Saturday, March 12, 2011

Any Willing Provider must mean Another Bleedin' Monopoly

What will Any Willing Provider (AWP) in public services actually mean in practice? In three words, it will mean: lots more competition.

To some, especially in the public sector, this spells duplication, chaos, a race to the bottom and bullying private companies, squashing the rest. To others, particularly in the private, social enterprise and voluntary sectors, it means diversity of supply, innovation, choice and efficiency, as organisations vie for new business.

The truth about the future is that either camp may be right. It all depends on how we go about the process of opening up public sector markets. So how do we end up with the good side of competition and avoid the bad?

Three things are important here. The first is how far we go to ensure diversity of supply – and avoid monopoly or oligopoly. Large, single providers – public or private – can be appealing to councillors and their local commissioners. They offer simplicity, accountability, early economies of scale and a logical "joined-up" approach compared to the "chaos" of the market.

As competition dawns there will no doubt be many providers, both larger and smaller, seeking to offer so-called integrated approaches in particular communities, which are, in fact, a byword for long-term monopoly. Once the commissioning bodies are dependent on the new arrangements the provider can turn the handle, raise prices and lower quality as much as it wants.

If this happens, it will be an expensive route back to what we have today in most public services: costly, unmoveable, low-quality, low-innovation services. The solution, of course, is for the principle of diversity of supply – allowing no one to become dominant – to be an absolute non-negotiable in local public service markets.

The second point is how markets are set up at local level. Just letting the market rip without any rules of engagement or quality thresholds for new entrants will be a recipe for disaster. It goes without saying that the public have to be protected from cowboy operators. Again, a proper job for local councillors and authorities.

More importantly, heavily capitalised organisations need to be prevented from dominating markets at the expense of small and medium players – as in the US, where 25% of public sector contracts are set aside for these firms. In UK healthcare, for example, we could introduce this rule to ensure that smaller and local providers have a guaranteed role in the healthcare economy.

Linked to this, we have to set up markets to ensure that any partnering between large and small organisations is fair – and that companies that abuse their relationships with smaller providers face blacklisting. Again, this is a legitimate role for councils and their councillors as "consumer champions". Don't get me wrong, private sector partnerships with social enterprises and charities should happen – they just need to be fair. Rules of engagement, with teeth, overseen at local level, will guarantee this.

The third factor that will shape how AWP operates at local level will be the fate of the private members bill on social value in commissioning, which is currently making its way through parliament. This bill will pass into UK law that local commissioning and procurement reflects the total "social value" to a community of a bid, as well as price and quality. Without this, we may face a "race to the bottom", as price factors overwhelm all others in the minds of financially pressed local authorities.

So AWP may be a good thing, if it delivers a genuine market. But only appropriately managed competition, a rock-solid commitment to diversity of supply and the hard-wiring of social value into local commissioning will deliver this. It is clear to many of us in the social economy that a simple free-for-all will lead not to AWP but back to another monopoly provider. Not what any of us – including the coalition – intended.

Craig Dearden-Phillips is founder and chief executive of Stepping Out, a business helping parts of the public sector become a social enterprise, and is a Liberal Democrat county councillor in Suffolk.

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