Markets aren’t the panacea for public services

4 Mar 2019, 5:00

The failure of the provider should prompt us to reflect seriously on the role of the marketplace in learning and skills, says Stephen Evans

Working Links’ fall into administration is bad news for the people they support and their employees. Its case is different to that of learndirect and other providers. But together, they should give pause for thought about the nature of markets in learning and skills and their limits.

Firstly, commissioners need to be realistic. A large part of Working Links’ problems came from its struggling probation contracts. Its management and staff bear responsibility for bad practice, such as assessing probation users as lower risk to avoid putting sufficient resources into helping them. But the government should have heeded the warnings at the time of procurement that you couldn’t cut huge amounts of money out of the system without affecting the service. Added to a focus on price, rather than value, this leads to a vicious circle where providers either put in unrealistic bids or face going out of business.

Ultimately, good public services cost money. We should always strive for greater efficiency, but procurement isn’t a sort of inverse magic money tree – sometimes you get what you pay for.

Secondly, this looks like the end of what was meant to be a new type of provider. Working Links started as a large, national partnership between the private, public and voluntary sectors in the New Labour years, intended to be the best of all worlds. It was sold off in 2016 to a private equity firm. Inevitably this leads to a push for higher profits at the risk of its social mission. The same can be said of learndirect, whose worst excesses (such as spending taxpayers’ money sponsoring a Formula One team) were rightly exposed by FE Week.

Procurement isn’t a sort of inverse magic money tree

Perhaps the future is more local? We’re already seeing that shift in the employment sector, where a greater proportion of opportunities are now locally commissioned. Does the contraction of the large outsourcers mean the rise of the local specialists? The devolution of the Adult Education Budget in parts of England could hasten this.

Thirdly, markets need managing and have their limits. Contracts and targets drive behaviour, whether set out through a procurement or managing an in-house public service.

That’s why we need effective monitoring of quality, including through Ofsted, and service standards. But you can’t write everything in a contract and you can’t monitor everything. The same is true of a service delivered in-house by the public sector of course.

Empowering employers and individuals can help in this. What are the minimum levels of service standards people can expect and what do they do if these aren’t met? The Apprenticeship Levy has the potential to shift the dial for employers – putting them in greater control through their levy accounts. Learning and Work Institute has argued that Personal Learning Accounts could empower individuals, and I’m pleased that the Welsh government has committed to trialling them. Bottom-up accountability to customers can complement top-down regulation.

The NHS ten-year plan for England argued that regulations requiring services to be tendered were holding back the integration of services that patients, often with complex conditions and needs, required. I wonder if we should start to make the same argument for learning and skills?

The lack of an overall vision and principles guiding decisions doesn’t help. Nor does seeing each service or contract in isolation. Learning and Work Institute will shortly be launching a project exploring how we balance a focus on integrated services with ensuring that we don’t lock out people with fresh ideas.

The decline and fall of Working Links and other providers is sad for all involved. It also raises big questions about how to build learning and skills systems that work for people and employers. We need a diverse range of high-quality providers. But we also need to recognise that markets have limits.

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