25 June 2007

The Rt Hon John Hutton MP

Secretary of State for Work and Pensions

Future Services Network – Consumer and Citizen Driven Services

Monday 25th June 2007

[Check against delivery]

Thank you very much for the opportunity to come and talk with you today.  Let me first just say a word about this initiative – the Future Services Network – and how important I think it is. 

It may seem a little strange for a politician to say this but I’ll do it anyway - for me, one of the deficits in political debate in recent years has often been the lack of a ´constituency´ for reform across public services - a constituency that challenges and argues not just about what they are against, but what they are for. 

And we need this kind of debate.  The political system can’t cope without it.  The stage cannot be left for politicians to propose and others to oppose.  Networks and coalitions are critical for the functioning of any civil society – whether in business, politics or family.  We need more of them in the debate about the future of public services.  To shape and inform our thinking.  To test and challenge our boundaries. To 'share the ownership of change' as we debate and decide the decade of reform that lies ahead.

And that is why I welcome what you are doing.  You represent different and varied perspectives but united in a common goal to make our public services more responsive and accountable to the user.  Public services must always, ultimately, be judged by this standard, because this is what people now expect from the services they consume. And in this respect, there shouldn’t be any difference in the standard of service provided between the private or the publicly funded sector.  This is the modern world we live in. Our public services must support the aspirations of our people today, and recognise that our society demands and expects more from public services. It is our job to meet these aspirations - not seek to deny them. And there is a wider imperative here.

Support for tax funded public services can itself only be sustained by a broad coalition; one that believes in universal provision of essential services, free at the point of need - but matched by clear responsibilities: for the individual to do everything they can to support themselves; and for Government – and all those engaged in the provision of public services – to deliver the best and most efficient services possible. Second best should never be good enough.

Today, as you know, the public expect more from their public services than ever before. As technology forges ahead, so people get the best products at the touch of a button in the wider economy. And, as taxpayers, they expect the same innovation in product design and service standards from what is the other 40% of the UK economy – the publicly funded sector.

If we are to build and maintain a coalition of support for public services we must rise to this challenge.

We’ve made important progress in the last decade.  But, however much I know you would like me too, I am not going to spend the next 10 minutes reciting them.  And of course, 10 minutes wouldn’t do it justice (!).

But for all the progress, it’s become equally clear that if we are to deliver on some of our most ambitious goals – reducing health inequalities, eradicating child poverty, bringing full employment to every community – then a continuing commitment to reforming our public services must be at the heart of our agenda as we renew ourselves in Government.

Indeed, globalisation and demographic change demand nothing less. Our public services will have a key role to play if we are to respond to these challenges and help individuals and families realise the opportunities of the new world economy. Without such a response, our society and our economy would be impoverished – the life chances of millions diminished. We just can’t let this happen.

But a commitment to pushing forward with public service reform doesn’t simply mean doing more of the same.  We must have a capacity to be reflective: to learn from what has and hasn’t worked.

In looking back over the past decade it is tempting for all of us to try and retrofit a neat story about our public service reforms. In reality, in any walk of life, whether in the public or private sector, you learn on the job. And as you do, themes emerge.

For me, two things stand out.

First, that it is the development of social markets that holds the key to reform. Opening up monopoly state provision to private and voluntary sector providers has been perhaps the most controversial and most challenging of our reforms.  But those who think that structural change is a distraction from raising standards in educational or healthcare are mistaken.  Structural change and incentives are integral to raising standards; you simply can not have one without the other. 

Second, that there are also clear limits to central intervention, planning, targets, audit and inspection. Because we believed strongly in the case for change, we initially drove it hard from the centre. We set central targets and oversaw their delivery through one of the most expansive audit and inspection regimes in the world. We gave accountability to the centre; not the front-line; and too often we neglected the role of the public in helping to shape and improve public services.

More recently, we’ve begun to put that right. We’ve recognised that successful public services will only be achieved if individual users of public services increasingly become the drivers of performance and local staff and institutions are empowered to respond to those preferences.

Yet, our ability to devise systems that create and sustain these effective, flexible, empowered but also accountable relationships between the service and the user is perhaps still our greatest challenge.  Because in practice, what is easy to say here on this platform, is often harder to translate into every day reality on the ground – at the front line of public services.    

What is required, I believe, is a different type of intervention from the centre. We have reached the high-water mark of centrally imposed targets. It is the public who must more and more be the ones who effectively set the targets of the future by the choices they make over which service to choose or which provider to use.

And I am clear that this won’t be achieved by slowing down the pace of reform. It will only be achieved by pushing forwards - by sharing the responsibility and accountability for change with those on the front line; and by enhancing, wherever possible and appropriate, the use of competition and the information with which consumers can make choices that will allow them to drive the development of public services tailored to their needs.

Let me just say a few words about each of these.

One of our most critical tasks in this next phase of reform is to share power, responsibility and accountability with staff and institutions; to create a new momentum behind reform – one that is less reliant on central direction but balanced by new accountabilities and underpinned by an intolerance of failure.

Too often in the past, public services have been undermined by low expectations and an acceptance of second-best. The result was a situation where those who could afford to would opt-out for something better; while those most in need were left behind.

At the heart of our reforms must be a new settlement of accountability that matches real devolution of power with the use of more robust financial incentives; incentives that reward success but also carry clear consequences for those who fail to deliver. There can be no second-best in public services.

Over the past decade we have better understood the intrinsic benefits of managed competition as a way of driving up standards, strengthening accountability and sharing the ownership of change. If you get it right, it is that process of effective competition and how we structure it that creates the dynamic for change – not necessarily whether services are delivered by the public, private or voluntary sectors.

At the DWP, our Cities Strategy seeks to capture these principles – offering local consortia of providers new funding and flexibilities in return for outcome based payments.

The same is true for health and education. At the heart of the public service reform programme in the NHS is the development of a more transparent payment by results system that incentivises output based performance. While in education we are developing and piloting models of valued added – which measure the results of pupils against what might be expected based on previous attainment and factors relating to their background.

And that leads me onto my second point – the power of information in the hands of service users.

The potential power of such information is not just that it strengthens accountability and performance management – but when combined with greater contestability and choice, it can give the user of public services a strong mechanism to shape these services through the choices they make.

Exercising choice over a provider or programme can be a powerful way of restoring a real sense of personal responsibility in the individual – enabling them to shape the service outcomes that they themselves want. But there are, of course, also limits to choice – and we must always understand this. If my home is broken into in Barrow it would be ridiculous to offer me the choice of either the Kent or Glasgow police to catch the criminal.

And in some parts of public service delivery greater choice should actually be seen as an earned entitlement, particularly where there is a stronger balance of rights and responsibilities between the citizen and state.

In welfare, for example, I believe we should move to a position where choice of either provider or programme is available to people in the early stages of their claim, but the longer the claim continues, so the fewer choices should be available and the more prescriptive the intervention should be.

But the limits of choice must not become an excuse for failing to extend the opportunity of choice where it is appropriate, to help those most in need of our pubic services; the parents and patients who could never afford to buy education and health themselves.

Ultimately public services will only be effective when they are driven by patient or parent – and the doctor or teacher is able to respond and be accountable to their demands.

Successful public services are about consumer interests. The practitioner must be empowered to deliver, but it is the patient who makes the choices in a successful health service. That’s why the new NHS Choices Website is so important in giving people greater information and choice in healthcare; in choosing where to go for an operation and placing power in the hands of the people – where it should be.

I think there is a real appetite amongst the public for more involvement and control over public services.  Today’s report from the Future Services Network makes this clear. 90% of those polled believed that the quality of customer care is as important as the service outcome.  That, yet again, is telling us something about the quality of relationships within our public services.  Almost as many said they would like more influence in deciding how local public services are delivered.

Easily accessible, real time, independently verified information will be critical to this.  Your report today found that over two-thirds of people would like to be able to compare independent customer satisfaction levels for different public services.

And Directgov for example, could be developed in the future to be an accessible and comprehensive reference point for comparator data.  Directgov provides a vehicle for citizens to access online services across the whole of Government. In bringing together such information it seeks to break down the old silos between different Department’s interactions with the public and ensure a more coherent and integrated service, designed around the needs of the citizen.

I’m keen to see us go further – which is why I believe it is so important we have a public debate around the issue of data-sharing. There’s obviously a clear trade-off between meeting customer demand for more personalised, joined-up services and ensuring that we maintain appropriate protection of privacy.  But currently too many of our services continue to treat customers in silos and leave the customers to make the joins between those services. This happens because we don’t share enough of the basic information about people across organisational boundaries.

So the challenge of making our public services ever more consumer and citizen-focused is clear. But so is our commitment to achieving it.

There are some on the political margins who hope that when Gordon Brown becomes Prime Minister later this week, there will be an opportunity to reverse our approach. They will be disappointed. Gordon has been at the heart of the debate in Government over the future of public services for over a decade and I have no doubt about his commitment to advancing the next phase of reform.

As he himself made clear this weekend, our progress now will depend on how successfully we involve people in this next stage of the reform journey. Public services – schools, hospitals, welfare, police, have been enormously improved over the last ten years. Now our efforts must be focused on making them better still.

Government can not deliver public service reform on its own. Rather, through our collective endeavours, we can together deliver better outcomes in public services; more in tune with what the public want – but only if we are prepared to see through the radical reform we have begun. To make our public services truly accountable to the people they serve; and to deliver fairness, prosperity and decency in our society – with no-one left behind.

These are significant challenges. But if we can meet them – and I do believe we can – then we will lay the foundations for public services that are truly fit to meet the modern needs of our society – and, in doing so, fulfil our mission to spread opportunities more fairly to every section of our community.

Thank you.