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

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How Theresa May laid a trap for herself on the immigration target

When Home Secretary, she insisted on keeping foreign students in the figures – causing a headache for herself today.

When Home Secretary, Theresa May insisted that foreign students should continue to be counted in the overall immigration figures. Some cabinet colleagues, including then Business Secretary Vince Cable and Chancellor George Osborne wanted to reverse this. It was economically illiterate. Current ministers, like the Foreign Secretary Boris Johnson, Chancellor Philip Hammond and Home Secretary Amber Rudd, also want foreign students exempted from the total.

David Cameron’s government aimed to cut immigration figures – including overseas students in that aim meant trying to limit one of the UK’s crucial financial resources. They are worth £25bn to the UK economy, and their fees make up 14 per cent of total university income. And the impact is not just financial – welcoming foreign students is diplomatically and culturally key to Britain’s reputation and its relationship with the rest of the world too. Even more important now Brexit is on its way.

But they stayed in the figures – a situation that, along with counterproductive visa restrictions also introduced by May’s old department, put a lot of foreign students off studying here. For example, there has been a 44 per cent decrease in the number of Indian students coming to Britain to study in the last five years.

Now May’s stubbornness on the migration figures appears to have caught up with her. The Times has revealed that the Prime Minister is ready to “soften her longstanding opposition to taking foreign students out of immigration totals”. It reports that she will offer to change the way the numbers are calculated.

Why the u-turn? No 10 says the concession is to ensure the Higher and Research Bill, key university legislation, can pass due to a Lords amendment urging the government not to count students as “long-term migrants” for “public policy purposes”.

But it will also be a factor in May’s manifesto pledge (and continuation of Cameron’s promise) to cut immigration to the “tens of thousands”. Until today, ministers had been unclear about whether this would be in the manifesto.

Now her u-turn on student figures is being seized upon by opposition parties as “massaging” the migration figures to meet her target. An accusation for which May only has herself, and her steadfast politicising of immigration, to blame.

Anoosh Chakelian is senior writer at the New Statesman.

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