This document discusses challenges and opportunities in public services delivery. It notes that the future will see more complex procurement models, strategic infrastructure planning, and a focus on efficiency and transformation. New challenges include funding, prioritizing spend, and new procurement approaches. The role of the state will be as a champion for users, and markets for public services may continue developing. The future public sector buyer will focus more on outcomes, while the provider side will likely involve a mixed economy of cross-sector partners working to improve outcomes.

1. World class public services:
meeting the delivery challenge
27 November 2009

2. Market segmentation
• Looking after the past
• Current pipeline
• Looking to the future

3. Project Pipeline - size and value
NUMBER Total Value
Number
45 3.000
40
2.500
35
30 2.000
25
1.500
20
15 1.000
10
0.500
5
0 -
1001-
0 - 50
51-100
101-150
151-200
201-250
251-300
301-400
401-500
501-1000
£bn
2000
Capital Value £m

4. Impact on Communities
• More investment flowing through local public sector
bodies
• More emphasis on making better use of existing
budgets
• Wider range of procurement methods
• More complex procurement models
• Greater involvement of the public sector
• Joint commissioning
• Outcome based contracts

5. The Future

6. New Challenges
• Strategic infrastructure planning
• Funding and Financing
• Prioritisation of Spend
• New procurement models
• Efficiency and Transformation

7. Strategic Infrastructure Planning
• Need to plan now for 5 to 50 years’ time
• Key sectors – Water, waste, telecoms, energy, and
transport
• In the last ten years most of the attention has been
on the PFI/PPP programme

8. New Procurement Models

9. Procurement Models
Complex JVs and
PPPs outside PFI
(MFTS, MoDEL Modified PFI
Crossrail) (LUL PPP)
Segment of
highest risk
ICT Change
Management
Traditional
Complexity of
(E Borders ,
Procurement
NDPD
NP FIT) PFI (From
(Argyl and
prisons to
Bute)
hospitals)
DBO
(RSME)
Out – sourcing
(MoD Flagship
CLG IT)
Programme
Lease plus
Enhanced Services
LIFT Regulation by
(DVLA)
Express Dept or Delivery
BSF D and B
Enhanced D and B Target LIFT bodies
Price
(S.Glasgow Hospital) Incentivised cost
DOH
reimbursement
Independent
Traditional D and B (NDA)
Treatment
(Scottish Parliament)
Centres
Defence
Traditional Services Frameworks Prime
(Procure 21) Contracts
Extent of Central
Involvement

10. Capturing the benefits of PPP
• Extended risk transfer
• Whole life cost approach
• Set aside budgets
• Output based contracting
• Management of supply markets

11. Bridging the Gap
High
Cost-plus JVs
Contract Flexibility
Partnering
Integrator
Frameworks
Medium
D&B
DBO+
PFI−
PFI
Concessions
Low
Short Medium Long
1-5 7-12 20-30
Contract Term (years)

12. Efficiency and Transformation

13. Public Services

14. The Broader Context – The Role of the
State
• The state operates primarily as the champion of the user of
public services (the patient, the pupil, the infirm, the offender,
the traveller).
• Where the state is involved in delivery of public services, it is
a “means” to achieving good, stable, value-for-money public
services; it is not an end in itself.
• A key test of the state’s role in the area of public services is
largely pragmatic (i.e. is a market operable?). This may be a
moving target, as demand and supply dynamics can shift over
time.
• Strategic decisions to modify the state’s role in an area of
public service delivery can be taken – market building and
market development programmes can be actively pursued.

15. Changing Market Dynamics in Public
Services
High
• Insurance Supporting People
• Social housing
Number of Commissions
• Utilities
Social Care
Community health
services
Welfare to work
Probation services
Low
Low High
Plurality of Provision

16. What Opportunities are Emerging – Community
Health?
Average Weekly Tenders 2008
9
8
7 Tenders in Period: Number Percentage
July - August 2008
6
5
Service Lines with
more than one tender
4
Primary Care 17 27%
Healthy Lifestyles* 7 11%
3
Mental Health 4 6%
Sexual Health 4 6%
2 Childrens Services 3 5%
Dermatology 3 5%
1
Diabetes 2 3%
Prison Health 2 3%
Dental 2 3%
0 Occupational Health 2 3%
Janu ary Fe bruary Ma rch April May June July August Se ptember
Physio / MSK 2 3%
Eating Disorder 1 2%
Services with
single tender 14 22%
Total 63 100%
Mean tenders This Period Previous
per month Periods
21 7
* Healthy Lifestyles: cov ers smoking cessation, fit for
work, weight management

17. So What Will the Public Sector Buy-Side
Look Like in the Future?
• The distinction between those sourcing public services and
those supplying public services should be much clearer and
cleaner
• Sector asymmetries should be less prevalent
• Market mechanisms should be sharper and market
management and regulatory apparatus more fit for purpose
• Outcome based commissioning should lead to those sourcing
public services being less prescriptive about the “who” and the
“how”, and more prescriptive about the “what”

18. So what will the provider side look like in the
future?
• A mixed economy
• Public, private and third sectors working together
• Federations of cross-sectoral service providers
• Contractual structures recalibrated to reward
outcomes

19. James Stewart
james.stewart@partnershipsuk.org.uk