New Reform reports show the potential benefits and favourable public attitudes towards for-profit delivery in public services

By Matthew Barrett

The Reform think-tank today launched a new report highlighting cases of successful private sector involvement in public services. These include:

• The Valencia region in Spain, where 20% of health services are provided by private sector organisations, who have to deliver at a cost 25% lower than the public sector.
• In Germany, a third of hospitals are run by for-profit organisations and a further third by not-for-profit organisations. All hospitals are accessible to German citizens through the national programme.
• In Britain, private sector companies have operated prisons for some years. In 2010, an independent evaluation of HMP Doncaster, operated by Serco, found that “the prison is considered to be leading the way in terms of the rehabilitation revolution”.
• A number of failing Local Education Authorities have been run by for-profit companies since 1999. Cambridge Education @ Islington became the education partner of the London Borough of Islington in 2000. By last year, the borough's GCSE results have nearly caught up with the national average, having once being among the worst.
• Other Local Education Authorities have given contracts to for-profit companies to help them improve schools. In 2008, for example, Northamptonshire County Council agreed a three-year contract with the for-profit company EdisonLearning to improve seventeen primary schools and four secondary schools in the council's remit. In the first two years of the contract, the proportion of 15-year-olds achieving five good GCSEs increased from 24.8% to 33.3%.

Reform's Director, Andrew Haldenby, writes:

"Inevitably people will have different views about the future of public services but there are facts and experience on which all should agree, and which the examples in these pages bear out. The first is that for-profit companies (and of course not-for-profit companies and charities) are delivering public services successfully in the core areas of health, education, prisons and policing, both in the UK and overseas. The second is that they are doing so at greater value and with equal if not better quality. The third is that the fears raised by the critics of competition have not materialised. The German healthcare system has not “fragmented” under competition, for example. In fact, the involvement of the private sector has added to the richness of German healthcare and provided new services from which every German citizen can benefit. Competition has strengthened the fabric of the UK prisons system in the same way."

The full report can be read here (pdf). A related polling report, about public attitudes towards private sector involvement in public services was also released by Reform today.

There are some interesting results, including that for NHS hospitals and state schools, young voters (18-24 year-olds) are sympathetic to profit-making companies delivering services, but older voters are opposed.

The agree/disagree scores for the statement "In general, if private sector companies do a better job of running public services than the government, then they deserve to make a profit" are noteworthy - especially attitudes among Lib Dem voters and young people:

• Total agree – 52%, disagree – 34%
• 18-24 year-olds – 64% agree, 28% disagree 
• Conservative voters – 67% agree, 20% disagree
• Liberal Democrat voters – 64% agree, 20% disagree
• Labour voters – 39% agree, 47% disagree.

The full polling report can be read here (pdf).

Reform also highlighted areas of Coalition retreat on public sector reform, including:

• The "pause" on NHS reforms
• Suffolk Council suspending its plan to outsource nearly all council services
• Francis Maude's leaked memo, which said that the Coalition did not want private sector companies to take over public services
• The low number of Free School applications that have been approved
• The Public Services White Paper, which has had its deadline pushed back from January, to April, and now to July at the earliest