We need to start talking about public service reform again

A strange paradox seems to be affecting the political debate about public services: the more parlous the spending outlook, the less national politicians seem to want to talk about reform. On top of the deepest and longest cuts for a generation, George Osborne announced in his Autumn statement, even more cuts for the next parliament. His spending plans will shrink state spending back to 1948 levels by 2019.

But this fiscal contraction is only one part of the pincer movement that public services face. The other equally significant pressure is coming from rapidly rising demand. Demographic change and the ageing society, along with the rise in chronic health conditions are the main factors here. The LGA estimate that at least 56 Councils are at risk of bankruptcy after 2015 because their revenue will not cover the cost of meeting the demand for statutory services , much of which is attributable to demographic change.

Yet I have not heard any of the party leaders talk explicitly about the challenge that public services face. If deficit denial was a major feature of the last election then public service reform denial looks set to play the same role in the next one.

The main parties seem to want to talk about anything but public service reform. For the Coalition, the lofty ambition of the Big Society has given way to silo based reform. Instead of there being one overarching narrative there's a mix of different initiatives, some more successful than others but with no overall strategy. Meanwhile, for Labour the spectre of the Blair/ Brown wars still hangs over any substantive discussion of public service reform, which too often means it's safer to say nothing.

Last week, along with Alison Ogden-Newton, from The Transition Institute, Sonia Sodha, from Which, and Andrew Haldenby, from Reform, I gave evidence to the Public Administration Select Committee on public service reform Evidence to PASC. It was a polite and reasonable discussion, but it all seemed rather inconsequential. To be fair to the Cabinet Office, they are doing lots of useful and informative work to promote transparency, mutualism, better commissioning, whole place budget pilots, and payment by results, as part of their Open Public Services agenda. But this all feels very second order, because there isn't a clear overall message from the Government, and as I said to the Select Committee, austerity drowns everything else out.

I was struck by the fact that national politicians no longer have a clear language or conceptual framework with which to talk about public service reform. Choice is useful up to a point, but there isn't a great deal of momentum behind it any longer. Almost by default this leads MPs, including on PASC, to talk about 'accountability' as the key driver of reform.

But whilst accountability is undoubtedly important, it's only one aspect of the reform we need. Accountability implies that we are simply consumers of public service goods. If that was the full extent of our relationship then logic would suggest that better accountability mechanisms would enable us to demand more. There are two fundamental and interrelated problems with this. First, it's a market based analogy which doesn't do justice to the reality of citizenship, through which we have a democratic say on services, co-produce outcomes such as better health, safer and cleaner streets, as well as exercise entitlements. Secondly, it's financially unsustainable, since continually rising demand would be disastrous for public services.

All of which suggests that we need to be having a different conversation about public service reform. Instead of focussing solely on supply side reform and choice and competition, we need to understand how better to manage demand. This is about households, families and communities - what they want for their lives, what they expect from public services and what they can do for themselves. Unless public services start to engage with and try to change the dynamics of demand then they will face a bleak future as residualised services.

The good news is that at a local level a number of councils and some other public bodies are thinking creatively about demand management. With the LGA, ESRC, Impower and Collaborate, we are working on a study of demand management. At one level this is a catch all for a spectrum of approaches that aim to achieve better social outcomes whilst reducing the trend increase in demand for services. These include early intervention and prevention rather than reaction, 'nudge'/behavioural change, social network analysis, customer insight, values modes analysis, and community leadership.

At the more ambitious end of the spectrum this about whole place, whole system change. This means redesigning public service systems around the priorities and patterns of behaviour of cities, communities and households rather than traditional service silos. The whole place budget pilot in Greater Manchester with Oldham is one of the most promising and innovative examples of this. Their aim is to manage demand and promote growth through reducing the proportion of reactive expenditure in local and public service spending. And their own analysis shows that the balance of expenditure since the beginning of the recession has further tilted towards reaction, as Welfare expenditure has increased in proportion to the decline in Council expenditure. Other Councils such as Sunderland, Essex, Lambeth, and Wiltshire and the Co-operative Council Innovation Network  are all developing similar approaches.

What's needed is a new public and political narrative to encompass this. This is ultimately about shaping a new social contract. At its core is the idea of social productivity that we developed through the 2020 Public Services Commission. It’s worth quoting how we defined this in our final report in 2010, because this is even more salient now than it was then:

“Public services should be judged by the extent to which they help citizens, families and communities to achieve the social outcomes they desire. At a time when state resources squeezed it is vital to mobilise the ‘hidden wealth’ of citizens Instead of top down targets the new tests should be about how public services can: • Help create social value for citizens and communities. • Enhance citizen autonomy, capability and resilience. • Unlock citizen resource • Support existing social networks and build collective community capacity” From Social security to social productivity, 2020 Public Services Commission

This idea has struck a powerful chord with many local politicians and public service leaders, but very few national politicians have talked about public services as social investments in these terms. It’s difficult for them because it requires a different dialogue based on social citizenship, creativity and responsibility, rather than delivery, spending and accountability. But the alternative is far worse – further erosion of trust in politics and residualisation of public services.