How does outsourcing constrain open policy?Posted: July 31, 2012 | |
In the previous two posts we have asked if there is a tension between two competing Government agendas – open public services and open policy making. In this post we set out fours ways in which the current approach to outsourcing of public services can stifle open policy.
The ongoing saga surrounding the role (or more often, the non-role) of G4S in providing Olympic security has again highlighted that important aspects of outsourced public services – including performance and contract terms – are often hidden from public view behind a wall labeled ‘commercial in confidence’. This has significant implications for open policy, in at least four respects.
Firstly, outsourcing sometimes obscures performance. The Government’s flagship Work Programme is a case in point. This £5 billion programme has been heralded as a radical approach to reducing long-term worklessness. It uses a payment by results approach where providers are paid on achievement of outcomes. Providers have the freedom to decide how they will deliver the service without prescription from government (often called a ‘black box approach’). The problem is that effective transparent scrutiny is difficult because providers are not able to share data about what is working and what isn’t. They are required to sign comprehensive contracts, which prevent them from sharing performance data unless it is already in the public domain. Providers must also not attract ‘adverse publicity’ from their media work or face consequences if they do. Charities and media commentators have questioned this but ministers have refused to change this.
Rather than protect the policy in its relatively early stages, this has only served to intensify the questions as to whether the Work Programme is working effectively. Various charities are pulling out of the programme or going bankrupt, raising concerns about the viability and sustainability of the policy. Data leaked to Channel 4 News indicated that only 3.5% of individuals referred to A4e are securing a job outcome. The way the Department for Work and Pensions has released performance data about the programme has made it difficult to effectively scrutinize the policy overall, a view shared by ERSA – the welfare to work trade body.
Secondly, where public services are not provided by the public sector, this can result in data no longer being available to public policymakers. Francis Maude has argued that data belongs to citizens and not the state, but this hasn’t been reflected in all contracting processes. In a recent Q&A on open government Vicky Sargent from Socitm pointed to cases where council contact centres have been outsourced and the data about enquiries is no longer available to the council because it was not explicitly included in the contract. Vicky rightly argues that retaining the right to data from outsourced systems is critical.
Thirdly, what this reflects is that different providers are treated differently when it comes to transparency. Local Government departments are required to publish all expenditure above £500 as well as salaries of senior officials. Similar rules apply to Whitehall departments but the same rules don’t apply to outsourced service providers. The Freedom of Information Act also doesn’t apply to private and voluntary sector providers, even though it would if the same services were delivered in-house. This inconsistency in applying transparency rules between services delivered by the state and those by the private/voluntary sector means that we are seeing ‘black holes’ open up in public service commissioning, to the detriment of public accountability.
Fourthly, this situation is likely to undermine the greater use of evidence in policymaking, for example Sir Jeremy Heywood’s desire to see a social policy equivalent of NICE that could issue social policy ‘kitemarks’ for particularly effective and proven approaches. How could such an approach be adopted consistently across public services? Knowing what works and what doesn’t could help the Government in its ambition to increase social investment in areas such as long-term worklessness, but this is unlikely to be realized if we aren’t able to analyse the performance data, costs and timescales across all programmes whoever provides them.
Transparency and scrutiny is not a luxury, rather it is essential if we are to understand whether policy is working and if it isn’t, how it could be improved. We need to understand the impact of public expenditure and whether it represents value for money. We need to make informed decisions, based on evidence, about existing and future policy. Policy will be weaker if a substantial part of the evidence base is hidden behind a veil of supposed ‘commercial confidentiality’. At stake is whether outsourced services are still ‘public’. If public money is being spent in the public interest, then surely how this money is spent should be transparent.
As we suggested in the previous post, the current situation has allowed a further serious problem to develop, of which the G4S fiasco is just one outcome – the emergence of a small, very powerful but somewhat unaccountable group of providers who have significant interest in public policy stemming from their role in delivering a range of public services from prisons, welfare to work, hospitals through to schools. Given their size and scope, independent and transparent analysis of the activity of these providers is essential if we are to scrutinize how this investment is spent and to what effect. Any future social policy equivalent of NICE surely requires a stronger and more secure foundation than this – something we will address in a future post.
We will be looking at each of the issues raised in this post in more depth in future blogs. Please tell us what you think.