Open policy requires open research – the CBI’s report on outsourcing public services doesn’t meet this standardPosted: October 1, 2012
Last week the CBI published research that claimed that government could save billions by outsourcing more public services to private business. Ironically for a report titled ‘Open Access’, the main problem with the report is not its argument but its lack of transparency. For such an important issue as the future of public services and who delivers them, we aren’t given enough opportunities to judge for ourselves whether the report’s claims stand up to scrutiny. Open policy requires a much greater openness about the data and analysis used to support such conclusions – otherwise it’s just a press release.
The CBI’s Open Access report claims that “opening up public service delivery to independent providers” (that is, outsourcing public services) could achieve savings of £22.6 billion “or more”. For such a big claim, the research has a fairly simple methodology. The researchers (Oxford Economics) looked at 20 different service areas to determine the average cost savings from greater efficiency and productivity from outsourcing (a figure of at least 11 per cent, within a range of 10-20 per cent); applying the same calculations across the estimated £278 billion of public services which the CBI believes could be fully ‘opened up’ produces potential savings from outsourcing of £22.6 billion.
Trade unions have criticised the report for a ‘lack of evidence’ (for example, Unison) and for not taking into account any of the transactional costs associated with outsourcing including procurement, tendering and contract management, let alone when private providers fail to deliver. The Local Government Association called the report’s calculations “ludicrous” for effectively double-counting savings from services which have already been outsourced. Other commentators have identified specific flaws in the research (for example, for fundamentally misunderstanding who already provides what in the housing sector).
Beyond this, it’s also important to note that efficiency is not the same as effectiveness, which is to say, cheaper does not always represent real value for money. This is especially the case when it comes to public services where there are often broader considerations to be made regarding ‘public value‘ – encompassing not only benefit to the individual service users but also to communities and society as a whole.
For example, it’s unfortunate that the CBI’s report promotes the Work Programme as a model of good practice, both because of the identified risk of fraud in the programme, but also because of the significant concerns about the programme’s impact on charities. As the NCVO has argued: “The Work Programme continues to pose major issues for charities particularly around managing cash flow and taking on risk and very large contracts prevent smaller and more specialist organisations from playing their full part. More seriously it’s clear that the payment structures used continue to threaten the viability of contracts.” However ‘efficiently’ it achieves its objectives, if a programme undermines the diversity of provision including from smaller charities, can it really be regarded as generating better ‘value’ for society?
Further, while the report recognises the widely shared public concerns about outsourcing public services, it also effectively makes these problems that government needs to solve – as if government is to blame for them: “The Government must take important steps to ensure the public retains confidence in the opening up of public services by becoming a more effective market manager and ensuring that the best, most effective providers from all sectors have the opportunity to manage our public services. Providers too must work with the government to address the public’s concerns about value for money, accountability and service failure.” Certainly government has the ultimate responsibility to ensure that public money is spent responsibly, for example that providers are properly audited. But if they are to be given millions or billions of pounds of public money, private providers also need to do more to prove their worth and reliability, such that they can be trusted to provide public services (something not helped by last week’s further revelations about the G4S Olympics debacle). Of course, one way to avoid such problems would be not to outsource more public services – but this is a view that the CBI regards as “dogmatic”.
However, the main problem with the CBI’s report is that we can’t properly determine the accuracy or veracity of the research for ourselves. It seems particularly questionable to assume that the same level of savings can be achieved uniformly across different areas of public services, and yet to quote from the research: “If an average 11% of productivity improvements is achievable across just £24.5bn out of the £666bn annual public sector expenditure on services in the UK, then similar levels of savings must be possible: not just in the un-open proportion of the markets researched but in the unopened proportion of the estimated £278bn of public services spending which could practicably be more opened up to independent provision.” [emphasis added]
Unfortunately, it’s not possible for us to investigate this much further. The problem is the methodology – or rather its lack of openness. As acknowledged in the report: “There is as yet little published information on the scope and performance of services delivered by independent providers.” The average saving figure used in the report is based on “existing research, and information from public bodies and providers” – including crucially from a survey of CBI members. The CBI has produced a nicely presented summary of the analysis by Oxford Economics; the actual analysis (which is a bit more difficult to find) is pretty opaque, especially when it comes to this survey of CBI members. One phrase that keeps popping up in the original Oxford Economics analysis is: “The degree of potential cost savings that could be achieved through outsourcing these services is estimated from responses to the CBI member survey.” In other words, the most critical figure in the research, the basis of the argument made in the report, comes from what the CBI’s own members claim – a claim we are unable to judge for ourselves because we are provided with no further information about it (for example, how many of the CBI’s members responded, what size were these providers, what specific types of services they provide, etc). For an argument in favour of open public services, this represents a remarkably closed approach to evidence.
As the CBI’s report notes, we are in the middle of the biggest wave of government outsourcing since the 1980s, with more than £4 billion in tenders being negotiated in 2012 alone in services ranging from prisons and police to defence and health. Given this, we need much more robust and reliable research about the benefits and the problems that outsourcing more public services would produce – before we outsource these services (perhaps irreversibly). The research commissioned by the CBI may or may not be a useful contribution to this analysis; the problem is that because of the report’s own lack of transparency, it’s very difficult for us to know.
Olympics over (at least until the Paralympics start), we can get back to where we were – wondering how G4S cocked up so badly providing security for the Games, and what it might mean for outsourcing and social policy. The Olympics have provided a stark contrast between the performance of companies like G4S and the thousands of volunteers and public sector workers who made the Games happen – something to remember when it comes to who we trust to deliver public services.
The biggest cheer at the closing ceremony was undoubtedly for the volunteers. An astonishing four million people applied to be volunteer ‘Games Makers‘, and 70,000 were chosen. Spectators’ and tourists’ experience of their help and hospitality seems to have been almost universally positive (volunteers’ own stories seem to have been equally good).
Then there’s the behind-the-scenes public sector workers – the planners, highways staff, events and civil emergency teams, social workers and others who supported the Games, often on top of their regular responsibilities. Comments on the Daily Telegraph’s site might regularly refer to public sector workers as “parasites” and “scum”, but when it comes to delivering for the nation it seems that the public sector still has its uses and some forms of ‘public investment’ are okay.
This is not private sector-bashing; many businesses and sponsors also made the Games happen. The National Lottery also played a crucial role in the Games’ success, through its investment into hosting the Games themselves, as well as into the success of Team GB’s athletes. But the G4S experience shouldn’t be forgotten. It points to at least three important issues in outsourcing.
The first is about trust. On our behalf, the Government trusted G4S to deliver and the company failed. Thankfully there were no major security incidents, thanks to the thousands of public sector workers in the form of the police and army who stepped into the breach at the last minute. What we need to know now is whether this failure relates specifically to G4S or not. If G4S is a particularly poorly managed company that can’t be trusted, its performance in delivering so many other contracts also needs to be reviewed. Alternatively, if as G4S and others have seemed to suggest, the Government made major mistakes in how it commissioned and oversaw its contract, then the issue is much broader – it’s about whether outsourcing at this scale can ever be trusted.
The second is about openness. G4S’s clumsy and surely counter-productive ‘donation’ of £2.5 million to the armed forces shouldn’t succeed in obscuring these issues, rather it raises more questions. We will only find out the answers if we can see the contract that G4S was given, and in particular how the company will ever be held accountable. How many security staff did G4S (2011 revenues of £7.52 billion) actually deliver? What penalty clauses are there for its non-delivery? How much will it paid for what it did manage to do – and how much will it (properly) recompense the public sector for the additional costs that it (we) had to cover?
The third is about what we value and what motivates us. Some commentators (and ministers) have claimed that the Games reflected the Big Society. The Games Makers in particular demonstrated that people are prepared to volunteer in huge numbers. This doesn’t mean we can deliver public services on the backs of volunteers, but it does suggest there is a vast and often neglected commitment that could be harnessed to improve society. Even The Economist magazine (a consistent advocate of outsourcing) noted last week that volunteering has gone up during the recession – not because of the Big Society but because people care about their local services and communities and so are more motivated to ‘save’ them when their budgets are being cut. Danny Boyle’s opening ceremony (also largely a volunteer army) might have been “multicultural crap” to reactionary misanthropes, but the reason it moved the rest of us is that it reminded us of social achievements driven by a commitment to collective good rather than private benefit.
How many of the Games Makers would have turned up if their job was to save G4S’s neck? The latter might not have offered much pay, but the former weren’t offered anything – beyond the opportunity to be part of something that matters, to make a contribution to a national moment. The Big Society (by whatever name you want to call it) won’t happen if people feel they are being asked to take the place of public services that they’ve already paid for, especially if large outsourcing companies are getting paid at the same time. Perhaps it wasn’t coincidence that while we were distracted by the Olympics, it was ‘leaked’ that the Government is set to give the contract to manage the National Citizen Service to Serco (2011 revenues of £4.64 billion). Put to one side the question of why volunteering – something that charities do all the time – requires a for-profit outsourcing company to manage it. The G4S fiasco suggests we should make sure the penalty clause is so strong – and so transparent – that we won’t have to rely on Serco’s sense of ‘charity’ if and when it fails to deliver.
This is a series of posts in which we’ve invited people to give us their reactions to Guerilla Policy (formerly the New Think Tank project). This post: Zoe Vickerman, Director, Centre for Social Justice Alliance and Awards. Thanks to Zoe for contributing the post, and we welcome your comments.
A few weeks ago, I sat conspicuously in the front row of an excellent panel discussion on child poverty, hosted by Policy Exchange. Worthy adversaries, including the Rt Hon Frank Field MP, set out their views on what they felt the measures of child poverty should be in this country. I became increasingly aware of the agitation of the gentleman sitting next to me. His physical twitching turned into muffled bursts of outrage, and it wasn’t long before I could predict exactly which comments were going to elicit what responses. The more a speaker extolled income transfer as the best way to lift a child out of poverty, the more this gentleman leaned forward in his seat, nodding aggressively. But an uncontroversial suggestion from Fraser Nelson that giving an extra £10 to an addict would do little to lift their child out of their impoverished standard of living was met with eye-rolling and headshaking. Concerned that others might confuse my physical proximity to him with any kind of intellectual proximity, I put on my best condescending expression and shuffled to the furthest edge of my seat.
What surprised me was not the Mediterranean nature of his expressions. In fact, I find it rather impressive that he should have retained such a quality in a country that prefers to squash at infancy such displays of passion. Child poverty is an emotive subject, and I believe it should make us all equally hot under the collar. However, I have great objections to the notion that someone representing a prominent and well-regarded organisation (which turned out to be the case) would be so entrenched in their view that they are unable to accept what is plain fact – an undeniable truth. A child growing up in a home with a single parent who is addicted to drugs will not live in any better circumstances if the family has a little extra cash. We all know where the money’s likely to go.
The Centre for Social Justice is a social policy think tank, working on issues that range from education to welfare, debt and addiction. We think, but most importantly we listen. Our team of policy experts become experts thanks to hundreds of professionals, front line charity workers, academics (yes, they are important too) and people who have been affected by the situation that we are researching. For any given report that we publish, say community cohesion, the team leading the research will have taken hundreds of hours of evidence from what we call our CSJ Alliance – a network of over 300 local charities that are changing lives in communities across the UK, and which have been assessed as particularly outstanding and effective.
To the CSJ, these charities are not a take-it-or-leave-it source of sad personal case studies, offering illustrations to make a policy document not quite such a dull read. Rather, we recognise these charities as pioneers of innovation and effectiveness, the best of which are changing lives more successfully and more rapidly than any alternative public or private sector offering. They don’t just highlight problems to us – they give us solutions and prove that these solutions work. We need to listen to them.
For if we don’t, then we end up rolling our eyes in policy discussions, knocking about theoretical arguments where people ‘take sides’ that are determined by their broader political leaning, which may or may not bear any relation to reality. The starting point must surely be evidence. Only evidence from the ground has the power to shake policymakers out of their ivory towers.
The CSJ recently surveyed our 300 Alliance charities, asking what single aspect of early childhood had the greatest bearing on that child’s life outcomes. The near unanimous response was that growing up in a stable and loving family was the primary determining factor. Yes, money is important, but people and relationships are more so. That is the voice of people who face every day the issues that policy makers are trying to fix.
New Think Tank’s principles of engaging with those on the ‘front line’ are right. They are the ones with the answers, so let’s start listening.
Zoe Vickerman, Director, Centre for Social Justice Alliance and Awards
Ten reasons why we need a new approach to developing social policy – 7. Policy would be more diverse and inclusive, and so betterPosted: May 14, 2012
This is the seventh in a series of posts on why social policy should be developed by and with the people who use and provide public and voluntary services. We’re publishing the rest of the series over the next week, and we welcome your comments.
With more voices able to participate in policy research and development, policy would include more perspectives beyond the ‘usual suspects’. Policy would better reflect who we are. That policy would be more representative is a good in itself, but a much more open and participatory approach to policy development would also greatly enhance the range of intelligence that informs policy. Policy would better reflect the reality of providing and using public and voluntary services. Let’s deal with these two points in turn.
Firstly, democracy and representation. The policy world, including think tanks, can be exclusive and elitist – not because they are designed to be, but as a result of a set of implicit assumptions about who is able and willing to participate in policy issues, the ‘correct’ language to use, and an often competitive style of policy debate and discussion. In short, policy and politics is highly off-putting to a great many people. Commentators often describe low turnouts at elections as a symptom of ‘apathy’, but it’s not that we’re lazy. To quote from the film Slacker: “Withdrawing in disgust is not the same thing as apathy.”
The problem is that we haven’t yet adopted and popularised an appropriate and accessible set of mechanisms that enable mass participation in policy development. Many of the required mechanisms already exist; what’s missing is the desire to use them. Fundamental to this project is our belief there’s a much larger constituency of people who would be involved in policy if the opportunity was presented to them in the right way – for example through a community-based approach, by creating a place to share and consider practical intelligence on the policy issues that are closest to people. The debilitating apathy, we would suggest, lies instead with the established political class and their reluctance (and resistance?) to experiment with some of these participatory decision-making mechanisms in order to try to establish a new legitimacy for our politics.
Secondly, a greater diversity of voices in policy would greatly enhance the range of intelligence, insight, experience, expertise that informs policy. Progressive businesses have recognised that there’s a strong business case for diversity and that this goes well beyond the glossy corporate recruitment brochure. Politicians have often urged companies and the public sector to be more diverse; they should do more to ensure that the policymaking for which they are ultimately responsible is similarly more representative of who we are.
The particular focus of this project is to develop a way to enable more organisations to conduct and contribute to better policy and research based on frontline expertise, experience and insight. This means the organisations that are typically excluded from policy such as smaller charities, but also individuals as well – the lone practitioner or service user who wants to contribute their perspective to policy but currently doesn’t have any way to do this. This would also increase the amount of (practical, tested) innovation and creativity in policy (the subject of the next post in this series).
History suggests that, one way or another, people eventually find a way to be heard. The new social movements of the 1960s and 1970s – for racial equality, women’s rights, gay rights – were (and continue to be) calls for recognition, acceptance and participation. But what’s remarkable about today’s sense of marginalisation is how widespread it is, and just how many of us feel ourselves to be excluded by the political system. When the majority feels like it’s on the outside, those on the inside need to recognise the dangers of complacency. Much greater diversity, then, isn’t just a ‘nice to have’ – it’s now critical to better policy development at a time when better policy development is critical, and to the sustainability of democracy when our democracy is looking increasingly unsustainable. We welcome all of your thoughts.
Ten reasons why we need a new approach to developing social policy – 3. We would strengthen democracy, trust and participationPosted: May 4, 2012
This is the third in a series of posts on why social policy should be developed by and with the people who use and provide public and voluntary services. We’re publishing the whole series over the next two weeks, and we welcome your comments.
We face a significant and growing public disillusionment and disengagement from mainstream politics. Scepticism and cynicism is rife about politicians, political parties, and as a consequence, about politics itself. However unfair, inaccurate and self-fulfilling this scepticism might be, it is a real phenomenon and an increasingly serious one. How do we resolve it?
Not by tweaking, a bit of reform here and there. What’s happening reflects a longer-term social and cultural change, flowing away from deference and attachment (to a community, to a class, to a party) and towards individualism, autonomy, and self-determination. It’s both good and bad, and depending on your political position, what you might consider to be largely good, someone else might consider to be largely bad – the changing nature of the family for example.
What unites us is that we’ve had enough of bullshit. We’ve reached the end of the ‘marketing age‘ in contemporary politics. That’s not to say that we won’t get fooled again, but we might be quicker to rumble it. Clever political marketing also doesn’t sit very well with a grinding economic recession. Greater authenticity does. We don’t care where someone went to school – it’s what they do, their character and what they stand for that matters.
What’s next? The opposite of being marketed to is being part of something and helping to create it. It’s not that we don’t care about politics, it’s that traditional institutions and mechanisms don’t reflect the social and cultural change that’s happened. They don’t reflect our scepticism, but neither do they reflect something much more positive: our desire to be involved, to participate, and to exercise our self-determination collectively.
This is not a passive age, quite the opposite. There’s massive engagement in movements and platforms that show that they recognise this social change and provide ways for us to be part of something good. Look at Avaaz, Change.org, 38 Degrees, Citizens UK (London Citizens), and campaigns such as Make Poverty History (returning in 2013). It’s not a coincidence that the President of the United States was a community organiser: he knows how to mobilise people, and many of us want to be mobilised. Charities, political parties and companies are having to adjust to this reality; those that don’t give us meaningful ways to be involved will fade away.
So the obvious question is, why not government as well? Why can’t we – as the providers and users of public and voluntary services – help to shape the policies that determine how these services are provided, how they are financed and held accountable? Traditional consultations are the policy equivalent of being asking to sign a petition, when we want to be the petitioner. Open data, open services – these are good things, but the third dimension of open government is open decision-making. For us, that means developing new ways that public policymaking can be democratised, and in particular ways in which a greater diversity of the people who use and provide public services can more directly inform policy based on their own expertise and experience – something that’s largely missing from policy development at the moment.
It’s not about a better form of consultation, it’s about cooperative problem-solving. What this means is that the future of national policymaking, the way that we can resolve the crisis in trust and legitimacy facing us, lies in the ethos and practices of community organising – in developing platforms for real change that are non-partisan but passionate, hard-headed but optimistic, accessible but serious. Anyone got any better ideas?
Considering our branding recently made me think (of course) about Apple, and in particular how one advertising campaign marked the turnaround in the company’s fortunes and the start of its journey to become the biggest company in the world. What can we learn from this ad?
Many people think that advertising is superficial, but you can’t suggest it’s inconsequential when it can help to save a company and inspire a whole organisation with the same spirit. In September 1997, Apple was by some accounts just six months away from bankruptcy. Steve Jobs commissioned the campaign to remind people (including within Apple) of the philosophy underpinning the company he co-founded (and was then thrown out of) but which was struggling despite his return. It was based on a recognition that the spark that drove Apple existed long before the company, and that a good way to show what kind of company Apple was would be to celebrate the people it admired. In the space of only a minute, the ad helped give Apple back the counter-culture attitude that it had lost over the preceding decade and a half.
The campaign was ‘Think Different’. The most famous single ad in the campaign was ‘Here’s to the crazy ones‘ (this link takes you to a special version of the ad with a voiceover by Steve Jobs himself). It’s a great piece of copywriting, worth quoting in full (and this is the fullest version):
“Here’s to the crazy ones. The misfits. The rebels. The troublemakers. The round pegs in the square holes. The ones who see things differently. They’re not fond of rules. And they have no respect for the status quo. You can quote them, disagree with them, glorify or vilify them. About the only thing you can’t do is ignore them. Because they change things. They invent. They imagine. They heal. They explore. They create. They inspire. They push the human race forward. Maybe they have to be crazy. How else can you stare at an empty canvas and see a work of art? Or sit in silence and hear a song that’s never been written? Or gaze at a red planet and see a laboratory on wheels? We make tools for these kinds of people. While some see them as the crazy ones, we see genius. Because the people who are crazy enough to think they can change the world, are the ones who do.”
The words ‘Think Different’ were created by advertising firm Chiat/Day art director Craig Tanimoto, and the advert’s text was written by Rob Siltanen and Ken Segall. Segall consulted for Apple until 2007 (he also came up with the name ‘iMac’); when he subsequently started working for Dell he found a very different culture (this is from an interview on the Cult of Mac website):
“Dell and Apple: It’s night and day. It’s a transactional world Dell lives in. It’s all about numbers. Everything they say about Apple making products for themselves is true. Apple — it’s about changing the world. For everyone else, it’s about the money.”
This isn’t one of those ‘what we can learn from how Apple innovates’ articles. Providing public and voluntary services is very different from making and selling computers. But what would happen if we ‘sold’ the idea of serving the public – at all levels of the state and third sector – with the same passion as Apple talks about what it does? Instead of effectively denigrating their own staff (as pointed out recently by Benedict Dellot on the RSA blog), what if more public and voluntary sector organisations inspired the same culture of creativity and commitment in their employees? And instead of becoming more like Dell, what if the lesson from Apple was about motivating people by focusing on changing the world first and ‘efficiency’ second?
Apropos of this, let’s quote Steve Jobs again (this time from a 1994 PBS documentary):
“When you grow up you tend to get told the world is the way it is and your life is just to live your life inside the world. Try not to bash into the walls too much. Try to have a nice family life, have fun, save a little money. That’s a very limited life. Life can be much broader once you discover one simple fact, and that is – everything around you that you call life, was made up by people that were no smarter than you. And you can change it, you can influence it, you can build your own things that other people can use. The minute that you understand that you can poke life and actually something will, you know if you push in, something will pop out the other side, that you can change it, you can mold it. That’s maybe the most important thing. It’s to shake off this erroneous notion that life is there and you’re just gonna live in it, versus embrace it, change it, improve it, make your mark upon it. I think that’s very important and however you learn that, once you learn it, you’ll want to change life and make it better, cause it’s kind of messed up, in a lot of ways. Once you learn that, you’ll never be the same again.”