Debate Kathy Evans, Chief Executive Lessons for commissioners from Carillion [First published in CYP Now, July 2018] Between the drama of President Trump’s visit to the UK, and the melodrama of Brexit plans and resignations, it would have been easy to miss the report from the Public Administration and Constitutional Affairs Committee (PACAC) on what needs to be learned by politicians and public service commissioners following the collapse of Carillion. You could also read right through it without seeing any explicit reference to children’s services, but it really is vitally important for our sector, raising huge questions about how the public sector has approached the whole ‘business’ of competitive tendering for public service contracts. There is lots more in the report, but I have picked out three findings that are critical for our sector. First, the Committee raises ‘grave concern’ at “the government’s preoccupation with price” – which it says is too often the primary rationale for contracting. This, they say, is at the expense of a proper understanding of quality, or of the financial sustainability of the businesses they contract with. Focussing on lowest price is particularly high risk in commissioning ‘complex services for vulnerable people’ – a term that could describe all services for children and families! With the advent of 100% price-weighting (ie no credit given for quality at all) on tenders in some areas’ fostering contracts, and having watched 4Children grow rapidly by undercutting other bidders on price, only to then watch them collapse as a business, this is a long-overdue warning from parliament that the children’s sector should heed. Second, PACAC calls for a halt to payment by results (and other complex ‘innovative’ financing mechanisms) that have exacerbated the transfer and complexity of risk in contracts with service delivery agencies. Payment by results has been widely experimented with in children’s services, and publicly failed in the case of Children’s Centre PBR pilots and Troubled Families. But this recommendation presents a challenge to government’s continuing evangelism for Social Impact Bonds (SIBs). SIBs are complex financial deals for funding public-benefit projects, that promise financial rewards for private investors from taxpayer budgets, in return for the production of practice ‘outcomes’. There are already SIBs in our sector – in fostering and adoption, careleavers’ support and more – and all SIBs are inherently premised on payment by results mechanisms. So it will be interesting to see how government responds to PACAC’s bold demand to halt new PbR contracts and renegotiate existing ones. Lastly the Committee powerfully underlines the fact that many public service markets – like fostering and children’s homes – are monopsonies. That means ‘markets’ where the only paying customer is the state itself. In monopsonies, they say, it is not enough for the state (whether councils or Whitehall departments) to go ‘shopping’ for the cheapest offers they can get from whichever organisation will step forward. In monsopsonies the state is responsible for the whole market, in its entirety. In children’s services that means councils must stop complaining if they feel they are ‘victim’ to private profit-making fostering firms, for example. When the state holds all the spending budgets and makes all the decisions, they are the ones with the power to decide who provides, or not. And if they keep spending on cheapest bidders that can’t sustain their business on the terms they are offering, they won’t be able to wash their hands of responsibility if those businesses collapse like Carillion either.