Policy choices on public service delivery should focus on optimum value for money whilst delivering acceptable quality.
After agreeing what level of public spending is desirable and affordable, as described above (3.5.2.3), there is still the question of how best to deliver the chosen services. A government has a duty of care: to ensure that the services it funds are of adequate quality and that they represent optimum value for money.
There has been a trend towards privatisation since the 1980s, driven by ideology, as explored in Kean Birch’s article: Neoliberalism and the geographies of marketization: The entangling of state and markets; the article explains the background to this trend and examines the reasoning behind it:
“growing public and political antipathy to the expansion of public spending, compounded by demands for tax cuts, led to a crisis of public investment…
…governments around the world have turned to the private sector to pursue their agendas, partly to access new sources of financing but also to encourage greater efficiencies and accountability as a result of this private sector involvement.”
The politics of public service delivery is discussed later (6.7.1.2), but there are several purely economic considerations – as described in the following sub-sections:
· State employees can offer a uniform service to everyone, with efficiencies of scale (3.5.3.1). They can't offer much consumer choice, though, and they might not offer the efficiency and level of innovation of private companies.
· More choice can be offered by providing public funding to civil society organisations (3.5.3.2), to supplement or replace what is delivered by government employees. This can also enable private charitable donations to be added to the total available funding.
· People can be given public funding to make their own purchasing decisions from private companies seeking a profit (3.5.3.3). This might offer cost and efficiency benefits, although consumer protection is essential.
· Outsourcing to a private company where there is a natural monopoly, for example where water supplies are obtained from a restricted source, it is important to have appropriate procurement safeguards (3.5.3.4).
· The use of private finance for public infrastructure projects has been expensive (3.5.3.5). It dodges headline government expenditure rather than properly explaining the need for investment.
· Outsourcing might offer efficiency benefits, but the role of profit in public service delivery is contentious (3.5.3.6). It creates conflicts of interest. This is especially the case with health and social care, sometimes resulting in poor value for money.
(This is an archive of a page intended to form part of Edition 4 of the Patterns of Power series of books. The latest versions are at book contents).