Market reformers of public services could never be accused of being closed to new ideas. The current evangelical enthusiasm for the expansion of personal budgets beyond social care and into health and other services is just the latest in a long line of initiatives dating back almost thirty years. Compulsory competitive tendering, market testing, the internal market, vouchers, best value, PFI and PPP, individual user choice have all left their mark.

For some reason, however, the gleam of newness never seems to rub off of the market-based approach. It always manages to present itself as the most innovative, most driven approach to improving public services.

The TUC’s latest Touchstone pamphlet, Rethinking Public Service Reform, argues that this is precisely part of the problem. After thirty years of reform, it is time for a less starry-eyed view of the approach. For example, the core claim of market reforms is that the approach can deliver efficiency and better value for money. But independent analysis says this ain’t necessarily so. The private sector has inherently higher costs because firms have to pay dividends and cannot borrow as cheaply as the public sector. And those that don’t involve the private sector can often lead to such high administration and support costs that any proposed saving is wiped out.

Another claim is that initiatives such as user choice give the poor the same access to excellent services that are normally the preserve of the better-off. However, on this as well, the reality is decidedly underwhelming. Evidence shows that parental choice has led to polarisation of quality in local schools and increasing class and ethnic segregation. Studies of Independent Sector Treatment Centres in the NHS have shown a worrying knock-on effect on the quality of training and service in hospitals serving the same communities as the ISTCs. The one sector in which the private sector dominates – care homes – has clearly failed to deliver services of an adequate quality other than to those who can afford the best.

Of course, this is not to claim that in-house services are perfect by any means. But neither are they the inevitable failures that some market reformers imply. As hugely impressive initiatives such as NHS Direct, Job Centre Plus Action Teams and the road safety drive of the last eight years show, in-house services can be cost-effective, efficient, innovative and responsive when given the freedom to be so.

So the time is ripe to think hard about a genuinely new approach to public service reform. In large part we need to ditch the market reformers’ obsession with fads and initiatives and instead learning from the highly successful services listed above. Fundamentally what this means is encouraging real dialogue between service managers, staff and users through deliberative forums and by supporting the sort of daily feedback and responsiveness that only front-line staff can deliver. It means creating the kinds of networks and processes which ensure that local accountability is at the very heart of service delivery.
This is vital not just because it is the route to responsive services but because for all their claims of prioritising the user, the market-based approach can actively undermine accountability. The aggregate outcome of millions of individual choices is not necessarily the same as achieving our strategic goals. This sort of accountability can only be delivered collectively.

This is why Rethinking Public Service Reform calls for a closer look at the new approach of ‘public value’ which is currently under discussion in think-tank and policy-wonk circles. Public value recognises that service users are citizens as well as consumers. They don’t just want good services today, they also want a say over where the service will be in a year, two years, even 10 years’ time.

Public value also recognises that creating total public satisfaction with public services is impossible. A world of scarce resources inevitably means tough choices. There will always be winners and losers or, at best, partial winners and partial losers when priorities have to be set. Under such circumstances, it is vital that users are involved in debating and setting those priorities to avoid the alienation and shrill protest that is such a common feature of public services today.

After the promises of boundless user choice and satisfaction from the market reformers who never seem to notice capacity and resource constraints, it is now time to investigate public value as a potentially more realistic way forward to better public services.