In our previous post on the NHS, we asked why do public services feel increasingly less public? In this post from our continuing series on shadow politics, we offer three reasons – from the development of policy to the delivery and regulation of services – to explain why. These are representative of the shadow politics that is increasingly undermining the legitimacy of politicians and policymaking – and may come back to haunt the political class itself.
Firstly, the revolving door of private companies seconding ‘experts’ into Whitehall departments and political parties to develop policy represents the effective privatization of policymaking. The Conservatives, Liberal Democrats and Labour have received over £1m of in-kind support from KPMG, Deloitte and PWC since the 2010 General Election. Data on the number of secondees into government is not recorded centrally, however the Bureau of Investigative Journalism has found that 15 individuals from external accountancy firms were seconded to the Treasury only in the past year. All but one came from a ‘big four’ firm. The placements ranged from five months to two and a half years, with the average time spent at the Treasury lasting 19 months.
This influence goes to the heart of government. Paul Kirby, the recently departed head of the Number 10 Policy Unit, was drafted into government from KPMG. Kirby had previously been seconded by KPMG into George Osborne’s office when the Conservatives were in opposition. He has now returned to KPMG.
These secondees play a critical role in providing ‘independent’ policy advice to ministers, especially when budgets are constrained. They are certainly fans of more outsourcing, which also provides commercial opportunities for them; the proliferation of private providers of public services requires more and more oversight, regulation and auditing, all of which chimes nicely with the services offered by the big four accountancy firms. It’s not just an indirect benefit either; these companies provide outsourced services themselves (such as IT systems), and have direct interests in outsourced providers – for example, Deloitte owns 50% of Ingeus Deloitte, the largest Work Programme prime contractor with contracts worth nearly £774m.
Secondly, outsourced public services themselves increasingly operate on the margins of transparency and democratic accountability. They are not covered by freedom of information legislation and ‘commercial confidentiality’ is frequently cited as an excuse to not divulge information on their performance.
The Work Programme, a £5 billion investment in reducing long-term worklessness, is a prime example of the spreading shadow public services. Two years into a five-year programme, many prime contractors (providers responsible for managing and delivering the programme) are still failing to meet even minimum performance standards despite recent claims from Mark Hoban, the Employment Minister that there has been a ‘profound’ improvement in performance. This is the same group of prime contractors who were both heavily involved in the shaping of the Work Programme and submitted aggressive bids to the Department for Work and Pensions to deliver the programme.
Despite the legitimate concerns about what is happening to the taxpayer’s money that has been invested in this programme, it is still difficult to properly scrutinize actual performance. Providers are prevented from divulging performance data because of strict gagging clauses in their contracts, whilst prime contractors, who are able to share more than minimum performance data, are electing to stay quiet.
In large part, this secrecy is related to the fundamental mistruth that the political class has promoted (and continues to promote) about outsourcing – that it is a way to reduce costs. When the expected profit margins by prime contractors are factored in, this requires ‘efficiencies’ in the region of 40-50% to satisfy the interests of both policymakers and outsourcing companies. Savings of this scale are clearly not achievable while maintaining both the availability and quality of provision, hence the need to obscure performance. (It’s no wonder then that zero hour contracts are increasingly being used in outsourced public services, as staff typically represent the largest cost, leading to situations such as the 150,000 home care workers who are now employed on such contracts because competition and cuts have put pressure on profit margins in this market.)
More broadly, it is becoming increasingly difficult to find out even basic information on the public services we all pay for. Emma Daniel who writes the excellent blog Huxley06, has researched how the new Clinical Commissioning Groups (CCGs), established by the Health and Social Care Act 2012 engage with their local communities. Emma’s research points to how hard it is to find contact details for CCG Board Members as well as organisational contact details such as a Twitter account and generic email address.
Thirdly, accountability itself is being outsourced to arms length bodies, who are supposed to ‘regulate’ public services, and who can act as scapegoats when things go wrong. It is far easier for politicians to blame ‘bureaucratic quangos’ for sleeping on the job than to have to take responsibility themselves.
Transferring regulation to independent bodies has a chequered history of course. Ofgem, formed in 1999 to regulate the UK’s energy market, has been criticised for its weakness in protecting electricity and gas consumers from exorbitant price rises by the large energy suppliers. In public services, to take just one example, the Care Quality Commission has been much criticised for its failure to adequately regulate the social care market and the culture of bullying within the regulator to cover-up scandals (the Health Select Committee earlier this year argued that despite sustained criticism of CQC, it has not yet successfully defined its core purpose or earned public confidence).
Despite this, new bodies continue to be formed; Jim Brown, writing on On Probation Blog, recently argued that the new National Probation Service has been established for precisely the same reason – to carry the can for failings in the soon to be outsourced probation service.
The public may not always be aware of the detail of these radical reforms to what were once genuinely public services (with all their successes and failings), but they certainly recognize their impact – not only on the quality of services, but on the legitimacy of the political system that has allowed this to happen (or be done) against their wishes and their interests. Perhaps sensing this, some politicians are beginning to voice concerns, for example Andy Burnham, the Shadow Health Secretary, acknowledged in the Guardian this week that it was a mistake for the last Labour government to allow the private sector into the NHS:
“Once the market takes a hold on the system it will destroy what’s precious about it. We had been building a policy that had been saying it doesn’t matter who provides healthcare as long as it’s free at the point of delivery. But I’m saying it does matter.”
With unprecedented levels of outsourcing taking place across prisons, probation services, policing, schools, welfare to work and the health service, such concerns may have come too late.