Does the Government have a public services policy?

8 February 2016

This time last week, Sharon White, CEO of the media regulator Ofcom, made a clarion call in favour of competition. She quoted Herbert Hoover: “Competition is not only the basis of protection to the consumer, but is the incentive to progress.”

Later in the week, Jim Mackey, head of one of the NHS regulators, said that competition was “absolutely not centre stage” in NHS policy. The point of his comment was that the pressure on NHS finances is now so great that only a central grip can make the system work. Senior figures such as Chris Ham of the King’s Fund interpreted this as a retreat from the efforts to decentralise health policy at the beginning of the 2010 Parliament. The Department of Health apparently may break the spending limit agreed with the Treasury for this financial year 2015-16.

This is worth a number of reflections.

First, Sharon White is right. Senior politicians do not like making the case for competition because (I think) they have a sense that competition involves winners and losers among those providing any service. Any good politician hesitates before praising the creation of losers, especially in the public sector. What really matters however is that the true winners are consumers, who benefit from the new services that competition creates and the general pressure to keep providers honest. This must be one reason why the public is much more clearly in favour of NHS competition than politicians ever are, when they speak in public at least.

Second, NHS policy may have taken a serious turn for the worse. Reform has been arguing for a number of years that efforts to accelerate change and push innovation were going far too slowly. See our 2013 paper here and 2015 paper here. Without those innovations, the NHS was always going to hit the financial buffers, and it can’t be any surprise that it has occurred immediately after the General Election. It is difficult to see how a problem caused by a lack of reform will be caused by clamping down on change even further.

Third, the NHS breaking its financial limit is not the most important question. I remember meeting very senior Department of Health officials ten years ago who explained that the record NHS spending increases at that time, involving big increases in staffing in particular, were all fully accounted for. Perhaps they were, but the real question is whether the money is being well used. It would be fine if the NHS broke its limit in a period when it was clearly becoming a different, more efficient operation. That isn’t the case at the moment.

Fourth, what now is the policy on NHS staffing? After the Mid Staffordshire inquiries, the Department sent a clear message that more staff equals better care. (That was never actually the case, as NHS leaders have consistently said to me since. What matters is how staff are used.) Now it is saying that staff numbers must be cut. Does that mean it wants worse care? Or is it going to push hard for the big changes in NHS delivery (including better use of technology and better provision in social care and rehabilitation) which would result in better care and which would reduce the upwards pressure on hospital staff numbers? All of that would require greater use of the private sector and of local initiative, which presumably falls foul of the Jim Mackey rule.

Fifth, does the Government have a public services policy? Speaking today on prisons, the Prime Minister spoke eloquently in favour of greater freedom for prison governors and announced six new autonomous “Reform Prisons” (great name). I am guessing that Jim Mackey will not be applying to run one of those new institutions.

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