Outsourcing scandals show why we need a new model of public service reform

To deal with complex problems, we need a complete reconfiguration of public services, with a shift from the 'delivery state' to the 'relational state'.

Today’s 'offer' by G4S to reimburse the public purse by £24.1m following revelations of overcharging is merely the latest turn in a series of outsourcing controversies that have shaken public confidence in the government’s public service reform agenda. This comes on top of the widely catalogued failures of the Work Programme and growing concern about the rushed privatisation of the probation service.  While each of these problems has its own independent sources, they are in fact signs of a whole public service reform paradigm in retreat.

In part the problem is a lack of openness and it is right, as Sadiq Khan has argued, that all those providing public services should be subject to the same transparency requirements. But the problem goes much deeper than this.

For 30 years, governments have deployed so-called 'new public management' methods to try to improve public services. These methods have taken two forms: bureaucratic targets imposed from the centre and external competition to incentivise improvement. The Work Programme and the probation reforms involve a combination of these 'delivery state' approaches. In both cases a silo of state provision is contracted out to (mainly) private providers who are paid if they achieve certain outcomes. My argument in a forthcoming IPPR paper is that such approaches are ill suited to tackling the kind of problems they aim to address.

Long term unemployment and reoffending are examples of ‘complex problems’. The causes of such problems are not like billiard balls, which if hit at the right angle will with certainty go into the right pocket. Nor can such problems be tackled within departmental or contractural silos: their causes are multiple and interconnected across different domains.  So, for example, supporting those who are sick or disabled into work following long periods of unemployment requires a holistic and personalised approach that attends to all of the barriers to work, including physical and mental health problems, a lack of confidence, poor interpersonal skills and a lack of qualifications.  

The Work Programme is by contrast a narrow job-focused programme and those providing it do not control most of the factors that prevent many people from accessing work.  This is why the private companies running the programme tend to 'cream' the easy candidates and 'park' the difficult cases: just 6.9 per cent of those referred in receipt of Employment Support Allowance were found work in the latest period against a 17 per cent target.  The probation reforms, based on the same model and dealing with similarly complex problems, are likely to suffer the same fate. 

The challenge of complexity extends beyond reoffending and long term unemployment: there is a growing range of complex problems taking up a rising level of public expenditure.  These include the epidemic of mental illness, the army of young people not in education employment and training and the rise of chronic health conditions. Bureaucratic and market reforms have been effective at dealing with problems that have a small number of linear relationships and that can be dealt with within the bounds of a particular service. So, for example, contracting out refuse services has often improved efficiency and outcomes, and targets have been very successful at reducing hospital waits.  But these 'new public management' tools are ill suited to tackling complex problems.

To deal with complexity we need a complete reconfiguration of public services, which means shifting from the ‘delivery state’ to the 'relational state'. This shift can be summarized in two words: connect and deepen.  First, services which are aimed at tackling complex problems need to be integrated much more at the local level so that they can develop coordinated approaches across different services. This means devolving pooled budgets in areas like welfare to work and probation to local authorities and city regions and holding them to account for the overall outcomes achieved. Rather than looking to the Work Programme for a model of how to reform the probation service the government would have been better advised to look at the successful experience of Youth Offending Teams.  These are based in local authorities and bring together mixed teams of professionals to take a holistic approach to reducing youth offending.

Second, tackling these problems requires deep relationships in place of shallow transactions: deep relationships between citizens and professionals who can work together and get to know one another over time, and deep relationships between citizens who together can be empowered to solve problems for themselves.

The coalition’s reform agenda is derivative of the kind of thinking that has dominated public service debates since the 1980s.  A more complex world demands a new approach.

Rick Muir is Associate Director for Public Service Reform at IPPR.  His new paper Many to Many. How the relational state will transform public services will be published in January.

Justice Secretary Chris Grayling speaks during the Conservative conference in Manchester. Photograph: Getty Images.

Rick Muir is director of the Police Foundation

Felipe Araujo
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Hull revisited: What happens when a Brexit stronghold becomes City of Culture?

We report from Hull, to find out if you can replace the kind of nostalgia that led to a Leave vote with cultural investment.

At 75 metres long, the offshore wind turbine blade erected across Queen Victoria Square, in the heart of Hull, is a sculpture intended to mark a new chapter in the city’s history. For the next 12 months, Hull, a city of more than a quarter of a million people in the northeast of England, will be the UK’s City of Culture.

The 28-tonne blade hails from the local Siemens plant. The German technology company employs around 1,000 people in the area, making it Hull’s biggest single employer.

Seen up close in this context – laid dormant in the middle of a town square instead of spinning up in the air generating energy – the structure is meant to remind passersby of a giant sea creature. It is also, I’m told, an allusion to Hull’s rich maritime history.


All photos: Felipe Araujo

Nostalgia is a big thing in this part of the country. At one point, Hull was the UK’s third largest port but technology and privatisation drastically changed that. The battle over cod fishing with Iceland in the waters of the North Sea 40 years ago has also dealt a major blow to a region with a long and proud trawling tradition.

People here still talk about a bygone era when the fishing industry provided jobs for everyone and there was enough money to go around.

Fast forward to 2017, and the country’s new capital of culture is the same city that voted 67 per cent in favour of leaving the EU last June. Its new-found prestige, it seems, is not enough to erase years of neglect by a political class “too busy for commoners like us”, as one resident puts it.

“More than a message to Brussels, it [the Brexit vote] was a message to Westminster,” Paul Leeson-Taylor, a filmmaker born and bred in Hull, tells me. “For the first time in a long time people in Hull felt like they had the chance to change something, and they took it.”

But while speaking to people on the high street and hanging out with locals at the Community Boxing Club in Orchard Park, one of the city’s most deprived areas, there is one word that consistently popped up in conversation – more than any specific policy from Westminster or the much-hated rules “dictated” by Brussels. Foreigners.

According to official figures, Hull’s population is 89.1 per cent white British. Still, immigration is big on people’s minds here.

During my two-day stay in the city, I find myself being the only black person in most places I visit – I’m certainly the only black guy at the boxing club. So when someone begins a sentence with “I’m not racist but…”, I know a tirade on immigrants is about to ensue.

“There are just too many of them,” Nick Beach, an estate agent whose Polish clientele is a big part of his business, tells me as he is about to teach a boxing class to local children. Beach was born in Shepherd’s Bush, in West London, but has been living in Hull for the last 20 years.

“When I go down there these days and go into Westfield shopping centre, it is very rare you get an English person serving you now,” he says. “I just find it disappointing that you go into your capital city and you are a minority there.”

These are the much-discussed “left behind”, a white working-class community that has gained particular prominence in a time of Brexit and Donald Trump. Under economic pressure and facing social change, they want to have their say in running a country they claim to no longer recognise.

For Professor Simon Lee, a senior politics lecturer at the University of Hull, immigration is only a superficial layer when it comes to explaining the resentment I witness here. For him, the loss of the empire 70 years ago is still something that as a country Britain hasn’t come to terms with.

“The reason for us to be together as a United Kingdom has gone, so what is the project?”

As destiny would have it, a foreign company will now play a major role on Hull’s economic future, at least in the short term. In the wake of the Brexit vote, there were widespread fears Siemens would pull out of the region and take its factory elsewhere. With the massive blade looming large in the background, Jason Speedy, director of the blade factory in Hull, assures me that isn’t the case.

“The Brexit decision has made no difference. We have made our investment decision, so Siemens, together with the Association of British Ports, has put in £310m. It’s all full steam ahead.”

As Hull becomes the country’s cultural hub for the next few months, the hope is that its residents stop looking back and start looking forward.

For Professor Lee, though, until there is a complete change in the power structures that run the country, the north-south divide will remain – with or without the EU. “The way you kill nostalgia is to have something new,” he said. “The reason why people here are nostalgic is because there is nothing to replace it with.”

Felipe Araujo is a freelance journalist based in London. He writes about race, culture and sports. He covered the Rio Olympics and Paralympics on the ground for the New Statesman. He tweets @felipethejourno.