The Privatisation of Public Policy

First published in Canvas: 9th July 2012

In recent months, the government has advanced its proposal to outsource civil service policy functions to think tanks, charities and academics. It is envisaged that from Autumn of 2012, Government departments will commission outside consultants to compose and develop a wide range of policies – from business regulations to welfare and public sector reform – rather than rely on civil servants. The move comes as a series of policy blunders erodes public confidence in the Coalition government, and is spearheaded by Cabinet Secretary Jeremy Heywood, a former Morgan Stanley investment banker, abetted by Peter Riddell, Director of the Institute for Government (IFG) and Francis Maude MP, the Minister for the Cabinet Office.1

In their current configuration, the proposals indicate that third parties would be asked to devise policy without the involvement of the Civil Service. This is an unprecedented step. Though secondments from companies – particularly law firms such as Ernst and Young – have been commonplace for decades, and consultancies such as McKinsey’s and PriceWaterhouseCooper’s regularly advise the Government on finance issues, for the first time, such companies would be asked to devise and implement policy. ‘In areas such as regulatory reform, for example, the same firm which developed the policy could implement it as well,” a senior Whitehall source was quoted in The Times.2

At first glance, the move appears at first to be a natural progression in Coalition efforts to widen participation in government decision making akin to its ‘Big Society’ initiative. More deeply however, it represents the latest expression of a deep seated impulse towards civil service reform which has, for over thirty years, attempted to make the Civil Service more ‘amenable’ to Government control. In 1988, the Government introduced a number of reforms suggested by Sir Robin Ibbs under the ‘Next Steps’ banner. In particular, Ibbs had suggested that the Civil Service was failing to provide an adequate service to the public – both in the advice it gave and the policies it implemented. The solution, as implemented, was to create executive agencies responsible for individual functions, and after 1991, private companies were invited to compete for Civil Service contracts. Moves towards broader participation have long been an aspiration of Riddell’s, and has culminated in the publication of his ‘Open Letter’ to Heywood and Kerslake in March 2012. Speaking at the launch event, Jack Heywood stated that that the civil service had a monopoly on policy-making, and that if other parts of the public sector were to be market tested, policy should also be opened to ‘contestability.’ ‘Designing policies that work needs to become a core civil service expertise, extending across a wide range of backgrounds, well beyond those who are part of the ‘policy profession. Civil servants must become expert at seeking out new ideas, collaborating with others, understanding potential impacts and turning policies from strategic concepts into measures that can be put into practice and work.”3

The ‘Letter’ received a mixed response. Julian McCrae, director of research at the Institute for Government was in favour. “Good policymaking is essential in Whitehall,” she stated, “but too often policy is developed behind closed doors through an unproductively adversarial departmental process. Anything that opens up the policymaking process and improves it should therefore be welcomed.” Bob Kerslake has been more apprehensive, and has clashed with Steve Hilton – David Cameron’s strategy adviser – who believes that the Civil Service was at fault for its failed to predict the policy fallout surrounding benefit cutbacks, NHS reforms, and the ‘granny tax.’ Both Kerslake and Heywood refused to sign up to Hilton’s proposal that Whitehall staffing be cut by 70%.4

The implication that Whitehall would, under the proposals, be reduced to the status of commissioning agent is strong. But according to Simon Parker of the IFG, such assumptions are unfounded. ‘Outsourcing’ implies that we are going to give Deloitte or KPMG a massive contract to do climate policy for four years. We can all agree that this is probably a bad idea. So if what Jeremy Heywood meant is that we should make departments bid for some of their policy budget against social enterprises, consultancies, service providers in the public and voluntary sectors, or consortia comprising a number of these, then he might be on to something.’5

Among the benefits Parker outlines include the broadening of expertise beyond the confines of the civil service; the increase in competition between departments in terms of delivering effective policy implementation strategies; the creation of policy that better fits existing structures; and the creation of incentives for Civil Servants to upskill and encourage innovation. “Contestability of policy making is rather different,’ claims Parker, “it’s the idea that a certain amount of the government’s policy spending might be up for grabs. I would expect that contestable projects would still have some significant civil service involvement as client and probably as participants in cross-cutting teams. Done well, this sort of system could strengthen both policy making and the Civil Service itself.’6

There remains however, much to be sceptical of. Firstly, how could the government ensure that policy-makers from outsourced firms remain impartial. Whereas civil servants have few conflicts, the opportunity to develop policy that benefit”s a certain firm or industry would surely be hard to resist. Secondly, if a policy team consists purely of temp workers, who provides the continuity and foresight that experience brings? Thirdly, if the work is outsourced, how can success be measured? Finally, in case of political uncertainty, cabinet reshuffles, or a change in priorities, would the government be liable to large contract cancellation charges, and is the sacrifice of flexibility worth it?

More important are the hidden influences. It is common for think tanks to hide behind their charitable status, whilst accepting corporate donations. Investigations by George Monbiot and the WhoFundsYou website have found that only that only one right-of-centre think tank – Reform – has revealed its funding sources. A number of organisations, including The Adam Smith Institute, The Centre for Policy Studies, The Centre for Social Justice, and The Institute for Economic Studies, reveal next to nothing about their patrons, or their funding. Even think tanks considered politically neutral appear to rely on corporate funding. Should policy be outsourced to organisations of which we know nothing, and remain unaccountable?7

Perhaps the enthusiasm for private sector involvement simply appeals to a more fundamental urge amongst MPs – by surrounding themselves with successful businessmen they endow themsevles with a prestige that the public sector cannot provide. ‘Private sector people who come into Whitehall get a big shiny star,” remarked Gus O’Donnell, Kerslake and Heywood’s predecessor (the job was split). “Ministers think they’re wonderful. I tried to bring in more people from outside and on the whole they did slightly worse than other civil servants Often they took very big pay cuts to come in. You’d see some of them and you’d think… what was all that about?’8

Further Reading:

1http://www.thetimes.co.uk/tto/news/politics/article3415702.ece

2Ibid.

3http://www.instituteforgovernment.org.uk/sites/default/files/publications/An%20Open%20Letter.pdf

4http://thegwpf.org/uk-news/5756-think-tanks-will-take-over-civil-service-policy-role.html

5http://www.instituteforgovernment.org.uk/blog/4161/competitive-policy-making/

6Ibid.

7http://whofundsyou.org/compare

8http://www.telegraph.co.uk/news/politics/9329248/Whitehalls-knights-joust-over-public-service-reform.html

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