David Melding asks whether Welsh public services can thrive without the market

October 3rd, 2013

According to the French poet Paul Valèry “if the state is strong, it will crush us; if it is weak, we shall perish”.

The role of the state in industrial societies like Wales and Britain changed enormously in the 20th century. From Lloyd George’s people’s budget in 1909 to the heady days of economic planning in the 1960’s and 1970’s the state became pervasive in economic affairs. What British citizens expected of the state matched this massive shift. But why should we expect the state’s role in the 21st century not to change radically again? And is not the evidence of another radical shift not already evident?

The assumption that advanced states require a hyper-active government has, according to the Italian economist Vito Tanzi, been challenged. He argues that the role of the state must focus instead on regulation – preventing what is loosely called market failure not correcting it afterwards.

The Welsh Government, just like any other administration in Europe or North America, finds itself subject to these pressures and changes. In this context the work of the Welsh Government’s Commission on Public Service Governance and Delivery is to be welcomed.

However, in setting itself against market mechanisms the Welsh Government faces an enormous challenge in maintaining a rather 20th century view of the state.

The lack of choice and competition in the delivery of public services in Wales must end. A radical re-think in the way we fund and manage public services, like health and education, is urgently needed to deal with profound financial pressures we are facing.  The combination of spending cuts and growing costs from an ageing and rising population will leave Welsh services facing a potential shortfall of £4.6 billion by 2025.  This is according to a report by Wales public services 2025.

The Welsh Government have up until now been almost devoid of competition in their public services, this needs to change. Greater use of the independent sector and greater choice for the user will be crucial for success in allowing public services to thrive in Wales.

The Welsh Government would needs to enable public services in Wales to thrive in the future. To do this they must create:

  • Contestability with the checks and balances needed to promote effective and efficient public services,
  •  Citizen Consumers, allowing citizens more choice and influence in the delivery of public services,
  • Innovation and adaptability encouraging change and development in public service delivery,
  • Public funding with independent delivery to achieve a mixed economy in Welsh public services.

All of this could be achieved with what the Welsh Government calls an optimal model, but it will be no small task. In particular, greater use of the independent sector and greater choice for the user will be crucial for success.

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David Melding AM is President of the independent non-party think tank, Gorwel.

3 Responses to:“Spending squeeze a chance to shake up services”

  1. Matt Hemsley says:

    I hope the Conference today is a success in generating debate and ideas around reforming public services in Wales.

    We must be careful not to confuse choice and competition – as Dave Boyle rightly highlighted in his essay in the new Coalition and Beyond pamphlet published by Liberal Reform.

    Competition in itself can be engineered by Government to provide the outcome that it prefers – simply offering tendering opportunities for services, for example, could be considered competition. In the long run, this will have minimal effect.

    Choice on the other hand, is crucial. We should seek to change how people are able to interact with public services to get the services that they most value. In the long run, this can be cheaper, too.

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  2. John Dew OBE says:

    I attended the Gorwel Conference yesterday and came away having been enlightened by the speakers and enthused by the breadth and liveliness of the debate that took place.

    Very good article David! I agree with you about the need to take a long hard look at the future role of the State – especially, as we can no longer afford the mammoths we currently have! In our fast-moving, highly-connected and volatile World, the current lumbering beasts simply cannot react with the speed, deftness and agility that is essential in the Digital Age!

    I agree with you also on the case for a mixed economy in public service delivery with a far greater role for independents. A word of caution though, as one of the delegates said yesterday, let’s not write-off our public sector and assume that they cannot increase productivity and become competitive in terms of affordability, value for money and excellence. Despite the enormity of the challenges we all face, what we cannot have is a knee-jerk reaction founded upon the assumption that all public sector is bad and all independents are good or better than. We need an informed balance.

    Whilst the fiscal pressures demand ACTION NOW we need to be mindful in Wales of the high proportion of both public sector employment and social deprivation. That, for me, demands a well thought through transition programme of progressive change – not crude reorganisation, restructuring or a return to the “Geddes Axe”. Whatever the future public service model will become, I hope that at its heart, will be the one thing that once differentiated the Public Sector from the Private Sector – The Principle of selfless SERVICE. Encapsulated so well in the following quote:

    “You make a living by what you Get… You make a life by what you Give!” Winston Churchill

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  3. R.Tredwyn says:

    Once again I struggle to extract any content out of all this. What does “a well thought-through programme of progressive change” actually mean? After all no-one is arguing for an ill-considered programme of regressive stagnation. This just amounts to saying: do the right thing. Thanks, very helpful.

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