United Kingdom

Details

  • Type: Business and industry issue
  • Date: 12/07/2011

Open Public Services – from principles to practice 

 

The Government understands that achieving cuts is an incomplete solution. The recent “Open Public Services” White Paper lays out the principles that underpin a shift of power to citizens and staff in order to drive service improvements. For the Government, ‘opening’ public services means enabling greater choice by those who use them and extending competition among those who provide them.

 

The White Paper lists many areas for further consultation. We consider just four key areas for immediate action on the supply side which we believe would move implementation a step closer:

 

Grasping the opportunity: sponsorship & capability

The first step toward implementation is to build a stronger appetite within the public sector for the hard slog of real change to services. Service providers and commissioners will need to show the leadership to act on opportunities, drive innovation and make changes in the face of competing demands and be supported by their organisation in doing so. This means identifying leaders who can create a shared vision for the future and are supported by teams with the skills, knowledge and experience to build persuasive cases for change. This must be mirrored by incentives and support from the centre of Government – from No. 10, the Treasury and Cabinet Office – for radical provider and user-led change. The best leaders in the public sector will recognise that the right solution may be to withdraw from the direct provision of services and focus on commissioning services from a wider range of external providers.

Designing new market and commercial models

As well as enabling organisations and entities to grasp current opportunities, Government needs to think about long-term viability. Commissioners and providers need the freedom to design new delivery models that underwrite the future sustainability of their services; provision must not be constrained by existing policy silos or commissioning approaches. Achieving sustainability also means that Government must be prepared for an open and honest conversation about both sides of Payment by Results in order to ensure cost reductions for commissioners are matched by financial attractiveness and sustainability for providers.

Preparing for failures: risk management

 

At the national level, any market-based reform brings with it the risk that an individual organisation will fail.  Government needs to find the correct balance between giving up control to free up space for providers to deliver in new ways and the need for mechanisms to be in place to deal with failures should they occur. To reduce the risk of more general market failures, providers taking the first steps must believe that the rewards available to them are commensurate with the level of risk and effort required; any alteration to the scale, ambition or direction of proposals could see a failure to realise the significant potential locked within the public services.

Assessing the cost: initial funding

 

Any change brings with it upfront costs and Government must therefore indicate its willingness for public bodies to divert some of their scare resources to generating and refining new ideas and approaches. By making a commitment to long-term improvements over and above short-term cost reduction, the Government will underline the real implications of the change in narrative away from the ‘age of austerity’ towards Open Public Services.  Cost reduction should no longer be the sole lens through which public services are examined and evaluated.

 

In addition, if we are to realise the ambition of diversity of provision across all sectors, specific technical areas including investment finance, asset ownership, implicit tax disadvantages and the treatment of VAT will need to be resolved in order to reduce barriers to entry. Any potential provider will, of course, also need to demonstrate how they will achieve long-term cost reductions and improve value for money.  This is particularly true given that greater transparency and openness around costs which will increasingly turn the public into ‘armchair auditors’.

Alan Downey, head of KPMG’s public sector business, commented: ‘I have no doubt that the direction of travel is correct and will leave to radical improvements in the services provided to citizens and the value obtained by tax payers’.

 

We have found real enthusiasm across the public, private and voluntary sectors for the proposed policy direction. In our Business Leaders Agenda Survey 2011, 74% of public sector leaders agreed with the need for a reform programme to enable the Government to deliver more for less, including a greater role for private and voluntary sectors. In the same survey 76% of public sector leaders agreed that all providers of public services, whether in-house or external, should be incentivised and rewarded on the basis of the results they deliver, linked to the delivery of a successful outcome. 

 

As always, the hard work will come when the ideals of the White Paper are put into practice. Alan Downey commented: ‘What the Government needs to do next is to specify which services are to be opened up and how the principle of competition will be put into effect. It needs to move quickly to translate its statement of intent into practice: That means publishing a comprehensive list of the services that are to be opened up to competition and the timetable for allowing potential new providers to bid.’

Contact

For more information, or to discuss any of the ideas raised here, please contact:

 

 

Alan Downey

 

Partner
KPMG LLP (UK)

 

020 7311 6541 | alan.downey@kpmg.co.uk

 

Your Choice - how to get better public services

KPMG are pleased to sponsor the report on Open Public Services by CentreForum, the liberal think tank. In Your Choice - how to get better public services, CentreForum attempts to define the principles that should underpin such reform: high quality information, effective regulation, a rigorous approach to risk transfer, the creation of sound investment propositions and competitive neutrality between public, voluntary and private providers.

Public Sector