The Coalition government’s health reforms are moving ahead at speed, despite the reservations of NHS staff, trade unions and academics. Make no mistake, these are large scale reforms, and compare with the great (and very unsuccessful) reorganisation of 1974, the internal market reforms of the 1990s, and New Labour’s reforms in the aftermath of the NHS plan of 2000. However, the current reforms are in many respects a continuation of recent policy trends – increased use of the private sector and social enterprise, more competition and use of market forces, a greater emphasis on choice and personalisation, a stronger voice for patients and more accountability, greater responsibilities and autonomy for health organisations and professionals at local level and less interference from politicians,  a focus on improved health outcomes, better joint working between health care, social care and public health bodies.

No one could disagree with the expressed desire to improve outcomes and create a service that is more responsive to patients. But as ever the devil is in the detail. And there is going to be a lot of detail. The Health and Social Care Bill, at almost 370 pages long, is four times longer than the Act of 1946 that created the NHS.  Furthermore, it will spawn plenty of secondary legislation. The key question is how will it be implemented? NHS reform rarely goes to plan. History teaches us that reforms tend to hit problems and further changes are then required. The government has set a timetable for axing the very bodies that implement its NHS policies, while limiting the formal powers of central bodies, including the Department of Health. The key words are going to be capacity, accountability, and fragmentation

There are already concerns about possible lack of capacity among the new GP commissioning bodies at a time when Strategic Health Authorities (SHAs) and Primary Care Trusts (PCTs) are going to be abolished. There are also worries about the capacity of the three central bodies – Monitor, the National Commissioning Board, and the Care Quality Commission – to regulate the NHS.  Despite what ministers say, the temptation to intervene will be strong.  The fragmentation of the system, local variations in service and individual service failures that arise will stimulate intervention from central policy makers and regulators.

Politically, the government has dug itself in a hole here. The announcement of health reforms in July was like pulling a rabbit from a hat. No one foresaw their magnitude. The Conservative leadership had worked hard to neutralise the NHS as a political issue and had successfully built up public trust in its health policies. The coalition with the Liberal Democrats made widespread reform even less likely, as they too had no plans for root and branch reorganisation. The result of this U-turn is that the NHS is back on the front pages providing plenty of ammunition for the government’s opponents. The spectre of large scale privatisation has been raised, amid greater suspicion about competition and markets, particular in the light of the banking crisis.  One might ask: why should markets work in health care when they demonstrably failed in the financial sector?

The key tests for the reforms are: will they improve health outcomes, reduce health inequalities, improve partnership working, strengthen accountability and responsiveness to patients and the public, and improve efficiency (and in particular, achieve the £20 billion demanded in savings)? There are strong reasons for arguing that such a massive organisational reform will jeopardise all these objectives. It will cause major structural turbulence and will be expensive. It is also likely to distract from the urgent business of improving and protecting and promoting public health, which could be sidetracked as ministers concentrate on the organisational detail of NHS structural reform.

Post by Professor Rob Baggott, Director of the Health Policy Research Unit, De Montfort University

In December 2010, the Office for Civil Society in the Cabinet Office published its Green consultation Paper  ‘Modernising Commissioning: Increasing the role of charities, social enterprises, mutuals and cooperatives in public service delivery as part of their commitment to promote a ‘greater involvement’ of these actors ‘in the running of public services’. This consultation will be a core base to the Public Service Reform White Paper to be published this month and fits in the wider Public Services (Social Enterprise and Social Value) Bill. This consultation paper is part of the unfolding of the Big Society agenda.

This consultation which ran from December 7th 2010 until January 5th, relates to the issue of integrating these ‘civil society organisations’ (CSOs) and Small and Medium sized Enterprises (SMEs) into the running of public services, elaborating on concerns of participation to the delivery and bid for public service contracts. It outlines the benefits to public services of a greater involvement of these actors: better value by turning to the best possible provider with specialised skills and know-how in the domain; satisfaction of the public through a decreased risk of service failure,   greater involvement in the delivery of these services and effort to ‘reach’ disadvantaged groups.

This commitment to an increased role of CSOs in the delivery of public services fits into the wider ‘Big Society’ project of loosening the ‘provider’ role of central and local government and opening up a space for an empowered  and ‘ flourishing civil society’ to shape its own public services. It also concurs with the £80bn spending cuts announced in the October 2010 Comprehensive Spending Review (CSR), ‘[enabling] commissioners to drive and implement [these] cuts in fully informed ways, removing unnecessary duplications and responding to local priorities.’(p.6)

Some of the immediate reactions of charities and CSOs to this consultation related to the limited four and a half week time frame set for these actors to add to the debate, in breach of the 12-week period set by the Compact, making it, according to NCVO chief Stuart Etherington, ‘virtually impossible for either of our organisations or the government to meaningfully consult’.

Some major issues are outlined in this paper as regards to the accessibility of CSOs and SMEs to the delivery of public services although the solutions do not seem to be clearly stated yet. Firstly, a new system of payment by result will start coexisting with the more classical system. This new scheme echoes the Social Impact Bond pilot introduced for charities involved in projects of reoffending reduction. What this new outcomes-focused scheme seems to underestimate is the greater risk that it involves, especially for small, local, specialised CSOs that will not have the necessary ‘strength’ to take on such hazard. Charities that focus on marginalised groups such as Crisis (working with homeless people) call for measures such as starter payment and additional premiums in order to curb that risk. This system also seems to underestimate the more holistic outcomes aimed by the third sector’s work in public services. ‘Softer’ outcomes such as self-esteem building amongst socially excluded individuals might be hard to measure and such projects could be penalised by this system that, except for its name, strongly resembles a target-based approach.

A right to challenge local authorities will be introduced by the Localism Bill, giving CSOs and public service workers the opportunity to make local governments accountable for their choices. The latter will be challenged where it is believed that they could provide services differently or better.

Also problematic is the issue of capacity-building for CSOs in order to help them engage in the commissioning process and make commissioners aware of the diversity of providers. This capacity-building role, played by local voluntary and community support and development organisation (LSDOs), is said to be crucial by CSOs but undergoing drastic cuts and uncertain funding after April 2011.

The bridge-building role between communities and commissioners that CSOs are asked to play might nonetheless be contradicted by the payment by result system or inflexible accessibility criteria such as the contract length and funding conditions.

Indeed, although recognising the importance of access to finance, initiatives such as the Big Society Bank appear for the least embryonic: ‘The Big Society Bank will be financed by all the funding made available to England from UK dormant accounts. The amount [...], however, is difficult to predict.’

This unresolved financial issue is even more series when combined with the spending cuts announced by the CSR. Alliances of VCOs (Voluntary and Community Organisations) such as Leeds Third Sector were told by their local authority that their funding will be cut. On the other side of the scope, local authorities across England are being asked to facilitate the involvement of third sector organisations in the commissioning process. Lambeth Council has estimated such an initiative will cost £165000 and take six years to achieve.

In a time of financial austerity and increased difficulties faced by communities – redundancies, growing debts, rising prices - are the conditions gathered for a successful transformation of public service delivery?

Polly Toynbee writing recently in the Guardian highlighted the concern and potential dissent brewing in local government about the terms of the financial settlement following the Comprehensive Spending Review. Local government, one of the hardest hit areas of government spending, faces a front-loaded cut of 28% over four years, meaning that local authorities are faced with finding millions in cuts and savings from their budgets. Urban deprived areas are argued to be hardest hit by this settlement, with many reliant on specific government grants for example in regeneration and housing.

Paul O’Brien, Chief Executive of the Association for Public Service Excellence (APSE), a local government professional body, spoke at APSE’s Full Association meeting in Edinburgh on Thursday about the need for local government to make a strategic response to the current economic situation. Short-termist spending decisions could potentially be a ‘road to nowhere’ for local government, diminishing its current role rather than forging a new one. O’Brien set the challenge of determining a new vision for local government after the cuts.

De Montfort University is now working with APSE on a Knowledge Transfer Partnership (KTP) to develop practical tools for local authorities to respond strategically to the economic challenges they face. THE KTP commenced in early January 2011 and has at its core the aim of developing a vision for local government around the concept of the ‘Ensuring Council’. Following Giddens’ work on the ‘ensuring state’ and in contrast to the model of the hollowed out ‘enabling’ model set out in the 1980s, the ‘Ensuring Council’ model aims to retain core service provision and co-ordinating capacity for local government to allow the continued achievement of strategic goals. However, this is not to say that local government should go into defensive retrenchment rather, the protectionist element of the ‘Ensuring’ Council’ needs to be balanced by both innovation in service delivery and the empowerment of public sector staff and local communities.

Innovation is crucial to the Ensuring Council model and the KTP will explore ideas such as a ‘Revolving Investment Fund’ to generate income for local authorities through investment in renewables and considering whether and how co-operatives and mutuals can complement and support public service provision. Core to the Ensuring Council is the concept of ‘public value’ which seeks to re-focus public sector organisations on the communities they serve, rebuilding trust and restructuring service deliver so as to engage communities and citizens and respond to their needs and priorities in the round.

We are at the starting point of building these ideas…. be part of the conversation!

The values of mutualism featured strongly in the Conservative and Liberal Democrat manifestos at the 2010 General Election and specific policy pledges have since been made by the Coalition government to help develop public sector staff to develop employee-owned mutuals and co-operatives to deliver public services. This interest in mutualism is driven by the Coalition Government’s flagship agenda of the ‘Big Society’. By giving public sector workers a right to form mutuals and co-operatives, the government can claim to be making headway with the key themes of the ‘Big Society’ such as devolution of power to communities and offering a greater role in public services for voluntary and community organisations and other civil society organisations. But what impact may this agenda have for the future of the public sector?

As part of the Comprehensive Spending Review in October 2010, George Osbourne gave direct reference to communities running services, owning assets and a new right for public sector workers to form employee-owned co-operatives and mutuals to take over the services they deliver. Following this announcement, in November, Minister for the Cabinet Office, Francis Maude, unveiled new support for public service ‘spin-outs’ in the form of a new information line and web service (Mutuals Information Service), a £10 million investment to help best fledgling mutual reach investment readiness and a ‘Challenge Group’ involving employee-ownership experts to investigate ways to improve regulation. Francis Maude suggested prisons, Sure Start children’s centres and hospitals as examples of services that could become mutuals under the scheme. He hoped that private investors would put money into mutuals and co-operatives and said they may be able to receive financial benefit from doing so.

Is the government actually talking about co-ops? How robust, stable and sustainable is the Government’s approach to co-operatives and mutuals?

As defined by the Mutuals Information Service, mutuals are businesses that are owned by their members; which can operate as employee-owned, co-operative or wider social enterprises. They can include or participate a variety of commercial arrangements, including joint ventures with government or other parties.  Co-operatives are businesses that are fully or majority owned by their members – who may be employees, consumers, others in the community or a mix of these. Co-operatives work on one member, one vote – rather than one share, one vote. Key stakeholders, for example those involved in the umbrella organisation Co-ops UK, have met the Coalition’s interest in mutualism with a wary welcome. Concerns have been voiced over whether examples of ‘co-operatives’ actually are co-operatives, as identified by the principles outlined by the International Co-operative Alliance, or whether they have been labelled as such because of the policy currency of the term. Indeed, the introduction of public sector mutuals comprises a political risk to the public sector services, in that support for mutuals and co-operatives may be highly contingent. The achievement of future policy changes and associated national/ local objectives may contribute to the diminishing of governmental support for mutuals and co-operatives at some point.

 

How can public sector services be mutualised without the fear of diminishing employee rights, pay and terms and conditions?

Concerns have also been voiced over the lack of evidence of success for mutuals and co-ops in the delivering public sector services and so this agenda potentially presents significant risks for the quality of public services delivered. Lack of evidence of success of mutuals leads to key questions on the ‘real’ advantages mutuals have for their employees/ members. The Coalition’s claims ‘ownership, community, freedom, and entrepreneurs’ sound highly appealing, but the lack of evidence detailing the real possibility of these, suggests they are currently unsubstantiated . In fact, evidence on existing mutuals has suggested poor terms and conditions for employees, alongside poor pensions and salaries. There has even been the suggestion of forced membership due to employees feeling threatened or lacking other options but to join in with the mutualisation.

 

How do we ensure accountability in the development of public sector mutualisation?

Research indicates that it seems the Government’s approach to co-ops and mutuals contrasts with the principles outlined by the International Co-operative Alliance. Michael Stephenson, the General Secretary of the Co-operative party, warned that the government’s plans for public service mutuals fails to ensure accountability, a key international principle of mutualism. He argues “local libraries and swimming pools should be controlled by local people, and run in their interest, not just by the service managers”. In addition, transforming public sector services into mutuals or co-operatives takes local authorities out of the loop and thus they already start from a weakened position in terms of formal accountability.

 

How far are mutuals and co-operatives compatible with the public sector?

The opportunity for innovation and entrepreneurialism in the public sector is welcomed by many; with the hope that public sector potential may be unleashed by the development of co-operatives and mutuals. But of course this is process and context dependent; some public sector services may be non-starters for co-operative activity due to lack of capital or the questionability of sustainability. Mutualism can certainly be seen as a bright shining tool in innovating public service delivery, but like any tool, mutuals and co-operatives are only fit for particular purposes.

It has also been stated that there is a commercial risk to setting up co-operative activity in the public sector. There is a fear that once public sector co-operatives have taken on the service delivery and demonstrated the market, at the end of the contract, a private sector tender may be preferred. Market based contracts do not offer favourable tendering conditions for co-operatives. The lack of longer term contracts poses a commercial risk to co-operatives, as does the danger of relying on a single customer.

 

Is mutualism the first stage to marketisation? How can we prevent the fragmentation and further marketisation of public services under these arrangements?

This is perhaps the biggest concern many have towards the mutualisation of public sector services.  Echoing APSE’s Mark Bramah’s previous blog post on mutualism, there was a surge in the late 1980’s and early 1990’s to encourage public sector managers to set up management buy outs, however very few of these survived the competitive market, and passing trends in public policy. What is different in contemporary society? Certainly there are no government strategies as yet which ensure developed mutuals and co-operatives are protected from further marketisation. There is a clear lack of strategy from the government concerning the development of public sector mutuals and co-operatives in the UK. One has to question whether this is deliberate.


 ’Neighbourhood’ has been recognised as a space that citizens identify with, feel a sense of belonging and where their concerns are in sharpest relief. It is also an enduring concept giving a spatial focus to a range of policy areas. Neighbourhood was prominent in policy particularly in the early part of the New Labour administration and this focus seems to be continuing with the Coalition government’s agenda of the ‘Big Society’. But, how useful will existing neighbourhood structures prove in delivering the civic objectives of the ‘Big Society’? Our research has shown that many examples of neighbourhood working, both those created in the UK under the New Labour administration and internationally, have been primarily ‘invited’ spaces created by the state, as opposed to ‘popular’ spaces outside of conventional political structures established by citizens which the ‘Big Society’ seems to aspire to (Lowndes and Sullivan, 2008).

The Coalition’s aim for the ‘Big Society’ is to involve communities in social action and the delivery of public services. The Coalition Agreement and recent Localism Bill refer to encouraging volunteering, training community organisers and supporting the creation of neighbourhood groups. The Agreement also sets out an objective to expand the role of mutuals, co-operatives and social enterprises in public services. Policy pronouncement have also sought to promote decentralisation and democratic engagement, aiming to end the era of ‘big government’, removing bureaucracy and giving ‘new powers to local councils, communities, neighbourhoods and individuals’. Following in the tradition of politicians to say something three times to prove their seriousness, Eric Pickles, Secretary of State for Communities and Local Government (CLG) has asserted that his priorities for government are ‘localism…  localism, and… localism’ (2010).  Whilst it does matter who initiates and sets up neighbourhood structures, there is no ideal structure. Research from Durose and Richardson (2009) has suggested that local authorities have struggled to deliver on multiple and potentially competing objectives for neighbourhood working to move beyond their ‘comfort zone’ of service provision to deliver on civic objectives and opportunities for direct citizen participation and community involvement. Elected members in many localities can often feel their role and electoral mandate is threatened by community representatives and wider participation.

Yet, community control does come with its own risks. Community initiated neighbourhood spaces can often lack capacity and communities can struggle to sustain these spaces over a long period. Neighbourhood initiatives can often be insufficiently strategic and can be captured by an unrepresentative portion of the community. There remains a significant question about the appetite or interest in the ‘Big Society’ from communities.

Evidence from the National Strategy for Neighbourhood Renewal evaluation suggests that ‘invited’ neighbourhood spaces provide an important complement and catalyst for ‘popular’ activity. Wider evidence has suggested that ‘invited’ spaces can assist in building capacity within the community and act as a ‘broker’ within the community helping to ensure inclusion. Moreover, community action does take time to develop and often needs ongoing support. It seems that some communities are more ready than others for the ‘Big Society’. Rather than reducing the role of the state, in disadvantaged areas, it may increase demands on the state.

The ‘Big Society’ has potentially serious consequence for equality in opportunities and outcomes in deprived communities. These concerns make the need to retain, if reform, neighbourhood structures, particularly in disadvantaged areas more important than ever. Yet, the call for the ‘Big Society’ comes however, at a time where the funding available to sustain neighbourhood working is in question. A context of radical local austerity may undermine the ‘Big Society’ rather than foment it.

This blog post draws on a forthcoming paper by Catherine Durose (DMU), Jonathan France (ECORYS), Liz Richardson (University of Manchester) and Ruth Lupton (LSE)

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