TRANSFORMING PUBLIC SERVICES IS NEW GROWTH INDUSTRY

DEPARTMENT FOR BUSINESS, ENTERPRISE AND REGULATORY REFORM
News Release (2007/119) issued by The Government News Network on 5 December 2007

A review of the emerging public service industry was today commissioned by Business Secretary John Hutton to examine the increasing contribution being made to the UK's economy by firms and other organisations contracted to deliver services in the NHS, the prison service and right across the public sector.

Addressing the CBI's Public Services Forum at Sadler's Wells in London, Mr Hutton said:

"The last decade has seen our longest and most stable period of economic growth. And it has also seen the largest and most sustained investment in our public services.

"Out of this has emerged the 'public service industry'. Thousands of organisations have prospered in this new industry, employing tens, possibly hundreds of thousands of people and making a real difference to people's lives. It has helped us to meet the challenge of renewing our public services, through efficiency, innovation and effectiveness.

"And just as importantly, it has made a tremendous contribution to UK plc.

"It is a sector with huge potential. But to achieve it - at home and abroad - we need a greater understanding of its existing contribution and what more Government can do, as policy maker, regulator and procurer to get the best results for consumers and taxpayers."

In 2005/06 the Government directly procured £115bn of goods and services. However, the total value of this industry (including supply chains), key trends within it, contribution to UK economy (including innovation and productivity) has not, to date, been comprehensively analysed.

The aim of the review is to build a clearer, fuller understanding of the emerging sector. It will seek to identify the facts and factors that could support its growth - including the market's scale, employment base and characteristics of its leading players - and define the value of its contribution to our economy, productivity and international competitiveness.

The study will examine:

* the development of the 'public service industry' to date, including significant recent trends (in terms of value, innovation, productivity, capability, capacity);

* the value and competitiveness of the 'public service industry' by sector (e.g. health, education, welfare, defence, transport, home affairs), and capability (e.g. IT, consultancy, legal, scientific, accountancy, construction), including indirect supply chains.

* the number of people directly and indirectly employed in th 'public service industry'; its contribution to public service innovation and productivity in the UK economy;

* analysis of key factors and trends that drive performance across the sector including market management (policy and regulation) and commercial management (commissioning capability, contract management including scale, length, complexity, risk, incentives);

* the barriers to entry and exit across firm types in key public service markets and the characteristics of companies that operate across the sector;

* the comparative advantage of UK public service market in attracting overseas investment, compared to existing and emerging comparator markets overseas;

* the potential global market for goods and services in this market and the competitive advantage of UK businesses in overseas market (with a focus on emerging growth markets where UK has comparative advantage);

The study will engage with existing work across Whitehall departments and agencies relevant to the questions set out above (e.g. DUIS on innovation in the public sector, ONS on public sector productivity, OGC on commissioning and procurement.)

The study will be primarily concerned with providing a factual analysis of the issues discussed in relation to the above questions in order to inform further work in this area. To that extent, recommendations flowing from this analysis will be welcome as and where necessary.

The study will be led by Dr DeAnne Julius CBE and supported by a senior internal and external Advisory Panel and a secretariat from BERR. It is expected that the study will be published during summer 2008.

TRANSFORMING PUBLIC SERVICES IS NEW GROWTH INDUSTRY

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