3.5.3.3 Private Delivery of Public Services

Public funding can be given to people, so that they can buy some services from private companies, by different methods:

  • Those most in need can be given transfer payments: benefits, which they can spend as they wish.
  • Some people, or everyone, can be given vouchers. Education vouchers, for example, can allow parents to choose a school for their children – allowing them to set the voucher against a State school or towards the cost of a private school.
  • Governments can reimburse private companies, such as private healthcare providers, for costs that have been incurred by some individuals.

Where it is possible to ensure that there is competition, private companies can ensure value for money in publicly funded services.  An article in The Economist, The end of privatisation?, claimed that “Privatisation has become a dirty word in Britain. That is curious, since it has been a huge success”.  It cited the example of Britain’s privatization of telecommunications: new entrants joined the market; quality and reliability improved; and prices almost halved.

Competition is an effective form of governance in itself (3.3.2); it is synonymous with offering choice to the consumer and can make suppliers more responsive.  Safeguards are needed, though:

  • Consumers need transparent and honest information so that they are not misled when making their choice of supplier. This is a matter of regulation (3.3.1.3).
  • People may lack sufficient knowledge to choose. This is the case with health, where specialist advice is needed, though people can use independent doctors to advise them before choosing treatment in a hospital or clinic.

Employees of private companies are likely to be profit-orientated, but this might not be to the customer’s disadvantage if a globally competitive market encourages innovation in technologies and service offerings in response to consumer demand.

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This is a current page, from the Patterns of Power Edition 3a book, © PatternsofPower.org, 2020.  An archived copy of it is held at https://www.patternsofpower.org/edition03/3533.htm