Discretionary Government-Funded Public Services

Discretionary government-funded public services, such as health and education, are contentious because they compete with the private sector

It is assumed here that the following functions must be provided by the government, so they are non-discretionary:

●  It is essential that the government maintains law and order.

●  The government is also responsible for the defence of the realm.

●  It also needs some administrative functions to exert management control over its finances and the services it provides.  These include procurement, regulation of the economy, tax collection and benefit allocation.  Administration can be seen as a category of cost that should be minimised, because it doesn’t directly deliver a service to the public, but it cannot be completely eliminated.  If it is done well, it can improve the overall cost-effectiveness of government spend.

Any other services provided by the government are referred to as ‘discretionary’, because it is possible for them to be provided by the private sector and be paid for directly by those who use them.  These often include the funding of healthcare, social care, and education as so-called ‘socio-economic rights’ – sometimes referred to as forming part of a ‘Welfare State’.  They constitute a government investment in people, who are a key component of wealth creation as described later (3.2.5).  As such, there is an economic justification for funding these services free of charge – at least to those who could not otherwise afford them.

Discretionary government-funded public services are paid for by the government, using its income from taxation, but they can be delivered either by employees of the State or by private companies.  In both cases, those employees are earning money which they can spend elsewhere in the economy – but they are different in other respects:

●  When a State provides services with its own employees it has full management responsibility, so it can ensure standardisation across the country, but the population has less choice in what services to buy.

●  The choice of providers for public services can be treated as a question of value for money, where the case is often made that the private sector would be more efficient.  That argument is contested, though, as discussed later in this chapter (3.5.3)



This page is intended to form part of Edition 4 of the Patterns of Power series of books.  An archived copy of it is held at https://www.patternsofpower.org/edition04/3231.htm.