Understanding the Public Services Industy

Public Services Industry Review
Structure of the Report
This report is divided into six sections reflecting the key aims of the Review. Section 1
discusses the broad categories of public services and considers the various ways that they
can be provided and funded. It then defines the Public Services Industry (PSI) and describes
what is included and excluded by this definition.
Section 2 draws on work commissioned from Oxford Economics which looks at the size and
composition of the PSI in the UK and examines how this has changed over the last
12 years. It measures its contribution to GDP and employment and also considers how
the PSI may grow in the future. It discusses some of the data difficulties in this area and
provides a classification of the supply side of the industry.
Section 3 looks at why government may wish to use the private and third sectors to provide
services either directly to the public or to support its own activities. Empirical and academic
literature is examined for evidence on where the PSI has (and has not) delivered better
public service outcomes.
Section 4 considers the issues that have influenced the long term development of the PSI
in the UK. It describes the policies which have helped the PSI reach its current size and
then considers key factors which have been identified during the Review as preventing the
PSI from delivering to its full potential. General recommendations for overcoming these
difficulties are made.
Section 5 looks at international aspects of the PSI. It compares the UK PSI with that in
selected OECD countries and considers how the government can support the activities of UK
PSI firms operating overseas.
Finally, Section 6 draws together the key themes and messages from the previous sections
to set out a vision for the future of the PSI in the UK.
Terminology
It has become apparent that some of the terms commonly used mean different things
to different people, so this report tries to be as consistent as possible with the language
used. For example, in this report ‘commissioning’ is used to refer to the process which
‘defines strategic outcomes and seeks to create relationships to ensure these outcomes
are delivered’ 3 . Thus it covers everything from defining the objectives of a particular
procurement, the formal bidding process, project implementation and post project
monitoring and evaluation. ‘Procurement’ is one element of the commissioning cycle. It
refers to the processes around drawing up tender documents and engaging a particular
contractor. A glossary of terms used is included in Annex C.
3 Commissioning and Community Leadership in Local Government – The Supply side Challenges – a discussion paper,
DCLG (Forthcoming).
2