Beyond the market: a new agenda for public services

Moving beyond the market need not mean turning back the clock to a highly centralised state-run model.

Moving beyond the market need not mean turning back the clock to a highly centralised state-run model

Mark Serwotka is quite right: the profit motive has no place in our public services, and the case of Iain Duncan Smith’s work programme is a perfect illustration of why.

Deteriorating quality, ill attention to the needs of vulnerable people, poor value for money: the National Audit Office’s report on the work programme tells a familiar story of the failures of the private sector to secure public goods.

The limits of the market

Successive governments have pursued a public services agenda based on market competition, consumer choice and outsourcing to private providers, promising better quality, more responsive services at lower costs.

But these benefits have not materialised.

Power has been concentrated in the hands of a few supremely wealthy private providers. Pay and conditions have declined, with knock on affects for service quality. And a recent survey of 140 local authorities across the country showed that the majority are bringing services back in-house or considering doing so, mainly because of rising costs and declining quality.

This should come as no surprise. Market competition tends to lead to fragmentation and opposition between stakeholders, discouraging the partnerships and holistic thinking necessary for joined-up and preventative services. What’s more, private companies are legally obliged to prioritise shareholder-return, a goal not easily aligned with broader public policy priorities such as meeting social need.

The market has failed public services. But what is the alternative?

On the work programme, Mark Serwotka suggests taking services back in-house. This is, surely, a good start. But what should in-house services look like in the 21st century?

A new direction of travel

The neo-liberal agenda of marketisation and outsourcing took hold, partly, on the back of a particular critique of state-run services as top-down, inefficient and out of touch with people’s needs, knowledge and preferences.

While there is every reason to oppose the neo-liberal solution, it is true that the post-45 model of public services often afforded little power or control to frontline staff and citizens, with power largely residing in the hands of Whitehall politicians, civil servants and ‘expert’ advisers.

A new discussion paper from the New Economics Foundation (NEF) argues that moving beyond the market need not mean turning back the clock to this highly centralised model. The norm should be for public services delivered within a re-vitalised and democratised public realm, grounded in public participation, with more power for frontline staff, and collaboration with other not-for-profit community and civil society groups.

Some public agencies, across the UK and beyond, are already enjoying the benefits of doing things differently in this respect. Co-production is catching on, seeing services designed and delivered through an equal partnership between professionals and service users.

Following impressive results in Porto Alegre, Brazil, more UK public agencies are giving citizens direct control over public spending decisions through participatory budgeting.

Councils such as Newcastle have demonstrated the benefits of less hierarchical working cultures that afford frontline staff more autonomy and trust. And Co-operative Trust Schools show how the public sector can work in collaborative partnership with other not-for-profit organisations.

However, the coalition government’s programme of austerity cuts and accelerated marketisation has been accompanied by a narrative of increasing local control and citizen engagement in the move ‘from Big Government’ to the ‘Big Society’.

So how is our agenda different?

Firstly, we need redistribution alongside devolution. This means central and local government action to tackle inequalities within and between regions.

Meanwhile, a slow and steady move towards a 30 hour working week, alongside measures to address low pay, would ensure that people have the capacity to partake in this kind of ‘everyday democracy’.

Finally, NEF’s research shows that public spending reductions are decimating local services and, despite recent claims of the coalition, the cuts are undermining our chances of a lasting economic recovery. We need an end to austerity and a new macroeconomic strategy based on government investment, including in our public services.

Join the debate

Amidst a steady onslaught of high profile scandals of private provision, it has become difficult to extol the virtues of free market entrepreneurialism as a driver of public service quality and innovation. Indeed, recent polling conducted for campaign group We Own It shows that just 21 per cent of us trust outsourcing companies (in comparison to the 79 per cent of us who trust the NHS).

The tide might just be turning against marketisation and outsourcing. But there is a need for fresh thinking on what should come next. NEF’s new discussion paper suggests one direction of travel – shifting power towards citizens and frontline staff – but other ideas are out there. Join the debate in the comments box below or on Twitter, using the hashtag #futurewelfare.

James Angel is social policy researcher at the New Economics Foundation (NEF)

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