Departments and central government bodies should devolve more than £100bn-worth of commissioning spend – rescinding control of Jobcentre Plus and scrapping NHS England in the process – to fix the “fundamentally flawed” way public services are commissioned, according to a report by Reform.
Calling for a “drastic acceleration” of the devolution agenda in England, the right-of-centre think tank argued that government should create 38 local authority structures to commission services in healthcare, employment, skills and probation.
The report, Vive la devolution: devolved public-services commissioning, highlights Whitehall’s poor contract management skills and limited grasp on local needs, and suggests that more local commissioning would ensure better value for money and less fragmented services.
Government spends more than £335bn each year on public services, with 75% of expenditure currently spent by Whitehall.
The report pointed out that the Office for Budgetary Responsibility has said services are “unsustainable” in the long term on their current trajectory – and lays out Reform’s vision for a “radical new offer”.
In a series of recommendations, the think tank calls for central government to scrap NHS England and devolve 95% of its budget, devolve responsibility for the commissioning of five employment-services programmes including Jobcentre Plus, 12 skills and apprenticeships programmes, and probation and youth-justice services.
The money spent commissioning these services totalled £107.7bn in 2016-17.
The creation of 38 “devolved commissioning areas” would involve a shifting of existing commissioning boundaries to remove current gaps in service provision. They would replace existing commissioning bodies such as Clinical Commissioning Groups and Police and Crime Commissioners.
Alex Hitchcock, Reform senior researcher and report co-author, said: “We looked at the way that government designs policy in key areas such as healthcare, employment services and probation and found that, actually, government would achieve better value for money if it devolved lots of these key services to the regions.
“We concluded that over £100bn-worth of spend can be devolved to 38 regions across the country.”
He added that the UK can learn from other countries that are already less centralised. “Examples from Spain to Scandinavia show that more devolved healthcare can improve value for money in services by tailoring them to these local needs,” he said.
Based on examples from overseas, the report suggests that moves to create a more devolved UK in this way could be completed in 15 years.
Eight devolution deals have been agreed in England since the first London mayor was appointed in 2000, but the report argues that the “devolution of public-services commissioning has been no more than delegation”.
Even in Greater Manchester – a particular focus for former chancellor and Northern Powerhouse advocate George Osborne – Whitehall still controls the design and functioning of healthcare services through national contracts and targets, despite the city’s devolution deal that gives the Greater Manchester Combined Authority budgetary control.
But the report says some progress is being made, particularly with the devolution of adult skills budgets to combined authorities.
It also suggests there is appetite for greater devolution of commissioning powers, locally and centrally and from the public. Local authorities interviewed by the think tank expressed desires for more power, while the Department for Communities and Local Government officials interviewed “were open to the transfer of significant commissioning powers if proof of concepts were established”.
Polls consistently suggest that citizens trust local government more than central government to make decisions about the areas in which they live.
The report also calls for a bolstered role for the Cities and Local Growth Unit, which is made up of officials from the DCLG and the Department for Business, Energy, Innovation and Skills. Reform believes it should be renamed the “Devolution Unit” and have oversight of the devolution of public services commissioning.