Learning from History: Markets in Welfare

Panel speakers:

Rt Hon James Purnell - former Secretary of State for Work and Pensions
Professor Dan Finn - Professor of Social Inclusion, Portsmouth University
Sir Leigh Lewis - former Permanent Secretary Department of Work and Pensions
Kirsty McHugh - Chief Executive, Employment Related Services Association

Chair:

Nick Timmins - Senior Fellow at the Institute for Government and The King's Fund, Former Public Policy Commentator of the Financial Times and author of The Five Giants: A Biography of the Welfare State.

Event report:

The first Learning from History event provided a wide-ranging discussion, with many valuable insights on what current policy-makers and implementers can learn from past experiences. The panel each brought their unique experience to the debate: from either a ministerial, civil service, provider or academic perspective.

The discussion started with a summary of the forces of change before moving on to explore the successes and obstacles on the way. Dan Finn summarised the factors of change as being mass unemployment in the 1980s, the public sector reform agenda (introducing the idea of quasi-markets and the 'contestability' agenda) and the growing provider interest. James Purnell then gave more detail on why Labour could push the 'contestability' agenda: due to welfare not being at the core of policy-making, the business background of ministers and the perception that it was an easier sector in which to experiment.

Leigh Lewis explained why he felt that commissioning had encouraged innovation (in ways often unseen before in the public sector) and described how general consensus across political parties was achieved. His conclusion: for effective implementation you still need distinguished leadership and continuous high-level government attention. Kirsty McHugh described the key recent success as being removing the previous plethora of programmes, and lessons have been learned by using longer contracts, partnerships, a 'black box' approach (where providers are free to apply their own intervention methodology) and a stronger payment by results link. But challenges still exist including more voluntary sector involvement and how to respond to a localist agenda. Some key obstacles mentioned by the speakers included increasing the number of providers (which is applicable across departments) including the third sector, as well as sustaining people in jobs.

At some points, the discussion went into real detail – on the use of pilots, how to give sub-contractors more power in the market, and how to take the workforce into account.

• On the topic of pilots, the panel agreed that they can slow down implementation and are often introduced for the wrong reasons. Dan Finn made the point that although they help build an evidence base before further roll-out, the premise of the Work Programme was that it did not need pilots – as it focuses on outcomes, rather than process.
• On the debate between prime contractors and sub-contractors, Leigh Lewis argued that sub-contractors can become more powerful than prime contractors as they bring innovative methods to the 'market'. But he also explained that we still do not have a good knowledge of the risk appetite and profile of these sub-contractors, and we should adapt better to their needs.
• The panel agreed that taking the workforce into account is also important (and especially across other market 'sectors' such as GP commissioning), with James Purnell making the point that this is easier if you have representative bodies such as trade unions on your side.
• Finally, the discussion concluded with Dan Finn (and some twitter commentators) complaining that the end goal of reforms is to help the end user and too often their opinions are neglected. For markets to work efficiently, choice is important – not just for providers but also users.