Worth the wait?

The government's Open Public Services White Paper was finally published this week. Mark Johnson examines how radical a blueprint for reform it is.

The long-awaited White Paper on Public Services Reform was published on 11 July. In their introduction, Prime Minister David Cameron and Deputy Prime-Minister Nick Clegg, present the issue of public services reform as a “progressive cause” with an “urgent moral purpose”. The imperative behind the reforms is ensuring equality of opportunity for all, instead of the current system where “often the poorest bear the brunt of under-performance”.

The issue of opening up public services to competition, which has proved so contentious in the NHS reforms, is presented as a means to achieving this end, with the emphasis that free and fair competition is necessary to ensure choice and the availability of alternatives. A key phrase used is “What matters is the quality of service, not the ownership model”.

The government’s belief is that “giving people more control over the public services they receive, and opening up the delivery of those services to new providers, will lead to better public services for all”.

The White Paper manages to be both bold in setting out a “comprehensive policy framework” for public service reform, and cautious in its acknowledgement that “the Government recognises that it cannot all be achieved at once”. There is also a concession to the fact that there is not a great deal that is ‘new’ – as the Paper states, “many of the reforms…are already underway”. Equally, many of the ideas expressed are at early stages and are subject to consultation and change during the ‘listening period’ between now and September.

Five principles for modernising public services

The White Paper signals five key principles that will drive modernisation of public services:

• increasing choice wherever possible – for example through direct payments, personal budgets, entitlements or choices. All councils will be required to introduce personal budgets for adult social care by 2013.
• decentralising public services to the lowest appropriate level – whether this be to the individual or a representative body for the community
• opening public services to a range of providers – there is to be no presumption on which sector should provide services – private, public or voluntary. Only if there are different types and size of provider can people exercise choice.
• ensuring fair access to public services – there will be extra help for the disadvantaged to access services, for example the Pupil Premium in education.
• making public services accountable to users and taxpayers – transparency and accessible data will be key.

Throughout these principles the role of central government will be one of overseer of core standards, in keeping with the Localism agenda.

The rise of public service mutuals

The government vision is for one in six public servants to be working in a mutual organisation by 2015. The ‘community right to challenge’ in Clause 68 of the Localism Bill will give local authority staff the right to take their service out into a new structure. We are seeing strong appetite from some of our authority clients to explore mutual models in areas as diverse as adult social care, community transport and pest control.

Government will not “dictate the precise form” of public service mutuals – the form should be driven by what is appropriate for the service but options identified in the Paper include wholly employee-led, multi-stakeholder and mutual joint venture models (with some involvement by existing private sector businesses). Expect to see a variety of hybrid models emerge.

The Paper contains a commitment that the government will identify and remove barriers facing public sector workers wishing to establish a mutual, particularly around procurement procedures, TUPE and pensions issues. Some start up funding will be made available through the Mutuals Support Programme.

Key themes to emerge

Whilst response to the White Paper has been lukewarm in some quarters with some commentators sensing political compromise, the proposals, if implemented, would still represent a radical blueprint for the way public services are organised and delivered, and could have profound implications for the organisational and governance arrangements of authorities.

Key themes I would pick out are:

• More contracts will move towards payment by results, funding will follow individual choice, spelling an end to large block contracts and ‘take or pay’ arrangements with demand guarantees
• We may see more accreditation and regulation of service providers in service sectors which are currently not regulated (like leisure or library services), to ensure minimum service standards. The White Paper ominously calls for “severe consequences” for management teams involved with the governance of a failing service provider.
• There will be greater transparency over performance data and the content of commercial agreements to allow new entrants to bid for contracts – Freedom of Information defences based on commercial confidentiality may be less likely to succeed.
• Essential public assets may be opened up for use by a wider range of service providers (e.g. council premises or NHS hospitals may have to allow access and occupation by external service providers to allow them to compete, similar to the ‘unbundling’ seen in the utilities sector).
• New forms of capital investment instrument are likely to emerge which link the return for investors to the outcomes achieved for service users and citizens – a kind of PFI 2.0.
• In procurement processes, there are signs that the pre-qualification hurdle may be lowered to allow new entrants to compete, and a new forum may be introduced to allow procurement decisions to be challenged more informally than by going to court.
• There will be a new emphasis on digital delivery of services – perhaps even with a centralised digital platform which service providers could use as their shopfront – akin to an Amazon or eBay for public services.

We can expect more detailed proposals to emerge in November 2011, once the listening exercise concludes in September.

The White Paper can be found here.

Mark Johnson is Managing Director of TPP Law. He can be contacted on 020 7620 0888 or by email at This email address is being protected from spambots. You need JavaScript enabled to view it..