Public procurement 'must be rebalanced in favour of smaller providers'

Report from Social Enterprise UK, written by head of policy Dan Gregory, says public service provision is dominated by a small number of 'oligopolies'

Dan Gregory
Dan Gregory

The government must rebalance public procurement to reduce the advantages of a small number of large public providers, a report from Social Enterprise UK has said.

Out of the Shadows?, a report into the provision of public services by private and voluntary sector organisations, written by Dan Gregory, head of policy at SEUK, says that public service provision is dominated by a small number of companies that have formed "oligopolies" and dominate most large contracts in several markets.

"Transparency and genuine accountability are often lacking and contracts can be heavily weighted in favour a handful of private providers and their shareholders, to the detriment of the taxpayer and service users," the report says. "Even for those with a firm belief in the role of markets in public services, these are a long way from the markets we might hope to see, distributing services efficiently and effectively.

"In fact, many of the markets where public services are traded are widely agreed to be rigged, or even broken."

The report follows up on The Shadow State, a report into the same subject written last year, and repeats several recommendations in that report to rebalance the market in favour of social sector providers.

Those recommendations include strengthening the Public Services (Social Value) Act, extending the Freedom of Information Act to companies delivering public services and allowing performance under previous contracts to be explicitly weighed up as part of the decision-making process.

But the new report also says that "a number of promising signs" are emerging that the public procurement environment will improve, including EU rules that will increase the scope to procure for social value.

It says that trade unions are becoming less suspicious of social enterprises, particularly workers spinning out of the state, and that there is an increasing movement to give service users influence over who delivers those services.

"We are moving towards a policy landscape where elected representatives and their officials are increasingly given the flexibility to explore what they can achieve for the people they represent," the report says.

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