Innovation and competition in public services can help deliver growth, the Serco Institute has said following the UK Chancellor’s so-called ‘Mini-Budget’.
In a significant policy shift, the Chancellor has said that growth rather than higher taxes will mean money to fund public services. Tax-cuts and other measures hoped to stimulate economic growth are described in the Growth Plan 2022 as the “only sustainable way to raise living standards and fund vital public services.”
Public services think tank the Serco Institute has said that this significant shift in fiscal policy can be matched by innovations in public service procurement and delivery. Independent research by Capital Economics for the Institute has found that savings of up to 15% can be made through more competition in public service delivery.
Currently the UK Government spends around 35% – or over £300bn – of its annual budget on buying goods and services from businesses, academic institutions, charities and other non-public sector organisations. If it were to match the share of spending on procurement from businesses to a similar level as those at the higher end of the OECD average, such as the Netherlands, taxpayers could benefit from savings of £5 to £15 billion every year.
Commenting on the fiscal event, Serco Institute Deputy Director Ben O’Keeffe said:
“Today marks a revolution in economic policy, but it can also be matched by an evolution in public services.
“It is clear that growth is the yardstick with which the new Government wants to be measured. This mini-budget has not only made growth the gateway for the UK to become a more prosperous nation, but as the means by which public services will be funded.
“These tax cuts will be most effective when running alongside efficient public services. Boosting efficiency will require innovation, invention and modernisation in public service provision.
“Our research has shown that competition and private sector involvement can help turn this ideal into reality, which in turn benefits the economy and the public.
“Growth can help fund public services, but public services can also help create growth.”