Understanding the Public Services Industy

Public Services Industry Review
to construction, building maintenance and highways but this was later extended to
virtually all blue collar jobs in local government and then yet further, to white collar
and professional services and jobs including housing management, personnel, legal
and financial services and information technology 29 .
4.6 Despite some early resistance by local authorities and health trusts, CCT is now widely
considered to have been a key driver in the development of the PSI. CCT opened up
markets to the private and third sectors on a scale that had not happened previously.
This radical and highly visible step was necessary both for the supply side and the
demand side of the market to develop. It allowed organisations to operate with greater
scale economies and provided the incentive to make investment in capacity. The
process is now sufficiently entrenched that compulsion has been removed and there is
little evidence of a return to non-competitive ways of working.
4.7 CCT, however, was not without its problems. In particular it tended to place too much
emphasis on lowering the costs associated with a particular service often to the
detriment of other factors such as quality or employment conditions. Because of this,
the focus of commissioning has now moved beyond this stage (Figure 4.1).
2. Value for Money
4.8 Ensuring that the quality of service is maintained or improved when competition is
introduced into a market is very important, particularly as more complex services
are involved. Policy has evolved 30 to take this into account and has moved towards a
strategic commissioning approach to achieve effective outcomes over the long term,
building on the concept of best value for money (Box 4.1).
Figure 4.1: The move from CCT to a Strategic Commissioning Model 31
Policy/practice levers
CCT
Best value
Strategic
Service
Partnership
Procurement
Capacity
Building
The
efficiency
review
Strategic
commissioning
Desired outcomes
Cost… Quality Innovation… Efficiency… Effective outcomes
29 The Local Government Act 1988, and 1992.
30 Budget 2008 announced a government study of competition in a number of key public service markets where the
government has committed to mixed provision. This work, being led by HMT, will examine opportunities for fair
competition to deliver higher quality public services and improve value for money. The study will focus on 3 sectors –
Childcare, Adult Skills and Offender Management but will also look to draw out broader insights applicable to other public
service markets where appropriate.
31 Developing the local government services market to support a long-term strategy for local government, DCLG/PwC (2006).
37