Public Services: The Shadow State report

Published last month, SE UK’s latest report The Shadow State makes for sobering reading. If you missed it, it is well worth a look.

The report describes the rise and rise of juggernaut companies and their private equity owners, sucking up public service contracts and creaming off the profits. Leaving everyone else – their beneficiaries, charities, and the state itself – only slim pickings.

If it reads like a recipe for disaster, it is perhaps a little rich. In my view, it is not necessary to reject the private sector in order to argue for better quality services or a greater role for voluntary organisations.

Yet the central point of the report is very well made.

“The full weight of the public sector’s purchasing power must be directed at delivering social, environmental and economic value… Governments can commission in such a way as to drive standards up, in both employment and delivery, and to boost local economies in the service of society’s needs.”

NCVO shares this vision for better commissioning of public services, that also boosts growth. We share too SE UK’s view that the new Social Value Act should be vigorously applied, as it comes into force this month. Instead of race-to-the-bottom pricing, providers should be required demonstrate how they would raise quality and created added value.

We have recently published our own report, Open Public Services: Experiences from the Voluntary Sector which includes several case studies of good commissioning. And also six case studies of charities delivering social value – one of which is also cited in the Shadow State report by Nick Hurd:

“You could do really smart stuff. In my area, Hillingdon Council, BlueSky do the landscaping. Their motto is, ‘we’re the only company in the country where you have to have a criminal record to work’. It’s the first chance to prove yourself, to prove that you can be trusted. From Hillingdon’s perspective, they get a good service at a good price. But they also reduce reoffending. For me, that’s smart commissioning.”

Indeed, getting commissioning right could turn the Shadow State around. With over a million people employed in the public services industry, and many millions more relying on their services, better commissioning could make a fundamental difference to the economy and society.

Whereas commissioners currently wonder if they can afford to pay for higher priced services, given the evidence in SE UK’s report, they should be wondering if they can afford not to:

“In bidding processes, companies are making offers to supply adult social care at a rate that should be mathematically impossible if they are paying the minimum wage, making National Insurance contributions, putting in to a pension scheme and providing training. No local authority should make that deal: even just on the pragmatic basis that it will be their own residents who are on the receiving end of that low wage, their own housing benefit department making up the carer’s rent shortfall, their own health and children’s services that come under strain when poverty is rife. And these care workers are storing up poverty for their own retirement.”

This is an important argument. But it should not be seen only in the negative. We need commissioners to take the positive view: what could we achieve by commissioning this service differently? What would we do differently if we wanted to maximise social and economic value of this service locally? The impact could be transformational.

With SE UK and others, we are continuing to call on Government to give commissioners the best training and guidance possible, so they can utilise the new Social Value Act to its full potential.

For more information on the Social Value Act, see the Cabinet Office’s guidance, NCVO’s blogs and case studies, and SE UK guide.

NCVO Policy Team’s blog

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Charlotte Ravenscroft was NCVO’s head of policy and public services. Charlotte’s wrote about funding, public service delivery, and strengthening the evidence base for voluntary action. She has also worked at the Big Lottery Fund and the Department for Education.

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