home Office contracts and less than one per cent in Revenue and Customs.

This needs to be tackled, despite Whitehall resistance. Some rules are farcical, such as start-ups told they must have three years of audited accounts to compete for work or new bidders told they must have proof of existing government contracts. What hope does this give a group of nurses wanting to set up a co-operative or an innovative drug rehabilitation charity?

Or take the rules governing transfer of ownership, which protect staff contracts and deter new entrants in public services. Teachers, for instance, are permitted to refuse 21 different tasks, including invigilating, photocopying or putting up a display. Any new bosses would have to accept such inflexibility or try to negotiate it away, giving unions the right to frustrate innovation and prevent improved services.

Mr Cameron is right: it does not matter who provides a public service, only that the best and most effective service is delivered to the public. Support must be strongest for those most in need. But it will take more than big speeches and brave words. The battle will be won or lost in the boring small print of government legislation and contracts.

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