KMPG’s Global Head of Government Paul Kirby offers his thoughts on giving the public choice, making markets, ensuring fairness and accountability.
I think the key thing is to get the overall framework right. Rather than rushing off to look at each individual services one by one, think about the framework. Perhaps take a principled approach. Perhaps think of four or five principles out of the UK experience …
Firstly, choice. Who are you actually giving choice to? Who is going to make the decision about the right provider and the right service? Are you going to give that choice to individuals? Are you trying to push it down to parents? Or choosing the school? Is it to patients choosing their public hospital or their general practitioner? Or is it something that you are trying to give to a neighbourhood?
Are you giving a local area choice over what happens with it highway services or the way that it is policed, so that they have got more discretion? Or is it something where actually the state government or the federal government needs to decide for itself and it can’t pass those decisions down and decentralise them to individuals or to places?
So having decided who you are giving the choice to (whether it is to individuals, whether it is local areas, or whether it is being held by the government itself to decide on who to it services from and what it wants — whether it is state government or federal), it is really then about how do you open up the supply?
And when you open it up, to think: “How do I get the market that I want?” So a huge amount of effort in the United Kingdom is currently going into making markets. So if I gave an example in probation service, the Justice Department has decided it wants to open that market up. It’s 100% public sector provided at the moment but it has spent two years making a market. So it has gone out there, it has found providers who have done similar things in the UK or found international providers and encouraged them in. It has been meeting investors who can get behind those businesses. It has been talking to NGOs about how they can collaborate with the private sector, come together in consortia, and it has been taking the 20,000 public sector staff and encouraging them to move into either their own businesses or to partner up with the new entrants into the market.
So I think, knowing that you have to make the market, not just take the market that is out there, is really important. So it is about getting choice right, it is about opening up the market, making it, not running a private versus public type competition, I think in taking it forward.
There is also recognising that when you bring in more contestability, people will always say: “What about fairness? Won’t the poor do badly out of this? Won’t the private sector just want to take profits at the expense of the poor?” It is recognising that there are those risks and not avoiding them and thinking how do we design into this the right incentives in a contestable world whereby the needs of the poorest or most vulnerable are helped.
For example, in the UK at the moment, a lot of work is going into the tariff system, for example, for the welfare-to-work programs or getting people back from mental health, back into work or back into wider society. To actually put the right price on the work. So the hardest-to-reach groups, the most challenged groups attract the most money.
That is true in schools too. So although we have a standard formula for how much money schools get when they attract a pupil (if they don’t attract any pupils, they don’t get any money) — they get a premium if they attract disadvantaged children. So I think it is not brushing that issue under the carpet. It is about addressing that head on, recognising the risk and pricing for that so that you are advantaging the disadvantaged thorough the way you go about the system.
And the final principle I think to get right in this, is accountability. That as you bring in contestability, you need to have more accountability. Whether that is for example, setting up new inspectorates. So we have strong inspectorates in the UK, in education, in health provision, in criminal justice, we have strong inspectorates around immigration services and probation.
Independent organisations who speak without fear or favour about what they find. Put all of that into the public domain in accessible ways. Use star ratings and other things to tell the public what is good and that works, that makes a big difference. Or whether it is about using transparency to put real time performance data out there so that the public can see for themselves what’s good. Whether that is leagues tables in public services or whether it is putting out there internal staff satisfaction surveys, so everyone can see how happy the people working in every single public sector body.
It is about putting transparency out there in the hands of users and making that a force for good and accountability. But then it is also about individual accountability for staff. Whether that is performance review or things that we have now got like surgeon ratings, so you can see every doctor and how well they do in their clinical outcomes and also see the satisfaction of patients with them. The Department of Health has put that in place nationally already. It is all about putting information out there and having the right bodies or consumer pressure or regulatory pressure to hold people to account.
So I think with contestability you have to think about it in quite a systemic way. So just to recap, that is about giving choice to the right people and making sure that they are well positioned to use that choice: individuals, local areas or government. Then it is about opening up markets and doing that very deliberately and working hard to have more competition, more supply and slightly brigading people together in the best forms.
Then it is about protecting fairness and making sure that the most disadvantaged are helped. Finally it is about making sure that there is lot of information and lots of accountability out there, putting pressure on providers but also empowering those who have the choice to keep making the best decisions.
Read more: UK Open Public Services White Paper