Of Public Services and Private Profit

I was a late and somewhat reluctant convert to Twitter, but to be honest this blog would not now be possible without recourse to it. Although I find it pretty useless for meaningful discussion, in voyeuristic fashion it provides valuable insight and information and is a brilliant recruiting sergeant for the blog. I saw this yesterday:-  

"The problem is now that probation is provided for profit, CRCs will effectively be making a sales pitch. They want – and probably need – more customers from the courts. And to the extent that they get them, so their shareholders will benefit." Frances Crook quoting Rob Allen

With the MoJ intent on forcing through another round of private sector contracting for probation services, despite a mountain of evidence that it will be an abject failure, this tweet resulted in us being pointed in the direction of an extract from Kittens are Evil : Little Heresies in Public Policy:-

Foreword 

Saying that ‘payment by results’ is fundamentally flawed is like saying kittens are evil. It’s heresy. 

The official consensus around payment by results is that it’s a no-brainer, and if there are problems with it in practice, it’s your fault: you’re not doing it right. Coercive and simplistic thinking informs a whole range of practices aimed at improving public services, so good people try hard to make bad initiatives, based on bad theory, work. Teething troubles, poor governance, bad apples and unintended consequences are cited as reasons for high-profile failures, such as disability assessments, Universal Credit and the Troubled Families initiative. 

This book argues that best efforts and poor excuses aren’t good enough. The authors describe how a bad system beats well-meaning individuals every time. They argue that no amount of tinkering, re-branding or good governance can compensate for the serious and widespread harm inflicted by a fundamentally flawed set of beliefs. George Monbiot succinctly described these beliefs and their consequences in The Guardian (April 2016): 

We respond to these crises as if they emerge in isolation, apparently unaware that they have all been either catalysed or exacerbated by the same coherent philosophy; a philosophy that has – or had – a name. What greater power can there be than to operate namelessly? 

So pervasive has neoliberalism become that we seldom even recognise it as an ideology. We appear to accept the proposition that this utopian, millenarian faith describes a neutral force; a kind of biological law, like Darwin’s theory of evolution. 

The authors of this book challenge manifestations of neoliberal assumptions in public services – through family intervention, personalisation, numerical targets, marketisation, league tables, economies of scale, inspection and payment by results. 

At the heart of neoliberalism is a belief about people. Individuals are perfectible: anyone can (and should) be successful, to ‘make something of themselves’, if they only try hard enough. If they are unsuccessful, they should be forced to compete harder. (Try watching Ken Loach’s I, Daniel Blake.) If only we ate less, exercised more, stopped getting older, were more enterprising, ticked the right boxes, remembered our unique customer reference number, were digital by default and frankly were more service-shaped. Wouldn’t that make the government’s job easier? 

A systems view has a very different starting point. This book argues that it is the system itself that is troubled, not families or individuals. As in finance, neoliberal ‘quick wins’ all too often turn into long-term disaster, and it is the same in the public sector that has internalised its thinking.

The system is where we need to intervene. Attending to systems and their consequences for people is the only sustainable route to better lives and a better society. 

This book isn’t a conscious attempt to design a new system, although in places it makes a start. It does, however, provide strong evidence for public sector professionals, academics and policy makers to see neoliberalism for what it is – not a neutral or inevitable force, but a set of intentional and man-made political beliefs. By seeing it, we can help politicians who believe in something different, to create a new orthodoxy. 

Charlotte Pell, Visiting Fellow, KITE, University of Newcastle Business School 

Simon Caulkin, Writer and editor

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Here is Kathy Evans, CEO of Children England, writing in Chapter 2: Public Service Markets Aren't Working for the Public Good... or as markets:-

With business terminology and comparisons now so deeply embedded across public and charitable services, it is perhaps illustrative to look at the most basic rudimentary tenets and ‘rules’ in successful commercial business. If public service market proponents were right in their belief that all types and sectors of organisation are best run according to the disciplines and incentives of commercial business management, it should be the case that the keys to business success would apply equally to public service provision. But they don’t. 

In commercial business demand is always a good thing. Increasing the volume of customers who want to buy your product is the first and most important objective of successful business for any entrepreneur – an objective which also underpins the entire advertising and marketing industry. In public or charitable services, however, demand is not straightforwardly positive. Up to a certain point knowing that people want and appreciate the service you offer is a ‘good thing’. Given the often sensitive personal and social problems that such services are there to meet, however, their need for help is nothing to celebrate or exploit, and an increasing volume of demand may be a cause for real concern, both as a service and as a society. ChildLine, for example, has reported that the numbers of children calling them to seek help for their suicidal feelings has substantially increased, year on year. As a service, the fact that they are available to respond to such distressing demand is a testament to the value of their service and the trust children have in them; the cause and implications of that rising demand, however, are clearly something about which to be deeply alarmed. 

In commercial business repeat custom is brilliant; indeed it has become prevalent to see customer loyalty reward schemes and ‘product obsolescence’ as strategies to promote repeat custom. In charitable and public services, if the same people are returning for your help over and over again then you need to consider the possibility that you are doing something very wrong!

In commercial business demand is your source of income. If demand is higher than you can supply you can still capitalise on it, either by raising the price (and rationing over-demand) or by investing in increased capacity to meet greater demand. The feasibility and repayment of loan finance in order to capitalise on high demand can be calculated by the projected income that will automatically be generated by being able to meet it. In public and charitable services, however, the person demanding your help does not bring with them the additional income that might help you to meet it. Whether your service is funded by taxes, donations or grants the capacity you have is finite unless or until anyone agrees to contribute more funds. A loan to invest in increased service capacity cannot easily be premised on any assumption that higher demand will generate any more income with which to repay it.

In commercial business, price is a reasonable gauge for value. When a customer decides that the price asked or negotiated for a commercial product is both affordable and reflective of its value to them, the sale can take place to the mutual satisfaction of both the customer and the seller. In general, in commercial markets, customer willingness to pay higher prices compared with others can be taken as a reasonable reflection of the relative value they place on that product. In charitable and public services the client rarely if ever pays or negotiates a price to be paid from their own pocket, and they may be inherently and completely oblivious to the costs of meeting their needs (e.g. an infant child needing expensive health care). Those who do fund the service, be they public commissioners or charitable donors, are not the consumers of it. The price of a service may, therefore, be completely unrelated to the value people place on receiving it, making ‘market competition’ on the basis of price comparisons an irrelevance in determining value. This disconnection between price and value can work both ways – a very expensive service could still have low satisfaction among its service users, just as a relatively low-cost, volunteer run service may be viewed as priceless and irreplaceable by the people who rely on it.

When the fundamental tenets of good business are so different from the similarly fundamental features and dynamics of public service delivery, it should be beyond doubt that ‘market forces’ cannot work in the same way in both sectors either. American economist, Professor Edgar Cahn, in an open letter to the non-profit community (2007) powerfully expressed an even more fundamental reason for the incompatibility of market mechanisms with the delivery of social benefits and support. The ‘core economy’ to which he refers in his quote below is a term used to describe the networks of relationships within family, friendship and community, through which people support each other at no monetary charge: 

Markets driven by monetary exchanges cannot put supply and demand together to rebuild the Core Economy because of the way that market value defines value. If quantity is scarce compared to demand, then market value is high. The opposite applies: if supply is abundant, then value goes down. We say something is dirt cheap or worthless if it is abundant.

That definition of value devalues those very universal capacities that enabled our species to survive and evolve: our ability to care for each other, to come to each other’s rescue, to learn from each other, to stand up for what’s right and to oppose what is wrong. In market terms, those capacities, if abundant, are worthless. In terms of rebuilding the core economy, those values are literally price-less.”

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Whilst the ever-so-smug civil servants now running NPS continue to revel in policies, procedures, acronyms and a command and control environment that takes them ever-further from the true probation ethos, it's fascinating to learn that the Kent, Surrey and Sussex CRC are reverting to pre-privatisation post titles of Chief Probation Officer and Assistant Chief Probation Officer:-

"Manjinder takes up the role of chief probation officer on 1 November 2018 and will report directly to KSS CRC chief executive officer, Suki Binning. In the coming weeks, KSS CRC will also reintroduce the roles of deputy chief probation officer, assistant chief probation officer and assistant chief officer to reflect the service’s probation identity, values and tradition."