Understanding the Public Services Industy

Public Services Industry Review
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UK companies like Serco and VT Group have used experience and skills acquired
through operating in the UK PSI to become successful international businesses.
American prison management companies dominated the first generation of
prison contracts in Australia and the UK.
Australian companies have used that country’s lead in PPP toll roads to become
major international players in the PPP roads market.
5.5 Companies interviewed during this Review repeatedly highlighted the importance of
the UK government continuing to develop innovative ways of working with the private
and third sectors as a driver for international business. Other countries have looked
to the UK to learn lessons from our use of PPP and PFI. Partnerships UK, for example,
frequently meet overseas representatives to discuss how the UK model can be applied
elsewhere. There are also many advisory and finance firms who gained experience
supporting PPPs and PFIs in the UK and who now generate significant export revenue
from applying those skills abroad.
How does the PSI in the UK compare to that in other OECD countries? 64
5.6 An important determinant of the size of a country’s PSI is the scale of overall public
spending. Figure 5.1 presents a comparison of the UK with 5 other OECD countries
where the PSI is of interest. The data are from the most recent year available in each
case so are not exactly comparable. However, at this general level they are unlikely to
change much from one year to the next. The lowest share of public spending among
these comparator countries is Australia with 28.5 per cent while the highest are France
and Sweden with over 50 per cent. The UK, at 42 per cent, falls roughly in the middle.
Figure 5.1: Public spending as a share of GDP in selected OECD countries
Billions 2005 2006 Per cent of GDP
US ($)
Spain (Euros)
France (Euros)
Sweden (SEK)
Australia (Aus $)
4,536
919
378
1,575
286
36.5
38.6
53.6
54.3
28.5
UK (£) 586 41.7
Source: Oxford Economics
Note: Overall public spending figure for the UK is a 2007/08 figure (source: PESA)
64 The information here is drawn from the work undertaken by Oxford Economics commissioned as part of this Review.
This study gathered information on the PSI in the US, Australia (although data here was more limited), France, Sweden
and Spain to compare with the UK. Full detail is available in the report ‘The Market for Public Services – International
comparisons’.
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