Short-termism puts privatised services at risk – just look at Hinchingbrooke

For years now Andy Burnham has rightly criticised the fragmentation caused by the commercialisation of the NHS. But today’s decision by Circle Healthcare reveals a different side to the risks thrown up by privatisation of public services: short-termism.

Indeed Circle’s decision to give up control of Hinchingbrooke NHS trust goes to the heart of the difference between commercial contractors and public interest institutions. True public services do not ‘hand back the keys’ when the going gets tough. Major public services like hospital trusts should be run as enduring institutions that are rooted in the communities they serve and accountable to users, employees and politicians.

In Going Public, the Fabian Society’s recent roadmap for public services after the general election, I said:

This is not to say that there aren’t any companies with strong and decent values or an internal ethic and culture that has some flavour of public character. Good companies are motivated by much more than shareholder value… but commitment to the public interest cannot be taken for granted since both market incentives and the profit motive pull in the other direction… and it is also next to impossible to enforce by contract…

Policy makers should be particularly cautious about marketization where (1) close personal relationships and joint endeavour with the citizen is involved; (2) complex collaboration across service boundaries is needed; or (3) a major system-wide transfer of risk and control is envisaged…

So private sector involvement can continue, but the status quo cannot. A commitment to strong public character means rejecting the coalition government’s ‘open public services’ agenda of ‘no default’ in frontline provision, whole-system privatisation and government acting simply as market maker. Specifically we think the next government should bring an end to huge outsourcing contracts which effectively privatise whole public services, as with the Work Programme and probation reforms. NHS commissioning based on competition from ‘any qualified provider’ should be replaced with a presumption in favour of public interest institutions delivering services. For-profit providers should only be commissioned where public or non-profit organisations are unable to meet specified needs.

A public interest institution?

An institution with strong public character must pass the ten tests of this checklist:

1.       Goals: Does it embrace broad goals – to help people thrive and to serve society?
2.       Values: Does it champion equality, dignity, transparency and probity?
3.       Citizens: Does it create equal relationships with its service users, giving them choice, control and responsibility in its interactions with them?
4.       Employees: Does it create trust and power for its employees, so they can autonomously serve citizens and develop in their vocation?
5.       Performance: Does it dedicate itself to improving performance and value-for money, by continuing to achieve more, restrain costs, and actively consider patterns of demand?
6.       An institution: Is it an enduring institution with strong identity, values and relationships?
7.       Shared ownership: Is it partly self-governing, setting priorities through shared decision making involving citizens, employees and service leaders?
8.       Democratic ownership: Is it partly led by democratic politics, responding to local and national political priorities?
9.       Collaboration: Does it achieving success through collaboration with partner institutions?
10.   Control of suppliers: When it uses third party suppliers, does it still lead the relationship with its service users and ensure that all the elements in this checklist are achieved?

The Fabian Society’s report Going Public by Andrew Harrop with Rob Tinker is available to read online here.