Sector verdict on the Open Public Services White Paper

Written by Andrew Holt
12/07/11

The Government's modernisation of public services and promise to give people choice and control over the services they use, and end the ‘get what you’re given’ culture, has been met with sector responses that range from the lukewarm to ice cold.

ACEVO warned about facing down vested interests, NCVO complemented the paper on a useful start but also the need for a level playing field, a message reiterated by the Social Enterprise Coalition in more forceful terms, and CAF noted that commissioners at all levels need to be truly empowered to value social impact.

Though the Prime Minister announced people will be given more choice to shape the public services they use, putting control in the hands of individuals and neighbourhoods so everyone can benefit from the best public services available.

Building on progress already taking place in areas like schools, welfare, health and policing, the Open Public Services White Paper attempts to turn the 'get what you're given' culture on its head.

Based on a philosophy that Whitehall does not know best, it begins a programme of consultation and engagement over the summer with individuals, communities, public sector staff and providers to ensure that the improvements are both ambitious and practical.

Speaking at Reform and the paper's launch, the Prime Minister said: “I know what our public services can do and how they are the backbone of this country.

"But I know too that the way they have been run for decades - old-fashioned, top-down, take-what-you’re-given - is just not working for a lot of people.

“Ours is a vision of open public services - there will be more freedom, more choice and more local control. Wherever possible we are increasing choice by giving people direct control over the services they use.”

The five core principles for modernising public services are:

1. Wherever possible Government will increase choice
This means giving people more direct control over the services they use, for example through personal budgets in healthcare. People will be given the power to choose where they send their children to school or which hospital they receive treatment in.

2. Public services should be de-centralised to the lowest appropriate level
This means giving communities more control over public services, for example by giving neighbourhood councils the chance to run the community library or local football pitch, or take control over local road improvements. We will make it easier for people to set up neighbourhood councils where they don’t already exist.

3. Public services should be open to a range of providers
These providers could be in the public, private or voluntary sectors. For example, in education the government is opening up services by expanding the Academies programme and introducing Free Schools to drive up standards. And we will tackle not just failing schools but coasting ones as well, ensuring that there is continuous improvement.

4. Fair access
The Government recognises that not all people start from the same point and believe the state needs to provide extra help to those individuals who have been previously left behind. For example, the Government has introduced pupil premium in schools, funding for community organisers in the poorest areas and 15 hours a week pre-school education for the poorest two year olds in the country.

5. Public services should be accountable to users and to taxpayers
All public services need to be accountable to the people who use them and the taxpayers who pay for them. Payment by results is one of the methods of increasing this kind of accountability, as is happening now in the Work Programme, a revolutionary new approach to supporting people back to work.

Chief secretary to the Treasury Danny Alexander said: “This is an important milestone in the Government’s mission to make public services better for the people that use them.

"This paper alone won’t change people’s lives, but the principles it sets out will shape and improve the public services people use for generations to come.”

Minister for Government Policy Oliver Letwin added: “For far too long, far too many people have had to make do with what they’ve been given, with only the better off being able to choose something else if the state let them down. That won’t be allowed to continue.”

These principles are already being applied to public services – in particular in education and welfare.

The Goverment says in the past year alone, for example, more than 1000 schools have applied to become academies and 20 groups of public sector employees have opted to create their own new public service ventures.

The Government recognises that the changes necessary to modernise public services will not happen over night.

Many of the policies will require detailed design, and engaging professionals and the wider public is critical to getting it right. This White Paper is open for consultation and we will soon commence a wide-range of discussions with individuals, communities, providers and public sector workers.

Hurd: radical change
Minister for Civil Society, Nick Hurd said: "The Open Public Services White Paper leaves no question of the Government's commitment to giving charities, social enterprises and voluntary groups a much bigger role in public services.

"We will also shortly publish a "roadmap" to inform civil society organisations of the practical new opportunities opening up to deliver these services.

"The message is clear, the state cannot solve stubborn social problems alone - we must have a meaningful partnership between the public sector, civil society and the private sector.

"This is radical change, many doors will open. I want civil society entrepreneurs to grasp these opportunities and will do all I can to support them."

ACEVO: facing vested interests
Responding to the long awaited White Paper, Sir Stephen Bubb, CEO of the charity leaders’ body ACEVO said: “The Government’s Open Public Services White Paper has set out the right direction of travel for our public services, but vested interests will try to make sure we never get to that intended location.

“Over the coming months I urge Government to stand strong when facing those vested interests, and to bring forward concrete departmental policies in order to move their vision forward."

NCVO: useful start
Sir Stuart Etherington, chief executive of NCVO, said: "This paper is a useful start in looking at the tasks ahead. We want to see a smart, effective and innovative commissioning system which values what all sectors can bring to the table and has the interests of service users and communities at its heart. There needs to be a major overhaul of commissioning to ensure a level playing field for all providers.

"NCVO has never argued that voluntary organisations have an automatic right to deliver publicly funded services, or that we should deliver public services without considering whether this is best for users.

"But we do believe the sector can deliver services that users want and need. Voluntary and community organisations already have a strong track record in delivering public services, with particular expertise in working with excluded and disadvantaged communities.

"However, there are long-standing obstacles which this paper needs to tackle urgently if the sector is to fully deliver on this potential.

"First and foremost, the concept of social value needs to be mainstreamed, taken seriously and well understood. Rather than assessing providers purely on price, commissioning decisions should be informed by the full social, environmental and economic value a service can add."

Etherington noted there remain significant other concerns – including the size of contracts, where all but the biggest providers are often excluded.

"Access to finance and cash flow is another major barrier denying voluntary organisations from taking on a greater role in service delivery. The Big Society Bank is a positive step towards remedying this, but will not be able to provide finance to the whole sector.

"There is an ongoing need for a range of grants, loans and contracts to make services accessible and sustainable.

‘‘We are pleased that the Government has acknowledged that whilst Payment By Results and competition have potential, that neither of those are ends in themselves when considering public services.

"In the case of payments by results, we agree with the principle of rewards for high quality performance. However, some NCVO members have expressed concern about its implementation.

"NCVO will be building our response to Government from the views of our members."

Charities Aid Foundation: part in service delivery
Hannah Terrey, head of policy and public affairs at CAF, said: “For years, charities and social enterprises have proved their ability to innovate and address some of the most entrenched problems in society.

"We welcome the recognition today that the voluntary and community sector plays an essential part in public service delivery and is often best placed to meet the needs of local communities.

“However, in order for the ideas announced today to succeed, the Government will need to ensure that commissioners at all levels are truly empowered to take risks and to value social impact over pure cost considerations, and importantly that organisations can access the working capital they need to be able to participate – for example on a payment by results basis – to capitalise on these opportunities and compete on a level playing field.”

Turning Point: post rhetoric public services
Turning Point’s CEO, Lord Victor Adebowale said: “Turning Point supports the vision of today’s White Paper. Public services need to become services for the public but we also need solutions that actually work.

“Public services can be delivered in a variety of ways. What’s important is that we don’t leave the most vulnerable behind, and that communities get bespoke services.

“What we need are post rhetoric public services, because let’s face it, if governments keep doing what they’ve always done the public’s patience with getting what they’ve always got will start to wear thin.”

Social Enterprise Coalition: list of concerns
Reforms though, must protect public services, not put them at risk, warns the Social Enterprise Coalition, citing:

Without the necessary safeguards, private sector providers will dominate public sector markets;

New research shows a collapse in confidence among social enterprises who are working in public service markets – many are planning redundancies and diversification away from public services;

General public poll reveals overwhelming desire for social enterprises to deliver public services, not the private sector;

Big Society will not be realised without better investment and infrastructure in social enterprises and mutuals.

Peter Holbrook, chief executive of the Social Enterprise Coalition, said: “We are concerned that the proposed reforms will create an unequal playing field in which social enterprises are unable to compete with large private sector providers for public sector contracts. Social enterprises often do not have the capital or scale required to compete with big private businesses in open markets.

“These reforms must protect our public services, not put them at risk. Without the necessary safeguards, the consequence of these proposals will be that private providers will dominate public sector markets.

"Taxpayers’ money will flow into profit seeking organisations that exist only to satisfy the needs of their shareholders. Public services must operate for the communities and people they serve, nobody else.

“The Government’s plans to extend Payment by results across a number of other public services will put private sector organisations at an automatic advantage.

"The reality is that without decisive action to use public spending to improve social outcomes, the big organisations will simply use their stronger balance sheets and ability to attract private investment to win contracts.

“We only have to look to the Department for Work and Pensions Work Programme to see that when markets open up, large private sector providers move in and squeeze out smaller organisations.

"A very small proportion of the contracts went to social enterprises, despite it being hailed by Government as a boost for the Big Society.”

General public poll reveals overwhelming desire for social enterprises to deliver public services, not the private sector

Holbrook cited a You Gov poll carried out for the Social Enterprise Coalition shows that the UK population does not want the private sector to run and deliver public services.

The majority want them to be run by social enterprises - sustainable businesses with a social or environmental aim that reinvest their profits.

When asked which type of organisation is best-placed to provide public services – including leisure, health and transport services – UK adults chose the following:

• 43% chose ‘A community business that reinvests its profits to improve services’

• 36% chose ‘The government or public sector’

• 4% chose ‘A business that makes profit for its owners and shareholders’

• 3% chose ‘A charity’

Holbrook said that the Government’s ambition for Big Society would not be realised without better investment and infrastructure in social enterprises and mutuals:

“Social enterprises and mutuals must not be set up to fail. As well as opening up the markets, Government needs to lever in investment and infrastructure to ensure there are social enterprises and mutuals in the marketplace who can deliver.

"The question is how serious is the Government’s want for social enterprises and mutuals to play a bigger role in public service delivery. The £10million mutual support programme announced by ministers in November 2010 has not yet materialised – it’s an anxious waiting game.

“The last few years have seen current and previous governments invest in social enterprise to innovate in public services.

"Almost 50 staff-led social enterprises have set up to deliver primary care services in health, but each received significant investment to set up. Opening up markets is not enough – ensuring that public services can compete by supporting them through what is a tough transition is the only way to ensure they are not vulnerable to failure or takeover.

“When public service markets open up, it can be unclear where accountability lies and this is a risk the Government must consider.

"As seen with Southern Cross - the UK's largest care homes operator - the private sector organisation was able to make decisions on the basis of short term financial return, rather than those in need of its services. This is not the case with social enterprises – they are accountable to their patients, service users and customers.”

Moreover, Holbrook also cited new research revealing poor business confidence among social enterprises trading mainly with the public sector

Findings to be published next month in a report by the Social Enterprise Coalition reveal that:

• Social enterprises trading mainly with the public sector anticipate they will make half of all the likely redundancies within the social enterprise business community over the next 12 months.

• Social enterprises doing most of their business with the public sector view the coming years with gloom, with markedly lower business confidence than their social enterprise peers trading with consumers and private businesses.

• Of the social enterprises trading mainly with the public sector, two-thirds anticipate that their growth will come from diversifying away from working with the public sector (64%).

The Social Investment Business: reforms could make it harder
Sue Peters, The Social Investment Business’s managing director of Investments, said: “David Cameron’s acknowledgement that charities, social enterprises and voluntary organisations are able and willing to take on a greater role in providing high quality, efficient public services is very welcome.

“We work with hundreds of civil society organisations (CSOs) who already do this, but know of many more that can’t access public sector contracts because it is too hard to compete with the larger traditional providers from both the public and private sectors who sometimes seem to have the system all sewn up.

“More power in the hands of local people and commissioners presents greater opportunities for innovative local CSOs to either get involved or increase their role in delivering local services.

"But some proposed reforms could make it even harder – increased regulation and monitoring requirements for personalised budgets and payment by results contracts pose challenges for those without large capital reserves or who have the expertise, but not the requisite paperwork.”

Though social enterprise consultant Robert Ashton said: "In principal, this is true democracy. Removing the dead hand of bureaucracy should create the opportunity for people's own social enterprises to flourish as need and provision are directly linked.

"Cameron compared the state monopoly on services to only being able to buy one mobile phone from one mobile phone shop.

"In Ethiopia, the state has a monopoly on telecomms and Skype is illegal. Think about what opening up service provision to individuals and communities could do for making service affordable and efficient, like Skype.

"Now, though, local authorities face the challenge of ensuring fair play, preventing nepotism and exploitation, and helping people to use these opportunities properly."



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