17 May 2011
Putting public services out to tender ‘avoids the issue’ of how to increase productivity, a report out today warns.
The Work Foundation argues that the government’s policy of involving more providers in public services is failing to produce the innovations that could increase value for money and productivity.
Making the most of public services: a systems approach to public innovation argues that the public sector should carry out its own innovations, rather than lose them to the private sector through outsourcing. It could do this by forming collaborative relationships to jointly develop products and services.
The government spends £50bn a year on ‘intangible’ knowledge-based assets, which the report says are the main drivers of innovation. These include staff, software and research and development.
The Work Foundation argues this money is spent with little understanding of how to support innovation to provide the greatest value for money.
Lead author Charles Levy says without improvements, there is a danger that spending cuts and public service reforms will stifle innovation, losing the chance to reverse declining public sector productivity.
The report calls for guidance to be provided to all government departments on valuing and managing investment in intangible assets, which could improve productivity.
Levy says: ‘Public sector innovation has the potential to radically improve value for money at a time of growing demand. In spite of this, there has been very little research into how public services invest in and support innovation. Putting services out to tender avoids the issue, and with rapid, swingeing cuts now being made across the board, there is a real danger that innovation will be cut along with spending.
‘If the coalition is not to throw the baby out with the bathwater, it must look to the private sector as an example rather than a substitute for public sector innovation.’
