Understanding the Public Services Industy

Public Services Industry Review
Figure 5.7: Public & PSI spending on selected Government activities as a percentage of GDP
%GDP
9
8
7
6
5
4
3
2
1
0
General Public Services
5
Defence
4
PSI
3
Other public spending
2
1
0
US France Spain Sweden UK US France Spain Sweden UK
3
Public Order and Safety
25
Social Protection
%GDP
2
1
20
15
10
5
0
US France Spain Sweden UK
0
US France Spain Sweden UK
Source: Oxford Economics
5.13 The use of the PSI in different areas of government activity varies significantly across
countries. For example, Sweden channels relatively more of its public spending though
the PSI than other countries, with the exception of spending on social protection.
The UK ranks close to Sweden in terms of its overall use of the PSI but is low on
general public services. France and Spain utilise the PSI less than other countries
across the whole range of government activities. This was reflected in the Review’s
call for evidence where companies mentioned the US, Australia and large developing
countries – rather than our European neighbours – as the highest potential export
opportunities.
Potential Size of the PSI
5.14 It is interesting to compare the scale of the PSI in each country with how large the
industry could theoretically be if the government contracted out all service provision
that is currently represented by public sector pay. This is obviously an unrealistic
extreme since some components of public sector pay – such as combat roles in the
military – are never likely to shift to the private or third sectors. Public sector staff
will always be needed for policy and parliamentary duties and, of course, to manage
the commissioning and project management process. However, as a calibration and
comparative exercise Figure 5.8 shows the PSI as a share of total public services
(measured as PSI plus public sector pay) for the UK and comparator countries.
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