Opening public services: Accounting & Business

Posted on October 1, 2011 · Posted in Accounting & Business

Much was expected of the Open Public Services White Paper, not least because it had been delayed repeatedly and was six months behind schedule when eventually published in July. Political dynamite had been predicted.

Yet the white paper drew barely any comment in the national media. If there had been political rows behind the scenes, they seem to have been resolved by removing the most contentious proposals.

Gillian Fawcett, head of public sector at ACCA, comments: “There are five high level principles outlined which remind me of Tony Blair’s four principles of public sector reform and when I read the white paper I thought I was reading the same document! I wondered, what is fundamentally different here? The response has been a bit of a damp squib – probably not the effect that the Government wanted.”

It was inevitable, suggests Fawcett, that the white paper would accelerate the outsourcing of public services, but this is nothing new. “If you look at local government over the last 20 or 30 years, the majority of expenditure now is on commissioning services,” she explains. “Thirty years ago you would have been looking at 80% of spending being on staffing.”

Much of the focus of the white paper is on improving the diversity of public service provision, enabling users more choice. “Service users are often the most vulnerable people in society,” warns Fawcett. “They may not want to make choices and can find it difficult to navigate the system. What about the 80 year old lady who doesn’t use IT?” Checks and balances are important to safeguard those who are vulnerable and have difficulty in exercising their theoretical rights to choose services, she suggests.

The big worry, though, is whether the current Government can learn from the difficult experience of Tony Blair’s administration, the lesson of which is that simply changing the structure of service delivery does not guarantee changed outcomes. Andrew Lansley’s health service reforms focus on restructuring in a way that suggests those lessons have not been learnt. The white paper risks making the same mistake and Fawcett argues that government needs to consider more what she describes as the “softer cultural issues” that have prevented the necessary productivity and service quality gains being achieved.

Concerns about the lack of productivity improvement in the public sector are, though, addressed in the white paper. It points out that public spending increased by 67% in real terms between 1997 and 2011, yet key outcomes – such as international comparisons on school results, cancer survival rates and crime rates – did not improve. The approach of higher spending combined with improvement targets has not worked, believes the coalition.

“Our reforms are the best way to deliver better services; indeed they are the only way we can deliver improved, modern public services in a time of fiscal consolidation and growing demand,” explains the white paper. In place of centrally determined, top down, targets, the white paper puts great stress on the use of standards and service user entitlements, while increasing the contracting-out of services.

There is also a commitment to devolve service control as near to the citizen as possible. This may mean, says the paper, that leisure centres, parks and some licensing will become the responsibility of a parish or town council, instead of a unitary or county council.

Where possible, service users will make their own decisions on service commissioning, through the use of direct payments and personalised budgets. These are already widely used for social care procurement and this may now be extended to Supporting People – the scheme that enables vulnerable people to obtain specialist housing services.

It is intended that only core – mostly security related and judicial – services will be directly provided by central government. Much of what is currently undertaken by the state will now be transferred to arm’s length agencies, or outsourcing.

Measures are outlined to support greater contracting-out of public services, including to staff-led mutuals. A £10m Mutuals Support Programme and an Enterprise Incubator Unit in the Cabinet Office will provide financial and practical support for staff seeking to convert public services into employee-led mutuals.

Employment regulations relating to transferred operations will be reviewed, in an attempt to make public service contracting more attractive to the private sector. Reform of public sector pensions, announced separately, are likely to have the same effect.

The TaxPayers’ Alliance, which has close links to the Conservative Party, welcomes the white paper. Its director, Matthew Sinclair, says: “It is often possible to get better value for taxpayers’ money by contracting-out services to private or voluntary sector providers.  A number of local authorities have shown that is a powerful way of delivering high quality services while cutting spending to deliver lower taxes.  It is great news that kind of approach is going to be used more often across the public sector.”

But the proposals outlined in the white paper may not be the end of the public sector reforms. It is reported that David Cameron’s chief policy advisor, Steve Hilton, is privately putting forward more radical initiatives, including closing all Jobcentres and extending their remit to voluntary sector welfare-to-work providers.

The Centre for Social Justice is a think-tank which specialises in welfare reform issues, set-up by current work and pensions secretary Iain Duncan Smith. It suggests that while it would not advocate this step, there is certainly room for a debate about the role of the Jobcentre when we have a simpler benefit system and a Universal Credit,” says Deven Ghelani, senior researcher at the Centre for Social Justice (CSJ) and an independent consultant on welfare.

Ghelani adds that a recent CSJ report concluded that Jobcentres need to be reformed so they can work better with employers to address recruitment requirements. “JCP [Jobcentresplus] spends a large proportion of its time administering benefits and enforcing conditionality, and are generally not well placed, resourced or structured to provide support,” he explains.

The mood music, then, is that further, and possibly more controversial, public sector reforms may be proposed at a later date. This may help to explain why the latest white paper made very few waves.

At a glance

Key principles in the white paper:

· Choice in public service provision will increase where possible.

· Public services should be decentralised as close to the public as possible.

· Public service delivery should be open to a range of providers.

· There must be fair access to public services.

· Public services should be accountable to service users and taxpayers.

People should control their own commissioning of public services as much as possible, via direct payments, personal budgets, entitlements, or choice.

There is no ideological preference for the public, voluntary, or private sector.

Tony Blair’s four principles for public service reform were:

· Choice

· Diversity of supply

· Personalisation

· Greater discretion for staff in how they work

What the white paper means for accountants

· Greater use of direct payments and personal budgets will create challenges for the accounting of public expenditure. Where individual service users commission their own services, financial accountability will still rest with the public body. Where service delivery is devolved, accounting officers must ensure that delivery agents operate strong accountability mechanisms.

· Commissioners will be held to account by service users, supported by enhanced rights of redress; statutory audit and regulatory bodies such as the National Audit Office; and ‘by independent champions (such as the TaxPayers’ Alliance)’.

· The Government will consult on the contracting-out of payment processing; fraud prevention, detection and investigation; debt management and enforcement services; and customer contact.