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 and is seen by government as a way of improving services and driving innovation. The Office for the Third Sector has recognised the role the VCS has to play in this; it is not simply about transferring services, but VCOs also have a role in transforming services. However it remains to be seen how this will be taken forward under the new Labour government.
What are the implications?
- Increased role in public services for VCOs.
- Increasing pressure to demonstrate efficiency and value for money.
- Intensification and complexity of competition. Suppliers must demonstrate added value in order to differentiate themselves.
- Blurring boundaries between the sectors as VCOs and private companies take on services previously delivered by the State.
- Procurement practices risk favouring larger organisations and polarising the VCS.
- Growth in hybrid organisations
Moving forward
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:
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:
Discuss
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