EPSU warns against going for PPP contractual arrangements for social services, also with the Social Investment Package

Brussels, 30 January 2013

Business Europe, the European Private Sector Employers’ Organisation, has recently presented an initiative to promote models labelled “public-private-partnership (PPP) in social policy in the common interest”. Business Europe claims that this format of delivery of social policies and in particular social services would help pushing the “efficiency in the delivery of social services”, “cost effectiveness in public spending” and “access to quality and affordable social services for all”. In a breakfast meeting of 29 January 2013 first ideas were presented in an effort to align own work with existing and forthcoming initiatives of the European Commission, not least the "Social Investment Package" announced for February 2013 (cf. the last paragraph of this article for more details).

Based on a broad range of existing experience from the last more than a decade, EPSU is critical about this type of attempts to push marketisation of social policies and the commercialisation of the provision of personal social services. In EPSU's view "public-private partnership models" as presented - amongst other types of involvement of private enterprises in contractual arrangements "in partnership" with local and regional government also mentioned and promoted - and promoted by Business Europe imply a move towards “two-tiered systems” of social services delivery, with the risk of to lead to, at least in the mid- and long-term run, better service quality and quicker access available for those that (can and are willing to) pay more out of their pocket. We oppose these developments based on our experience with private service delivery and on a more general level with public-private partnerships within and outside the sector of health and social services (see for a critical assessment of existing practice and an analysis of existing evidence, not least in the (British) health and social care sector, the documents and links at the end of this article). They show that commercial providers aim at creaming off the financially more attractive parts of the “social service market” to leave the rest to public authorities and organisations of the social economy. Interestingly enough, there is no real interest in and no actual (large-scale) investment in social service provision for all citizens or at the the broader public in countries of CEE and Southern Europe where there (currently) is not enough public money, this is only "articulated" where the exclusive or largest share of financing is from public money!

The interest of commercial providers - in particular of enterprises operating on a regional, national or multi-national level - to “enter into social service markets” is facilitated by at least ambiguous policy frameworks supported by the European Commission. The latter supports, partially openly, partially indirectly the setting up and EU-level regulation of transnational markets in health and social care – with policy, EU legislation and financial assistance.

EPSU has elaborated positions on the legal, policy and quality framework of social services (last updated in March 2011).

EPSU will monitor the concept and objectives linked to the "Social Investment Package" DG EMPL plans to present during February 2013, and this independently from the role of PPP-models in social policy. According to information shared with the participants of the meeting mentioned above this EC Initiative will be built around four instruments - they all seem to focus more on small and medium-sized enterprises (SMEs) and the organisations of the social economy:

1) Micro-credits, to be Better used and with a broader scope, in particular as to micro-finance instruments for start-ups of the migrant population in EU MS

2) Social innovation, e.g. in view of the use of ICT, new models of service delivery, the better integration of older workers in the care workforce

3) Public-Private-Partnerships with "Social Impact Bonds" (building on experiences in the USA and the UK)

4) Social entrepreneurship, partly refinanced with money from the European Social Fund, also available for private (not-for-profit and for-profit) providers of social services for investments into infrastructures

When presenting on 8 January 2013 the Employment and Social Situation Yearly Review 2012, Commissioner László Andor, DG EMPL, said the "Social Investment Package for Growth and Cohesion" was to address the growing risks of poverty and social exclusion. He continued stating that "as the crisis drags on, governments find it more difficult to invest in people and prevent economic and social exclusion. But we need social investment now, otherwise we will see a decline in economic potential and much larger social costs in the future" and concluded that "The Social Investment Package will show ways to modernise the European Social Model so that it mobilises a larger share of Europe's human capital, ensuring social inclusion of disadvantaged people and an adequate level of social protection."

Further reading on evidence of problems and failures of public-private partnerships constructions, including in the form of private finance initiatives (PFI), across different sectors of public services

a) PPP models in the sector of health and social care

- Summary Information on “Southern Cross Case and Social Care Market in the UK”, provided by EPSU member GMB

- Recent articles in different British newspapers dealing with the concept and experiences of PPP and the consequences of their failure for tax-payers, patients and health workers of Public Finance Initiatives (PFI) in the National Health Sector (NHS)

a) The Guardian (29.06.12): How PFI is crippling the NHS

b) The Independent (29.10.12): Debt-ridden NHS trust to be scrapped

c) The Telegraph (29.10.12): £207m debt at PFI-saddled hospital trust 'should be written off'

b) PPPs across different sectors of public services

- EPSU briefing “10 facts about public-private partnerships (PPPs)” (December 2011)

on the problems that PPPs can cause, compiled i.a. in view of the ongoing legislative process on service concessions. The paper prepared by PSIRU states: "At the heart of the “myths” that support PPPs is the idea that PPPs somehow bring additional private resources into public services or infrastructure. ... This is not true: the great majority of PPPs rely on a stream of income from payments by governments (for the hospital, school, railway, etc.) , i.e. public spending. ... Member States – including local and regional authorities - may be tempted to resort to PPPs as a ‘quick fix’ for budgetary restraints, even if the long-term consequences are disastrous. ... In summary, the PPP briefing shows that PPPs do not supplement public spending – they absorb it."

- PSIRU Report "Public rescue for more failed private finance institutions - a critique of the EC green paper on PPPs" (March 2010)

- PSIRU Report "Critique of PPP" (October 2008)

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