UK government urged to fix ‘broken’ public service markets

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Half of voters feel that no one takes responsibility when outsourced public services go wrong, according to a leading think-tank, which is urging the government to focus on fixing “broken” public service markets.

The finding, in a poll commissioned by the Institute for Government, came as it called on politicians to increase transparency in the way such markets worked and ensure there was clear accountability for failure.

The survey, by Populus for the IfG, also found a widespread scepticism that parties would deliver on their election pledges in government. Only 15 per cent were confident that parties knew how they would fulfil their promises, while almost two in three thought political parties in the UK “generally do not keep their election promises”.

Fewer than one in five thought the political parties were good at explaining how their proposed policies would be implemented or paid for.

Peter Riddell, IfG director, said that whoever took office after next May’s general election would have to govern differently if they wanted to build public confidence.

Mr Riddell added: “Crucially, this does not mean a shift to a technocratic or managerial view of government; rather the reverse. Our advice is about how to get the politics right in order to achieve political goals.”

Publishing a “manifesto for effective government” for parties wishing to win public trust, it noted that about £90bn of public services was now delivered by private and voluntary organisations.

Yet, said IfG, more complex outsourcing projects often underperformed because of “perverse contractual incentives, weak public sector oversight, and a lack of transparency and competition”.

It cited recent scandals in areas such electronic tagging, where Serco and G4S were both forced to repay millions of pounds to the taxpayer after they were found to have overcharged for some services.

The IfG said that “worryingly” half the people in the survey it had commissioned “felt that no one takes responsibility when problems occur in outsourced services”.

In order to improve public services, the think-tank renewed calls for government to “slow down on outsourcing more services to allow greater focus on fixing broken and underperforming public service markets”.

It should “share information on the costs and performance of providers with the public and parliament to show that government is in control, and increase the focus on ensuring value for money”.

Government should also increase the scrutiny of new outsourcing deals, particularly those worth more than £100m, to ensure they were “sensible”, adds IfG. It recommends seeking “independent, formal advice on competition issues” from the Competition and Markets Authority, which has a brief to ensure competitive markets.

As Westminster prepares to offer more powers to Scotland, in a bid to slow a pro-independence bandwagon, the IfG also suggests that changes are needed in the way that civil servants and ministers negotiate with the devolved nations.

It highlights “frustration and practical problems” in Wales, resulting from it being consulted too late on relevant legislation.

“The mix of powers that have been devolved is complex, and the devolution processes in Wales, Scotland and Northern Ireland will continue”, it says.

An incoming government should create “rules of the game” and appropriate mechanisms “to involve, consult or co-operate with devolved nations in policy development and announcements,” adds the IfG.

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