The corrosive nature of contract culture

I am beginning to feel that the unresolved, unresolveable struggle between privatisers and nationalisers has so stymied debate in the UK - almost as much as the race debate bogs everything down in the USA.  Nothing seems to change.  Nobody changes their mind.  The old battles continue with the advocates on both sides slugging it out with the same old phrases - like the Bourbons, they forget nothing and they remember nothing.

So I do kind of welcome unusual interventions, especially about the future of public services, from wherever they come from.  My friend Jonty Oliffe-Cooper, and his colleagues at Reform, have produced one of these - in the shape of their new report Markets For Good.

The authors say the problem isn't using markets in public services - the problem is not using them enough.  He identifies absolutely correctly two of the major blocks to urgent reform, the piecemeal unconnected nature of public services across the sectors, and the way that the exhausting business of contracting private and voluntary sector suppliers bogs everything down further.

They are absolutely spot on about this and I hope the report gets read.  There are aspects of their solution which are eminently practical - basic licencing rather than contracting, and opening up all services to all providers across the different departmental and geographical boundaries.

Those are bold and exciting ideas.  But there is a difficulty, which is the long reach of contract culture.

In fact, I've come to the conclusion, not that privatised services are somehow inherently worse - though the extra expense will soon be making them very much rarer - but that contract culture narrows what they can achieve down to ever-narrower numerical outputs.  These are then gamed voraciously by the big players, which as a result spread extra costs around the system.

The problem isn't public versus private, it is small versus big, and contracted versus flexible.

Jonty and his colleagues say this can be tackled by payment-by-results.  But the real problem is that payment-by-results agreements have precisely the same effect as the much-hated contracts: they narrow outputs down, minimise effort from the service providers and spread costs elsewhere in the system.

Yes, I know that PBR can be made more difficult to game.  But the result is an acceleration of the kind of complexity that made the old contracts so exhausting, and to load bureaucracy in such weight that - once again - the small mutual suppliers can't compete.  Even if they could afford the up front costs.

The report authors are right that we need to open up the whole system to achieve broader results.  But PBR will never achieve that, because it is always narrowing results down to deliverable, reportable, numerical outcomes.

My own feeling is that the way forward is being pioneered by the Department of Health, thanks largely to Norman Lamb, and involving the integration of increasing swathes of the public sector at local level - governed if necessary by wider contracts - which can still involve smaller players to help them with specific issues.

They will also need a preventive layer of infrastructure, which is as informal as possible, and which can support people before they need formal services, or when they are coming out of direct professional care.

This kind of thing will need to be planned in via local government, but traditional contract culture - and traditional targets - will kill it.

The underlying problem is much more far-reaching, as I set out in my book The Tyranny of Numbers - though not quite in these terms.  How come, when we have reached the kind of technological sophistication that we have, has humanity increasingly constrained their own judgement with approximations?

Because that is the corrosive power of contract culture - specified, gameable, inaccurate approximations of reality.