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Making public service markets work

Professionalising government’s approach to commissioning and market stewardship

The past 30 years have seen a dramatic shift in the way UK public services are provided. Government is now rarely the sole provider of publicly-funded services. In education, employment, health – indeed, almost every area – private, public and voluntary sector organisations compete for the right to provide our services, with users often having a say in whose services they receive. Today, roughly £1 in every £3 that government spends on public services goes to independent providers

The impact of this vast shift is, in truth, not well understood. The evidence does suggest that contracting with independent providers has worked well in simpler, more transactional services like waste management – particularly where providers also offer their services to the private sector. In more complex services, like health or education, the impact of competition is unclear, not least because government has rarely implemented changes in a way that they can be easily evaluated.

It is clear, however, that – as in directly managed services – government does not always succeed in delivering value for money. In the past months, independent enquiries and media investigations have uncovered problems in rail-franchising renegotiations, electronic monitoring of offenders and housing for asylum seekers to name just a few. Failures often have a high cost for both service users and taxpayers.

This report examines government’s creation and oversight of public service markets in employment services (the Work Programme), secondary education, care for older people and probation services.