Community Care Live May 2016
Avoiding Market Failure
Kathy Evans
CEO
Twitter @Kathy_CEO_CE
[email protected]
How did we get here anyway?
The ‘long view’ from children’s residential care:
- Pre and Post WWII the social care ‘market’ was dominated by charities, viewed as partners with
government in meeting (and strategically ‘handing over’) statutory care duties, with significant capital and
fundraising capacity to add to state resources.
- Creating a ‘competitive market’ for care was never a strategic policy decision – rather an evolving set of
dominant practices, rooted in CCT, Care in the Community, later NHS ‘internal market’ reforms, and EU
regs.
- The flight of charities from their former dominance in providing residential care, and the fact that the state
never fully ‘nationalised’ the supply of care homes before ‘outsourcing’ it, are highly significant in explaining
the current market dominance of private firms and capital on whom the state now relies for three
quarters of its residential care supply
- Short term approaches to procuring the supply of care services (across fostering, adoption and
residential care) sit in stark contrast with the long term planning, contracting and capital investments being
made by government in relation to other comparable and enduring public service duties of the state, such
as prisons and schools
- Navigating the way forward to a more sustainable, effective and efficient way of improving residential care
will require of everyone involved that we come to terms with the inadequacy and risks of using ‘the
market’ as a means of achieving such an objective
Defining ‘Market Failure’ and its causes
The Chartered Institute of Purchasing and Supply, in their procurement glossary, offer
the following:
“Market failure occurs when the
action of the market does not create
an optimal outcome."
They go on to explain that causes of market failure can be attributed to three main reasons.........
Causes of Market Failure 1: Market Distortion
Causes of Market Failure 2: Externalities
Causes of Market Failure 3: being a public good
What can we do?
- We
are already in ‘market failure’.....what we must urgently try to avoid is market
collapse
- Competitive markets for public goods are inherently, structurally destined for
market failure! Market mechanisms alone will always fail to achieve optimal
outcomes – we need systemic redesign
- Cuts to LA budgets are a significant accellerant of market collapse, but reversal of
cuts alone would not solve market unsustainability
- Need to keep all current capacity, roles and skills in the mix, but we need to
organise them very differently. In particular, we must ‘reconnect’ the
customer/consumer split – address the structural disempowerment of the child and
of the care practitioner
- How radically are we really willing to imagine a different system and set of
relationships? Have you heard about Buuzorg (Holland)?