BS2032 Public Sector Management

1. BS2032 Public Sector Management 5: Public Services and Market Mechanisms

2. BS2032 Public Sector Management5: Public Services and Market Mechanisms TRADITIONAL MODEL OF PUBLIC SERVICE PROVISION • Public provision is more effective than any private alternative e.g. defence, law and order • Role of the state is to provide conditions in which social life and markets may operate • On moral grounds, services such as health, education and welfare are regarded as ‘moral’ goods

3. BS2032 Public Sector Management5: Public Services and Market Mechanisms MARKET FAILURE • Public goods (clean air,health-education-welfare are largely public goods) • Increasing returns to scale (telecommunications, utilities) • Externalities not taken into account e.g. pollution • Merit goods (e.g. education, health) to which private markets may restrict access • Information assymetries i.e. power of professionals

4. BS2032 Public Sector Management5: Public Services and Market Mechanisms THE FAILURE OF THE STATE • Large bureaucracies doomed to failure • Wasteful because no incentive to control costs • ‘Public choice’ theory argue that politicians, bureaucrats act only in their own self-interest – prestige projects can proliferate (Concorde, Millennium Dome) • Large scale bureaucracies produce results that were unintended (Child Support Agency)

5. BS2032 Public Sector Management5: Public Services and Market Mechanisms The modern economy: • Infrastructure • Government and industry • Demography • Education • Health • Social security

6. BS2032 Public Sector Management5: Public Services and Market Mechanisms • Why should ‘public services’ be non-marketable? • McKevitt(1998),Managing Core Public Servicesargues… • Differential information (e.g. health, law) • Social interdependence (public health)

7. BS2032 Public Sector Management5: Public Services and Market Mechanisms GOVERNMENT SPENDING • Keynesian control of the modern economy from 1945-1970’s • Government spending as % of GDP: 42% (1996) • OECD average 46%; Britain ranks approx. 11th/17 industrial societies (Sweden 65%; USA 33%) • Rigid attempts to control % of GDP (‘rolling back frontiers of the state’) unsuccessful (43% in 1980, 47% in 1996)

8. BS2032 Public Sector Management5: Public Services and Market Mechanisms • The 1970’s watershed… • ‘Stagflation’ • Corporatism • Oil crises and disruption to western economies • Globalisation and rise of the ‘tiger’ economies • Impact of ICTs • ‘Winter of discontent’

9. BS2032 Public Sector Management5: Public Services and Market Mechanisms • Radical right solutions .. ‘Thatcherism’ [1979-1990] • Monetarist experiments • Taxes on consumption, not incomes • Attack on public expenditure (but huge costs associated with health, social security,poverty) • Privatisation programme • ‘No such thing as society’

10. BS2032 Public Sector Management5: Public Services and Market Mechanisms • The Major Years [1990-1997] • Poll tax replaced after popular discontent • The ‘Charter’ movement • Agencification continues • Market testing of government functions

11. BS2032 Public Sector Management5: Public Services and Market Mechanisms • New Labour [1997..] • Retained conservative spending plans • Agenda said to be right of Margaret Thatcher’s first manifesto • Devolution; Reform of the House of Lords • The politics of the spin-doctor

12. BS2032 Public Sector Management5: Public Services and Market Mechanisms • Modernisation programme • Policy initiatives in health, education • A Government for London • Independence for Bank of England • Incorporation of European Convention on Human Rights

13. BS2032 Public Sector Management5: Public Services and Market Mechanisms • What kind of public services do we want ? • Can we have better quality at lower cost ? • What room for manoeuvre has any modern government ? • What is the role of the market in health ? education ?

14. BS2032 Public Sector Management5: Public Services and Market Mechanisms

15. BS2032 Public Sector Management5: Public Services and Market Mechanisms