Bringing markets into public services

Bringing markets into public services, or 'contestability', is a key way for the Government to open up public services to a more diverse range of suppliers. The government sees it as a way of improving services and driving innovation.  The idea is that the services will be transformed as they are delivered by a different supplier, opening up space for innovation. It remains to be seen how this policy will be taken forward by the new government which is likely to be elected in 2010, particularly in the context of constrained public spending.

What are the implications?

Moving forward

How might a new government take forward the policy of open markets for public services? If this is a key driver for your organisation, you may like to do some scenario planning.

As competition for public service contracts increases, it will be important to distinguish your organisation from its competitors.

  • How can you demonstrate the unique value you would add to a service?
  • Is it possible to expand your work to include other services?
  • Delivering value for money is important, but do you recognise the true costs of projects to your organisation?  If you decide to bypass full cost recovery, is this sustainable and beneficial to your organisation in the long term?

Working in collaboration can give you a competitive advantage by enhancing your services and creating economies of scale.

  • Are there other organisations with different areas of expertise that your organisation could work with to complement your services?
  • Could you continue to deliver your services independently but share back office costs with another organisation to help you deliver value for money?

Want to know more?

Private sector role in public services explodes

Published by: The Financial Times (a centrist newspaper with a focus on economic issues)  

Date: 2007

Format: Web

What is it? An article discussing a recent study published by Oxford Economics on the increase of the private sector in delivering public services.

How useful is this? The article is short but it does discuss the increased role of the VCS in public services compared to the private sector and lists some of the key public services this applies to. It also contains some key statistics about levels of VCS and private sector providers.

Other comments: The Oxford Economics study itself is not available online.

Building on progress report: Public services

Published by: HM Government, Prime Minister’s Strategy Unit

Date: 2007

Format: PDF

What is it?  One of several reports from the Prime Minister’s Strategy Unit policy review setting out a vision for the future of public services.

How useful is this? Chapter 4 discusses the need to open up supply where appropriate including to the VCS. It focuses on the importance of commissioning services and using contestability to drive innovation and level the playing field between the different sectors that deliver public services.

Other comments:

The third-sector way

Published by: The Guardian (a left of centre newspaper)

Date: 2007

Format: Web

What is it? An article discussing the Labour government’s interest in opening up public services to private and VCS providers by Richard Gutch, the Chief Executive of Future Builders, a loan finance provider for the VCS.

How useful is this? This article explores the options for the opening up of public services to markets, particularly the VCS. It examines some of the challenges the VCS face around public service delivery and discusses some of the actions that the government is implementing around procurement to try and level the commissioning playing field. However, as it is written by the Chief Executive of Future Builders, it does focus on the merits of loan finance in addressing these difficulties.

Other comments:

Last updated at 16:29 Thu 26/Aug/10.

Recent comments

Megan 's picture


Third Sector Foresight

Last week we were up in Doncaster with 12 chief officers and chairs of local infrastructure organisation. One of the discussions revolved around the implications and strategic actions that could flow from consideration of this driver (and the related drivers of increasing role of the sector in service delivery, procurement practice and polarisation of the sector.

Read the participants’ ideas about implications and potential actions.

Join the discussion!

How will this affect your organisation? Have you considered it during your strategic planning? Can you share any interesting relevant links?

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