IMPROVING PRODUCTIVITY IN SCOTLANDS PUBLIC SECTOR JO ARMSTRONG Scottish Policy Innovation Forum February 29 th 2008.

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Presentation transcript:

IMPROVING PRODUCTIVITY IN SCOTLANDS PUBLIC SECTOR JO ARMSTRONG Scottish Policy Innovation Forum February 29 th 2008

Presentation outline Ø Why competition / contestibility Ø Scottish Water Ø Lessons to apply to 3 chosen sectors –Social housing –Care services –Waste management

Why competition Ø Competition delivers effective allocation of scarce resources Ø 2007 Budget settlement very tight SG spending rising at 1.5% pa in real compared to >5% pa historically Some facing a real terms cut & feels like a cut for many more?

Scottish Government DEL £ million, nominal prices HMT Scottish DEL26,57827,60228,75630,141 SG DEL26,82428,00229,25630,339 Overspend Funded by: EYF / reserves Over-allocation Balance0000

Why competition Ø 2007 Budget settlement very tight Ø Demand for services keeps growing COMPETITION = PRIVATISATION

Scottish Water experience Ø Monopoly provider established in 2002 Ø Economic Regulator sets price caps within which Scottish Water must operate Ø Delivered: –40% reduction in operating costs –undertook record investment AND –increased output and quality

Actual Vs Target operating costs (£m, prices) Source: WICS

Lessons for wider application Ø Clear Objectives Ø Effective competition and regulation Ø Effective benchmarking Ø Incentives drive performance

Social Housing

Care Services

Waste Management

Conclusions Ø Efficiencies no longer nice to have Ø Competition & contestibility offer routes to greater VFM (economic regulation 2 nd best option) Ø Scotland fears competition – how do we reduce the fear?

/ Improving Productivity in Scotland's Public Services [Data-light version out soon!]

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