Open Public Service White Paper: A Matrimonial View
Its guest post time on WLLG and today’s post features the sort of ‘walking through the park’ conversation that would have Mr WLLG rolling his eyes. However, our guest poster uses an early evening stroll to try to get to grips with the risks and pitfalls of public service reform, coalition style. We think he does a good job:
The other day my wife and I were discussing public service reform as we strolled through our local park in the early evening sunshine. My wife is on maternity leave with our first born and has, through listening to radio 4 more regularly and utilising local services as a young mother, become more engaged in the political debates around public services.
She asked, prompted by the news of the new Open Public Service White Paper, what the incentive was for opening up public services to competition.
I said the short answer that proponents would give was that greater competition between providers to improve cost efficiency and to drive up quality. I said that there were already examples of many services being delivered by providers other than the state or local government. We then discussed the issue of how alternative providers can make money by offering economies of scale and more efficient ways of working that could allow them a margin to make a profit. Once Southern Cross entered the discussion, the subject of risk reared it’s arguably ugly head.
I quoted from a recent newspaper article that had, through FOI, retrieved some research commissioned for the Government that suggested one of the ways that private companies are able to make money is their ability to enter and leave a market at speed.
When an opportunity presents itself a fleet footed company will want to get in, without massive set up costs, and take advantage. If at some point an activity becomes less successful and unprofitable then the business can close down and invest its capital in more successful ventures.
However, the public sector is different to much of the private sector. If the backers of HMV, for example, decide the business of selling CDs etc through a shop is not for them then they can simply stop. The consequences of this action would not be life threatening even if HMV were the only provider of CDs.
Apply this idea to public services, the report said as I understand, and you need to be prepared to allow for market failure i.e. schools, hospitals and other services that are doing less well to fail. This appeared to be a really good explanation of the positive and negative implications of market forces in public services.
In short, for providers to profit, we must tolerate failure.
However, I argued, given that we have no stomach for Southern Cross to fail, nor any of the banks for that matter, is there the political or public will to see services fail in an open competition.
This leads to one of many crucial questions: What services if any, would we be prepared as society to see be open to this kind of risk.
Finally, I’d argue that it’s this failure to discuss properly and proactively where our tolerance of risk is, ahead of potentially calamitous events, that has held back our appetite (for good or ill) for, and understanding of, public service reform.
At that point we walked back through our beautiful council maintained park, past the local library and then back through the private housing estate that was propped up by the Housing & Communities Agency.
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