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New approaches to integration and collaboration in public service markets

The recent Government Spending Review announced some key changes to public service markets.

Alex Bleasdale

The recent Government Spending Review announced some key changes to public service markets – expanding support for social impact bonds, joint commissioning of employment support between the Mayor of London and London boroughs, and introducing a new Work and Health Programme after current Work Programme and Work Choice contracts end. In the second event in the series ‘Where next for public service markets?’, run in partnership with the Business Services Association, the Institute for Government convened a panel of experts to explore what these new models of public service markets might look like. Alex Bleasdale analyses the discussion.

Unlocking innovation with joint ventures Christine Chang, Investment Director at Big Society Capital, called joint ownership across social and private sectors “the key to innovation”. She used the recently funded Public Services Lab in Liverpool – a collaboration between Interserve and Catch22 – as an example of the success of this method. The Lab will combine the economies of scale of the private sector giant with the expertise of social business, in order to help community organisations and charities deliver big public service contracts. Chang also argued that government should consider setting a standardised price, to “prevent a race to the bottom” by providers that might otherwise affect the quality of service provision. She outlined steps government commissioners should take to create a more level playing field for charities and small and medium-sized enterprises (SMEs) in public service markets; “requirements around financial health should be made clear as early as possible…so organisations aren’t wasting precious time and resources in bidding for these contracts”. Joining up services at a local level Chris Blackwell, Managing Director of Human Services at Maximus, spoke about the benefits and limitations of co-commissioning the delivery of multiple services to those in need at a local level. Using the example of the Government’s Health, Work and Wellbeing initiative, he said that supporting a more holistic way of working was critical, but there are significant challenges in bringing together the distinct cultures of different services and supporting them to work beyond outcomes associated with individual services. Sarah Billiald, Managing Director at Collaborate, cited the conditions necessary for successful cross-sector collaboration and systems change; encouraging competition and focusing on a small number of outcomes for individuals. She highlighted Coventry’s integration of previously fragmented housing and homelessness services as a good example of this. In this case, time was spent engaging with both the market and users in the design phase, and decisions such as making the case management system available to both parties meant that “the artificial division between commissioner and provider was dead”. Barriers to effective markets Richard Johnson, formerly Chief Executive of WorkDirections UK (now Ingeus) and Managing Director of Serco’s welfare-to-work business, and now a consultant at the World Bank, said budgeting and finance at a national and local level was “not fit for purpose”. He argued that services are funded and delivered in silos, which disincentivises collaboration, and that they focus on the short term rather than the long term – such as the £249 million ‘underspend’ by the Work Programme that was transferred to the Treasury, rather than invested in generating better outcomes. He cited Slough Children’s Services, before it became an independent trust, as an example of how services can become “bogged down by the administration, bureaucracy and supervision of rigid professionalism”, which squeezes out responsiveness to individual need. To make progress, “high-level political buy-in” is necessary; as are clearly specified duties for the commissioner, prime contractor and the provider, in order to prevent conflicts of interest. Blackwell highlighted a current lack of transparency of performance data across the board and spoke about the necessity of removing barriers to data sharing. Data was highlighted by Billiald as invaluable in providing insights for both commissioners and users. The role of the centre The panellists looked at ways central and local government can overcome these barriers. Managing with Less, the Institute’s report on the Spending Review, recommended that we needed more central coordination from government in overseeing public service markets, and particularly in sharing learning across departments. All four speakers agreed that government should act as a ‘convener’. Chris Blackwell advocated for a “simple set of metrics” to measure success and compare initiatives; lack of clarity on what constitutes best practice is currently a major issue, he said. The panellists ended by emphasising that public sector markets should promote rather than complicate collaboration. Whilst there should be market competition for the prime contractor, providers should be working together. As Johnson put it: “we need to challenge the idea that competition and collaboration can’t go together”. The next event in the series will be on 25 January 2016, looking at the skills and capabilities that devolved areas, government departments and agencies need to set up and manage public sector markets successfully. More information will be posted soon at www.instituteforgovernment.org.uk/events.
Watch a video replay of the event here.

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