Tag Archives: public services

Do all public services have to be delivered by professionals?

One of the most prominent 20th century proponents of ‘deprofessionalisation’ was the Austrian-born priest and philosopher, Ivan Illich. Illich railed against what he viewed as the ‘monopoly’ control of education and healthcare by teachers and doctors…” – my latest blog on public services and social innovation for Pioneers Post.

 

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Who pays when the state can’t?

We don’t need public services and welfare spending primarily because commercial markets are a bad way of meeting social need but because they’re a bad way of determining what ‘social need’ means… ” – the latest in my series of Pioneers Post blogs on public service reform and social innovation.

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Market leaders

In a recent opinion piece in The New York Times, Peter Buffett, musician, philanthropist and son of Warren Buffett, lays into what the headline writer calls ‘The Charitable-Industrial Complex’.

Buffett’s view is that thanks to increasing numbers of very wealthy people deciding to ‘give back’ some of their immense wealth, the US has ever-expanding ‘not-for-profit’ sector which is making those rich donors feel much better about themselves but is also helping to sustain the economic structures that produce the social problems their donations are, in theory, designed to solve.

Buffett tells us that: “Between 2001 and 2011, the number of nonprofits increased 25 percent. Their growth rate now exceeds that of both the business and government sectors. It’s a massive business, with approximately $316 billion given away in 2012 in the United States alone and more than 9.4 million employed.”

He continues: “As more lives and communities are destroyed by the system that creates vast amounts of wealth for the few, the more heroic it sounds to ‘give back.’ … But this just keeps the existing structure of inequality in place. The rich sleep better at night, while others get just enough to keep the pot from boiling over.

And concludes that: “… as long as most folks are patting themselves on the back for charitable acts, we’ve got a perpetual poverty machine. It’s an old story; we really need a new one.

While no individual wealthy philanthropist is in a position to fundamentally change ‘the system’ single-handed, wealthy philanthropists are an integral part of the economic model that, as Buffet sees it, their philanthropy is insufficient to ameliorate.

You don’t need to accept Buffett’s definition of the current economic set-up, either in the US or globally, as a ‘perpetual poverty machine’ or share his views on the effects of philanthropy, to accept the underlying point that any social venture – whether it calls itself a charity, social enterprise, social business, not-for-profit etc. – has the potential to simultaneously be both part of the solution to poverty and social injustice and part of the problem.

That was the underlying question I was engaging with in my blog last week about the charity/social enterprise, Turning Point, and their policy of firing staff and rehiring them on less favourable conditions. The key defence for this kind of approach is that if Turning Point – and the many other charities who provide outsourced government services who operate in a similar way – are to compete with private sector providers, the only way to do so is by reducing costs. In the service sectors, staffing is the biggest cost.

Some in the social enterprise see beating the private sector at their own game as the mark of a successful social enterprise. That’s not a bad philosophy in principle but it’s not one that can usefully be applied irrespective of who the private sector competitors are or what ‘their own game’ is. When it comes to public services, the impact of outsourcing to private sector companies is to reduce wages and make jobs less secure.

Like wealthy philanthropists within the economic system as a whole, social enterprises and trading charities* have not been disinterested bystanders in the ongoing process of marketisation of UK public services.

As a typical example, Charity Times reported that, responding to the publication of the current government’s, Open Public Services White Paper in 2011, ACEVO‘s chief executive, Sir Stephen Bubb 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.

It’s not necessarily wrong for charity and social enterprise leaders to campaign for greater marketisation of public services but to do so does not amount to casting a consequence free vote in favour of more public services being delivered by lovely people who are passionate about what they do.

It’s also a vote for more services being delivered by Serco, G4S and A4e. It’s difficult to imagine an approach to public service marketisation that would be legal under EU law and would deliver more opportunities for trading charities and social enterprises without also delivering even more opportunities for larger private sector providers at the same time.

Even in a situation where real wages in the UK are falling fast and the queues at food banks are growing, it’s perfectly legitimate for charity and social enterprise leaders to argue that the overall benefits of public service marketisation outweigh the drawbacks (many of us believe that they sometimes do and sometimes don’t).

What’s not acceptable is to claim – as some social enterprise leaders have been – that public service marketisation is something that’s been done to trading charities and social enterprises rather being a process that they’ve actively contributed to and have significant responsibility for. And the very minimum level of responsibility that these organisations need to take is responsibility for the wider social impact – beyond whether a good service is delivered at a competitive price – of the services that they themselves deliver.

Unlike some in the social enterprise movement, I don’t believe that the fact that an organisation doesn’t distribute profits to shareholders is, in itself, a significant positive social impact – particularly not if surpluses are reinvested in chasing more contracts that involve firing staff and re-employing them on worse conditions.

I don’t believe that members of the senior management team at Turning Point and other charities who’ve taken similar tough choices, sit around stroking cats and cackling with glee at the idea the of firing their staff and re-employing them on worse conditions, but I don’t believe that managers at Serco and A4e do that either.

The question is not whether the leaders of large charity and social enterprise outsourcing organisation are bad people it’s whether they offer any distinctly different and more socially useful that what they private sector offers. Maybe they can and do, but most what I see at that moment suggests they’re just similar but smaller.

 

*Trading charities in this instance refers to charities delivering public sector contracts who do not self identify as social enterprises.

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Opening up to what?

Last Monday was, as Social Enterprise Coalition, chief executive, Peter Holbrook points out, a good day for the government to bury bad news. Not that David Cameron believes the Open Public Services white paper represents bad news – it’s a key part of the government’s overall agenda – but, whatever the intentions, there’s a clear danger that the blueprint for modernised public services will end up being bad news for social enterprise.

That’s despite the fact that five principles guiding public service reform – paraphrased here by my colleague, Mark Brown, are:

  • Providing more choice
  • Shifting power from the centre
  • Ensuring diversity
  • Guaranteeing fair access
  • Delivering accountability

Clearly these are principles that many in the social enterprise movement support. And, in theory, the government is very much in favour of more social enterprises delivering services in these newly opened markets for public services. The problem is creating a situation where that aspiration is actually likely to become a reality.

The only large scale roll out of a significant new approach to public service delivery so far has the been the Department of Work & Pensions’ (DWP) Work Programme. That commissioning process didn’t work out too well for social enterprises but, equally importantly, while the Prime Minister cites the programme as an application of the principle that ‘Public services should be accountable to users and to taxpayers’ it’s difficult to see how this new programme is more accountable to the unemployed people who use back to work services.

The contracting process for the Work Programme and the ‘payment by results’ system seems to be an example of the government discharging its responsibilities to large private sector providers at the lowest possible cost while creating the conditions for those providers to under-prioritise the needs of the most vulnerable service users.

The Work Programme example illustrates that whatever its principles (and there no reason to doubt that these principles are deeply held) the over-arching practical driver of policy since the coalition came to power has been the search for short term cost savings. Even in times of plenty it is the government’s responsibility to act in a way that ensures good value for money for all of us as taxpayers. We aren’t in times of plenty and some short term savings are clearly necessary but there is big potential for conflict between an approach to Open Public Services that prioritises makes public services as cheap as possible in the short term and an approach designed to deliver a vibrant and diverse marketplace where a wide range of providers can offer services that deliver positive long term change (and financial sustainability).

The danger is that the practical outcomes of the Prime Minister’s laudable aims will be that large private companies will get to hoover up lucrative public service contracts while less lucrative work gets ‘decentralised to the lowest appropriate level’ for armies of volunteers will to deliver it for free.

So far, the results of the much touted drive for public service mutualisation amount to a situation where  “20 groups of public sector employees have opted to create their own new public service ventures.” and, as yet, there have been no practical measures taken to make it easier for existing successful social enterprises to deliver more public services. As Peter Holbrook points out, the reality is that social enterprises trading with public sector are preparing to cut staff rather than take them on.

I’m not one of those who believe that social enterprises, simply by virtue of being social enterprises, deliver public services in a way that maximises positive social outcomes but I believe that the best ones do. I also believe that the approach of the best social enterprises, delivering local services responding to the needs and drawing on the experiences of people who use them, is the right approach to delivering services – whether the organisation doing that delivery is public, private, charity or social enterprise. If the government agrees then just saying so isn’t enough. What are they going to do to make it happen?

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