Getting better at managing public service markets

In a recent speech on creating a ‘smarter state’, the Prime Minister said that government will be ‘bringing in new providers or allowing new ways of doing things’, that ‘those providers should be paid by the results they achieve’ and that ‘opening up contracts to small businesses can drive innovation’. But we know that the Civil Service’s record on managing public service markets is not great, with a number of high-profile collapses in provision, and that public servants need help in this area. That’s why we have launched Public Service Markets – A Practical Guide. This includes a framework for understanding markets and a diagnostic tool to help analyse a specific public service market in depth. What’s needed to improve public service markets? Our work on public service markets shows that the Civil Service needs to do more to develop the right mechanisms, skills and capacity to ensure public service markets are professionally designed, managed and stewarded. We’re not alone in thinking this. In a speech at the Institute to the Public Chairs’ Forum on 14 October 2015 Matt Hancock MP, Minister for the Cabinet Office, highlighted how citizens are “increasingly demanding better public services…as…is happening in all other areas of life” and that strong leadership is critical in the delivery of public services and driving efficiency. John Manzoni, Chief Executive of the Civil Service, has also recently highlighted the lack of expertise to take advantage of competition in external markets: “Sometimes we need to develop a market or create competition within a market. We should be working in partnership with external markets – holding our own in commercial negotiations, and being more strategic in our approach to procurement. This all needs highly skilled expertise we don’t have today in sufficient quantity.” Given this lack of expertise, it’s perhaps not surprising that the public are still wary of public service markets, with half of respondents in a 2014 survey commissioned by the Institute for Government worrying that no-one takes responsibility when problems occur in outsourced services. The public service markets analysis tool There are a number of existing mechanisms to improve performance and commercial capabilities including the Commissioning Academy, the Major Projects Leadership Academy programmes and the Crown Commercial Service, but there’s still a gap. Many of those working with markets, though instrumental in managing these complex systems, do not see themselves as “commissioners” and may not be supported by these mechanisms. What’s needed, therefore, is practical information and support for those designing, managing and stewarding public service markets across central and local government. Our Guide to Public Service Markets is designed to fill this gap. It comes in three parts:

• About public service markets. This discusses why public service delivery has changed in recent years and explains some of the complexities of public service market systems.
• Manage a public service market. This section discusses how public service markets can be managed more effectively. It uses the Market Stewardship Framework we have developed to explain what is needed for a public service market to function well, and includes examples to illustrate where things have gone wrong in the past. It is aimed particularly at those involved in managing public service delivery, where this includes elements of choice and competition.
• Analyse your public service market. This allows you to analyse a particular public service market in depth, answering questions about your service and market set-up to receive a tailored report with practical suggestions for addressing the risks identified.

Initial feedback on the tool from colleagues has been positive: “The content would be useful for civil servants who are new to the field of market development and helps them understand how it is relevant to them”. (Lucy Sydney, Deputy Director, Commissioning Academy and Private Secretary to the Chief Executive)  “There isn’t very much out there on market development – I really like this and will recommend it to colleagues. It’s practical, and takes people through step by step…” (Samantha Butler, Head of Design, Local Commissioning Academies) We want to hear from you on whether the public service markets diagnostic tool and supporting information are useful to you, so please get in touch and tell us your views.