End failed marketisation of public services – TUC calls for democratic alternative

Will words be matched with deeds?

Markets have failed public services – time for a new ‘public value’ alternative
Successive attempts to introduce market mechanisms into public services by Labour and Conservative governments – £44 billion worth of public services are now delivered each year outside the public sector – have not delivered better value and have often made worse the problems they were claimed to solve, says the TUC in a new pamphlet published today (Wednesday).

The second TUC Touchstone pamphlet – part of a series designed to inject a trade union perspective into serious debate about public policy issues ­- says that rather than go back to previous top-down ways of running public services that could ignore the needs of users, reform and modernisation should be based on an alternative ‘public value’ model.

Rethinking public service reform – the public value alternative says that this approach requires managers, users and providers to work together to shape the future of public services. The pamphlet recognises that the value for society created by public services cannot be measured using the same simple profit and loss accountancy used in the private sector, and needs to be based on a more sophisticated approach based on the wider needs of society, the satisfaction of service users and the views of local communities, without neglecting value for money.

TUC General Secretary Brendan Barber said: ‘Politicians of all parties now have a kneejerk preference for private sector solutions, and seem to have lost all faith in the ability of public servants to deliver quality public services. Yet this is ideology and prejudice is not based on any evidence of what works. NHS Direct is one of the most innovative changes in health care and has been developed entirely within the public sector, while one private tube maintenance contract has collapsed at vast public expense.

‘Yet voters still back public sector values, and can see that the professionalism and commitment of public servants is as important as sound management and value for money. They don’t want to be customers at the public service supermarket.

‘It’s time that ministers ended their market obsession, that sees hospitals as potential profit centres, and started asking patients, staff and communities what they actually want.

‘This is not to say that public services do not need to change or modernise, or that we should not be looking for value for money. This is why we are spelling out exciting new ideas rooted in what works and what people want and need for a new approach to planning the future of public service.’

Rethinking public service reform – the public value alternative analyses successive market initiatives by different governments and shows that the original justification for contracting out was that it would simply deliver cash savings. But when this turned out to be normally at the expense of service quality (eg the quality of school meals), the government introduced more complex mechanisms and made a wider claim that market mechanisms would improve access to public services to those previously squeezed out by the better off and better educated.

But the evidence now suggests that:

* Private sector efficiency savings do not outweigh the extra costs of providing a return to shareholders and the private sector’s inability to borrow as cheaply as the public sector.

*While the private sector profits when contracts go well, the public sector has to pick up the tab when things go wrong (such as Railtrack, the Benefits Agency and Air Traffic Control) as ultimate risk cannot be transferred.

* Increasing choice can increase inequality. For example, parental choice has led to greater inequalities between the best performing schools and the rest, as better off articulate parents are more successful in getting their children into such schools.

* Breaking up the public sector into contracts for the private sector often has unintended consequences – e.g. the creation of Independent Treatment Centres – has reduced opportunities for junior doctors to develop skills, and left NHS hospitals with difficult, expensive cases and unused capacity.

* The original problem of the private sector often delivering lower quality services has not been overcome – e.g. private sector home care services and care homes deliver poorer quality than public sector services – often because they rely on minimum wage jobs with high turnovers and little if any training.

The pamphlet instead says that future public service developments should be based on the alternative ‘public value’ model, increasingly supported by academics and thinktanks, that aims to maximise the value from public services, not simply minimise the costs.

While value for money is always important, public value also involves service users in planning and assessing public services. It is non-ideological, pragmatic and while it asks users and citizens directly what they want from public services and then seeks to deliver it, there are no blue-prints and off-the-shelf solutions.