The road to reform

For the Big Society to work, there needs to be a clearer public understanding about how local and central government will collaborate to make services more efficient. Andrew Adonis calls for less rhetoric and more communication

Government must know its own limits and become more strategic. It must step up its efforts to cut unnecessary targets, strip out waste and devolve responsibility to communities, councils and local service providers... And above all, government must embrace a new culture that celebrates local innovation and ends once and for all the view that the man or woman in Whitehall always knows best.”

This is not David Cameron’s vision of the Big Society; it is Gordon Brown explaining how we can achieve “world-class” public services in 2008. Before that, Tony Blair was pushing for greater choice and contestability in public services as early as 2001. Blair and Brown were equally keen on the third sector. Indeed, Blair established an office of the third sector within the Cabinet Office, under Ed Miliband as minister.

Many of the strands within David Cameron’s Big Society have been a familiar part of the public-service reform narrative for many years. Some of these themes, such as radical devolution and the role of the voluntary and charitable sectors, are stronger now. As the volume has increased, however, many have found the melody less distinct, complaining of a lack of clarity about what the Big Society means in practice.

So are we really now on the brink of a revolution or can we expect the Big Society to fade quietly into the background as public services stubbornly resist all reform? If a revolution is on the cards, what exactly will that mean for government, public services and society as a whole?

Change is coming

Three facts suggest that the Big Society will herald change in public services. First, elements of the Big Society had already been put into practice under the previous government and long before the financial crisis took place. As schools minister under Blair and Brown, I was responsible for the academies programme, one of the most notable advances for third-sector providers of major public services. I enhanced the role of school promoters and managers drawn from the charitable and voluntary sectors, including philanthropists with a successful business background, churches, existing successful schools and universities, and a range of education and children’s charities. They became responsible for establishing and running new state-funded secondaries to replace failing schools or provide entirely new ones in areas of deprivation. The pioneering Teach First charity brought about a similar revolution in the supply of new teachers, recruiting them direct from university and placing, training and supporting them on an independent basis while the state paid their basic salary.

The coalition intends to push further in the same direction, in education and across the terrain of public and local services. In August, Francis Maude announced the first wave of 12 Pathfinder mutuals to be run by entrepreneurial public-sector staff who want to take control of their services. In Swindon, for example, staff are planning to integrate community health and adult social services into a cooperative social enterprise. By bringing these services together, we can treat health and social needs together, with the potential to focus on prevention as well as treatment.

Second, the fiscal crisis demands revolution rather than evolution across the entire public sector. There is a fear that central and local government will seek to transfer services to voluntary providers to save money. Far more likely, however, is that the redesign of services to promote efficiency and productivity will offer new, welcome openings for voluntary-sector providers. For example, local libraries and sub post offices could offer attractive opportunities for new forms of partnership with charities and voluntary-sector organisations.

Third, the coalition has dismantled many aspects of Labour’s public-service reform machinery, clearing the path for new approaches. Targets, Public Service Agreements and Comprehensive Area Assessments have been discarded, and associated organisations such as the Prime Minister’s Delivery Unit and Audit Commission scrapped. This could allow greater flexibility in the design and delivery of local services, giving local authorities greater freedom to set priorities. For example, there will be no more ringfencing of local government revenue from 2011–12 onwards, except for simplified schools grants and a new public-health grant. From April, 16 areas covering 31 councils and their partners will be put in charge of community budgets that will pool various strands of Whitehall funding into a single ‘local bank account’ for tackling social problems related to families with complex needs.

Polling data suggests that the Big Society vision is not clear, or at least not clear enough to know what the specific implications are likely to be. This must be addressed, as millions of people will need to change the way they think and how they approach problems if the Big Society vision is to become a reality.

The traditional view of public services assumes the state will be the primary provider of people, assets and funding. For example, the state will train and employ doctors and nurses, build and maintain the hospital in which they work and cover the running costs. The Big Society challenges us to think far more broadly about the sources of people, assets and funding in the provision of public services. For example, the people delivering public services may not be state employees, but could be employed by a charity or voluntary group, or simply work for themselves. Public assets, such as parks and community centres, could be handed over to community groups, while non-state assets such as church halls could be brought into use. Funding could be drawn from
a variety of sources, including public money, charitable donations and private finance.

There is a lot of debate about whether the government should be more transparent about what it hopes will be achieved through innovative combinations of people, funding and assets. Some argue that, in order for the Big Society to be truly owned at the local level, the government should not comment on what success looks like. Yet, without the government being especially dogmatic, an end vision is coming into focus. By freeing local areas from the pressures of overly prescriptive central government, the coalition hopes to achieve two things. First, that local individuals and groups will feel ‘empowered’ to provide public services that respond to local preferences and needs. Second, that local services will be more accountable to the populations they serve.

The breadth of Big Society work already being undertaken should not be underestimated. Learning for the 4th Age (L4E) and Vision Housing are just two examples of the array of different types of organisation that could tackle local social problems in the Big Society. L4E is a voluntary organisation that, by combining £60,000 of seed funding from the Social Enterprise Investment Fund with voluntary donations, supports a network of volunteers. The volunteers teach elderly care-home residents a range of topics, helping to increase their independence and potentially saving the public sector money on social and acute care services. Vision Housing is a social enterprise that, through a government contract with the London Probation Service and donor funding, employs ex-offenders to provide the peer-to-peer support that offenders need to make the transition into society.

Groups are already bringing together new combinations of resources to increase the accountability of civic institutions. The social enterprise Patient Opinion receives annual subscriptions from hospitals and private or voluntary organisations that want feedback on their services. The success of Patient Opinion will depend on its employees innovating in a competitive environment, and on existing health-institution employees adapting their work in light of the customer feedback they receive. Through Patient Opinion, employees from the state and the private sectors are coming together to make services more accountable.

The challenges ahead

So, the Big Society vision is beginning to crystallise and we can see some examples of where it is becoming a reality. The question now is what the government needs to do to support its expansion. I believe there are four areas to focus on.

First, the government needs to continue to communicate the opportunities that the Big Society offers the public. Without clear public understanding of the task ahead, action is unlikely to occur on the scale envisaged. David Cameron used his speech to the Conservative party conference to stress that “the spirit we need is the Big Society spirit” and to explain why he felt that “its time has come”. This rhetoric now needs to be refined into an explanation of specific opportunities for Big Society action, sector by sector. The Big Society vision will have been successfully communicated if local players know what opportunities they have to become involved.

The vision also needs to be communicated in a joined-up way across central government. Otherwise, it may become too strongly identified with a single department and, in turn, other departments may not make the agenda relevant to their own policy areas. In addition, there is a risk that each government department develops its own version of the Big Society, with inconsistencies emerging when people seek to piece together the vision at the local community level.

Historically, cross-Whitehall change programmes have been managed from the centre of government, with clear prime ministerial backing. While the spirit of the Big Society is at odds with top-down government, the coalition should consider whether it has the necessary cross-Whitehall governance structures in place to develop a coordinated vision. The Office for Civil Society is in a good place to take up this cause.

Second, central government needs to define the rules of the Big Society game. As power is devolved, the inevitable consequence will be a service landscape that looks different from place to place. Yet there is currently limited public acceptance of variation in service provision depending on postcode. To relieve this tension, central government needs to be clear about the level of variation it will tolerate and define the minimum standards to which all providers must adhere. It will also need to decide on an inspection and regulation system that allows performance to be assessed against these standards while not stifling local innovation.  

As Francis Maude has highlighted, given the experimental nature of the Big Society, action may appear ‘chaotic and disorderly’ and at times things will go wrong. Under pressure from the media and public expectation, central government’s default position is often to take action in cases of failure. Yet if local players are to bring together people, funding and assets, they will also need to take responsibility for their actions. For this to work, the government needs to clarify the failure regime. In particular, what will central government take responsibility for, and what remains the responsibility of local organisations? Clearer rules about minimum standards, inspection and regulation, and what to do in cases of failure, will lay the foundations of the Big Society.

Third, the government needs to support local collaboration and innovation. In many cases, the best outcome for an area can be achieved if organisations with different skills and capabilities work collaboratively to produce innovative solutions to local problems. In the context of rapidly shrinking budgets, it is becoming increasingly important to prevent gaps in services from worsening. Yet one of the hardest administrative nuts to crack is how to make local collaboration work, given the disparate nature of local governance and budgetary arrangements.

For this to be a success, credible local leaders – perhaps more elected mayors? – need to take responsibility for brokering deals between different local people, funding and assets. This role requires more freedom to use public assets, break down existing budget lines and combine resources across sectors. These brokers could then use resources to commission a range of providers to deliver locally determined outcomes, with payments linked where appropriate to the achievement of those outcomes. This may result in a diversification of the delivery landscape, with new deals being struck between government, community groups and private organisations with expertise in addressing local needs.

If we are to foster innovative solutions to local problems, a different approach to commissioning may be needed. Currently, the amount of risk assurance, regulation and paperwork involved in commissioning can place a heavy resource burden on small organisations bidding for contracts. Without signs that the government is taking steps to make it easier for small and medium-sized organisations to gain access to deal-making opportunities, there is limited incentive for them to try to get involved.

The government also needs to create opportunities for non-government funders to supply private risk-based financing that helps drive innovation. Historically, private investors have been reluctant to invest in organisations delivering public services, put off by a perception of weak business models and uncertain cashflows. Outcome-based contracts may help overcome these perceptions, but these will need to be priced at a level that offers something approaching a commercial return if organisations are to attract significant amounts of private capital.

Social Impact Bonds are an example of this kind of mechanism in practice. A Social Impact Bond is a contract between a public-sector body and investors, in which investor funds are used to pay for a range of interventions to improve a specified social outcome. If the outcome is achieved, the investors receive a return. If not, the investors receive nothing. The first (and only) Social Impact Bond went live at Peterborough Prison in September, with the aim of reducing reoffending. A charity, St Giles Trust, will provide intensive support to 3,000 short-term prisoners, both inside prison and after release, to help them resettle into the community. If the Big Society vision is to become a reality, then mechanisms such as this, which provide sustainable ways for civil-society organisations to deliver public services, will need to become the norm.

Fourth, the strength of local accountability will help determine whether reforms in the name of the Big Society lead to efficient, effective and fair public services. Only through proper local scrutiny will there be confidence that local brokers are not excluding the most deprived individuals and areas. Greater transparency of performance and spending data will help to support stronger local accountability but should not be viewed as an accountability mechanism in itself.

Currently, there is an array of local accountability mechanisms, including democratic elections, markets and feedback mechanisms. Proposed reforms such as community budgets, GP consortia and elected police commissioners will add to this mix.

Real accountability

To make such mechanisms effective, two things are essential. First, the accountability tools must work. The UK has had a media and political culture that seeks to hold ministers directly accountable for cases of underperformance. The government’s tendency to buckle to pressure and directly intervene in cases of failure goes some way to explain why we have a centralised system of governance. To break this cycle, local accountability will need to be strengthened.  

For example, in the case of healthcare, patients will need to feel they actually have some power when it comes to commissioning GPs. The fact that patients will be able to choose a different GP may strengthen accountability; however, this will depend on there being alternative providers from which to choose and on GPs being concerned about losing their patients’ custom. If these conditions are not in place, citizens will look for alternative ways to hold their providers to account. Ultimately, local democratic routes may need to be strengthened to reassure the public that the government will still be accountable for the quality of public services. Otherwise, the risk is that accountability will bounce back to central government and the decentralisation agenda will be undermined.

The second key condition is for different accountability mechanisms to work alongside one another. GP consortia may feel accountable for health needs, and elected police and crime commissioners may feel responsible for tackling crime. Yet a beneficial outcome for the public sector as a whole would be, for example, a health intervention that prevents patients with drug, alcohol or mental illnesses from resorting to crime. The government will need to take steps to ensure that there is accountable, strategic decision making across services.

In short, the Big Society is not simply about the state handing over services to the voluntary sector. It is about new forms of partnership, innovation and accountability, and it is about broadening the range of suppliers that can provide better as well as more cost-effective services. It will be a work in progress for many years to come.

Andrew Adonis is director of the Institute for Government