The Failure of Competitive Tendering in Social Care

The UK has had a policy of competitive tendering for public services since the 1980s; this is despite the fact that there has been no research evidence of its success. At the heart of this policy are a set of policy rules, set by central government, which force local government into using a competitive tendering process to ‘purchase’ public services. These rules are often called EU Procurement Rules, although the UK has twisted these rules to make them harsher and more damaging. For instance, most countries exclude services like social care from competitive tendering – but not the UK (nor, so far, Finland). This is another example of how the UK often falsely blames the EU for its own rules. It is likely that competitive tendering has played some part in alienating the British people from the European Union.

A personal perspective

Competitive tendering began in the 1980s, but it became central to all social care (support for people with disabilities, including the elderly) after the 1992 NHS & Community Care Act. From this point onward local government was forced to become a ‘purchaser’ of services, while the private and non-profit sectors became ‘providers’.

These changes happened at the beginning of my career and much of my early thinking and practice was focused on trying to make sense of these changes. More experienced colleagues were more pessimistic than me, they believed that these changes would be wholly negative. However I felt that these changes, whilst dangerous, did present some opportunities for positive change.

In 1996 I wrote my first book Unlocking the Imagination where I argued that the model of commissioning proposed by government was wrong; however I tried to persuade local leaders to adapt that model to design a better system to promote inclusion and empowerment for local people. But it turned out that I was naïve and that my colleagues were right. The UK’s system of competitive tendering has been very harmful and there have been no serious efforts to reshape it into one that promotes better values. The dominant neoliberal ideology, which has reduced everything to financial transactions and contractual control, has won the day.

The only successful challenge to competitive tendering has come from those people who have managed to exit the system, by demanding control over their own funding. First the 1996 Direct Payment Act allowed people to ask for their own budget, instead of a service. In 2003 I led a project called In Control to individualise all social care services using personal budgets. These initiatives have had some success, but they have come into conflict with the established system:

  • We said, give people and families control, because they know best
  • The system said, no we need even more control, because we know best

Today, in England, less than 25% of the funding has been individualised, most funding remains locked inside the competitive tendering regime.

The impact of competitive tendering

The impact of competitive tendering has been wholly negative and it has caused a number of serious problems, each of which has got progressively worse over time:

1. Lowering costs by cutting frontline salaries – When competing for funding the easiest way to win a contract is to reduce the salaries of frontline staff. However, and at the same time, salaries for senior managers have rapidly increased, so the level of income inequality inside organisations is now extreme. For example, the CEO of an NGO (Non-Governmental Organisation, often called a ‘charity’ in UK law) may be earning €210,000 pa whilst frontline staff may be on €16,000 (a ratio of 13:1). Social care has also seen rapid growth in precarious work: zero-hour or short-term contracts. Things have got so bad that many NGOs can no longer afford to meet minimum legal standards for pay and have been lobbying government to be exempted from these standards. It seems shameful that some NGOs are campaigning to keep standards lower rather than fighting for better rights for disabled people.

2. Increased compliance and reduced advocacy – In the past NGOs acted as advocates for people and for important causes; however today their independence has been eroded. They are very reliant on government funding and they can lose funding very quickly. Today NGOs provide little meaningful advocacy and this has contributed to the deep cuts in social care – 700,000 people have lost support since 2009 – a cut of over 40%. This was one of the major reasons why the United Nations recently condemned the UK Government for using its austerity programme to target cuts on disabled people in breach of the UN Convention.

3. Toxic culture of mistrust and regulation – The financial, bureaucratic and transactional focus of tendering damages the quality of relationships within and between organisations. Anything too warm and human now seems suspicious and contrary to the principles of tendering; only bureaucratic processes can be trusted. This has created a culture of mistrust which has infected almost every aspect of social care. It is assumed that government only wants to save money, service providers only want to make profit and that staff are all potential abusers. Every problem is solved by adding more rules, regulations and penalties. John O’Brien has called this new world Cog World, and its spirit is entirely hostile to the purpose and nature of social care and independent living – it is like expecting a robot to dance.

4. The death of creativity – Before the era of competitive tendering most innovative work was carried out in the NGO sector and it was common for NGOs to cooperate with each other and with government. Today’s NGOs now compete with each other for work and fear cooperation. The tendering process has also killed creativity. Government officers who issue contracts for funding will never be a source of creativity; it is only people, families and practitioners who can develop creative solutions to problems. This is the true source of efficiency and positive social change. Competitive tendering creates organisational chaos, yet it is fundamentally conservative. Commissioners are constantly purchasing last year’s solutions. Contracts that are ripped up every three years will never foster real creativity, which demands time, commitment and the capacity to take risks. Competitive tendering is like gardening with hand grenades.

The myth of the social care market

Although there is no evidence to support the use of competitive tendering the idea that this is a reasonable process is sustained by a series of myths and linguistic tricks. We apply important sounding language from another world and then imagine a reality that does not exist. In the process we become blind to the critical damage that is being done. For instance, Government often refers to a social care ‘market’ but this is an illusion. In the current system:

  • Government decides what people and families need
  • Providers do the work on behalf of the government
  • People and families must accept what has been decided for them

Even if you like markets it is clear that the social care system is not really any kind of market. The current system is more like the Christmas myth:

  • Santa Claus decides what all the children deserve
  • The elves make all the presents for him
  • The children wake to find out what he has delivered

Unfortunately Santa Claus does not exist and it is not a good idea to ask someone you don’t know to make important decisions about your life on your behalf. It is also not a good idea to enslave a race of elves to carry out your wishes. People with disabilities need rights, not gifts; and professionals need to work in partnership with people with disabilities and their families, not for the Government.

The new language of social care also makes us forget that creativity is essential to human services – at every level. Notice the language we have been forced to use:

  • Procurement
  • Tendering
  • Purchasing
  • Commissioning
  • Service Provider
  • Service Delivery
  • Consumer
  • Service User
  • Regulation
  • Quality Control

This is the language of industry. Strangely, at the same time as traditional industry has declined, its language has been imported into the world of social care. We had hoped that, as the institutions began to close, people with disabilities could take their place as full citizens. Instead we’ve converted human relationships into manufactured commodities that can be sold and purchased in bulk.

The way out of the madness

After 25 years this system of competitive tendering is now approaching collapse:

  • The social care system is in deep crisis with funding slashed and service providers operating on the fringes of legality.
  • Local government cannot afford to contract with more than a handful of services because of the cuts to their own core staff, and some authorities find they must go back to providing services themselves.
  • Service providers are merging with each in order to cut costs and to reduce the level of competition for contracts.

But the biggest cost of this system is the opportunity cost: for 30 years we have missed the opportunity to do the right thing, to focus on creating inclusive and welcoming communities and on developing ourselves as active citizens. Instead of seeing people with disabilities as leaders in the transformation of our communities we have wasted our time by wrapping some people in over-regulated and under-funded services while leaving others isolated and unsupported.

The alternative is clear enough:

  1. Self-directed support – Treat people as citizens and ensure they have a clear entitlement to support, one which is implicit in the UN Convention on the Rights of Persons with Disabilities
  2. Community sourcing – Encourage inclusive communities by respecting and supporting community groups and citizens to bring about the necessary social change.
  3. Local support – Ensure that local communities have the structures, expertise and information to enables them to develop local solutions.

Finland is showing us the way. It is time to throw competitive tendering in the bin. It is time to reclaim our citizenship and design a social care system that treats us as full human beings, not as lots to be sold off to corporations at the lowest possible cost.

Read the article: Not for Sale and show your support via Citizen Network Finland.

First published by the Centre for Welfare Reform.