Imitating the private sector

A business-led approach to public services may deliver benefits but some remain sceptical that wholeheartedly imitating the private sector is the best way forward
City worker Lehman
Not everything the private sector touches turns to gold. Photograph: Rex

This week's report from the Commons' Treasury select sub-committee calls for a more "business-led" approach to making savings.

On the surface, this is sensible and many of the report's recommendations are no more than common-sense for both private and public sectors: don't set arbitrary targets without consultation; measure figures accurately to assess savings and compare savings in different areas; ensure different parts of government cooperate more closely to avoid duplication and waste.

But many in the public sector may be dismayed by a blanket call for a "business-led" approach, without careful consideration of how, exactly, this should apply to the inevitably complex world of public services.

A couple of recent publications illustrate some of the difficulties in importing business ideas into public services, particularly to healthcare. The rightwing thinktank Civitas this week published a book that argues that many of the business reforms imported into the NHS have backfired, because the changes have led to businesses "set up to serve the state rather than patients".

Authors Peter Davies and James Gubb do argue for a "more business-like framework", but only aligned with a greater focus on what is required in frontline services. This is a familiar rightwing theme - the need to enable professionals to run things with greater autonomy, and to be freed up from regulatory bodies - but has resonance because it does tackle some of the problems that are created when commercial ideas are not adapted with great caution to the needs of the public sector. The authors blame an inflexible top-down approach, a lack of risk-taking and a lack of space in which senior managers are able to display leadership for some of the problems in the NHS; but none of those are unique to public services.

There's a similar theme in a report from HayGroup on what foundation trusts can learn from success and failure in the FTSE 100. It says many businesses in the FTSE 100 have dropped out or failed in the past 10 years and highlights the main reasons:

• taking too many risks and losing focus on core business
• failing to adapt to changing circumstances
• making poor acquisitions
• over-expanding
• brutal cost-cutting
• failed collaboration

Hay concludes that there are critical lessons for foundation trusts from this:

• understand what you're good at
• be highly sceptical of potential takeovers
• respond thoughtfully to policy changes and problems - don't just restructure
• keep up staff morale
• keep in touch with what's going on inside and outside the organisation
• strategic vision is good - but delivery is better
• live within your means

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