Learning from History: Markets in Local Government

Panel speakers:

• Helen Bailey – Former Director of Public Services HMT and former chief executive of Islington Borough Council
• Tony Travers – Director of LSE London
• Carolyn Downs – Chief Executive, Local Government Association
• Sir Rod Aldridge – Founder of Capita

Chair:

Nick Timmins – Senior Fellow at the Institute for Government and The King's Fund, author of The Five Giants: A Biography of the Welfare State.

Event report:

The fourth and final event in the Learning from History series brought together a distinguished panel of practitioners in the history of the creation of markets in Local Government.

Tony Travers began by outlining the growth in local government in the latter half of the twentieth century, with the evolution of the welfare state and the additional services that this entailed. The main forces for change in this period were the Thatcher governments distaste for local public spending control (which helped promote Compulsory Competitive Tendering), the obstacles to evolution from Trade Unions and the Labour Party (which introduced Best Value in the late 1990s), and the growing desire from citizens demanding better services for less money. Helen Bailey built on these main factors by discussing the lack of confidence in the public sector to deliver high quality services (and often the automatic assumption that the private sector must therefore be better). This added to the political 'zeitgeist' of expectations changing in favour of outsourcing and specialisation. Benchmarking against the private sector was often a good way of improving quality and value within the publicly delivered services.

Rod Aldridge, from his perspective as a former leader of a major private sector provider, explained how local government has been the most innovative sector to be in, with commissioning attitudes being different from central government. However, for providers to be interested in competing within the market, they need to be assured of political and executive leadership behind the opening up of service provision. Recently, procurement has become more complex, which is understandable but also can limit smaller private and voluntary providers. Carolyn Downs added to these contributing factors by exploring the effects of TUPE and pensions regulation (whereby employees in the public sector could be transferred to a private sector organisation under the same employment conditions). She also discussed how some services are more adaptable to private provision than others – raising the question as to whether it is acceptable to make profit out of vulnerable people, for example with social care?

Other interesting issues that were discussed during the course of the event included:

• How arrangements and commissioning models could differ between rural and urban areas, with the possibility of greater efficiencies depending on the service (for example, between refuse collection/treatment and bus services).
• Whether markets in local government came about by chance or were due more to having  people in leadership roles willing to engage in conversations about contracting out? The panel agreed mainly with the latter argument, with Rod Aldridge making the point that supply often follows demand, where providers need structure and 'permission to succeed' in order to enter the market.
• To what extent central government raises expectations that local government cannot deliver (for example, with the recent Open Public Services White Paper)? Here, Tony Travers agreed that this has been a long-running theme throughout the expansion of markets in local government, and that this is often necessary to instigate progress in these sectors.
• How much do markets just create financial pressures (to cut costs) rather than to innovate and change the way services are delivered and the quality of provision? Carolyn Downs explained that if accountability can be easily located and defined, there is less pressure solely to cut costs, and more to concentrate on the quality of provision.