Public Service Reform – from theory to policy?

1. Public Service Reform – from theory to policy? Richard Brooks

2. Outline • Context • The government’s model of PSR • Is this a useful model? • Theory and evidence • How will the model be developed? • What are the key challenges and next steps in public service reform?

3. Context • External drivers of reform • Social, demographic and technological change; rising public expectations; resource pressures; limitations of current services and of top-down reform approaches. • Ongoing ippr PSR project to end 2006 • Immediate context provided by June 6th National School of Governance Conference & PMSU paper ‘The UK government’s approach to PSR’

4. The government’s model of PSR Source: PMSU 2006

5. The government’s model of PSR Source: PMSU 2006

6. Is this a useful model? • Yes: • Explicit account of what is already happening • Sets out objectives, with a progressive flavour • Sets out theory and evidence for scrutiny • Acknowledges some of the risks • Sets reform approaches alongside each other rather than presenting them in isolation • As it stands, helps identify areas of the public services that look like priorities for reform • local public services; police/community safety; armed forces? • What do we want from a general model of PSR?

7. Theory and evidence • Theory sound but at a high level of generality • Broad approach is ‘risks can all be managed with appropriate policy design’ • Should we simply accept that choice does not always support equity and move on? • Theory of user voice relatively underdeveloped, and evidence base is thin • Evidence sometimes difficult to interpret due to specific circumstances and policy designs • But reform cannot wait for perfect evidence…

8. How will the model be developed? • Questions for central government: • What happens next to this model? • What should other parts of gov.t be doing with it? • How will it inform the CSR, future green & white papers, departmental strategies and plans? • Questions for everyone (including ippr project): • How can such cross cutting work be most useful? • What are the key issues for further development? • Can we develop a useable PSR toolkit? • What are the specific policy implications?

9. What are the key challenges and next steps in public service reform? • What are the likely costs of reform? • How do the different mechanisms interact? • How should reforms be sequenced? • How is the role of central government likely to change? • How can reforms embed progressive values? • Can reform be developed into a compelling public narrative ?

10. What are the likely costs of reform? • Reforms have costs which need to be weighed against potential benefits: • Some costs are explicit: e.g. premia paid to encourage new providers to enter a market. • Others result from new market structures, e.g. transaction costs or loss of economies of scale. • Supporting choice and voice may be expensive. • Reorganisation requires corporate resources. • These costs may be outweighed by improved efficiency or quality • Costs and benefits are likely to vary between services. What are the priority reforms?

11. How do the different mechanisms interact? • Many potential synergies and conflicts, e.g: • Top down intervention can build capacity in failing organisations, but excessive control may weaken professionalism and capacity to innovate. • Centrally directed frameworks may facilitate choice and voice, but user pressures may then conflict with top down targets and controls. • Purchaser / provider split may allow services to focus on outcomes rather than mechanisms, but may also lead to a loss of skills and knowledge in the service. • Provider markets may facilitate user choice, but multiple providers may diffuse accountability.

12. How should reforms be sequenced? • Some reforms naturally precede others, some have consequences for later reforms: • Intervention may be the first step towards reform for a failing organisation. • Effective implementation of many reforms itself requires significant service capability. • Contracts may create obligations that make other pressures (both top-down and bottom up) less effective. • Reforms which successfully empower users may de-legitimise the imposition of other reform, for example by central government…

13. How is the role of central government likely to change? • The implications of reform are very significant for central government • especially if user voice establishes a high level of legitimacy • Reform will fail if the centre attempts intensive ‘system management’: • Information and co-ordination problems • Confused accountability and incentives • Conflict with user empowerment • Can the centre really step back? This requires a changed relationship with the public.

14. How can reforms embed progressive values? • Three sets of issues: • How should reforms be designed to support progressive ends in the first instance? • How can they be made difficult to modify so they are no longer progressive? • How can they be made difficult to remove altogether? • Presumably wide and durable public support is one key. • What about support from professionals as well?

15. Can reform be developed into a compelling public narrative ? • Labour can no longer assume the public services are its natural political territory • Investment and reform: • spending set to slow post 2005-6 • ‘reform’ was never an easy idea to articulate • A compelling story is also necessary to facilitate a new relationship between citizens (as choosers, governors) and their services • ‘Whenever a maid kicks over a bucket of slops in a ward…’

16. What are the key challenges and next steps in public service reform? • What are the likely costs of reform? • How do the different mechanisms interact? • How should reforms be sequenced? • How is the role of central government likely to change? • How can reforms embed progressive values? • Can reform be developed into a compelling public narrative ? ** How can this work be made most useful? **