Understanding the Public Services Industy

Public Services Industry Review
Executive Summary
As in other advanced countries, the demand for public services in the UK is growing faster
than the economy as a whole. Especially for health and education, this trend is set to
continue as the population ages and the UK invests in the skills and infrastructure it needs
to compete in the global economy. There will also be new challenges in providing modern
services that are more personalised and meet the needs of diverse and demanding users.
With government budgetary constraints likely to remain tight, it will be critical to find
practical ways to deliver higher quality public services that provide the best value for money
for taxpayers.
Historically most public services were provided directly by government employees. More
recently, in the UK and elsewhere, the private and third sectors have been increasingly
commissioned to help with public service delivery. They are now involved in a wide range
of services at both local and central government levels. This has led to the emergence of the
Public Services Industry.
In view of these developments, in December 2007, the Secretary of State for Business
Enterprise and Regulatory Reform, John Hutton announced a Review of the Public Services
Industry to be lead by Dr. DeAnne Julius.
This Review defines the Public Services Industry (PSI) to include:
‘All private and third sector enterprises that provide services to the public on behalf of
Government or to the Government itself’.
This Review has examined the PSI in the UK in order to:
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define and measure the PSI, its contribution to GDP and employment and consider
how this has changed over recent years;
review the lessons learned about private and third sector delivery of public services in
the UK; and
assess how government can help the PSI to be more successful in delivering high
quality public services both at home and abroad.
Overall the Review has found that the PSI has made a major contribution to the provision of
better value for money public services in the UK. It has also grown to become a significant
part of the economy, accounting for nearly 6 per cent of GDP and directly employing over
1.2 million people. Despite this record of success, the Review has revealed some worrying
trends. The growth rate of the PSI has been slowing and the costs of bidding are rising with
an increasingly complex commissioning process.
By its very nature the future of the PSI is largely in the hands of government. Unlike other
industries, its growth is not self-sustaining simply by being successful. At the same time,
the PSI can do more than any other industry to help government achieve its core objectives.
Despite its size and importance, however, the PSI has received little focussed attention and
its relatively few failures are better reported than its many achievements.
The key findings and recommendations from the Review are set out below:
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