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Social justice
21 February 2013

Fake market mechanisms will not reform our public services

It is said that some goods are too important to be left to the market – for instance, healthcare. And, yet, there are various aspects of our health and wellbeing that we routinely entrust to private sector providers. Nutrition, for instance, or the provision of clean water. Then there’s our eyesight, which, for millions of people, is tested and corrected with great speed and efficiency without a public sector provider anywhere to be seen (even with our new glasses).

But what about those needs which are simply too complex and intrinsically bespoke in nature to be supplied as a mass market product? Well, some of these can be supplied by the private sector too, but only at a price beyond the reach of many or most individuals and, were it not for careful allocation (i.e. rationing), to the public purse too.

Thus the reason why such needs are provided by the public sector is not because they alone fall into the ‘too important’ category, but because they present problems of supply and, especially, demand that can only be managed collectively. 

And yet, in recent decades, repeated attempts have been made to reform our public services by introducing market-like mechanisms – in the hope of replicating the choice, competition, efficiency and innovation associated with private sector provision.

In an op-ed for PublicServiceEurope, John Seddon identifies the central flaw of this approach:

  • “The vehicle for market-making in social care is commissioning. Commissioning requires a specification against which providers can pitch a price. Ideologues believe providers will compete on price and the lowest price will win. Studying care services reveals the folly of this ideology. A citizen has a health or social care need. The need is assessed and eventually, for it can take a very long time, a service is commissioned and then provided. Boxes ticked.”

The problem here is that the “specification” is far too simplistic to properly describe the very “specific, human, peculiar and particular” needs that are supposedly to be supplied. As a result the service users keep coming back – ‘re-presenting’ – to get what they needed in the first place:

  • “We then go through the same loop - assess, commission and provide - and the person represents. It is common to find that this amplification of assessment activity and service provision can be nine times, 12 times, even more than 20 times. It can extend an episode; it can become a whole life.”

Of course, this can happen without any attempt at “market-making”. Unreformed public services, can and do fail to provide what their users need. The special problem with a commissioning system though is that it artificially locks-in the failure – because as long as they meet the contractual specification, suppliers have no incentive to adapt to actual need, in fact, they may well have no way of knowing that the real need – as opposed to the bureaucratically specified need – is going unmet.

Seddon argues that free from these fake market mechanisms, “managers can discard ideology and devote their energy to designing a service that works”:

  • “They build a design that is super-sensitive to people, their needs and their context. The design places the individuals' wishes at the centre of service provision. People who need help are met by people who have the expertise to help them and the services provided are truly tailored… Everyone – citizens, service professionals and providers – is happier, more motivated and more engaged. Ingenuity and innovation emerge naturally. And then the big prize is revealed. Costs fall out, dramatically.”

So should we forget reform and revert to the old top-down model of delivery?

Surely not, because Seddon’s model depends totally on the freedom to act on local knowledge. One might add it also depends on the ability of service providers to co-ordinate at the level at which they naturally come together i.e. that of real places and real people. This implies the opposite of top-down bureaucracy – of which fake market mechanisms are not the only manifestation.

Furthermore, it would be good if those who advocate the Seddon approach would acknowledge that the “ingenuity and innovation” that he says emerges naturally, can be squashed by institutional attitudes and cultures that have nothing to do with market ideology.

Even when public service institutions are given a free hand, some will fail through their own fault. It is therefore vital that service users have a choice – not in the sense of irrelevant consumerism – but so that they are never captive to an abusive producerism. Providers should always be aware that the people they’re supposed to serve can vote with their feet as well as at the ballot box.


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