Soundings of choppy waters

The government unleashed private providers to change the sector, but has there been a tide of creative disruption?

October 30, 2014

There are few institutions as close to the public’s heart as the NHS, which ensures that there is intense scrutiny of any and every proposed reform.

In recent years, much of this scrutiny has focused on the extent to which the health service is being “privatised” by the expanded role of private contractors.

The chief executive of NHS England, Simon Stevens, was asked about this in an interview on BBC Radio 4’s Today programme last week – a particularly relevant line of questioning given that Stevens spent the past 10 years working for a US private health firm.

His reply was that while most care would continue to be provided by the NHS, we should “think like a patient and act like a taxpayer” when deciding who is best to deliver services.

In this space, new players have been encouraged to ‘disrupt’. But private companies will want to grow their business as rapidly as the rules allow

This notion of putting patients at the heart of the NHS, with private providers driving quality and efficiency, has parallels with the government’s thinking on higher education.

The aim of the 2011 higher education White Paper was to save the taxpayer money (by moving the bulk of university funding “off balance sheet” from teaching grant to tuition fees underwritten by government) and to improve things for students by granting them consumer sovereignty and introducing market forces into the equation. However, the paper was not followed up with appropriate legislation to underpin it.

By most people’s assessment, the great consumer experiment has yet to deliver the promised sea change in the quality of education (which in most cases was pretty good in the first place), and has started the countdown on a financial time-bomb given the likely default rate of those state-backed loans.

But if these were the two main pillars of the reforms, a key component of the foundation on which they were built was an expanded, disruptive, role for “alternative” providers, who were supposed to trigger a “rising tide that would lift all boats”.

David Willetts, the former universities minister, set out his thinking in a speech in 2011: “I have worked on many different areas of the public sector over the past 30 years. The biggest lesson I have learned is that the most powerful driver of reform is to let new providers into the system. They do things differently in ways none can predict.”

This last statement, at least, has proved accurate. In our cover feature, we examine in detail the way in which one alternative provider has responded to the government’s overtures, with rapid growth in the number of students with state-backed loans taking Higher National Diplomas, and the way in which the oversight of a new and emerging part of the higher education sector is working.

This is a case study of one college that is operating in a space deliberately created by the government, in which new players have been encouraged to “disrupt”. There is no suggestion that it has broken any rules – it has done what private companies do and grown its business as rapidly as the rules allow.

In another Radio 4 interview last week, a GP of 25 years was asked for her view of private healthcare contractors. “I’ve got nothing against alternative providers, as long as they add value to the NHS,” she said. The same obvious logic applies in higher education. So the question is: can you feel that tide lapping at your toes?

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