Suppliers are being ignored by the Government


The last government (DFES) commissioned PWC to look at the childrens services market and to come up with some ideas about how it could be better managed. The Labour Government wanted Local Authorities to move towards becoming commissioners rather than providers of services.  The PWC report (see link below)made recommendations as to how the supply market could be opened up so  for profit and not for profit providers   could deliver more  services( sounds familiar?). Indeed this is an aim shared by this government.  PWC concluded that:

“We have identified a number of barriers that exist to effective market operation.  The barriers that exist in the fostering market are typical of these markets and include: a lack of transparency  on costs; limited visibility of markets; a shortage of experienced commissioners; limited  dialogue between suppliers and commissioners; inconsistent application of overall national  frameworks; and potentially conflicting roles of local authorities acting as commissioner and  provider.  These barriers need to be addressed to improve the operation of the markets.  The DfES can play a significant role in removing the barriers and encouraging effective and strategic commissioning.”

Ministers agreed but then not much happened. Local Authorities largely continued in the way they had  always done in providing most services in-house, some even reducing the number of their  outsourced contracts. Of course, there were some contracts outsourced but certainly not on the transformative  scale the Government intended.The message had clearly not trickled down to the commissioning and procurement  staff in LAs.  The result was  that with no government intervention the supply market failed to develop here and companies went in search of  new business and income streams abroad.  But abroad these  companies  found, as they still do,  that they  they had to  compete  against grant funded  education quangos  who are not transparent with their costs and who who do not compete on an equal basis with other for profit and not for profit suppliers.

This government, like the last one, has failed to engage with  these market issues. Indeed, as Education Investor revealed last month five senior managers,   all exporters of education services, wrote to Francis Maude ,the Minister responsible  for public services reform and procurement issues, highlighting the problem of education  quangos and  unfair competition, (British Council, SSAT, NCSL etc)  helpfully recommending too,  ways in which the Government might  help create a level playing field and an enabling environment in which the market might expand. The Minister took five months to reply to this letter , (only replying with a backdated letter when the editor of Education Investor contacted his office), refused to acknowledge there was a problem and , to add insult to injury, ignored their recommendations . The recommendations, by the way, included a number of steps that the BBC has taken to address competition and transparency issues  following complaints about its market activities from its non-subsidised competitors. So what were these five senior managers’ recommendations?


Detailed supplier agreements should be drawn up to ensure that the commercial arms of quangos charge appropriately and are fully transparent on their costs.


Quango staff should be trained on fair trading and competition principles; and a governance structure for fair trading matters overseen by an impartial body (National Audit Office).


There should be separate accounting for commercial activities, with a certificate by the External Auditor that there is no material cross-subsidy of commercial activities out of public funds.


There should also be a recognised process and provisions to receive complaints and appeals by competitors claiming a grievance against subsidised entities.


An annual report for each quango should be published in searchable format with clear performance benchmarks and measurement of outputs and value added.


All quangos should be subject to the Freedom of Information Act.


There should be a range of penalties and sanctions for anti-competitive behaviour and the possibility of compensation to deter anti-competitive behaviour.


Parliament should take a view on how best it can hold Quangos regularly accountable for the way they manage and account for public funds.


These, as you can probably see, were constructive recommendations, from companies trying to export UK education services, in an area where we potentially have a competitive advantage and whose efforts can help our balance of payments too.

We know this government wants to make life easier for profit and not for profit suppliers  and SMEs in the market place. So why on  earth are they not prepared to engage with these suppliers or to address the  obstacles to a fair and transparent market. I think that they deserve an answer.. and not in five months time.


The SSAT will tell you its not a quango and has never been because its a ‘ Charity’.  So being a Charity  means you avoid the dreaded quango label, does it? I think not. Using this argument  the British Council is not a quango either,  as it, too, is a Charity.If it looks like a quango, behaves like one, and is supported by grant funding… then err.. thats  exactly what it is,  a Quango.


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