10 reasons why the public sector is different

It's becoming clear that "big society" means opening up state-owned services to a wider range of "service providers". Proponents see this an opportunity for innovation and choice.

Choice. As far as I can see, for all but the urban dwelling middle-classes the whole rhetoric of choice is a nonsense. Most people want a good local school, a good local GP, a good local hospital. So does Choice lead to competition lead to improvement? Making hospitals compete for funding, and for the best local staff, seems to me to waste their time. This "survival of the fittest" mentality when it comes to public services feels to me like it was dreamt up by people who aren't troubled by their local services because they rarely use them. Certainly many politicians direct education policy without having gone to state schools themselves.

Innovation, though, this is different. I believe in change, in progress, in always looking for better ways to do things. The socio-economic environment changes all the time, and we need our public services to keep responding.

Clearly, some people feel that the public sector is not innovating enough. They feel that bringing in the perspective of business and charities will help. They feel this will give the public sector a kick up the arse.

So why do I think that private sector and charities aren't the knights on white horses they are being portrayed as? Me and my husband have made a list of 10 reasons why the way the public sector operates is *different*.

Let's start with charities.

1. I'm not sure of definitions. Having charitable status is not the same as being an organisation set up first and foremost to do fundraising and good works. So I'm not sure the third sector is as big as it looks.

2. Many many of these genuine charities are supported by state grants. From central governments, and from local councils. Many win contracts. In other words many of them are doing work the state deems valuable, and the state subsidises. Financing from independent sources is fantastic, and private donations are great, of course. But to think of charities as an alternative to the state is to ignore the co-dependency. At a time when central and local spending is reducing, charities are operating on reduced funding too.

3. Charities can choose what to do. They can choose to exist or not exist. They can choose to focus on young people, or old people, or sick people. They can set rules on who to help. In filling the gaps between and within public services they can choose those that they can create a coherent and compelling argument for. They can market their specialism. They can't fail, because they can only ever do their best. And if they run out of money they can close.

So charities operate differently to the public sector. They are not like the public sector only smaller/specialised/privatelyfunded. They are simply not like the public sector.

So let's move onto business. As in private companies, commercial companies, businesses. They can innovate, they can approach problems in diverse ways, they can improve, they can deliver quality services. So surely they have much to teach the public sector? They do, but let's be clear about how they differ from the public sector.

4. Businesses can choose the most profitable products/ services. They don't have to do anything that doesn't make money.

5. That said, they can choose to have loss-leaders, they can aim for a balanced portfolio.

6. They can choose to leave a market when it's no longer desirable. If the public sector decided that providing services for people in long term unemployment was never going to improve the situation, could they just walk away? I think not.

7. In business, Increased demand is good. They can stimulate demand through advertising, etc. In the public sector, demand is largely uncontrollable and undesirable, except for maybe public health campaigns for spotting disease warning signs early.

8. Negative impact of one business's activity will be dealt with by another company or the public sector. If mp3 players cut into the market for CDs, that's not a problem for mp3 player manufacturers. But trends in general practice affect hospitals, trends in benefit payments affect social services, and trends in social housing affect schools. The campaigns for spotting the early signs of heart disease are to try to take pressure off acute services and instead encourage a trip to the GP. The public sector is a vast network of interdependency, something local government knows very well, but that doesn't seem to get mentioned in this talk of breaking it up.

9. Business can cut the costs of the supply chain: offshore, pay less for labour etc. It's hard to think of a public sector function where the labour could be overseas - you'd have to bring overseas people here, as the NHS does.

So there we go. The public sector *is* different. Before its critics start dismantling it perhaps they should understand why it is the way it is. So many people I know who work in the public sector know its not perfect, they want to improve things, they know its weaknesses more than anyone. Which brings me on to my last reason why the public sector is different.

10. Efficiency is not rewarded in the public sector. Because of the way funding cascades from Treasury, by the time money arrives with you it needs to be spent. You often can't carry it into the next year. Without strong management you can't move it from one activity to another. You are certainly not encouraged to admit to having spent less than planned. Underspend is a dirty word. Underspend means next year you get less money. Sometimes its not spent because work didn't get done, sometimes its not spent because the budget agreed was over-estimated, but sometimes its because good people, who care about their job, who want to get things done right, have managed to do more with less. But shhhhh, don't tell anyone you saved money, or next year you'll get less funding ;-)

 

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Comments

[dkernohan]

Great post - thanks for sharing it.

I'm not sure underspend is a dirty word - it's more a chance to support work than you initially thought you wouldn't be able to. There's always more stuff that we'd like to do than we could do. Sometimes it's not in a "fashionable" direction, sometimes it'd be too piecemeal to justify to a committee, sometimes you don't even know you wanted to do it until halfway through what you were actually meant to be doing.

If you think of your overall budget as the total amount that The Rt Hon George Gideon Osborne wants to spend on your area of interest this year, you have to invest it in the way that best benefits your area of work before he takes it away and spends it on something far more crazy (like tax breaks for millionaires, or married couples tax allowance, or Trident...). A budget is an opportunity to invest in something worth doing. If we don't think it is worth doing then we shouldn't ask for a budget.