Markets for good? A response to Reform

For various reasons I’ve been thinking a lot about commissioning as a process lately.  Of course, you could say that’s my job, as a commissioner of substance misuse services, but actually the day-to-day work is precisely that – focusing on day-to-day issues, rather than the sorts of principles and models beloved of policy advisers and think tankers.

One of the reasons I’ve been mulling over these principles and models is a report published back in November by Reform, written by Andrew Haldenby, Richard Harries (no, not that one) and Jonty Olliff-Cooper.  The key message is that performance of ‘human’ public services isn’t great, and in a period of freefalling budgets reform is the only solution.  The reform proposed is, in broad brush terms, to stop either state provision or contracts won through tendering.  Instead, ‘licences’ to deliver services would be granted to any qualified provider.  Then, you’d get competition for services and a range of options so that each individual access an approach that suits them.

(As an aside, I should say that anyone interested in substance misuse services specifically should check out Russell Webster’s series of blogs on this report – though we differ in our views.)

I don’t want to go into a great deal of detail about the report (though I probably will anyway).  I’d take issue with a few specific points – particularly those criticising the field of substance misuse, given that this is miles ahead of most commissioning I’ve seen in local authorities or CCGs – but this is mostly defensive vanity.

As usual, there’s a few straw men in there, as when there’s a claim that people are seriously suggesting ‘salami slicing’ public services in the face of huge cuts (p.13).  It’s also odd for the authors to suggest that drug treatment should be opened up to ‘non-state providers’ (p.9) when this has been the case for decades.  I’d also suggest that this is true more widely in terms of ‘licensing’: there’s plenty of private provision of health and social care (think of residential rehabs for substance misuse, or BUPA for mainstream healthcare).  The issue could only be with the demand side, and ensuring that people have access to the range of providers.

I’m also not convinced that such a licensing system could work in an area like Dorset for the services being discussed.  You only just get competition in food suppliers (most towns don’t have a choice of genuine supermarket), and everyone buys food.  About 5 in every thousand people in Dorset use opiates.  I can’t see how villages and towns could realistically offer choice in drug treatment, or that you’d get a range of providers competing to provide services.  People can’t travel because there aren’t any decent transport services – and in any case, why should someone from Blandford have to travel to Weymouth to get choice in their healthcare?  But that’s all an argument for another day.

What I want to focus on in this post is a more fundamental point about the general conception of markets.  The report itself is called ‘Markets for Good’.  Apart from the fact that this sounds suspiciously like the title of an Ed Miliband speech, it concerns me that the potential clarity of ‘market’ as a concept, as an analogy or metaphor, has been lost.

The reason ‘markets’ are attractive as an idea is that we think we’re familiar with them – we buy our food and other groceries through them, and even if we don’t actually use a market in its traditional sense, we think of going to Tesco as participating in ‘the market’.  We talk about ‘the market’ for particular consumer products.

What Reform are describing, though, isn’t like those ‘markets’.  There’s elements of competition, but that in itself doesn’t make a ‘market’.  Most importantly, what’s described is an actively created structure in which companies might operate, that isn’t a replica of the ‘market’ for food or white goods, or any of those things we’re familiar with.  If we’re actively creating a particular environment to in some ways mimic a market, it’s important to work out why we consider ‘markets’ to be efficient and fair modes of allocating resources and fostering innovation, as it’s those bits we’d want to build into the pseudo-market being proposed.  One I don’t discuss here, but is worth thinking about, is that by virtue of the fact that ‘strong markets are characterised by vigorous competition’ (p.18), they’re also characterised by failure of providers.  Is this acceptable and manageable in public services?

However, back to the fundamentals.  The reason we get efficient services from providers like Tesco is that there’s widespread demand for food and clothes, and there are economies of scale in providing single products for people.  You might get some choice within a supermarket, but we don’t get ‘personalised’ services (p.11).  Most people buy their clothes ‘off the peg’, not tailored to them personally.

Moreover, the report talks about how providers should “address the ‘whole person’ by working on multiple outcomes with the same individual” (p.11).  This sort of knitting together of services is indeed crucial, as we know that recovery from substance misuse, for example, doesn’t depend on dealing with substance use in isolation from other factors such as housing, employment, relationships.

However, think again about whether markets we know as working efficiently actually provide this.  Even in a world of supermarkets, we tend not to find the needs for our ‘whole person’ from the same provider.  Even if we just think about food, the aim isn’t for a single shop to provide us with a hamper of all we need; it’s about making sure the consumer has access to all the best shops for those particular products.  Take the example of my lunch at work (and don’t judge my choices).  It could well feature a pork pie and an apple from Waitrose, but crisps and a sandwich from M&S.  (And this example tells you already the options available to me in Dorchester town centre: no Tesco, Sainsbury’s, Greggs, Morrison’s etc.)

(Weirdly, the report concludes by suggesting that it favours a model whereby a consumer has a different provider for each key ‘outcome’ (p.70).)

The whole report seems to be based on an odd, superficial reading of markets, seeing them as comprised simply of individuals and individual transactions.  We can’t really understand the purchase of green beans as a transaction between me and Tesco; there’s all sorts of other levels of transaction involved with providers, transporters, governments and so forth.  (Incidentally, the document piously claims that ‘aiming to pay no more than the raw unit cost of a service will kill the market’ (p.57).  Tell that to supermarket suppliers.)

You might think I’m being unfair by comparing providers of ‘human’ public services with supermarkets and food – but that’s precisely the analogy employed by the authors themselves (p.28).  I just can’t see that it’s helpful.  The whole principle of grocery shopping is that you can buy the products again tomorrow, and switch to an alternative provider without any serious long-term consequences.  That just not true of social care.  Moreover, the report actually rules out switching providers, as it would be ‘too complex to administer’ (p.69).

There’s also a strange view of providers as being uncooperative or unthinking, where ‘incentives’ (p.21) have to be actively created to make providers behave the way we’d expect them to.  By contrast, all the providers I’ve ever dealt with have been keen to make a difference.  Who works in the field of substance misuse unless they’re passionate about the cause?  Providers are constantly squeezing activity out of limited resources and finding new sources of funding within the community.  In fact, the providers are obliged to take this approach, and not just be motivated by financial incentives attached to contracts, because they tend to be charitable foundations, often founded by parents concerned about their loved ones’ substance use.

Crucially, the proposed structures don’t resemble the markets we’re familiar with either.  The report of course talks about ‘outcomes’ based commissioning.  I’m not opposed to this (though it’s much more complicated than a lot of people seem to think, as soon as the ‘outcome’ is anything more complex than the delivery of a vaccination).  However, the model proposed bears no relation to how markets actually work.

The classic example of an ‘outcome’ relates to a birthday cake.  You could buy ingredients, or a ready-made cake, but that’s only the ‘output’; the actual outcome is the smile on your child’s face and their full belly.  The Reform authors complain about ‘paying for process, not outcomes’, but that’s precisely how the markets we know of work.  We don’t walk out of a supermarket and say: “I’ll pay you if, and only if, my little boy is smiling once he’s eaten this cake”.  You might not buy next year’s birthday cake from Sainsbury’s if he didn’t like it, but in reality hardly anyone goes back to the supermarket saying they weren’t ‘completely satisfied’ with the product.  And in any case, there’s too many personal factors involved to blame the supermarket if your son isn’t smiling – but that’s the outcome you were looking for when you entered into the transaction.  It’s hard to see how ‘allow[ing] customers to pay by satisfaction’ (p.48) would be workable in practice, particularly in a field like substance misuse where the outcome is complex and long-term, as relapse is common.

More fundamentally, the report worries that prices can be set ‘too high or too low’(p.31) – but the key to a market providing efficient outcomes is the price mechanism.  What the report ends up describing is the sort of arrangement that would infuriate Hayek: central planners must very carefully set the price of a service at just the right level.  In fact, the level of bureaucracy (or perhaps technocracy) is striking: each individual consumer will have a ‘price’ attached to them for a successful outcome, based on their individual characteristics (p.39).

Shockingly, for a paper that’s supposedly singing the praises of markets, it’s suggested that ‘providers should not be permitted to compete on price, only on quality’ (p.54).  I can’t think how a purchasing process without price competition can helpfully be considered a market.

I worry that underneath some of this there’s a misunderstanding of the nature of choice and ‘price’.  When suggesting (quite reasonably) that customers should be able to ‘choose any licensed provider’, the comparison given is university choice (p.66).  But this is to be blind to the fact that the currency in the university ‘market’ for students is exam grades.  Those with ABB+ are much more attractive to universities (based on the funding structure created by the Coalition government); it’s naïve to suggest that students can ‘choose’ whatever ‘provider’ they want.  In fact, it’s unlikely this constraint would apply in a ‘market’ for public services, but not being able to see that the university analogy is inappropriate signals a wider problem with understanding the nature of the proposed system.

Crucially, much of the discussion at this point has nothing to do with commissioning structures or practices, but the quality of these: the system doesn’t mean that ‘providers are all too often chosen for being the cheapest, not the best’ (p.34); that’s just poor practice that can happen in any system where providers or prices are chosen by central planners.

And much of the suggestions are perfectly possible within the current system.  When the authors complain about ‘blink and you miss it’ starts to contracts, this isn’t a problem (p.43).  Dynamic purchasing systems (DPS) already exist perfectly happily within current regulations – but they suit particular types of services (like short one-off placements where there can be economies of scale).  And they’re not that new – here’s some guidance from 2008 that’s the top result on Google.  In fact, spot-purchasing systems have been in place for as long as I can think – residential rehabs don’t just survive on block contracts?

This is a secondary point, but it does link into my feeling on reading the paper that probably commissioners on the ground actually know more about this and how to do it than the authors.  The friends and family test, mentioned on p.50 as being used in A&E is already in widespread use across all sorts of services, and although this is my defensive vanity again, it’s galling to see this, like DPS or spot purchasing or mystery shopping, being promoted as something new and worth shouting about.

Fundamentally, there’s lots of ideas I value in the report, and (despite the tone of this blog post) plenty of food for thought and helpful challenge to the way I think about commissioning.  There are services where licensing would apply and could be helpful, and it’s not fair to criticise the principle on the basis that it wouldn’t work perfectly for everything.

However, my theoretical or conceptual concern is genuine.  Much sociological ink has been spilt on the issue of whether markets retain their hegemony in political discourse after the financial crisis, but this report shows that the term is perceived to have some value.  And how could it not, when we happily supply so many of our wants and needs through structures we understand as ‘markets’?  But I do think it’s important we understand what the merits of these ‘markets’ are.

I’d respond to Reform’s proposals, then, in exactly the same way they criticise current commissioning arrangements: ‘they are scarcely markets at all’ (p.8).  On my reading, the whole report is based on a faith in something different from markets specifically: competition.  It’s competition, not markets with the key feature of a price mechanism, which is understood to drive performance.

In that respect, I agree strongly with the thrust of the paper, but the fact that what is proposed is not a ‘market’ in any real sense highlights that there are myriad structures within which competition and a drive for excellence can be fostered.  I would suggest that it’s the job of commissioners to do this, and the market metaphor may close down the options we see.  Here’s hoping when I’m back at work on Monday morning I’m able to live up to this claim.

The continuing search for a big number

Wellbeing is big in politics at the moment – or perhaps it’s better known as the happiness agenda.  It’s a long time since David Cameron talked about replacing GDP as a metric with a happiness index, but it’s still a live issue in politics.  Last week the British Academy and Prospect hosted an event with some pretty eminent speakers including Gus O’Donnell and David Halpern.

As an agenda, wellbeing is meant to open out new ways of thinking about politics.  What I was struck by, though, was the how the debate was conducted in very much the same terms as any other.  Perhaps inevitably given the backgrounds of most of the speakers, this ended up being a very technocratic discussion.  The audience certainly didn’t seem to be at odds with this approach, with one comment from the floor stressing the need for a wellbeing ‘number’ to rival GDP.

It might seem that such a proposal seeks to fundamentally change how we approach and judge politics, but in fact it’s merely an echo of a well-established (and perhaps discredited?) mode of politics.  All through O’Donnell’s talk I was thinking about how much this was the worldview of a New Labour era technocrat.  He was talking about the importance of cost-benefit analysis, and how wellbeing ought to be included in such analyses, through approaches such as social return on investment tools.

My perspective is slightly different, having seen inside the sausage machine.  All those claims about how much £1 spent on drug treatment saves the public are reliant on locally-generated data and cost estimates.  These might be in right ballpark, but they make me question the ability of them to inform marginal decisions about what to fund or what policy to implement.

And GOD (as O’Donnell was known) seemed to realise this too, casting doubt on the figures used to calculate the savings HS2 will generate.

There have been well-documented issues with government by ‘numbers’, and I would have thought that the real potential opportunity the concept of ‘wellbeing’ offers is to rethink fundamentally how we approach political issues.  The problem with GDP as I see it is that it is a single number with little nuance.  To replace it with another single number would strike me as just as misguided.

And of course most politicians haven’t focused simply on GDP.  It’s certainly a useful figure, but inequality is often also discussed, as are unemployment figures.  The fact is that politicians will always be looking for a figure that strengthens their case and position.

Wellbeing in this world isn’t an opportunity to fundamentally remodel politics; it’s a conceptual device to promote existing opinions.  Nic Marks, for example, at this event used wellbeing to argue that localism and further devolution of power was a good idea.  Personally, I can’t see what wellbeing adds to this debate – and I certainly can’t see that being pro-wellbeing should make you a localist.  I can imagine lots of public health advocates claiming that they believe in the importance of wellbeing and also noting the importance of national and international policy decisions on issues like alcohol.  Minimum unit pricing only really makes sense as a national policy, for example.  I’m not sure O’Donnell, with his view of policymaking and desire for a national wellbeing index, would agree with Marks either.

The most frustrating element of the event for me, though, was the lack of discussion around the potential role of a technocratic elite in making these decisions about what wellbeing might be and how it should be promoted.  David Halpern, the founder of the Behavioural Insights Team (better known as the Nudge Unit) originally within the Cabinet Office, revealingly stated that we’re often not very good at predicting what will make use happy.  He seemed to suggest that with better analysis and data we could get advice on making all sorts of decisions.  But giving that kind of advice really does mean having an idea of ‘eudaimonia’ agreed by society.  If analysts are to advise us on what makes us fulfilled, they’d surely need some kind of assumption about what fulfilment means for people in Britain.

And here’s the rub, and the key point of why GDP isn’t so bad after all – or, actually, why thinking in terms of money isn’t so bad.  (And I’m in the uncomfortable position of having to agree with Chris Snowdon on this – see p.92 on the value of economic growth here.)

The attraction of money – unless you’re modelling yourself on Silas Marner prior to the arrival of Eppie – is that you can exchange it for things you want.  You might spend £20,000 on a car.  I would think that to be mad, but it might make you ‘happy’ and ‘fulfilled’, and increase your ‘wellbeing’.  Money is a means to the end of individual fulfilment; wellbeing is that end – but to try to work out what it is for everyone seems to me to be a little fruitless.

Moreover, one of the dangers of focusing on wellbeing is that it misses the important point that money is a form of power.  The panellists suggested that we needed to focus on people who didn’t have high wellbeing rather than people who weren’t well off, but that leads me to worry (and this isn’t a particularly original thought) that we would be ignoring legitimate questions about the justice of the distribution of society’s rewards.  Money might not be everything, but it is something worth talking about.

Of course, politics isn’t – and shouldn’t be – simply about improving people’s financial lot, but the vision proposed at Senate House last Wednesday didn’t strike me as being any better.  The idea of wellbeing foregrounds issues of values, and we shouldn’t duck debates about these by thinking we can somehow resolve issues with a new all-encompassing ‘number’.

The Centre for Social Justice and Res Rehab (again)

As readers of previous posts will know, I’m not the greatest fan of the work of the Centre for Social Justice on substance misuse.  This isn’t anything to do with my own politics, or theirs.  I don’t think the claims are actually political in the sense of left or right.  Rather, they are (apparently) more like managerialism: ‘what works’ to deal with ‘addiction’?

The most recent claim of the CSJ was that there’s not enough residential rehabilitation in this country.  I say recent, but it’s an ongoing claim, but with a new quick and dirty bit of analysis behind it.

The CSJ looked at the estimated number of opiate and/or crack users in each region of the country, and then divided this by the number of residential rehabs listed by Public Health England (PHE).

Today’s post is just a short response to this analysis, highlighting a few points that make this not just inaccurate but unhelpful.

Setting aside one issue that frustrated me – whether we should be calling all (or any?) users of crack and opiates ‘addicts’ – there’s a clear and straightforward issue with the analysis.

I’m assuming that fundamentally what we’re concerned with is whether people are able to access a particular mode of treatment, which the CSJ says is “the most effective means of helping someone fully recover from addiction”.  Location is not the same as access.  This is particularly the case for a type of treatment where people generally stay for 3-6 months, and part of the very point of it (as opposed to the community-based treatment the CSJ continually run down) is that it’s not in the service user’s own local area.

It is, at best unintentionally misleading to claim that these stats suggest rehab is the preserve of the ‘wealthy’.  That might be true, and there would be ways of assessing that, but this analysis certainly doesn’t offer that evidence.

And this brings me to the more fundamental point: the CSJ are still claiming that res rehab is “the most effective means of helping someone fully recover from addiction”, when there is no evidence to suggest this.

Again, I’m not saying this isn’t the case.  I’m concerned that despite the illusion NDTMS gives of there being plenty of quality and quantity of data related to treatment, we don’t actually have quite the information we’d want to identify if someone can be said to have ‘fully recover[ed] from addiction’.  The NTA admitted as much in 2012.  And this is quite apart from working out what it would mean to ‘fully recover’.  (It seems from the CSJ ‘2015 manifesto’ that cocaine users should never drink again, otherwise they shouldn’t be classed as ‘successfully completing’ treatment – see p.22.)

The statement about the effectiveness of res rehab is particularly difficult to sustain when Iain Duncan Smith’s own Department for Work and Pensions has just recently published research showing that if res rehab is more effective than standard community-based treatment that only applies to a small cohort of the most ‘complex’ clients, and even then it’s not clear it’s ‘cost effective’.  There’s a great summary of this work at findings.org.uk

(It might seem harsh to be discussing cost effectiveness, but at some level all policy decisions have to come down to this, particularly if we’re talking about funding one form of treatment in place of another.)

Why does this matter?  Well, if CSJ staff really want to make a difference, they should be looking at producing evidence and arguments that make the debate about substance misuse treatment clearer, not muddier.  We do need an open debate about how well currently-commissioned work, and what the aims of those services should be, but outlandish statements about the number of res rehabs in the North East doesn’t help that.  Perhaps those staff could benefit from some reflection on why they’re so attached to res rehab.  That or reply to my tweets asking how they can substantiate their bold claims – because if there’s something they know and I don’t, it would be helpful to pass it on.  Then maybe we could work together to make a difference.