Reforming public markets
The biggest challenge to the new Government which comes into power on 8 May this year will be how to ensure a good quality of public services within the demands of getting the budget deficit down.
Good commissioning is key to this but seems to receive very little attention.
Commissioning public services in 2015 is a huge challenge. Commissioners have to try to get providers to deliver more services of the same quality for less money. Commissioning teams themselves have also been drastically cut back over the last five years, with one or two people commonly doing a job that was previously done by a team of four or five.
I came across a radical idea for transforming the way in which public services are commissioned in a report from the Reform think tank before Christmas (published 18 November 2014). The report is called “Markets for good: the Next Generation of public service reform”.
Reform claims to be non-party political, but is mainly staffed by people with strong links to the Conservative party, so it won’t surprise you that their proposed solution for overhauling commissioning is a market-based approach. Nevertheless, the report’s authors (Andrew Haldenby, Richard Harries and Jonty Olliff-Cooper) clearly know what they’re talking about and I found their description of the difficulties and challenges of current commissioning to be the best I’ve read. So much so, that I decided to write a series of posts over the next few weeks examining in more detail the key themes they highlight and looking at how their view of public sector commissioning squares with my knowledge of how the process works in the criminal justice, drug and alcohol and employability sectors.
Analysing the problem
One of the attractions of the report is that it is engagingly written and backed up with real understanding. The authors criticise the current vocational training system saying that it’s more fit for “nail technicians than nano technicians”. That might sound a little flip, but there is a real point:
“This is the reason why in 2010-11, the taxpayer funded 94,000 people to qualify in hair and beauty, despite the fact that there were only 18,000 vacancies in that industry. Simultaneously the skills system produced only 40,000 people qualified to work as plumbers, electricians and other tradespeople, despite there being almost 72,000 recorded vacancies in that industry.”
This situation is directly linked to a commissioning system which finds it easier to specify outputs rather than outcomes and of course it’s much easier to train up 1000 hair and beauty practitioners a year than a thousand carpenters.
It is also linked to a set of commissioning structures which focus narrowly on one key area of operation – getting skills, tackling an alcohol problem, finding accommodation or employment – despite our knowledge that the people in most need (and who cause most damage to themselves, their families and their communities and incur the most public expense) typically face many of these problems at the same time.
The Reform report not only calls for joined up commissioning but suggests a way forward.
It argues that the current system does not encourage innovation or quality. Whether provision is public or private it is typically a local monopoly with limited or no incentives to improve performance. Too often national and local commissioners prioritise price over effectiveness.
You won’t be surprised to hear that the Reform paper also argues for a proper shift to outcomes commissioning within a payment by results framework.
The figure below summarises the Reform analysis of the problem:
So, every Wednesday for the next few weeks, I will be examining one of the difficulties about modern commissioning highlighted in the Reform report, giving real-life examples from my own experience and arguing the case for real change in commissioning over the term of the next government.
I hope you find it of interest and contribute your own examples of how commissioning works, or doesn’t work, in your area.