Introduction

After 40 years of liberalisation of the public sector in the UK, there are now signs that a more mixed economy may be emerging, particularly in local government (LGA, 2019). There are a number of reasons for this. The first is a philosophical and ethical argument about the nature of public service, why it differs from a commercial service and how the public sector has reacted in crises and the last resort. Such arguments have increased with every public crisis that has occurred in the last 40 years, from flooding, foot and mouth disease, public health to social care. The political public policy narrative of outsourcing to improve efficiency and effectiveness has not been demonstrated in experience (for example NAO, 2012, 2014a, 2015b, 2020b). Costs for external providers have been higher and their performance has been mixed as demonstrated in the probation service (Kirton and Guillaume, 2019; NAO, 2019a). The achievement of lower prices has been based on removing working safeguards for employees and pushing back the costs for those on zero-hours contracts to the state (Brinkley, 2013; Hopkins and Fairfoul, 2014), either for income support or for care home deaths (Pollock et al, 2020). The second reason is that some of the structures of the outsourcing apparatus have not prevented failures. Some outsourced services have been unable to maintain their contract delivery over longer periods of time – for example rail franchises (NAO, 2015b), hospital private finance initiatives (NAO, 2020b), the probation service (NAO, 2019a) and the management of COVID-19 (NAO, 2020d). The third reason is that most contracting arrangements have been inflexible and difficult to change when needed (Mennicken, 2013). The cost reductions and efficiencies promised as part of liberalisation have not been found in practice across all services, and where they have, they have not always been due to outsourcing but rather work redesign and reducing eligibility (Bovaird, 2016).

There has also been a significant change in the understanding of public bodies, about the ways in which the European Commission public procurement legislation works. The Government Procurement Agreement (GPA) and the General Agreement on Trade in Services (GATS) were never intended to remove all direct public service provision but to open an agreed amount of expenditure to the competition. Many EU member states argued successfully that this discriminated against third sector bodies working with the local state.