Select Committee on Public Administration Appendices to the Minutes of Evidence

Memorandum by Middlesbrough Council (PSR 38)


1.   What should be the principles guiding the reform of public services?

  It is apparent that the debate round Public Private Partnerships has become polarised in a traditional public vs private dichotomy. This may be because there are not enough alternative models of service delivery available to providers/commissioners.

  It should also be recognised that many public services exist because private markets have failed to provide for some of the most fundamental human needs in a civil society.

  In that sense we agree with the NLGN recommendation to move beyond the pragmatism of "what matters is what works". This carries an implicit assumption that "what works" really means "what works for the customer", but there are problems with it.

  An exclusively customer focus cannot cope with the complexities of public service. What works for an individual or small group may not work for the broader community. This is particularly important in relatively deprived urban areas which lack the social capital necessary to sustain effective and efficient public services. Also, we may find that "what works" is more than we can afford locally due to the constraints of national economic imperatives.

  So it must be more sensible to consider individuals as citizens as this will encompass what people can contribute to the well-being of their communities as well as what they receive from the local state.

  Finally, as it seems to be a paradigm for public service that equilibrium cannot be achieved, the issue of rationing as raised by NLGN and others becomes crucial. The only way to resolve this in a democratic society is through a political process but this should operate at or as close as possible to the point of delivery and political decision making should be as inclusive as possible through a concerted process of engagement. The modernisation approach using LSP's and Community Strategies provides a potentially strong vehicle for delivering this. NLGN assert that choice is to some extent illusory in public service and the Local Government White Paper "Strong Local Leadership—Quality Public Services" (paragraph 3.79) accepts this. "Consumer choice can also come from active participation in Council decisions on the choice of provider". We would add that this choice also extends to active participation in decisions about the rationing of resources that govern the nature and level of local services and not just who provides them. So if the main purpose of reform is to ensure higher quality public services, Councils need to reinvent themselves around the needs of citizens. The underlying principles of the reform are those of good corporate governance—transparency, inclusivity and accountability.

2.   Does central government have clear principles and an effective strategy for reforming public service? Does it need to have a strategy at all, or is it better to let public bodies make their own arrangements for improving services?

  Evidence of clear principles and an effective strategy are apparent in the Prime Ministerial and other political level statements, but it is not clearly apparent that such principles are being practiced. It is not conceivable that national policy objectives can be met without the reform process being extended to the machinery of central government itself and the central local relationship. The culture of central government, its structure and processes are not conducive to the development of clear and effective national frameworks with which local delivery can be affected—and by definition delivery can only be local. This can be achieved without changing fundamentally the constitutional relationship but it requires the same principles to be applied at central government level. There are signs that changes are being made but these are taking place in an atmosphere that does not suggest rationalisation or urgency. The Local Government White Paper's proposals for plan rationalisation and deregulation are welcome but unconventional in nature and will not deliver outcomes within time horizons that are likely to be politically acceptable. The problems of central departmentalism must be addressed as a priority and there must be a further principle that links local accountability with the idea of local responsibility. The concept of local community leadership is fine but it will always be constrained if local leaders are accountable for issues for which they are not responsible.

3.   Do the devolved institutions and local government have clear principles and effective strategies for reforming public services? Could there be a role for strengthened regional institutions?

  The answer to this question is inextricably linked to the previous one. Clarity and effectiveness locally is conditioned by the relationship with the centre. This will also apply at a regional level if new or strengthened institutions do not have the capacity (and accountability) for the functions they undertake.

4.   What would be the consequences if there were significant differences between the policies adopted by central, devolved, regional and local government on public service reform issues?

  We do not necessarily accept the premise of the question. If the relationships between tiers of governance are clarified in some form of constitutional settlement based on a subsidiarity principle, the ability to achieve regional/local variations would be a positive virtue given the current economic and social imbalances between regions. This issue has not so far caused major problems in relation to Scottish and Welsh devolution.

5.   How do we know if public service reform is effective?

  One of the problems with Best Value as it currently operates is the insistence on achieving cross authority comparisons but the sheer diversity of local conditions means that comparisons between authorities that might appear to be similar are often spurious.

  The central theme of Best Value is continuous improvement and this should mean that the system allows Councils to assess their current performance against their past performance and, through a continued programme of engagement, communicate with citizens about that performance. But this always has to be done within a national framework that requires exclusively quantitative data to allow ratings and tables to be produced.

  The problem is (and this also applies to LPSA's) that there is often a mismatch between data and perception (eg fear of crime rising while actual crime is decreasing). It is to be hoped that the new Best Value regime will admit the use of more qualitative information as well as quantitative. So the short answer is we will know if the public tell us it is succeeding and that their views are evidenced through proper performance management arrangements.


6.   Is the concept of a public service an anachronism?

  "Public Service" is not an anachronism because markets fail and the state will always need to intervene in the interests of social justice. However, the concept has to be redefined away from a producer orientation at all levels of governance and given a new focus around achieving outcomes for individual citizens and society in general.

  This does not mean that where state intervention is deemed appropriate by the exercise of political judgements that the state should always be the provider. However, it is the absence of a broader range of delivery mechanisms that perennially reduces the debate into the usual public/private dichotomy. A greater degree of local experimentation than is currently allowed for by the legal framework and the cultural imperatives of central government is needed.

7.   Is there a public service ethos, and how can it be defined?

  Although there is no real evidence of the "pure" motivation of those of us who work in the public sector, it is nevertheless likely that many of us would cite as reasons for our choice of career as embracing some notion of social justice. It is not however inconsistent to link this concern with a notion more often associated with the private sector—that of business efficiency. This is a pragmatic basis for identifying a public service ethos. But as recorded above the parallels with the private sector do not extend to the range of incentives available to companies for Councils to achieve better outcomes for their customers/citizens and current proposals in the Local Government White Paper seem weighted more in terms of penalties for failure than rewards for success. The lack of a diverse range of service delivery mechanisms that would allow "profits" to be retained in the public sector in a serious constraint to developing such an ethos.

8.   How is the public service ethos different from the private (or voluntary) sector ethos?

  We do not see that "ethos" needs to be differentiated. Clearly companies are more driven by the profit motive and shareholder accountability and there are more similarities in the mission and roles of public and voluntary organisations. The key issues and differences relate to the treatment of profits and about what happens in the case of business failure. What is most important in the case of Public-Private partnerships is a shared understanding of the cultural differences between the partners and an agreed plan to overcome such differences through training and development.

9.   Is a public service ethos necessarily a good thing? Can it be an obstacle to the effective delivery of services to the public?

  A redefined public service ethos using the principles of corporate governance, partnership, diversity and citizen focus would be a positive virtue. If it were defined according to producer interests (whoever the producers might be) then it would not and could be an obstacle.

10.   Would the creation of a single public service help a public service ethos?

  No, if diversity of provision is a desirable outcome the ethos must extend to all involved in the production/delivery process regardless of who employs them.

11.   Is it possible for profit-oriented organisations to maintain the public service ethos?

  Yes—it is imperative or they will not profit in the long-term.

12.   What measures, if any, need to be put in place to ensure that the search for profit does not undermine the public service ethos?

  We do not necessarily believe that this is a matter for legislation or regulation. However, extending the ability of public sector bodies to trade and retain profits for investment will encourage more innovative joint ventures. Legislation could possibly allow for new forms of service delivery such as American style public benefit companies.

13.   Can lessons be learned from the experience of private sector involvement in public services in other countries?

  We do not doubt that foreign experience could be valuable and we also suggest that lessons can be drawn from the discretion afforded to local authorities in other countries not only to enter into partnerships with the private sector but also to trade more extensively on their strengths than is currently envisaged in this country.

14.   Do private sector people working in and around government, including secondees, task force members and others, undermine the public service ethos? Are special measures needed to regulate their activities and prevent positive conflicts of interest?

  We are not aware of evidence that would suggest this. To the contrary their involvement may help to redefine the public sector ethos. If the principles of corporate governance are applied properly then their activities should be transparent.

15.   Many companies are becoming increasingly aware of social and ethical issues. Does this make them more suitable for work in partnership with the public sector, or does it make no difference?

  The bottom line is whether the private sector partners can deliver the required outcomes, and we are still required to treat cost as the major procurement criterion. However, social and ethical awareness is an important cultural factor in ensuring that PPP's actually work. As such it becomes increasingly important during implementation.

  The answer to Question 8 above is also relevant here.

16.   Do the views, motivations and attitudes of public sector workers differ from those in the private sector? Does any difference in motivation have an effect on the delivery of public services?

  We do not believe it is possible to generate in a way implied by the question. While it may well be that some public sector workers have a different ethos, the important issue is that staff should be highly motivated regardless of who their employer is. This requires effective human resource and communications strategies to ensure that front line staff understand and own the mission and values of the organisation. In the case of private sector partners it is crucial that the partner shares in the public service objectives, is committed to the economic and social outcomes desired by the Council and communicates this effectively to its own employees. The outcome should be that recipients of the service have no need to differentiate between service providers from different sectors.

17.   There is conflicting evidence as to whether the public is in favour of private sector involvement in public services (MORI polling, June 2001). What in your view is the truth about public attitudes?

  We are convinced based on evidence from MORI and others and our own researches that the public in general are not concerned about the structures and processes of public service provision. They are concerned with outcomes but they retain a desire to be able to hold someone to account when things go wrong. This makes it essential that the public sector should retain the commissioning role, even if it is not providing services directly, and should be able to hold all service providers to account through a local system of representative democracy in a way that allows citizens to be involved in ways that suit them.

18.   If there are to be rules regulating private sector involvement in public services should they apply also to, for example, the voluntary sector? Should there be less stringent regulation where profit is not involved?

  We do not see this is necessary in a mixed economy of provision. What is important is that anyone involved in public service provision should be required to uphold the principles and practices of corporate governance.


19.   What kinds of accountability are most effective?

  As we are dealing with public services (defined as public partly because they involve the expenditure of public resources that are scarce), the broad answer is that accountability should be through a process that is both democratic and political, regardless of the method of provision. This is why public bodies must retain the commissioning role and be able to publicly hold to account the service provider. The new structures for local government introduced by the Local Government Act 2000 provide the framework of accountability and proposals in the new White Paper will enhance this, particularly in relation to performance management systems. However, in a system of representative democracy that is increasingly based on principles of partnership, the ability of citizens and stakeholders to share in the accountability process is very important. This can come through a number of routes; the Local Strategic Partnership, enhanced involvement in the Scrutiny process, but also through more sophisticated forms of engagement. The Partnership Engagement Framework adopted by Middlesborough Council and its LSP partners is a comprehensive toolkit based on the principle of fitness for purpose, which allows for much deeper citizen involvement not only on issues of service delivery but also on issues of policy and strategy development. This is acknowledged as a key element of "choice" in the new White Paper. We would be happy to provide further details on this issue.

20.   Is there sufficient coherence in the accountability arrangements for public services?

  The Partnership Engagement Framework mentioned above, operating in the context of the LSP and the Community Strategy and the new executive model of governance will we believe, provide the framework for a much greater degree of coherence.

  However, a major issue for us that is not addressed in the White Paper is the degree to which other public sector bodies can be made locally accountable through an LSP process when their formal lines of accountability are to a Minister.

21.   Is there too much accountability, or too little?

  It is very hard to make a generalised comment. Rather, we would suggest that a principle of proportionality should be applied taking into account the level of public expenditure involved as well as local circumstances (as sometimes low cost issues can become controversial). This suggests a further principle that the accountability should be at or as close as possible to the point of delivery.

22.   Does the new pattern of public service provision require new forms of accountability?

  We believe that the framework of accountability put in place by the 2000 Act should be tested before any judgements are made about new forms of accountability.

23.   In the Government's overall programme of public service reform, is the need for accountability to Parliament and to other bodies properly taken into account?

24.   If the answer to the above question is no, what measures should be put in place to ensure better accountability?

  As a local authority we do not feel competent to address these questions in detail. However, the differentiated approach to accountability outlined above would clearly provide for some accountability to Parliament mainly through the Select Committee system.

25.   Does the growth in private involvement in public services threaten to reduce public accountability?

  Not if the approach outlined above is adopted and implemented rigorously.

26.   Do the demands of commercial confidentiality threaten the accountability of public services when the private sector become involved?

  There is a potential for commercial considerations to blur public accountability and this cannot be addressed without addressing the imperatives of company law.

  This is partly why we would argue for changes to company law to allow the introduction of Public Benefit Companies and perhaps other mechanisms that might combine the advantages of being able to operate as a company with the transparency and accountability of a public body not governed by traditional shareholder loyalties.


27.   Does the Government's public services reform programme have sufficient focus on users and consumers of those services?

  In principle a clear focus on users/consumers cannot be doubted. But as the White Paper acknowledges the issue of "choice" is difficult in many public services. An exclusively consumer approach cannot deal effectively with these issues for the reasons discussed earlier in this response. We think that of necessity the focus should be more around the notion of the citizen.

28.   If not, how can the position of users and consumers be strengthened?

  It follows from the previous answer and the answers to questions 19-26 that the issue of citizen choice is as much about being involved in the setting of local priorities and processes of local accountability. We believe that a local approach to implementing the new national frameworks for local public services will strengthen the position.

29.   Should user rights be established in relation to public services?

  Such rights could only be established as statements of principle and good practice, taking into account national priorities and constraints and local circumstances. But they should be balanced in a citizen focused culture (rather than a consumer focused one) by a consideration of the responsibilities implied by the term "citizen". Citizens would be expected for example to take some responsibility for ensuring that public facilities are not misused.

30.   If so, how could these rights be exercised in practice?

  As above we believe that the new governance framework should provide a positive environment for citizen/stakeholder involvement.

31.   Could the Citizen's Charter/Service First approach be further developed?

  These initiatives or at least the principle on which they are based could be replicated locally.

32.   Are complaint/redress systems for public service users adequate and effective?

  Please see answer to question 30.

December 2001

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