In the previous post, we started to consider whether outsourcing public services is incompatible with open policymaking. In this post, we look at the size of the public services industry and ask whether ‘economies of scale’ also means ‘too big to influence’.
If you’re a critic of outsourcing, G4S has made it easy for you recently. The company’s Olympic security fiasco underlines everything you believe: that superlarge private outsourcing companies like G4S are largely unaccountable, sometimes unreliable, and – given that they profit from providing public services – fundamentally unethical. To its proponents (and sometime apologists), the public services outsourcing industry promotes greater efficiency, effectiveness and innovation, and as the public scrutiny now on G4S illustrates, they are doubly accountable – to society as well as shareholders.
Our focus here is slightly different. Guerilla Policy is a proposal for a radical openness in how public policy is created, in particular that the people who use and provide public services should have a much greater role in proposing, researching, developing, implementing and reviewing the policy that impacts directly on their services and their lives. In an age of social networks and social media, we think this is entirely possible – if the will exists to make it a reality. We’re encouraged that the Government now seems to be thinking the same way. As part of its recent civil service reform plan, it has committed itself to ‘open policymaking’. Government says it believes that policymaking is often drawn from a too narrow range of views and is not designed for implementation. Instead, it wants to improve policy advice by creating opportunities for a wider range of views and expertise to inform its development.
But as we started to suggest in the previous post, in reality the open policy agenda might be marginalised as a result of the Government’s (perhaps stronger) attachment to so-called ‘open public services’ – the challenge to the ‘presumption’ that the state should deliver public services rather than the voluntary or private sector (promoted through various policies such as mutually-owned providers, the expansion of personal budgets beyond social care, the use of payment by results to reduce re-offending, and the Community Right to Challenge enacted through the Localism Act 2011).
Outsourcing has increased significantly in scale since the 1980s, but the bulk of public services are still provided ‘in-house’. The expansion of outsourcing has been uneven, with a much greater amount of external commissioning having taken place in waste services, transport, prisons, welfare to work and ‘back office’ services such as IT, HR and facilities management. In contrast, the penetration of private sector providers into policing, education and probation services has – up until now – been limited. The historical trend however is clear and seemingly unceasing, whichever party is in power.
When it presents its vision for open public services, the Government tends to highlight the smaller charitable providers that have developed progressive, innovative, ‘people-centred’ services and approaches. It doesn’t tend to showcase the likes of Serco, Capita or Ingeus Deloitte. And yet these, more than any other providers, represent the reality of public service outsourcing today. In recent years, charities and voluntary sector organisations have seen a growth in income from contracts and fees from the public sector (to £12.8 billion per year, according to the NCVO), at the same time as grants have stagnated. However, this is still a relatively small proportion of the £82 billion in total spent on outsourcing by the public sector (according to Oxford Economics), and a smaller proportion still of total public sector procurement (of goods and services of all kinds) of £196 billion (all figures 2009/10). The Economist estimates that this £82 billion figure will increase to £140 billion by 2015.
What has been more dramatic is the growth of a small group of very large providers who have the scale to absorb the costs and risks associated with delivery of many contracts. Welfare to work is a case in point; the Work Programme is a £5 billion programme which is wholly outsourced to a group of large private sector ‘prime contractors’, with only one voluntary sector provider, CDG, delivering as a prime. A4e is a good example of a company that has emerged from nowhere in the 1990s to have an annual turnover of £215 million. The vast majority of its income comes from contracts to deliver welfare to work, skills, advice and probation services.
The increased reliance of government on this small group of increasingly powerful providers is well-illustrated by the G4S fiasco. And if such providers are ‘too big to fail’ – as the need for what is effectively another public sector bailout suggests (this time by police forces and the army) – then what does this suggest for the ability of ordinary people to influence such providers under open policy? If government struggles to hold such providers to account during the delivery (and indeed non-delivery) of contracts, how likely is it that we will be able to influence the way they deliver services, let alone the policies under which they provide them? The critics and proponents of outsourcing might be right to contest issues of transparency, accountability, efficiency and effectiveness when it comes to outsourcing. But as policy insiders themselves, these commentators also ignore the question that the scale of these providers poses for open policy: why should companies the size of G4S – the largest private security company and third largest private sector employer in the world – care what we think?
The G4S Olympics fiasco is only the latest example of what is now unavoidable – the conflict between two Government agendas, one for open public services and the other for open policymaking. Which of these two agendas wins out will decide the future of public services, perhaps irreversibly.
Over the past few months on this blog we’ve put forward the argument that policy should be made openly and wherever possible collaboratively with the people who are directly affected by it – in social policy this means the frontline providers of services and the people who use these services. As part of its recent civil service reform plan, the Government has committed itself to ‘open policymaking’, whereby policy “should be developed through the widest possible engagement with external experts and those who will have the task of delivering it.” However significant – and we think it should be supported – in reality the open policy agenda is likely to mean little as a result of another Government programme, that for ‘open public services’.
Open public services is about opening-up the provision of more public services to any ‘qualified provider’. Outsourcing is then a critical part of the open public services agenda. In his speech in July 2011 at the launch of the Open Public Services White Paper, David Cameron set out a commitment to challenge the ‘presumption’ that the state should deliver services rather than the voluntary or private sector. Although outsourcing certainly did not begin under this government, we are now witnessing a massive expansion of the role of the private and voluntary sector across a range of services – from prisons, community health services, hospitals, probation services, policing to schools. According to the Economist contracts worth at least £80 billion are currently outsourced to private providers by national and local government, with this number expected to rise to around £140 billion by 2015.
To its proponents, outsourcing is a way to reduce costs, improve efficiency and increase innovation. Fiascos like G4S’s hiring practices aside, the public debate has not reflected the scale of the change that is currently taking place. More than this, outsourcing is now threatening to undermine the very publicness of public policy.
The current ‘closed-door’ approach to outsourcing, whereby details of the services including its performance and impact are hidden behind the cloak of contractual obligations and commercial sensitivities, undermines the openness of policy in public services. It reduces the ability of the general public to hold policy to account. It erodes transparency, ownership, control, accountability and impacts the responsiveness of services to the users and communities they are meant to serve.
As a consequence, this approach to outsourcing also makes for poor policy. Transparency and openness are critical to ensure that policy is tested and evaluated robustly. Put simply, if policy is not held to account then it does not improve. At Guerilla Policy, we’ve been considering how open policymaking could improve public services. We’ve argued that social policy would be better if it was opened up to wider participation by those who use and provide public services. Scrutiny isn’t sufficient – but even effective scrutiny is now being undermined by outsourcing.
This issue – how our public services are commissioned, by whom and from whom, and how this relates to open policy and public accountability – will be a continuing focus on this blog, alongside our developing manifesto through which we hope to describe an alternative approach. At stake in this conflict between open public services and open policy is whether we continue to have ‘public services’ at all in any genuine sense, in the sense of publicly determined, publicly accountable, publicly responsible – if not necessarily always publicly provided – services for all.
We welcome your views.