Government spends more than £250bn of taxpayers money every year, providing services, fixing problems or improving communities up and down the land. The risks of getting it wrong are high profile, destructive and far reaching. The benefits of getting it right include improved quality of life, innovation and value for money. In this two-part blog series I look at what happens when we apply the RSA’s model of change to help improve commissioning and drive innovation in public services - why do we often get it so wrong, and what are some commissioners doing to get it right?
In recent months we have been seeking to identify the core characteristics of new approaches to solving societal challenges using public money. This is much more than a side issue; it is an issue of fundamental importance.
When services or contracts go wrong, as we have seen in recent times, they can go spectacularly wrong, ending lives, destroying families, ruining communities. Hope is lost and future expectations evaporate. Carillion, Grenfell, Baby P, Kids Company, Winterborne View - these and many more besides have entered the cultural lexicon as synonyms for failure. More recently we’ve seen media coverage around the failure of the East Coast mainline rail franchise, the part-privatisation of the probation service and the G4S-run Birmingham prison.
A slew of reports into many of these failures start to unpick some of the common threads, ultimately concluding that the way we currently commission and procure these services or providers is not fit for purpose. Crucially, as Liam Halligan reports, the Public Administration and Constitutional Affairs Committee (PACAC) has found that the public sector has become “too reliant on a small handful of big businesses”, which are effectively “too big to fail” as they run “vast swathes of public services with little effective competition”. At the point at which it went bust, Carillion alone held nearly 500 Government contracts, owed £1.2bn to sub-contractors and had a pension deficit of £800 million. It’s time to move beyond the axiom that ‘no-one ever got fired for employing IBM’.
Little wonder that Liam Halligan argues that the UK’s public-sector procurement chaos is a long-standing, cross-party problem: “this is about delivering decent public services, and securing some semblance of value for taxpayers – goals that are widely shared across the political spectrum”. Michael King, the Local Government Ombudsman, argued that the public sector "can outsource the service but it cannot outsource its responsibilities”. Ideas that help square that circle, and in so doing improve the mechanism through which that £250bn is spent, are at a premium. How might we, for example, engage citizens in the process, liberate the creativity of a broad range of potential providers, or change the legal framework around contracting? Identifying, testing and implementing practical steps such as these stand to have a major impact, reducing the risk of failure and increasing public value.
We’ve been looking at this challenge recently through the lens of our model of change - think like a system, act like an entrepreneur - which is the RSA’s account of how we might better understand the world and go about making change within it. It is also a response to our account of why policy, and social change, often fails. You won’t be surprised to hear that they clearly map onto the way the public sector buys things - from paper to services. Our analysis is that commissioning processes all too often:
- Are linear, path dependent and slow. By the time the process concludes, the world has changed, the context has changed and, in a procurement terms, the range of available solutions will also have changed. A recent PACAC report concluded that ‘competitions exist in which bidding processes take over 18 months and require the equivalent of 12 A4 boxes of information’.
- Assume that it is possible to define all the needs of the service in a specification. The requirement to prepare a detailed specification to commission against (eg to provide a refuse collection service or provide services for autistic children) provides a sense of certainty and an ability to compare submissions on both cost and quality. Yet if it’s not in the spec, it’s not getting done - without a costly contract variation. This crowds out innovation and collaboration.
- Are not ‘solution-agnostic’. Too often, commissioners start with the end in mind, yet this crowds-out innovation. We shouldn’t expect our commissioners and those charged with spending to be solution experts - how can anyone know the infinite number of potential solutions to a problem? Of course we’re working in a world where we have to make decisions based on imperfect knowledge, but we can expect commissioners to curate a process that achieves a deep understanding of the problem and moves iteratively and flexibly towards a solution. This absolutely fits the RSA’s notion of acting ‘entrepreneurially’.
- Build in a combative relationship between commissioner and supplier. Value is extracted through the contracting process rather than created through collaboration and mutual learning. This PAC review makes clear that the changes to the probation service "have weakened local partnership working and local accountability, meaning there is less joined-up working and collaboration at a local level". This is the destruction of public value - working effectively across complex systems requires collaboration across organisations, built on trust and a degree of give-and-take.
- Prioritise management of risk and reputation over experimentation and innovation.The Institute for Government found that “providers concerned about their financial survival are generally unwilling to take on further risks by doing things differently”. A recent study of payment by results programmes notes that “because of the financial risk transfer to providers” these programmes have “been more likely to stifle innovation” than stimulate it.
- Doesn’t reflect the characteristics of complex systems. As 'wicked problems' are never solved you can’t commission a solution. And if you tried, you can never know which elements of what you have commissioned will work, since you have imperfect information, have no easy way to test a potential solution, and you can’t predict the unintended consequences of intervening in complexity. To quote the recent review of Community Rehabilitation Companies, part of the £3.7bn Transforming Rehabilitation programme, "we are not convinced that CRCs should carry full responsibility for poor performance in reducing reoffending as many of the factors that impact on reoffending are outside the control of probation services".
There are, I'm sure, others. The challenge, following this diagnosis, is to identify possible solutions. How might we apply the RSA’s model of change to help improve commissioning and drive innovation in public services? I’ll tease out some possible prescriptions in part two of this blog.
Ian Burbidge is an Associate Director in the RSA's Public Services and Communities Team. Follow him on Twitter @ianburbidge
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