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Can we change public service markets for good?

We have to join up commissioning much better for this last group of people. So, should a homeless, unemployed drug dependent offender have one provider to deal with all their problems in the round, or separate providers (all specialists) responsible for each End Result? Reform suggests two possible solutions:

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Would licensing work?

This is the seventh in a series of posts on the challenges of modern commissioning stimulated by a recent report from the Reform think tank called “Markets for good: the Next Generation of public service reform”.

Last week’s post described Reform’s proposed overhaul of public commissioning which suggests doing away with costly and inefficient procurement processes, instead licensing providers who would then be free to set up shop and offer services wherever they chose. The overall idea being that, over time, service users will choose the best providers who will come to dominate the market. New providers with new approaches would be free to set up at any time, provided they met the basic licensing requirements.


Setting outcomes

Reform illustrates their view of how the new system would work including the example of the core group with which I am most concerned in my work: drug dependent offenders.

Reform case example

Putting it into practice

But how would this work in practice? Well the outcomes described above would be set via an initial assessment, which in this case would probably done by the National Probation Service as part of the sentencing process.

The cornerstone of Reform’s model is the affirmation of customer/service user choice on the basis that providers who best meet service users’ needs will attract the most “business” and become the main provider. Of course, if service quality then declines, people will move to the other providers as Tescos and Marks and Spencers have discovered, although people cannot move around from provider to provider during one “episode of care”, to prevent confusion and bureaucracy.

Reform acknowledges the importance of service users making an informed choice; saying that the Regulator will ensure that everyone has access to the following information about every provider:

  • Their percentage success rate with similar customers;
  • The difference between this provider’s performance and the best provider nationally with similar customers;
  • The difference between this provider’s performance and the best provider in the local area with similar customers; and
  • The customer satisfaction score with that provider.

Reform has also thought through some of the concerns that the providers might seek to game the system and emphasises that providers would not be able to provide inducements to persuade customers to choose them; so, for instance, education providers could not offer prospective students a free iPad.

However, Reform does not quite have the courage of its convictions when it comes to offenders. It suggests three formats of choice:

  • Free choice
    • Customers can choose any licensed provider, seeking professional advice only if they wish to do so.
    • Applies to people looking for skills providers and physical health support.
  • Professional choice
    • Professional makes the choice of provider on behalf of the citizen. Providers market to the professional not the end user.
    • Applies to offenders, dependent drug and alcohol users, those with severe mental health difficulties and most people referred by social services.
  • Assisted choice
    • A hybrid; professionals create a shortlist of suitable providers from which the customer chooses with the professional’s support
    • Applies to jobseekers, people with low level mental health problems and people with complex needs requiring many different outcomes and end results.

I don’t see why offenders couldn’t be offered the assisted choice – where they get to choose from a number of different local providers, on the advice of their assessor from the NPS.


The real-world challenge of multiple problems

It seems to me that this proposed system works well for people with one problem. However, as we know only too well, there are a very large number of people with complex needs who require a number of issues to be addressed at the same time (albeit in a proper sequence) in order to achieve long-term change.

One of the drivers for Reform’s report is the acknowledgement that we have to  join up commissioning much better for this last group of people. So, should a homeless, unemployed drug dependent offender have one provider to deal with all their problems in the round, or separate providers (all specialists) responsible for each End Result? Reform suggests two possible solutions:

The one provider for each outcome approach is  much easier to administer, that means individuals still working with several different public service providers who may be very tempted to argue about who has had the most impact in helping the service user achieve a number of End Results.

The one provider for all outcomes approach allows for a much more coordinated service and the potential to create economies of scope and scale. However, it would drive the creation of super providers which is the phenomenon which seems to be happening at the moment and which is causing many commentators (including myself) cause for concern. The way the system works at the moment encourages global companies to provide a very wide range of government services – a quick look at those companies who provide Work Programme, Transforming Rehabilitation and other prison, health and education contracts will bear this out.



My overall conclusion about the Reform report is that it has done an excellent job in analysing in some detail exactly where the current public service commissioning system fails to work. I think the licensing approach has much to commend it and I can see it working very well for single outcome providers.

However, I cannot envisage the licensing system working in practice for the core client group with which I am concerned. Given that drug using offenders are typically in and out of the criminal justice and drug treatment systems constantly, I still find it hard to imagine how it would be possible, practically, to set tariffs and make payments to the large number of providers typically needed to work in partnership to help an individual successfully reach a satisfactory end point in their journey towards desistance and recovery.

In my opinion, the most practical way to resolve this problem, which becomes more possible now that all short-term prisoners receive mandatory supervision, is to make the Community Rehabilitation Company responsible for all offenders’ outcomes over a three – five year period. However, there is a very high risk that this approach creates the sort of super providers whose mammoth size quickly causes a whole host of other problems, including the absolutely fatal one of being too large to fail.

I’m disappointed to have come up with such a negative conclusion and hope that readers will be to offer more positive ideas from way forward out of the current commissioning system which definitely does not seem fit for purpose.

Please use the comment section below to share your ideas.


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Payment by Results
Can the new Work Programme succeed?

Reform report says new Work and Health Programme should level the playing field for possible providers but still recommends heavy PbR approach.

Stop commissioning, start licensing public services

The idea is to let public services work like any other market with consumer choice meaning that the best services get to be market leaders and the market changes over time. To achieve this, Reform suggest doing away with the cumbersome procurement approach and introduce a licensing approach with these key features:

An inflexible commissioning system

Another consequence of these lengthy monolithic contracts is that it is very difficult for governments to change policy direction. Reform makes the point that to implement change a new government will often have to compensate existing providers and institute new, lengthy and expensive procurement processes. Although old providers may get some compensation, all potential

Price setting in public markets

Reform argues that there is a bell curve to innovation. When prices are set too high, providers make easy profits and public money is wasted. But setting prices aggressively low means that new providers are unable to innovate and tend to focus on easy to achieve results, which might not even have required a government funded intervention in the first place.

There’s not enough choice in public services

This then creates the problem of a provider who is ‘too big to fail’. If a provider under-performs, the government may not be able to remove them due to the difficulty of replacing lost capacity, undermining the threat of sanctions written into contracts.

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