How does outsourcing constrain open policy?

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.


Have outsourcing public service providers become too big to care?

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?


Is outsourcing public services incompatible with open policymaking?

Rare sighting of a G4S security guard at the Olympics. Copyright: Press Association.

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.


How could commissioners make greater use of social media?

How could commissioners make greater use of social media? Chris Sherwood, Co-Founder of Guerilla Policy and Director of Innovation and Development at Scope argues that commissioners should use social media as a way to collaborate with citizens to open up commissioning.

In the previous two blogs I have argued that an open, iterative approach to commissioning where citizens and providers collaborate with commissioners will ultimately lead to better, cheaper services.  In this blog I will consider how social media can be utilised by commissioners to achieve this objective.

Social media is an important tool that commissioners are missing out on. As I’ve suggested previously, social media is a way to engage a wider community of people around a particular issue and allows for the discovery of new ideas and networks of people. Commissioning is a complex, multi-disciplinary process, which involves a range of disciplines including research, analysis and evaluation – all areas where social media could play a helpful role. To adopt social media at scale in the commissioning landscape means that the expected skill set and training offered to commissioners would need to change to include social media as a key part of this.

Social media also offers up the opportunities for professionals to collaborate with each other, which has been pointed out in a comment from Alex Kenmure at Camden Council on an earlier blog post. In developing Guerilla Policy, we have considered its potential as a platform to facilitate collaboration between professionals within a sector as well as between sectors. Commissioners, whose numbers are under pressure, often don’t get the opportunity to collaborate and share ideas with each other or with potential providers. Social media could really help in this regard.

As I’ve argued in the first blog in this series, commissioning is often effectively a ‘closed shop’. I was involved in one recent national commissioning opportunity. The funding stream was a brand new one that targeted troubled families, and the government department launched a consultation exercise with prospective bidders on the proposed programme. The programme also involved close cooperation with local government (as they would be the source of referrals), yet they were not involved in this consultation and instead bidders were asked to contact them as part of the four-week commissioning window. The approach to involvement of these stakeholders was weak and rather late in the day, which meant that the ability to influence of the design of the programme was constrained.

Social media could have added significant value here as a cost-effective platform to facilitate a wider discussion between prospective service users, local authorities and providers. This example also points to a wider challenge that Guerilla Policy seeks to address, which is that too often the people who use and provide services are involved to comment (at best) on an already defined agenda rather than being involved in setting the agenda.

How could social media help? The commissioning cycle could be re-imagined as an iterative rather than linear process. The way we commission involves a number of different skills and disciplines, which a linear process could draw out and utilise. Safeguards could easily be built into the process to protect the interests of taxpayers, providers and service users.

This argument isn’t really about specific social media platforms or technologies but rather is about how to open up commissioning to wider participation of a community of interest for which social media could be a valuable tool.  As a starter for ten the following areas of the commissioning cycle strike me as primed for opening up using social media:

  • Undertaking a population needs assessment – could this be crowdsourced? The needs assessment conducted by the public body could be shared publicly as part of the commissioning process with comments invited from the community on the analysis that has been reached.
  • Developing tendering documentation – could suggestions be generated through a community blog site? Could aspects of the documentation (e.g. the outcomes the service is looking to achieve) be shared publicly with comment invited?
  • Scoring and selection of proposals – whilst this is a sensitive area because of commercial sensitivity, could a closed community (and anonymising of bids) be used to crowd source the scoring of bids?
  • Evaluation and monitoring – could users be invited to blog or upload a film to a YouTube channel documenting their experience and feedback on the service commissioned? Social media can play a role as a research tool, e.g. a hashtag could be set up on Twitter and this could be used as a way to trawl for comments and people to be invited.

Community Budgets, which are being piloted in 16 different areas to support families with complex problems (involving 28 different local authorities) and the recent announcement of whole-place and neighbourhood-level pilots, both offer up opportunities to experiment with social media. These pilots are designed to make better use of resources including local knowledge, community assets and voluntary effort, and afford greater control to local people over services. Making use of social media as part of the commissioning process could offer real benefits to these communities.

Ultimately this comes back to culture. Are we prepared to take risks and try something new? Social media can help to open up commissioning. It means that commissioners could involve a wider community ensuring both greater accountability and buy-in to commission services that deliver better outcomes, potentially for less money. Where and how do you think that social media could be applied in commissioning?  What are the constraints and where are the opportunities? Tell us what you think.


What role could social media play in commissioning?

Chris Sherwood, Co-Founder of Guerilla Policy and Director of Innovation and Development at Scope argues that commissioners should use social media as a way to collaborate with citizens to open up commissioning.

In the first blog we considered the need to open up commissioning and this is where social media can help. Social media offers a range of tangible benefits for commissioners, which mirror those that we have documented for the policy and research community (and are the inspiration behind our Guerilla Policy platform). It is cheap and easy to use. It can provide a way for commissioners to engage citizens and providers in the commissioning process. It can play a significant role in building the confidence and trust of citizens and services users in what is actually selected because the commissioning process has been conducted in an open and collaborative way using social media.  Most importantly it can help commissioners to improve the quality and impact of services by opening up commissioning to new people and ideas.

When it comes to social media, commissioning seems like it’s in the dark ages. Even half of MPs now have an active Twitter account – yet a Facebook page or Twitter account would be seen as unusual, even regarded as risky, for a commissioning team. This means that commissioners are missing out on the opportunities that social media offers to collaborate with the people who use and provide public services to commission services that better meet need and use resources effectively.

Social media is an accessible, mass-market technology that is increasingly blurring the distinctions between ‘producers’ and ‘consumes’ of services.  Social media is a platform for collaboration.  It can facilitate the discovery of new or different insights about a social problem.  It can allow ordinary citizens, people who use and provide public services and commissioners to come together to co-design products and services.  More people involved means that more ideas are considered and there is greater transparency over what is actually commissioned resulting in good quality services that deliver better outcomes.

Social media is not a panacea and is at the end of the day a mechanism to support a wider shift in commissioning patterns from a command and control approach to one that is iterative, open, citizen-centred and reflects the lived experience of users.  A good example of this shift is the Make it Work service in Sunderland.  The service design agency Live:Work were commissioned to work in partnership with Sunderland City Council to design a new service to support hard to reach unemployed people secure employment.  Make it Work was designed through a collaborative process involving over 280 practitioners, employers and clients.  It became a two-year and £5m Working Neighbourhood Fund Service which has supported over 800 people, of who 200 have secured work (at a cost of less than £5,000 per person).  Where this example differs from the norm is that the commissioning cycle was broken up with the ‘needs analysis’ and ‘development of options’ phases undertaken by Live:Work, with a provider then selected to actually deliver the service.  The reach of these examples is going to be limited in an era of public sector cuts, but social media offers up a way to collaborate with citizens in the earliest stages of commissioning (building on this example) at far less cost.

Pepsi Refresh provides further inspiration for how social media could play a role in commissioning.  A web platform – http://www.refresheverything.com – was used to crowd source project ideas that could receive funding.  Up to 32 projects could receive funding each month.  The platform gauged the reaction of people to proposed projects to assist in determining those that should receive funding.  There are obvious parallels here with commissioning.

Both of these examples point to a different commissioning process, which is open, collaborative and built on the needs, lived experience and aspirations of those who will ultimately benefit from the services that are commissioned.  Social media provides a way  to help spread these approaches by providing the means to engage citizens and service users at far less cost and in a more focused way.  A local authority could for instance crowd source a needs assessment or use a social networking site to record people’s experiences of a service that is commissioned.  In the next blog, we will go onto further consider how social media could be used in the commissioning cycle.

The use of social media challenges the conventional way of commissioning as discussed in the previous blog and there will inevitably be concerns about the use of social media from commissioners and providers.  Obvious objections include how will this mesh with competition law, how do we up skill commissioners to adopt these methods, could the process be hijacked by a small minority motivated by a particular agenda and how can the commercial sensitivities of providers be protected?  All are genuine concerns and as a Director of Development for a large national disability charity I share some of them; yet these should not be barriers to change.  There are ways to remove these.  Commissioning is a complex, multi-disciplinary process that could be re-imagined as an iterative process, which we will consider further in our next blog.

Now social media should not be seen as a cheap alternative to commissioning of services.  This is not an agenda for cuts.  It will still need to be resourced, but it does hint at a new way of working for commissioners that we will look at in our next blog.  It is also not a panacea to solve all problems with commissioning.

Ultimately, why social media offers benefits to commissioners is that it helps people to feel that their voice is heard in decisions that are made about services that should be commissioned in their area.  Surely that can only be a good thing?


Could social media help to open up commissioning?

Chris Sherwood, Co-Founder of Guerilla Policy and Director of Innovation and Development at Scope argues that commissioners should use social media as a way to collaborate with citizens to open up commissioning.

This is the first in a series of blogs that will look at how commissioners can embrace social media. Opening up commissioning can play a significant role in ensuring local accountability over what is commissioned ultimately leading to better, cheaper services. Social media could help.

The NCVO defines commissioning as “…the process of finding out about public needs, then designing and putting in place services that address those needs.” Commissioning is a complex, multi-disciplinary process involving research and analysis, design, procurement, contract management and evaluation. Commissioning has often been overlooked by policymakers but there is increasing recognition that it is an important policy lever as increasing amounts of public services are outsourced, a direction of travel that the Coalition has committed to speed up.  David Cameron set out in a speech in July 2011 a commitment to open up public services by challenging the ‘presumption’ that the state should deliver services rather than the voluntary or private sector.

Commissioning has traditionally been a function of public bodies like central government departments, local authorities and NHS bodies. However increasing amounts of public services are actually commissioned by the private and voluntary sector; with the Work Programme being the best example of this with private prime contractors responsible for commissioning a range of providers in their supply chain.  Commissioning by the private and voluntary sector offers up opportunities for innovation but there are also equally concerns about how services are commissioned by these bodies.

Commissioning is still largely a ‘closed shop’, operating in a bubble of the ‘professional knows best’ culture with activity taking place behind closed doors. Bureaucratic hurdles such as requirement of bidders to provide three years of accounts or TUPE obligations and perceived legal barriers such as EU competition law stifle the appetite for innovation and collaboration. This results in only limited engagement with relevant stakeholders either at the beginning of the commissioning process or after it has been completed.

This ‘closed shop’ approach to commissioning hampers innovation as the insights and ideas of providers and citizens are neglected or ignored.  Collaboration between providers is constrained because this approach results in competition rather than partnership, with providers reluctant to share any of their ‘added value’ for fear of it reducing their advantage when it comes to the scoring of their tender.  Finally, it reinforces inertia as commissioners are reluctant to de-commission or radically change what is commissioned.

There have been some innovations on the fringes of commissioning, but these are not yet the mainstream. Participatory budgeting is a process that many local authorities have adopted to engage local citizens in deciding how to spend small pots of discretionary funds. It was developed in Porto Alegre in Brazil has since been adopted in the UK. In my own borough of Lambeth residents were asked to decide which community projects should receive investment from a £250,000 investment pot. Residents were not able to suggest projects but could decide which of those offered up should receive funding.

Whilst Turning Point’s Connected Care uses a community research model to support the commissioning process.  Community researchers are involved in the development of a comprehensive needs assessment to inform what is commissioned. These researchers are local citizens who have received training to take part in a structured research process. The model has obvious benefits in that the local community plays an integral role in helping to shape what is commissioned but this approach has been criticized for being too expensive.

Both of these models offer interesting insights about future possibilities for a more collaborative and open approach to commissioning, where citizens play an active role as ‘producers’ as well as ‘consumers’ of services. Their reach could be expanded further through the use of social media. Community researchers could for instance use social media to crowd source quantitative and qualitative data to inform the needs assessment. Yet both of these examples operate at the fringes of public services. Examples of where citizens are engaged in designing services that help the public sector respond to the big challenges of cuts, an ageing society and climate change are harder to come by.

At the moment, we are thinking about the wider application of Guerilla Policy. Guerilla Policy is an experiment in how research and policy development can be opened up through the use of social media. Could this approach be applied to commissioning? So far we have talked a lot about national policy in our work (and it would be interesting to speculate on what the Work Programme would look like if the design had been crowdsourced). However, most commissioning however takes place at the local level, so the ‘guerilla policy’ approach also needs to be applied locally. In this series we will consider what role social media could play and where commissioners could adopt this approach.