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Delayed white paper opens up a market across public services

The much-delayed ‘open public services’ white paper has been published, cementing the Coalition Government’s aim of allowing groups and businesses from the private, voluntary and charitable sectors to bid to run services.

There has been debate behind the scenes about the extent of the proposed reforms, especially in the light of the controversy over similar plans for the NHS.

The white paper commits ministers to examine the case for a new “overarching” right to choice for all public services.

Prime Minister David Cameron is expected to say today: “The old dogma that said Whitehall knows best – it’s gone. There will be more freedom, more choice and more local control. Ours is a vision of open public services.”

Communities are expected to get powers to set up neighbourhood councils to commission services on a hyper-local level, while people will also get more personal budgets to buy their own services. The use of payment-by-results will be expanded to encourage markets to develop across the public sector.

The Guardian newspaper reported that civil servants have undertaken research showing that the only way the plans can work is if a ‘true market’ is created – which could mean allowing some services to fail. The alternative could be ever-rising costs if the Government has to guarantee to step in to protect every externally-run service.

The document seen by the newspaper warns of rising costs as more suppliers move into the public sector, costs could rise – but says: “This problem is mitigated if the system allows for provider exit as well as entry – and indeed the evidence suggests it is exit which drives efficiency...There is also evidence from the private sector that a significant share of productivity growth is due to entry and exit processes. But exit of providers (eg school closure) may be controversial and unpopular and an appropriate failure regime must be designed.”

There are concerns that outside providers may attempt to compete solely on price, at the expense of the quality of services. The Government insisted that regulators would stop this happening.

It is not yet clear what compromises may have been made behind the scenes to win support for the plans from sceptical Liberal Democrat ministers, and some Conservatives were also understood to have concerns – especially as it would mean opening up yet another conflict with public sector workers and the trade unions, on top of the pension changes, cuts, and job losses.

Labour has condemned the plans and said education and healthcare should not be treated as commodities.

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