Chris Grayling is in parliament today explaining his complex set of probation reforms to MPs. Never one to shirk a challenge, Grayling plans to:
Doing any one of these things would be difficult. Doing all of them makes this join the list of some of the most ambitious public service reforms currently being pursued – along with Universal Credit, NHS reform and schools reform. The Institute for Governments’ work shows that creating new ‘public service markets’ is difficult and rarely do government or new public service providers get things right first time.
Ambition increases the risks that things will go wrong – and a safer route would have been to carefully sequence changes. Grayling clearly feels he is up against an electoral deadline, however, so is going for the ‘big bang’.
In this context, the Ministry of Justice should be building in as much scope as possible to learn as they go and then adapt their outsourcing approach. The Institute’s research suggests that there are at least three obvious ways of doing this that will still allow Grayling to keep the same public aims for the programme.
First, contracts should not be let all in one go in summer 2014. Some should be held back until late 2014 or early 2015. This approach will both encourage new providers of probation services to get up to speed quickly so they can win future contracts and will allow the MoJ to improve the contracting model after its first go.
Second, the MoJ should ensure that it contracts with different types of organisation. Private sector providers will probably win the bulk of contracts but ensuring that some non-profit providers are involved will allow government to test whether a profit motivation has a positive impact on performance or simply creates an additional cost for government. Supporting a probation trust to ‘mutualise’ and provide services in one area on a non-profit basis is also desirable. And there is a strong case for saying that the MoJ should retain an in-house provider to ensure it keeps a good grasp on the costs of provision and understands how providers are responding to contractual incentives.
Third, MoJ should demand high levels of transparency from all providers. They should publish data not just on their key performance indicators (including reoffending rates) but also on the contracts they have let to specialist providers of services like drug treatment or mentoring support. This will help the MoJ and other large providers to spot those specialist service providers that appear to be doing a good job and will allow the MoJ to monitor the ‘health’ of the market. One risk of this programme is that smaller organisations are squeezed out, reducing levels of competition.
All these steps would reduce the risk of current reforms. And indeed there are myriad other ways of maximising learning and flexibility – perhaps too technical to enter into here.
There is a problem, however. Flexibility – while undoubtedly a good thing in managerial terms – is not necessarily what several actors in this reform programme really value. Many politicians talk in private about ‘locking-in’ their reforms, by which they mean making it impossible for subsequent governments to undo their work. Commercial organisations meanwhile like certainty about what they are doing and how much they are getting paid – as it reduces their costs of capital and makes it easier to plan financially. Flexibility therefore costs more in the short run – a premium that officials are often reluctant to pay even if it promises better long-term value for money. Success in a procurement career is, ironically, often tied not to ‘results’ but to the number of ‘big deals’ you’ve done and the ‘savings’ that you secured through the negotiation process – as shown by all those PFI deals that left the taxpayer paying for facilities they no longer needed.
In other words, flexibility is systematically undervalued in government reform programmes – even if it is precisely what is needed to ensure that reform programmes such as Grayling’s are to have even a chance of success.