Kathy Evans explored the increasing marketization of public services in the UK – the increasing use of competitive tendering, and the decreasing use of grants as mechanisms to deliver social policy outcomes. The value of public sector contracts to the voluntary sector rose from £4.6m to £11.1m between 2001/2 and 2011/12, and £90 billion of public services are delivered by the private sector, representing 50% of government spending.
Kathy described the market-driven behaviours which are now required for organisations to succeed in this environment, and the principles which underpin market activity. She explored the idea that public sector markets are distorted and ineffective because of various market-distorting factors which are intrinsic to public service contracting. She identified three major market distorting factors:
- monopolies (markets with single dominant suppliers)
- monopsonies (markets with single purchasers)
- externalities (the effects of market transactions which are felt by, and paid for, by people outside that market)
As a consequence of these distorting conditions, public sector markets don’t function to generate cost-effective and high quality public services.