A rash of public sector failures have raised questions about the use of markets across schools, hospitals and central government. Vital checks and balances are needed to ensure that markets work for the benefit of the user and not the provider
Back in the days when full-blown public sector markets were but a distant dream, Labour government advisers used to deliver homilies about producer ‘capture’ and consumer choice.
Public services should be designed around users, not employees, they stressed – and competitive markets were the best way to ensure that.
Times have moved on. Contracting and outsourcing are no longer hotly contested issues, and even politically sensitive areas like health and education have been thrown wide open to marketisation.
The mantra of ‘what works’ – as against public-knows-best dogma – has now become established orthodoxy.
But, as the influential Institute for Government (Opinion) has highlighted, the old debates are far from settled.
A rash of public sector market failures – from NHS 111 to the Ministry of Justice tagging fiasco, to repeated care home scandals – have re-raised the question: who pays the price when the market patently does not work?
As Peter Wilby argues in the latest issue of Public Finance (Put to the test) Michael Gove’s education revolution is transferring control of schooling from local authorities to a handful of commercial chains. The whole edifice is presided over by the secretary of state himself.
A minority of pupils in Gove’s ‘little platoons’ of free schools and highperforming academies may benefit from his reforms. But the vast majority of school children face increasingly marginalised and under-funded local education services.
As the IfG points out, many academy chains are further undermining parental and pupil choice by focusing on specific parts of the country: a big problem if one of them fails.
Similar issues arise in the newly reformed NHS, where clinical commissioning groups are under pressure to seek competitive tenders for care services – and the acute hospital sector is keen to follow suit.
However, squeezed payment-by-results tariffs, private health sector failures and a succession of care scandals (Safe in whose hands?) have tempered commercial appetites.
All of which underscores the IfG’s advice to Whitehall to slow down the pace of marketisation, test out new delivery models more thoroughly (in particular, for ‘gaming’) and insist on full commercial transparency.
Without these vital checks and balances, the only interests being served by the government’s market reforms will be those of near-monopoly private sector providers.
Public service users – as ever – will be last in line.
This column was published in the September issue of Public Finance
