Monthly Archives: March 2016

Fat Cat Salaries and Gold-Plated Pensions

Much of the popular press would have us believe that working in the public sector goes hand-in-hand with ‘fat-cat’ salaries (see here; here; and here), gold-plated final salary scheme pensions (here and here) and a job for life. In this context one might wonder why anyone would want to work anywhere else! Yet as this article by The Guardian demonstrates, these sensationalist headlines do not reflect the reality of the vast majority of public sector workers. Indeed, as the Full Fact website concludes,

The Office of National Statistics report actually notes many of the caveats raised by the unions, however much of this important context has been lost in the media reporting on the issue. Far from conclusively reporting the relative pay of workers in the private and public sectors, the ONS report seems to ask more questions than it answers.

So what are the benefits of working in the public sector? Indeed, are there any benefits at all?

1. It is hard

Working in the public sector is, in my opinion, harder than working in the private sector. Now let me qualify that statement. I don’t mean that all those who work in the public sector work longer hours or put in more effort over the average day than those who work in the private sector. But it is more difficult in the sense that measures of success are more difficult to define (and can shift over time). In the private sector, again to generalise, the measure of success is profit and the ultimate boss is the shareholders. In the public sector there are many different stakeholders including politicians (sometimes from opposing political parties), voters, the general public and service users – all of whom may have competing priorities in terms of what they perceive as being success. So, in other words, the public sector is more complex and linked to this efficiency savings are harder to achieve. How is this a benefit? Well, some people may quite like a challenge! At the same time it means that typically no two days will be the same and working with multiple groups of stakeholders, including international agencies, national governments and the general public, can be hugely rewarding in its own right.

2. It is not well paid

Again, it might seem counter-intuitive to highlight poor pay as an advantage of working in the public sector. To clarify, what I am referring to here is that there is comparatively poor pay in relation to equivalent jobs in the private sector. This has been demonstrated in ONS data, as referred to in this report by The Guardian, which shows that those with a degree or equivalent earn less in the public sector than in the private sector. So, if you are motivated by financial rewards, the public sector is most definitely not for you. People who work in the public sector tend to be motivated by, what has become known as, public service motivation (PSM). This explains how many of those who work in the public sector do so, not because of the personal benefits that accrue from this employment, but because of the social value of these jobs. Significant research has been conducted into the nature of PSM (see Perry 1996Perry, 1997;  Crewson, 1997;  Houston, 2000Wright et al., 2013Desmarais and Gamassou, 2014; and Ritz, 2016). Although different definitions abound, originally PSM was seen to involve: attraction to public policy making, commitment to the public interest, civic duty, social justice, self-sacrifice, and compassion. These are the real benefits of working in the public sector.

To put it another way, we should consider this, across the UK more than 5 million people are employed in the public sector. In Scotland 20.9% of the workforce is employed in the public sector. That does not include the significant numbers of people who work in private and third sector organisations delivering or supporting public services. Those people do not work in those roles because they are easy or well paid. People choose to work in the public sector because they believe in public service values and they believe in the potential of public services to improve the lives of the most vulnerable in our society and support thriving and sustainable communities. What other reason do you need?

 

This blog is an extended version of an interview which appeared in Prospects Magazine.

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National Maternity Review and Public Service Vouchers

On Wednesday 2 March 2016 I appeared alongside Baroness Cumberlege; Professor Jon Glasby, University of Birmingham; Professor Henk Nies, University of Amsterdam and David Walker from The Guardian on the Radio 4 Money Box programme. This was to discuss Personalised Budgets in light of the National Maternity Review conducted by Baroness Cumberlege which proposed the trial of personalised budgets in maternity care.

The full programme can be accessed here:

https://uwhisp.com/embed?whisp_id=145045

Needless to say it was quite a daunting experience being on radio for the first time and being alongside such eminent guests. What made it more peculiar was being inside, what I can best describe as a cupboard, at the Edinburgh BBC studios whilst others were either pre-recorded or live from London or Birmingham. The professionalism of all the technical staff, producers and the presenter, Lesley Curwin, to pull this all together and cover so much in a 30 minute programme was certainly impressive.

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Picture: BBC Studio, Edinburgh.

My involvement on this programme was primarily due to the nature of my PhD research which was specifically on ‘Barriers to the Implementation of Opt-Out Vouchers for Public Leisure Services’. In other words, what I looked at during my PhD included:

  1. The nature of public service vouchers and how they have been used in practice in education, housing and health services (particularly in the US where their use is prevalent);
  2. Circumstances where they can be used and where their use is more problematic;
  3. In a public service where their use would (according to theory) be least problematic (public leisure services) why this particular innovation has not been trialled more widely.

It is difficult to summarise this in one blog post (the original thesis was 667 pages long over two volumes) and as a result this is a rather long post – and even then does not go into significant detail. For more information there are some references provided at the end of this post.

In the context of ongoing reforms within health and social care my research is relevant as the nature of personal budgets are, in effect, a form of public service voucher. So what exactly is a public service voucher?

Public service vouchers are

publicly directed consumption with individualised choice of production and payment” (Valkama and Bailey, 2001: 54).

Anything that extends choice and enables the user to have direct control over their budget is, in effect, a voucher scheme. Successive governments have chosen to avoid this language as the voucher concept has become so politicised but there are in fact many types of voucher scheme in existence in the UK (and internationally). The latest example of this is in the form of the proposed changes to maternity care which include the idea of trialling personal budgets for maternity care, including child birth. The author of this review, Baroness Cumberlege says “why don’t you have a go at this?” Let me explain why.

Voucher systems can and do work. There is a range of evidence on their use in housing, education and health. There are two things we must look for when considering whether a voucher system is more or less appropriate:
1. How complex is the service? (i.e. low transaction costs)
2. Are there widespread and legitimate choices? (i.e. heterogeneous preferences)

So, with certain social care services, for example, the actual service itself may be easy for the service user to assess; it may be something that they receive regularly; and there may be a range of service providers available. Consequently vouchers can offer greater choice and voice to the user. They can also perform a range of political purposes by being, for example, redistributive by being means-tested or targeted at specific groups.

With many maternity services, and particularly with child birth, the characteristics  that we would look for to assess the viability of a voucher system simply do not exist. We can consider these in turn:

1. Widespread and legitimate preferences

The evidence shows that people do value choice in relation to health care. However, this depends, in part, on the question being asked. 75% of people want some say in the hospital where they are treated but only 22% support the idea of private businesses running hospitals. What’s more, when people are given the choice of either more personal choice or a better standard of care for everyone they are significantly more likely to support the latter.

2. Individuals must have incentives to shop around

It’s not clear why people would have an incentive to shop around for maternity care.  Another concerning aspect of the proposal is the idea that use of a voucher system could incentive efficiencies. When Baroness Cumberlege was interviewed on the programme she insisted that cost cutting was not a part of the impetus for this proposal yet the content of her own review highlights that,

The payment system for maternity services should be reformed so that it is fair, incentivises efficiency and pays providers appropriately for the services they provide”.

So it remains unclear to what extent efficiencies and cost savings are a part of this proposal. What’s more, innovation costs money and offering more a more bespoke service costs money. The Baroness admitted as much and Professor Nies was able to confirm that similar schemes in the Netherlands have ended up costing more money.

3. Individuals must be well informed about the market

This is where the area of health becomes particularly problematic in terms of use of choice. The review document states,

They may need to look at alternative and innovative providers such as midwifery practices and social enterprises to provide genuine choice for their community

The focus here seems to be on incentivising new providers into the market in order to meet the primary goal of being able to offer choice. Yet how informed will individuals be about the market. How certain can anyone be that a newly formed social enterprise offering child birth and maternity services today will still be in operation in nine months time?

4. There needs to be a range of suppliers to chose from or low start-up costs

There may be a range of suppliers in some areas such as large cities but choice will always be limited in more remote areas. Also most health services are complex and there are significant start up costs which will always limit the amount of competition available. It is noted in the review that all providers would be subject to the governance and oversight of the NHS which again is (rightly) going to limit competition.

5. Service users must be able to assess quality

It is very difficult to assess maternity care in any reliable way. Often it is only after the birth of a baby that any parent will be able to say whether they received a satisfactory level of care. At that point it is too late to exercise your consumer choice and go elsewhere. Similarly it is difficult to assess maternity services nationally – and any attempts to do so are likely to encourage perverse behaviours by providers by, for example, refusing to take high risk cases in order to look better on any league table of performance.

6. The service should be relatively inexpensive and purchased frequently so people can learn by experience.

Again this is a major issue with any health service. Typically these services are not cheap. And does anyone want to go with the cheapest option when it comes to child birth? What is more (as noted above), these are one-off events. Yes, if you have a bad experience with the care you receive during child birth the first time around you may well choose differently if you have another pregnancy. But in the moment of child birth choices are naturally limited.

In summing up the experimentation with alternative forms of maternity care Baroness Cumberlege stated:

Now the tariff is in three different sections and first of all it is for standard care which is low risk and then it is for intermediate care and then it is for complex care. And so it varies according to the care you need. We are saying to the commissioners, the GP commissioners who are buying services ‘why don’t you have a go at this?’

There are in fact many positive aspects of the National Maternity Review and it recognises the importance of quality of care within these services. But in terms of the use of vouchers all the above highlights the economic arguments against their use for maternity care – and specifically child birth. There are also important managerial and ethical considerations which should be taken into account before such a system is trialled. In particular we might ask whether it is appropriate to base decisions of maternity care and health policy on the grounds of ‘why don’t you have a go’.

Part of my ongoing research is looking at the leadership of change and innovation within public service contexts. Queen Margaret University are hosting an event on this very subject on Friday 13 May 2016. There are specific circumstances within public service environments where innovation may not be appropriate and others where it is. The trialling of voucher systems as a funding mechanism for maternity services may be a step too far.

Further sources:

Valkama, P., Bailey, S.J. and Elliott, I.C. 2010. “Vouchers as Innovative Funding of Public Services”. In Bailey, S.J., Valkama, P., and Anttiroiko, A. (Eds) Innovations in Financing Public Services: Country Case Studies. Palgrave Macmillan.
Elliott, I.C., Valkama, P. and Bailey, S.J. 2010. “Public Service Vouchers in the UK and Finland”. In Bailey, S.J., Valkama, P., and Anttiroiko, A. (Eds) Innovations in Financing Public Services: Country Case Studies. Palgrave Macmillan.
Elliott, I.C. 2008. “Making Space or Enabling Use: The Case of Opt-Out Vouchers for Public Leisure Services” in Gale, T., Curry, N. and Hill, J. (eds) Making Space: Managing Resources for Leisure and Tourism. Leisure Studies Association.
Bailey, S.J. 2003. Strategic Public Finance. Palgrave Macmillan.
Bailey, S.J. 2001. Public Sector Economics: Theory, Policy and Practice. 2nd Edition. Palgrave Macmillan.

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