Open Public Services White Paper, TUC Response
The case for public services
Public services are not discretionary commodities. They are public goods that provide benefits to both individual service users and wider society.
The TUC believes that the founding principles of public services, namely universal access, delivery according to need, services free at the point of use, and services delivered for the public good rather than for profit should be at the heart of any model of service delivery.
It is our view that through its democratic accountability, unique funding mechanism and long-term integrated approach, the public sector is best placed to provide public services that meet the criteria above.
The case for public service reform
Public services need to change and develop over time to meet the needs of our changing demography, to respond to new expectations, to deal with local needs and to harness technological and other innovations.
Public resources are finite and under increasing pressure as the economy struggles to recover from the global crash. Providing high quality, flexible services, whilst guaranteeing universal and fair access is a major challenge.
The TUC supports reform that improves delivery and creates services
that are responsive to communities by engaging service users, staff and commissioning authorities through negotiation and agreement within a
public sector framework.
This entails serious investment in the quality of the public service workforce, ensuring the best possible working conditions and training in order to build the expertise and commitment required to carry through genuine innovation and reform by public service workers.
The government's approach
The TUC rejects the individual consumer approach to public services promoted in the White Paper. The government's stated preference that 'power over the public services that people use as individuals should go to those individuals' fails to understand the collective nature and ethos of public services.
The TUC does not support the White Paper's assertion that indiscriminately opening public services to multiple providers is the 'only way' to improve quality. Indeed, we believe that the effect is likely to be the opposite
in practice, with quality driven down by the effects of marketisation
Market-based approaches to public service reform have generally failed to deliver promised improvements, with privatised public services characterised by market concentration, reduced accountability, detrimental impacts on the conditions of public service workers and high profile project failures bailed out by the taxpayer.
The Prime Minister and Deputy Prime Minister's depiction of those who oppose the government's market-based approach, including vast sections of the public and the public services workforce, as 'conspiring to keep our society less free, less fair and less united' is patronising and offensive.
The government's five key principles for public service reform; choice, decentralisation, diversity, fairness and accountability will be compromised by the escalation of privatisation and outsourcing in an open market, where services will be handed to national and multinational private providers with reduced accountability and responsiveness to local need.
The form of personalisation and choice based on the individualist approach of the White Paper potentially leads to inequality. Those who are more informed and empowered and those with greater social capital and power will inevitably have greater leverage over public services than others.
Choice is presented as a panacea, to be pursued at the expense of other priorities that are in fact higher priorities for the general public. Evidence from opinion polling has consistently shown that people prioritise the availability of good quality local services over 'choice'. People want to know that their local public services are good quality and responsive to their needs. Service users value choice about the nature of the service they receive from their provider. But choice between different kinds of provider is not a priority, particularly where this conflicts with other aspects such as security, consistency and
Service users will be faced with a complex range of competing service providers, covering a range of different organisational forms with different forms of accountability. Navigating this landscape will be particularly problematic for service users with complex and multiple needs dependent on a number of different providers, where integrated and holistic remedies and treatment paths are required.
Competition is seen as the best way to increase provider diversity and to achieve service improvement. However, experience suggests that public services markets are highly concentrated, with complex and fragmented supply chains inhibiting flexibility and joined up services. Collaborative approaches to service improvement and the sharing of expertise and best practice will be impeded by the extension of harmful competition within health, education and other public service markets. The extension of contract culture across public services will escalate transaction costs that have been seen to dramatically increase in quasi-market situations such as the health service and rail industry.
The government places overt focus on structural change and the break-up of public sector institutions. There is much less focus on effecting change to the practices of public service workers or the relationships between public service professionals and service users.
Public service quality relies heavily on the professionalism and empowerment of public service workers, as the White Paper acknowledges. However, unlike models of public service reform promoted in Wales and Scotland, the White Paper pays no regard to investment in the skills and capacity of the public sector workforce. No reference is made to partnership with public service professionals. Empowerment of public service workers is referenced only in regard to a flawed programme of mutualisation, which to date has been characterised by top down management restructuring in the face of widespread opposition from public service workers. Existing limited protections of public service workers facing the outsourcing of their jobs is under threat as the government withdraws the two-tier code and reviews Fair Deal of Pensions and TUPE. It is unclear how the fairness principle applies to the public
Accountability will be compromised as the democratic institutions of the state withdraw and are replaced by providers from alternative sectors. Providers from the private and voluntary sector will be outside of the scope of the Freedom of Information Act and lines of accountability will be complex and managed through contract compliance rather than direct accountability to elected representatives and democratic institutions. Democratic accountability is also weakened across many of the new governance structures in place,
e.g. Health and Wellbeing Boards.
The TUC approach to reform
While the government argues that opening up public services to the market is 'the only way to deliver the improvements that people demand', there is a wealth of evidence to suggest that in-house delivery of public services has proved particularly effective in improving quality, meeting user needs and achieving value for money.
There is scope to achieve innovative and sustainable reform within a public sector framework, whereby accountability to democratic institutions is balanced with mechanisms for engaging the community and service users and where the public sector workforce plays a fundamental role in the consultation and negotiation process with commissioners and users of services.
Trade unions can play a key role in facilitating worker engagement, empowering employees to play a role in the decision making process and breaking down institutional resistance and unlocking staff expertise.
Research into the role trade unions can play in public service reform showed that the majority of more than 200 local authority respondents stated that trade unions had played a positive role. The main outcomes and improvements achieved included 'improved efficiency, cost savings, better quality services and/or service redesign and improved staff motivation and morale'.
The TUC model for public service reform incorporates the following elements:
engagement with users to determine public service delivery strategies and implementation plans with a precise focus on identifying what public service users and the wider community want a service to generate
a commitment to deliberation and negotiation in identifying that
a recognition that any conception of public value must involve not just
what a service should deliver but also how it can be delivered in a
the development of public service delivery strategies and implementation plans that uphold the founding principles of public services, namely universal access, delivery according to need, services free at the point of use, and services delivered for the public good rather than for profit
the development of public service delivery strategies and implementation plans that preserve the organisational integrity of public services and which value collaboration and integration over competition and fragmentation
full engagement with public service staff in the determination of strategies and implementation plans
the establishment of robust feedback mechanisms for staff and users during the implementation and delivery phase of any strategy.
The TUC is the voice of Britain at work. We represent 55 affiliated unions with more than six million members. The TUC campaigns for a fair deal at work and for social justice at home and abroad.
This response builds on the TUC's previous submissions to the Modernising Commissioning Green Paper, the call for evidence on public service reform
and the TUC report Civil Society and Public Services: collaboration not competition. This response has been informed by consultation with
TUC-affiliated unions representing workers in the public and not-for-profit sectors through the Public Services Liaison Group (PSLG).
The TUC has serious concerns about the way that the consultation on the White Paper has been conducted. The timescales for consultation on the Green Paper and call for evidence informing the White Paper were both less than half the minimum period recommended by the Code of Practice on Consultation. Furthermore, the current consultation, held over the summer recess, offered limited scope for response through its online format and prescriptive questions that constrained the wider debate.
The TUC believes the White Paper is of critical importance and we have therefore taken the opportunity to set out our thinking in detail, exploring
the full range of issues arising from the government's proposals and
The TUC has serious concerns about the overall policy direction set out in the White Paper and many of the initiatives set out within it. We are also concerned at the lack of evidence provided for the significant assertions in the White Paper. This submission addresses these concerns through a critical analysis of the government's approach and a focus on the alternative approach to public services favoured by the TUC, based on evidence from a wide range of sources.
Structure of the response
The White Paper sets out five key principles guiding the government's public service reforms:
In this response we set out to critically examine the impact of the proposed reforms against each of these principles.
In addition, we include an additional four principles against which we assess the potential impact of the government's reforms:
value for money
valuing and empowering employees
valuing and empowering communities.
In so doing, we will articulate our own approach to reform based on a model that we believe best meets the core criteria of public services:
universal access and promotion of equality
delivery according to need
services for free at the point of use
high quality services
services delivered for public good not for profit
The case for public service reform
In this section we set out to:
outline the key areas of debate around public service delivery and the case for reform.
Making the case for public services
In the White Paper, the government makes clear its commitment to an individual consumer approach to public services: 'Our preference is that power over the public services that people use as individuals should go to those individuals wherever possible. No-one knows an individual's preferences better than they do, and while some people may need extra help to choose the services they want, at the centre of our vision is the belief that people should be trusted to choose the best services for themselves rather than being forced to accept choices determined by others.'
While framed within the language of individual empowerment, this telling passage clearly illustrates the government's failure to understand the nature or ethos of public services.
When launching the Open Public Services White Paper, the Prime Minister compared public services to the purchase of a mobile phone. But unlike mobile phones, public services are not discretionary commodities. They are public goods that provide benefits not only to individual service users but to society as a whole. Public service delivery entails citizens' rights and equality of access and provision. Public services carry a range of social imperatives and expectations clearly differ from those that govern consumer decisions.
Public services, from our National Health Service (NHS) to local authorities do not just provide key services to people but play a fundamental role in social cohesion, binding our communities together, securing long-term investment and support for local economies and providing the building blocks of the welfare state that was created, let it not be forgotten, to address decades of market failure. Years of unaccountable, top down, arbitrary services provided by charities and businesses left large parts of the population without the services, protection and security that the modern welfare state provides. It is this market failure that led to the very creation of the welfare state in the first place, to head back in the direction of private and charitable provision displays a fundamental misunderstanding of the very purpose of public services.
This is why public services and the workers who deliver them continue
to be held in such esteem and trust by the general public, as surveys
continually show. Hostility to privatisation of public services does not necessarily reflect widespread ideological opposition among the British public but an understanding that what makes our public services work is the adherence to core principles, at the forefront of which are universal access, fairness and security.
In the foreword to the White Paper, David Cameron and Nick Clegg describe those who oppose the government's plans to marketise public services, including vast sections of the public and the public services workforce, as 'conspiring to keep our society less free, less fair and less united'. This patronising and offensive labelling disguises what appears to be their ideological conviction, displayed throughout the White Paper, that the market is the only way to improve services.
The TUC also objects to the tone of language applied to public servants in the White Paper and by Ministers elsewhere. The use of caricatures of 'bureaucrats' and 'enemies of enterprise' fails to recognise the dedication, hard work and expertise that exist within the public service workforce and the added value those workers create. From nurses to climate scientists, there is a wealth of specialism and knowledge across the public sector that is a public asset that should be highly valued and regarded with respect. The depiction of adversarial relationships between service users and public sector professionals is misleading and unhelpful.
The TUC believes that the founding principles of public services, namely universal access and the promotion of equality, delivery according to need, services free at the point of use, and high quality services delivered for the public good rather than for profit should be at the heart of any model of service delivery.
It is our view that through its democratic accountability, unique funding mechanism and long term integrated approach, the public sector is best placed to provide public services that meet the
The case for public service reform
Public services need to change and develop over time in order to meet the needs of our changing demography, respond to new expectations, deal with local needs and harness technological and other innovations.
Public resources are finite and under increasing pressure as the economy struggles to recover from the global crash. Providing high quality, flexible services whilst guaranteeing universal and fair access is a major challenge.
But we are concerned that the approach set out by the government is driven not by these priorities but an ideological agenda aimed at expanding a free market for public services.
The TUC believes that this approach will lead to inequality for service users, public resources transferred to the private ownership, increased rewards for shareholders and executive pay while choice and resources will be consolidated in the hands of an empowered minority. It is highly improbable that 'the poorest will be at the front of the queue' as the White Paper nobly asserts.
Market-based approaches to public service reform have generally failed to deliver promised improvements, with privatised public services characterised by market concentration, reduced accountability, detrimental impacts on the conditions of public service workers and high profile project failures bailed out by the taxpayer.
Public service users value access, equity, reliability and a social ethos in the provision of their public services. These values tend to take precedence over provider choice. Service users understand the difference between public services and the private provision of consumer goods and have different expectations
Effective and sustainable improvements in outcomes are achieved through the shared endeavour of citizens and service providers. The TUC supports reform that improves delivery and creates services that are responsive to communities by engaging service users, staff and commissioning authorities through negotiation and agreement within a public sector framework.
This entails serious investment in the quality of the public service workforce, ensuring the best possible working conditions and training in order to build the expertise and commitment required to carry through genuine innovation and reform led by public service workers.
Through its programme of reforms, the government places overt focus on structural change and the break-up of public sector institutions. There is much less focus on effecting change to the practices of public service workers or the relationships between public service professionals and service users. Given the nature of public services, the prioritisation of reforms to structures rather than people and their relationships signals the government's misunderstanding of the challenges facing public services, the means to improving those services
and the social outcomes that might be derived from a greater focus on the interactions between the workforce, service users and their communities.
The government's reform agenda must also be seen within the context of its programme of unprecedented cuts to public spending which undermine any serious attempts to improve service delivery and implement genuine and sustainable reform.
The government's principles
In this section we set out to:
critically analyse each of the five principles for modernising public services, set out in the White Paper
outline the government's stated approach under each principle and assess what impact this might have on service provision, service users and their communities and public service workers.
Principle One: 'Wherever possible we will increase choice'
The White Paper says:
The government correctly identifies that people want to have a greater say
in how public services are run. The White Paper contends that public
services need to be 'responsive to people's demands if they are to retain people's trust.'
It is argued that choice will be increased 'by giving people direct control over the services they use.'
This is to be achieved through a combination of increased access to information, personal budgets, increasing competition between providers and a regulatory focus on choice.
The TUC supports choice for public service users and staff where it adds genuine value, allowing citizens to use services in the way that benefits them the most and allowing staff to work to develop responsive services. For example, we support the use of personal budgets where they are appropriate for the service user and are backed by specialist support and guidance.
What choices do people want?
Experience of the choice agenda in public services to date shows that 'the public are too often simply offered a choice between providers that all offer the same limited service instead of a service that really meets their needs and that they can shape.'
Research by Strathclyde University into public attitudes found that the principle of choice over service provision was supported but that there was widespread antipathy to private enterprise delivering public services, concluding that 'demand for choice is a demand for good (and diverse) publicly provided services.'
Choice is often presented as a panacea, to be pursued at the expense of other priorities that are in fact higher priorities for the general public. Evidence from opinion polling has consistently shown that people prioritise the availability of good quality local services over 'choice'. People want to know that their local public services are good quality and responsive to their needs. Service users value choice about the nature of the service they receive from their provider. But choice between different kinds of provider is not a priority, particularly where this conflicts with other aspects such as simplicity, convenience, access and reliability.
Research by Ipsos/MORI shows that people's key priority for public services
is 'ensuring that a good basic standard of services is available locally'.
Within this basic standard, the two main priorities identified by the public
are for 'fairness' and good 'customer service standards'. While people want, in principle, a greater say in public services, 'local control, personalisation
and choice are seen as less vital as ends in themselves'. According to the research findings, the public regard these principles as important but 'if
they have to make trade-offs then they prioritise core service standards over these principles.'
Fairness was particularly valued as a principle of public service delivery. This was largely defined as a commitment to uniformity in standards. Ipsos/MORI found that: '63 per cent of the public think that standards of public services should be the same everywhere in Britain, with just 20 per cent preferring greater local decision making.'
The TUC shares this view. Whilst choice is welcome in certain circumstances, it should be balanced with the need to ensure the key principles of public service. Reducing public service delivery to individual consumer choice endangers principles of universality and equity.
Is provider choice 'the only way' to improvement?
The White Paper appears to use a very narrow definition of how to empower service users. The focus on choice of providers as the central pillar of empowerment ignores other ways in which people might want to be involved in their public services, for instance by working with the staff team in a service to make it more responsive to users' needs. These ideas are explored further
in the final section of this paper where we set our alternative vision for
The TUC supports choice within a public sector framework, something
that appears to have been largely ignored in the White Paper. Many local authorities have worked hard to offer citizens choices about how they use services, for example:
Oldham Metropolitan Borough Council brought its waste collection services in-house following a record of poor performance by private sector contractors. Among other improvements, the services have been re-designed to focus on the council's vision of 'voice and choice' involving people in the way services are delivered, with waste services increasingly seen as 'mechanisms of engaging with service users and tailoring services, particularly collection schedules'.
Fife Council found that insourcing their buildings and gas servicing and repairs offered greater flexibility resulting in an alternative delivery model that provided 'more flexible appointment times for tenants'.
Redcar and Cleveland Council found that partnership with private contractors had failed to deliver an effective customer relations service. Insourcing enabled cost savings, greater flexibility and integration with other services, such as libraries, to provide a more innovative and responsive service that met people's needs. This has resulted in 95 per cent customer satisfaction rating and a 22 per cent improvement in resolution of problems within 24 hours at ward level.
In response to poor contractor performance and customer complaints,
North Tyneside Council brought its recycling service in-house and
through communication and redesign with employees and service users, there have been massive improvements in availability and use of recycling across the authority. 
Choice versus universality
The form of personalisation and choice outlined in the White Paper potentially leads to inequality. Those who are more informed and empowered, those with greater social capital and those with more power will inevitably have greater leverage over public services than others.
This leads to choice at the expense of consistent standards and equality of access. If a school is failing, parents cannot necessarily exercise the choice to move their children to another school if they lack resources such as time, money and education.
It is right that service users should have a say in the design and delivery of public services. However, as public goods, the provision of public services should be designed in a way that also meets wider social objectives and balances need across local communities and within finite resources. Choice based on the individual consumer can conflict with these imperatives.
Does choice enforce competition?
The TUC has serious concerns that choice can become a means of enforcing competition in public services. It is evident from the White Paper that choice is closely aligned to the diversity of providers that the government seeks to promote. This is particularly evident in the government's proposed reforms of the NHS, where Any Qualified Provider (AQP) will be used to open up NHS services to multiple providers. The Chair of the British Medical Association's GP Committee, Dr Lawrence Buckman, has said that AQP amounts to 'enforced competition'.
Sometimes competition and increasing private involvement can mean that a policy drive towards choice can in fact have the opposite effect. Again, AQP is a useful example, where experts are warning that large private providers will crowd out smaller voluntary sector providers and undercut the NHS. The ultimate outcome could be that other providers are not able to compete with private providers operating loss-leaders until they dominate the market. The result of this pattern could be less choice for patients, rather than more. Although the government has said that price competition in the NHS has been ruled out, the NHS Operating Framework still allows providers to offer services 'at less than the published mandatory tariff price'.
Is choice always an option?
The White Paper does not make clear how the government's choice agenda extends to those functions of government that do not immediately provide customer services to individual members of the public. As Prospect points out in its response to the White Paper: 'on what basis would individuals be able to judge how much environmental protection, R&D, or forensic science to fund? How would they ensure industrial or consumer safety? Further, how would this approach apply to services that are not used by individuals but serve broader societal needs, for example in the justice sector?'
Will enforced competition through the choice agenda entail the break- up of public services in order to make it easier to open up markets? Prospect point out that competition and choice is difficult to apply to complex services which are provided to very long time horizons, such as forestry management or climate science. Applying competition and choice to such services may leave them: 'dissected into distinct contractual packages' with the real danger that 'services could emerge from the commissioning process as much less than the sum of their parts'.
What do personal budgets mean for choice?
The TUC strongly supports mechanisms that enable disabled and elderly people and their carers to live independent lives with dignity and power
over their own lives. In principle, personalisation is an effective route to achieving this.
However, personal budgets and direct payments also raise a number of concerns about the employment of care workers, the quality of service and the potential impact on universal care services.
Where care workers are employed by disabled people under the personalisation policy, there is little clarity or awareness about the full extent of employer responsibilities and liabilities - who has responsibility for sick pay, holiday pay, maternity pay, employers' liability insurance, unfair dismissal and other issues? This leads to concerns about collective representation, pay rates, pension rights and career development.
Given the context of cuts to public spending, there is also a danger of disabled and elderly people being made responsible for making cuts to their own services or for negotiating the impact of cuts on the services they buy with
The use of personal budgets to drive competition between public sector
and other providers raises concerns that private competitors may cherry
pick services or undercut on price leaving existing high quality provision,
for instance in the NHS or local government, at risk of reduced funding
Fluctuating demand will also make workforce planning and resource management within the service more problematic, leading to reductions
in investment in training and professional development as well as
The response to personal budgets from health professionals is particularly instructive, given their experience and understanding of frontline delivery and their commitment to care quality. Surveys in the sector suggest that support for personal choice is high, with many seeing empowerment through choice as forming part of a successful treatment path in itself.
However, there are serious concerns about the lack of evidence linking choice through personal budgeting to improved outcomes, the potential use of NHS funding being diverted to non-evidence based provision from outside of the health service and the capacity of users to make informed choices that best use limited resources. Additional concerns were raised about the increase administration and bureaucracy associated with personal budgets acting as a barrier to personal care.
A survey of 395 practitioners in adult social care found that more than two-thirds of social workers felt that personal budgets had led to an increase in bureaucracy and a similar number were finding less time to work with users to support their self-assessment, a key part of personalisation.
A survey of 645 mental health practitioners found that while there was considerable support for the principle, there was much less enthusiasm for implementation. The survey found that: 'professionals believe their service users are already sufficiently involved in decisions about their health. They are yet to be convinced that practical application of personal health budgets will benefit patient care'.
Among GPs and psychologists there was concern around the 'absence of empirical evidence that patient choice delivered through the use of personal health budgets improves health outcomes'. While among social workers, community psychiatric nurses and occupational therapists there were worries that 'bureaucracy will subsume the benefits' with the 'administration associated with assessment, planning and management could reduce face-to-face therapeutic time with patients'. Again, bureaucracy involved in managing the market will impact negatively on the quality of care.
The TUC believes that personal budgets, rather than direct payments, could be used so that people who want to continue to rely on council-run services have a right to spend their personal budgets that way. Many people, especially elderly people, do not want to become employers and they should have the choice not to. Some unions have also suggested that - possibly except for the minority of disabled people who would want to run everything themselves - disabled people could have a personal budget that could be spent on council services or services designed and managed by the individual disabled person, but with the council being the employer of the people recruited.
As with other areas of public service, it is our view that service user and patient choice can be supported within a public sector framework, based on partnership between public service professionals and users without the need for wasteful and counter-productive marketisation.
Principle Two: 'Public services should be decentralised to the lowest appropriate level'
The White Paper says:
In order to ensure that people are closer to decision-making, 'power should be decentralised to the lowest appropriate level'.
This will be achieved through new local governance structures such as elected police commissioners, the creation of sub-local structures such as neighbourhood forums, local referenda, a limited range of co-commissioning on a sub-local basis, the devolution of some areas of commissioning to local authorities and powers to 'challenge' local service provision.
The range of policy initiatives grouped together through the government's 'localism' agenda potentially undermines local democratic structures as resources and services become outsourced to less accountable private and third sector providers and as other powers are devolved to either unrepresentative sub-local groups or, in many cases, are concentrated further at a national level.
The extension of commissioning and outsourcing could have the reverse effect of localism, by removing many services from local accountability as they become handed over to larger national and multi-national private providers.
The government's 'localism' agenda also provides opportunities for the capture of local civic decision-making by unaccountable and minority vested interests. From the promotion of business interests in neighbourhood forums to the outsourcing of services through the Right to Challenge, the government's prescriptions for decentralisation divert power and resources away from accountable and democratic public control to unaccountable groups, many of which will not be located within or representative of the local community.
For example, the TUC believes that the Community Right to Challenge in the Localism Bill provides inadequate safeguards against narrow interest groups targeting specific services with insufficient regard for the community as a whole or the interest of service users. There are insufficient means to ensure that, through a subsequent procurement process, service delivery would not be handed to non-local or private sector providers. As Voluntary Sector North West fear, this could well: 'provide a superficially accountable mechanism for the dismantling of the local state that simply paves the way for private sector takeover'.
The TUC welcomes the identification of local community assets. However, despite the rhetoric, there are few safeguards within the Community Right to Buy, beyond the moratorium regarded as too limited by most community groups, to stop the transfer of community assets into private hands through sale in an open market.
Proposed reforms will further remove many schools and health services from local and regional governance structures, leaving them ultimately accountable either directly to central government, in the event of failure, or otherwise to executives or senior staff, boards or governing bodies and the interests of corporate or other sponsors.
The situation in education is particularly acute but also confused. The crucial role of local authorities in strategic management, e.g. admissions, and the provision of a range of support services to all schools, e.g. SEN pupils, will be undermined as resources are diverted to the increasing numbers of academies and free schools opting out.
As an increasing number of higher performing schools move to academy status with the incentive of receiving direct funding to pay for support services, local authorities will be left with a smaller funding pot to provide support services for those schools in the locality with disproportionately greater needs. As such, not only is local accountability and strategic management weakened but loss of funding threatens to further undermine the ability of the local authority to respond to local need.
What is more, the Secretary of State is acquiring greater powers to direct local authorities to close schools and open all new schools as free schools and academies, increasing central government's management of schooling at a local level. This confusion between localist rhetoric and centralising powers is also evident in the implementation of the new National Curriculum which free schools will be exempt from.
Central government directions issued to local authorities on the provision of council newssheets, festive celebrations and bin collection indicates that this confusion is not confined to the Department for Education alone.
Additional powers for local authorities will be undermined by savage cuts imposed on their budgets. The principle of a 'general power of competence' for local authorities is one which the TUC supports. However, coming at the same time as unprecedented cuts to local authority budgets, the benefit of the new powers will not be felt by local authorities who might struggle even to conduct their statutory functions. As the Chair of the Local Government
Association (LGA) has said, the scale of the cuts, frontloaded into
the first year of the Spending Review settlement period, 'stifles opportunities for innovation'.
Principle Three: 'Public services should be open to a range of providers'
The White Paper says:
The government contends that 'the only way' to improve public services is to ensure that 'wherever possible, public services should be open to a range of providers competing to offer a better service'.
The White Paper states that 'services can be provided by the public sector, voluntary and community sector or the private sector'.
The market for public services will be stimulated through 'breaking down barriers, whether financial or regulatory', ensuring 'a level playing field' between providers from different sectors and enabling new providers to 'come in and challenge services'.
The TUC does not support the White Paper's assertion that indiscriminately opening public services to multiple providers is the only way to improve quality. Indeed, we believe that the effect is likely to be the opposite in practice, with quality driven down by the effects of marketisation and competition. The government's focus on a diversity of providers ignores the unique ability of the public sector to provide services in line with the key priorities of equity, access, quality and accountability.
The White Paper states that the government is 'breaking down barriers, whether regulatory or financial, so that a diverse range of providers
can deliver the public services people want'. However, surveys
show that the general public is largely hostile to the role of private enterprise in delivering public service and ambivalent about the participation of charities.
Do people want a greater range of providers?
Research shows while choice as a principle was widely supported respondents rejected private models of public service delivery. 57 per cent oppose
business running hospitals (compared to 22 per cent supporting), 55 per
cent opposed businesses running schools (compared to 19 per cent supporting) and 43 per cent opposing businesses delivering social care (compared to
31 per cent supporting). Respondents were equally divided over the role of charities in education and hospitals but largely supported charity provision in social care. 
A YouGov survey found that 73 per cent of voters disagreed or strongly disagreed with more competition within the NHS, while another survey found that 89 per cent of the public thought that 'public services should be run by the government or local authorities, rather than by private companies'. 
Research by IPPR and PriceWaterhouseCoopers (PWC) found that
94 per cent believe that national or local government or public service providers should be mainly responsible for providing health care, 93 per cent believe that different state agencies should be responsible for running local schools and 93 per cent believe that national or local government or public professionals should be responsible for keeping the streets safe.
Does diversity mean privatisation?
Alternative providers, particularly from the charity, community and voluntary sector can play a key role in plugging gaps and providing niche services, often to excluded and hard to reach client groups. These services should be commissioned in a way that augments public service delivery and encourages partnership between organisations and the communities they serve. But the fundamental market approach promoted by the government will have the opposite effect, outsourcing public services to a market in which third sector organisations will compete at a disadvantage with large private operators who already dominate the market.
This is particularly true when economies of scale dictate that greater efficiencies can be derived when a number of competing enterprises are brought together under a smaller number of 'super-providers'. What is more, the private sector's ability to ability to undercut smaller organisations and take an initial loss to gain a market leading position provides significant competitive advantage over those third sector organisations bidding for contracts.
Market-based solutions have negative impacts on diversity, as larger organisations, particularly from the private sector, can use their access to finance, economies of scale and capacity to tender across regions to dominate markets. Evidence shows that across the EU, liberalised public services are characterised by the transfer of ownership from public to private but with very few new providers.
The three year PIQUE research project looking at liberalised public service markets in four sectors across six countries in the EU concluded that liberalisation 'entailed a shift from a full or predominantly public to a predominantly private ownership structure on the market'. However they also found that the liberalisation process was 'more successful with regard to changing ownership structures than creating competitive market structures'.
The Audit Commission has highlighted the problems with public service markets, pointing out that: 'competition does not always work well even in private sector markets and there are additional complexities for public services' including 'lack of diversity, in supply, caused by monopoly, high market concentration among suppliers or geographical remoteness'.
This is increasingly the case in the UK where, according to research by UNISON: 'the public services industry is being controlled by ever fewer businesses, whose influence is ever greater'.
High transaction costs, economies of scale, mergers and acquisitions and incumbency advantage have been factors in the high levels of concentration seen in UK public service markets.
The Office for Fair Trading (OFT) has described how competition is weakened 'if the incumbent is in a privileged position when it comes to re-tendering of a particular contract' and when 'repeated selection of the same firm increases incumbency advantages'. What is more, the OFT points out that anticipation of such an outcome means that these suppliers: 'have an incentive to reduce their price when a new requirement is first put out to tender in the expectation of little competition and higher profits in the future'.
The growth of public sector procurement and the move to larger contracts
over longer periods of time has stimulated growth in mergers and acquisitions. UNISON research has shown high levels of concentration in markets for facilities management, social care, waste management, healthcare, leisure
The detrimental impacts of concentration can be particularly felt in the housing sector, as housing associations have gone through a comprehensive programme of restructuring in recent years, with some the products of the mergers of as many as five mid-tier associations, including those set up to
serve a particularly local purpose. This has resulted in some housing associations: 'losing touch with their founding ethos, their membership, their geographical focus'.
Another problem identified by UNISON's research is that: 'the buying and selling of public infrastructure assets and service concessions, which most notably characterises private equity involvement in public services', means that 'public bodies can have no certainty about which organisations they are working with or their long term objectives'.
Much of the proposed new reforms will consolidate market concentration as they favour the larger, mainly private sector, operators. Shared services, payment by results and personal budgets will necessitate providers with economies of scale and access to capital and cash flow, leaving civil society organisations and smaller operators at a disadvantage.
For example, in assessing the potential for introducing payment by results in offender rehabilitation programmes, Centre Forum found that: 'The working capital requirements of a PbR system will cause problems for Small and Medium Sized Enterprises (SMEs) and the third sector in bidding for contracts. This problem is not necessarily alleviated by use of large prime contractors, who will still seek to pass risk and the working capital requirements down to the SMEs and the voluntary sector providers.'
The government's aim to increase access for smaller providers is inconsistent, with calls for greater efficiencies in public procurement. The Secretary of State for Communities and Local Government Eric Pickles has exhorted local authorities to 'join forces and bulk buy', which would work against the stated aim of opening up the market to smaller providers.
Fears of corporate 'entryism' are also heightened by increasing evidence of Community and Voluntary Organisations and private sector operators bidding for public service contracts in partnership. Remploy and Balfour Beatty's partnership on the Work Programme and Nacro's joint bid with Group 4 Securicor to run prison services are two examples of the blurring of
boundaries between charity and corporate interests that both hinders the role of charities and increases the use of private for-profit companies in the delivery of public services.
This approach is also being actively promoted by the government. Minister for the Cabinet Office, Francis Maude, has encouraged employee-owned mutuals to undertake 'joint ventures' with 'partner organisations' such as management or IT consultants and private capital in order to provide
This has also been the case with social enterprises. With no legal definition, a number of organisational structures available and a variety of interpretations the concept of social enterprise is particularly open to flexible use by the private sector.
As one respondent to a survey by the Centre for Public Policy and Health at the University of Durham put it: 'We have to acknowledge that professional marketeers in the private sector are pretty good at their job, and that if social enterprise is the future, then a huge amount of private companies are going to become social enterprises, so they're part of the future. And I am concerned that the concept is so flimsy that there's no way of keeping out the imposters as it were.'
In a report commissioned by the Department of Trade and Industry's (DTI) Social Enterprise Unit, the opportunities afforded to private sector businesses through partnerships with social enterprise are made clear. Benefits that accrue to the private sector include the way that 'social enterprises can help commercial business partners develop their markets, especially in doing business with the public sector and in gaining access to local communities' and how 'business leaders can use their social enterprise partner to act like a 'translator' - allowing them to communicate effectively with hard-to-reach audiences, particularly at a local community level.'
One company, Accenture, found that the benefit of partnership
with the Community Action Network was evident 'in the way it has been able to use CAN to enhance its chances of winning a public sector contract'. 
The case of Ealing Community Transport (ECT) is instructive. ECT was one of the largest social enterprises in the UK, evolving from providing community transport, into a business with a multi-million pound turnover and interests in a range of trading sectors, including waste management, rail and healthcare recycling which grew to account for 80 per cent of its turnover. In June 2008, ECT Recycling was bought by the for-profit May Gurney construction company. Other divisions of ECT were disposed of, or separated from the parent group, leaving ECT to focus on its core transport operations. This restructuring thus allowed assets held for the interest of the community to be transferred into private hands, despite the fact that ECT was registered as a community interest company.
A report from the Third Sector Research Centre (TSRC) suggests that the vast majority of the 62,000 organisations designated as social enterprises under the definition used by the Office for Civil Society lack an asset lock preventing the sale of the business to a profit-making company. This means that they would not qualify for the 'Social Enterprise Mark', the quality mark promoted by the Social Enterprise Coalition that shows a business is a social enterprise.
This does little to assuage concerns about the potential for the transfer of public assets and services into private companies under the government's
Early indications from this government is that outsourcing in the health service and through the government's Work Programme leads to private sector organisations taking the lion's share of the market.
Of the 18 preferred bidders for 40 prime contracts in the Work Programme, the voluntary sector was awarded two. The public sector got one, and 15 went to the private sector, including SERCO, A4E and G4S. The two voluntary sector consortia that won bids were effectively voluntary/private partnerships.
When NHS Surrey came to award preferred bidder status for the delivery of its community health care services, the contract was awarded to private provider, Assura Medical Ltd, 75 per cent owned by the Virgin Group and not too much lauded NHS social enterprise spin out and 'Big Society Award' winner, Central
What does the market mean for civil society?
Increasing the role of community and voluntary organisations in mainstream public service delivery potentially inhibits their important role in providing independent advocacy and campaigning in response to clients, as groups increasingly tailor their activity to meet contract requirements. There is a real danger that this leads to mission drift and compromised independence.
The process of service commissioning and procurement has had a distorting effect on the voluntary sector for some time. This process had intensified as competition grows for shrinking resources.
In a working paper of July 2010, the TSRC identified six key impacts on the shape and direction of third sector organisations:
loss of innovation
worsening employment conditions
deteriorating inter-organisational relationships
polarisation within the sector.
Mission drift and compromised independence are significant risks. A survey by the Charity Commission found that only a quarter of charities providing public services agreed that they are free to make decisions without pressure to conform to the wishes of funders, compared to nearly three fifths of charities that did not deliver public services. This led the Commission to conclude that: 'charities that deliver public services are significantly less likely to agree that their charitable activities are determined by their mission rather than by
This dilemma is summed up in a report commissioned by the Institute for Voluntary Action Research (IVAR) where the authors found that, although evidence was variable, overall the impact of public service delivery was that: 'Some organisations have been drawn by the availability of funding away from community development and community responsiveness towards delivery of public services and services designed externally rather than in direct response to local need ... in making this shift, their potential to act as agents
of community change or as advocate for local people has been diminished.'
The problem is intensified for smaller, niche organisations that often struggle to engage with the commissioning process. Many of these niche operators will be dependent on other organisations sub-contracting their services, many of which will be private sector or larger charity organisations imposing tougher commissioning regimes.
The National Coalition for Independent Action (NCIA) asserts that: 'The primary role and purpose of voluntary organisations in civil society is to strengthen our democracy through diversity and pluralism, by providing a haven and test-bed for new thinking, for community action and ways to fill gaps in services and support to people, while maintain a platform for social action. Within this mix, the role of the sector in holding to account state agencies and interests through advocacy, campaigning and dissent, where needed, remains crucial.'
Arguably, much of this is increasingly being lost through the diminishing capacity of the sector to deliver due to a combination of funding cuts and an increasing dependence on contracts for public service delivery.
What do the reforms mean for joined up services?
Reforms outlined in the White Paper will lead to a fragmented patchwork of service providers. Already in education there is a confusing array of different models with complex lines of accountability that are proving increasingly difficult for citizens to navigate.
There is particular potential for problems in dealing with multiple and complex needs, where clear strategic direction and oversight is needed to join up services and ensured that the service users affected are properly supported.
Fragmentation will prevent effective collaboration and partnership between service providers within and across local authority boundaries. As increasing numbers of providers opt out of integrated public sector provision, such as with free schools and academies leaving local authority support, there is no framework for collaboration or sharing resources, expertise or best practice. In a competitive market, it is not in providers' interests to collaborate.
Fragmentation in some areas of public service can lead to significant safety and other risks to the public.
The government's proposals to abolish the role of schools in linking in with local strategies designed to improve the wider well-being of pupils (e.g. the links with Children's Trusts) provoked widespread criticism that this would weaken the duties of schools in promoting a more holistic approach to education and health at the local level. These duties were originally introduced as a result of the Laming Report following the death of Victoria Climbie. There was a very real concern that these changes would sacrifice the wellbeing and welfare of children and young people in the government's attempts to give greater autonomy and freedom to individual schools. We therefore welcome the fact that the government has responded to pressure from unions and others and reversed its decision, removing this stipulation from the Bill.
Evidence from Denmark where commissioning and delivery of fire services has already been decoupled and often used as an example for the UK to follow shows that fire fatalities are higher than in the UK. The statistics for fire deaths clearly indicate that in Denmark, there are 1.38 deaths per 100,000 persons, compared to the UK figure, which is 0.82 per 100,000 persons. This means that in the country where commissioning and delivery of fire and rescue services have already been separated, you are more significantly more likely to die in a fire than you are in the UK.
What do mutuals mean for public workers and public services?
The White Paper includes a significant focus on the development of mutuals in public services. The TUC welcomes a greater role for employees and citizens in decision-making and the design and implementation of public services. However, driving out more public service functions to the market through public service mutuals creates further fragmentation, leaves mutuals and service vulnerable to competition and takeover by private sector competitors and potentially worsens working conditions and job security for public
The White Paper states that the government is: 'giving public sector staff new rights to form new mutuals and bid to take over the services they deliver, empowering millions of public sector staff to become their own bosses'. It is claimed that this will 'free up the often untapped entrepreneurial and innovative drive of public sector professionals' therefore 'driving up quality'. Avoiding prescriptive models, the government states that mutual structures will be driven by the 'users of services and employees' but will include 'wholly employee-led, multi-stakeholder and mutual joint venture models.'
The TUC supports greater moves to empower public service workers and forge closer relationships between service users and public sector professionals. However, we maintain a number of concerns about the mutuals agenda in terms of its aims, its practical implementation and its potential consequences for public services.
We have heard on numerous occasions that mutuals improve performance management, encourage innovation, increase productivity and reduce absenteeism. While these are still the early stages in the mutuals roll out, it is worth tempering these claims until there is a more robust evidence base.
In looking at the evidence of employee-led spin outs so far, the Public Administration Select Committee (PASC) reported that it was 'unable to corroborate' these claims and that 'too much of the discussion is still hypothetical and anecdotal'. The TSRC report on social enterprise spin-outs from the NHS found an 'absence of a convincing body of evidence that such organisations can consistently deliver the expected innovation and efficiencies in health provision', the Department of Health's (DOH) own findings are that 'the benefits of the social enterprise model are not always clear, not only to potential commissioners, but also to staff and stakeholders'. The most systematic review of the evidence base for the effects of mutuals and co-ops delivering public services, undertaken by the Association of Public Service Excellence (APSE), found 'a paucity of evidence informing the current claims over the performance of co-ops and mutuals in delivering public services'.
While it may be the case that benefits can accrue, particularly when
a number of conditions are met, assertions made within the White Paper are clearly based on aspiration and speculation rather than firm evidence.
Another important point to consider is the relationship between employee-ownership and employee-engagement or participation.
The Employee Ownership Association (EOA) states that evidence suggests that the: 'clearest benefit from employee ownership is when employee-owners have more say in the running of the company. What is less clear is the extent to which employee ownership in