Public Service Reform – Where is Policy & Practice Going?

Geoff Mawdsley\’s speech to the Economic Development Association Scotland\’s conference "Public Service Reform – Where is Policy & Practice Going?" on 4th September 2008.

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"My aim is to outline where I think we have got to in Scotland in terms of public service reform and where Reform Scotland – the organisation which I run – thinks we should be going in the future.
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\r\n"So where are we? As a starting point, I think it is worth recognising that, although there are differences of opinion about how to achieve the objective, there is broad agreement throughout Scotland on the need for public services which match those seen anywhere else in the world. That is certainly one of our objectives at Reform Scotland, as we were established to look at how we might improve public services here in Scotland.
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\r\n"My assessment of where we are in relation to public services is not all doom and gloom. Too often, the political debate is overstated with those in government stating that everything is rosy and those in opposition claiming that the government is making a complete mess of things.
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\r\n"The reality is somewhat different. In April this year, we published a report looking at spending on our key public services – health, education and policing – and examining whether the real increases in spending over recent years had produced a corresponding improvement in performance.
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\r\nCertainly, the increases in spending over the last ten years have been significant. Health spending has grown by 55 per cent in real terms, education spending by 87 per cent and justice spending by 44 per cent. And these increases have led to many areas of improvement, particularly in relation to health and education.
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\r\n"For example, both men and women in Scotland can now expect to live longer, waiting lists have fallen and mortality rates for major diseases such as heart disease, strokes and cancer have all improved. Of course, other factors such as changes in lifestyle or culture play a part in many of these improvements in health outcomes. However, they are still a reasonable indicator that progress is being made.
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\r\n"The same is true in relation to education. Attainment in schools has increased over recent years and the number of those leaving school and not entering education, employment or training – the so-called NEETS – is declining.
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\r\n"Performance in relation to tackling crime has been less effective, with total crimes and offences rising by 14 per cent in the last 10 years, including increases in violent crime and antisocial behaviour. Our research also uncovered the alarming statistic that there is now more violent crime per head of population in Glasgow than in New York.
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\r\n"And the comparison between the performance of our major public services in Scotland and those of other countries shows there is no room for complacency.
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\r\n"Life expectancy in Scotland has increased, but it is still below the OECD average for men and women and is also lower than the North East of England – the worst performing part of England. And despite improving survival and mortality rates, according to a study carried out by the National Cancer Institute in Milan only 48 per cent of female cancer sufferers in Scotland survived for five years – the lowest rate out of 22 countries.
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\r\n"International educational studies of literacy, maths and science also show Scotland lagging behind other countries and, at best, our performance in these areas is mediocre in international terms.
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\r\n"This all leaves plenty of room for improvement if we aspire to match the public services seen in many other countries. We need to look at the means that have been used to try to improve the performance of our public services and see where they could be improved. In particular, I think we need to look at what other countries are doing differently and the lessons we can learn from them.
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\r\n"The main policy tool used to improve public services in recent years has been top-down management of performance. The features of this approach have become familiar – centrally-set targets, controls and directives together with tight control over expenditure.
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\r\n"The aim was to improve performance by trying to extract maximum value from the extra money invested in our main public services. High, uniform standards would be ensured, for example through the Best Value regime imposed on local government. At the same time, the government sought to ensure the efficient use of resources through measures such as the sharing of services with this process being directed from the centre.
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\r\n"The common thread in the public service reform agenda in Scotland has been an attempt to engineer improvement from the centre. However, this approach has not delivered the level of improvement people would have expected given the amounts of money invested. Indeed, it has not even delivered greater uniformity of standards as there are still wide variations in performance across the country.
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\r\n"For instance, in the health service the median wait was 44 days as of March 2007. This varied from 65 days in Forth Valley Health Board to 35 days for Greater Glasgow and Clyde. In our schools, 48 per cent of pupils do not reach the required level E in Maths by S2 in Aberdeenshire, whereas this figure rises to 62 per cent in Dundee. And the clear up rate for crimes is 64 per cent in the Highland Council area and only 30 per cent in East Renfrewshire.
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\r\n"There was a further stark reminder of the variation in outcomes between our different communities in the recent World Health Organisation report into life expectancy. This showed that a man in Lenzie could expect to live to 82, whereas eight miles down the road in Calton, the average life expectancy for male residents is just 54.
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\r\n"The question is why has this approach to improving public services not been as successful as was hoped? There are a number of reasons. Public services are extremely complex and have many dimensions. This makes it impossible for those at the centre to have the knowledge necessary to direct these services effectively and appropriately for all parts of the country.
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\r\n"Equally, by setting targets for certain aspects of a service, attention becomes focussed on them at the expense of other aspects which may be just as important. This leads to distorted priorities. Monitoring and administering this vast array of targets also requires a large bureaucracy which is not the best use of available resources.
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\r\n"At the same time, centrally-directed services which encourage uniformity are less likely to lead to the innovation necessary to raise standards.
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\r\n"That leaves the question of the direction of policy in the future. In deciding this, we should start by recognising and building on the strengths of our public services. One is the fundamental principle that everyone in our society is guaranteed access to vital public services such as health and education, irrespective of their ability to pay. Another is the enormous number of dedicated people who work in our public services.
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\r\n"We need to look at how we can reform these services in order to build on their good points, improving their quality and effectiveness as well as ensuring that they deliver better value for money.
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\r\n"Our research shows that other countries have not followed us down the centralising path. In fact they have been going in a very different direction and one that offers important lessons for Scotland.
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\r\n"Of course, a variety of different models of public service provision exist in comparable countries, but they have some important common features.
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\r\n"First, public services tend to be more directly accountable to the people and local communities they serve. For example, responsibility for the funding, management and operation of healthcare in Denmark is devolved down to local councils. This leads to different priorities in different parts of the country and a strong resistance to centrally-driven initiatives. It is no coincidence that the Danish health system also enjoys extremely high levels of public satisfaction.
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\r\n"In the education systems of both the Netherlands and Sweden, parents have far greater choice over the school their child will attend with public money following the choices of parents. This makes schools more responsive to parents and pupils as they determine funding rather than central or local government. Again, these examples are worth studying as the performance of the Netherlands in international studies is particularly good.
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\r\n"The second feature of public services in other countries is that decisions are taken at a more local level, whether by local authorities or other service providers. This makes the service more responsive to its users and helps to implement changes quickly that can make the service more effective both in terms of quality and cost.
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\r\n"The third feature of public services in other countries that we found was the greater diversity of providers. In most western European countries, there is a balance between the state providing funding and regulating services and a wide variety of organisations from local authorities and charities to churches and profit-making companies providing the service.
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\r\n"Such diversity has the advantage of extending choice. It also helps to drive innovation and higher standards as different providers find new and better ways of providing services.
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\r\n"We should look at ways of building these features into our public services here in Scotland as our public services are currently too centralised and we need to move in the direction of greater decentralisation in order to improve performance. How we might do this in relation to the criminal justice, healthcare and education systems will be covered in future Reform Scotland papers.
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\r\n"However, such decentralising reform should not be confused with privatisation or assumed to be an attempt to slavishly copy everything done in England.
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\r\n"We have to ensure that any policies adopted are appropriate to the situation in Scotland. Equally though, we should not reject policies which have achieved success in England simply for the sake of being different. To quote Tony Blair ‘What matters is what works.’ If we are prepared to examine objectively the results of the different approaches taken in different parts of the United Kingdom, then devolution can help us to identify better policy solutions.
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\r\n"So what should we be doing? Although decentralising reform does not stop at the level of the local authority, and we should explore ways in which we can empower individuals, devolving greater power to local authorities is the necessary starting point for decentralising reform.
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\r\n"This was the premise of Reform Scotland’s most recent report, ‘Local Power’. This recognised that the trend over the last century, under governments of various political persuasions, has been one of greater centralisation of power which undermined the autonomy of local government in Scotland. A variety of policy measures have helped to bring this centralisation about – the transfer of local authority power to quangos for one, whilst measures such as capping and the increase in the share of revenue coming in the form of central grant have reduced the financial freedom of councils. In addition, funding has become tied to central policy objectives with the room for manoeuvre of councils becoming further constrained by the array of central controls, directives and targets.
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\r\n"I acknowledge that the SNP Government has established a new relationship with local authorities by signing a concordat with CoSLA. This reduced the amount of ring-fenced funding councils receive, which is a welcome step in the right direction. However, it did so in return for a council tax freeze, so the centre is still exerting control, albeit by negotiation, over local taxation.
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\r\n"It is still early days for this administration and, hopefully, they will go much further in devolving power to local government. I certainly think that much more fundamental reform is required if we are to bring about improvements in the performance of our public services.
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\r\n"We need a completely new constitutional relationship between the Scottish Government and local authorities, which frees up councils to take action in the interests of their communities unless specifically prohibited from doing so. This is the principle adopted in many European states and is also the one that governs the relationship between Westminster and Holyrood. That makes it a sensible basis for this new constitutional relationship.
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\r\n"Legislation should also enshrine the principle of subsidiarity to ensure that tasks are carried out as close to those affected as possible. However, this greater local autonomy needs to be underpinned by a new financial relationship which ensures that, over time, councils have the ability to set their own tax levels and raise the bulk of their own revenue. To do this, councils will need to have discretion over more than one form of taxation and we have suggested returning control over business rates to councils as a first step in achieving a broader range of local taxes. This would have the added benefit of restoring the link between local economic development and higher revenues, giving councils a greater incentive to work with local businesses to improve the local economy.
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\r\n"This decentralisation of power would make local authorities responsible for providing the bulk of public services free of excessive central control. It would limit the role of central government to those areas where it has exclusive competence, as well as important areas such as the setting of certain minimum standards and ensuring fairness in the allocation of resources.
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\r\n"In turn, this new-found freedom for councils would encourage diversity rather than uniformity, reflecting the fact that there is no one right way to deliver public services. That is why central control is so damaging to new ideas and initiatives. The greater diversity encouraged by local provision would enable councils to look at different ways of providing services to find out what works best for their area. For example, some may want to provide a service directly, whilst others contract it out. The results of these different approaches can then be examined and local authorities will be able to learn from each others’ experiences with this process driving up standards across the board.
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\r\n"The usual argument against such an approach is that it will lead to a so-called postcode lottery with standards varying across the country. As I mentioned earlier though, centralisation has not delivered consistent high standards with a wide variation in performance between the best and worst.
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\r\n"The fact is that the needs and priorities of urban and rural communities in terms of public services are very different. Therefore, pretending that communities across Scotland face similar problems and trying to impose similar solutions from the centre makes no sense. It limits the room for manoeuvre of local communities and simply leads to the wrong solution for many parts of Scotland.
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\r\n"Diversity of provision does not necessarily mean that services are better or worse, merely that they reflect local priorities. However, if there are differences in quality, the dynamism associated with decentralised systems is more likely to lead to higher standards. This means that the average is usually better than the best achieved within a centralised, uniform system.
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\r\n"That is why countries such as Sweden, France and Spain have all decentralised power because they believe it is the key to better public services and a stronger, more cohesive society. Scotland needs to learn the lessons from these countries and restore our own tradition of local self government. It is not the whole answer, but it is the start of the process of decentralisation required to deliver better public services which address the needs of local communities throughout Scotland."

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Further information available from EDAS\’s website 
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