The Citizen's Charter states that 'every public service should be provided in the most appropriate and cost-effective way'. Such a goal is self-evidently A Good Thing. It is a short step from here to market testing: the process whereby the civil service competes with outside suppliers to determine which is best able to provide a particular service on the basis of best long-term value for money. However, as Nick Hasell reports in 'Testing Market Testing' (see page 38), the implementation of such competitions has been both controversial and unpopular.
Private sector chief executives have long been chanting the mantra of 'shareholders, customers, employees' - look after their interests and everything else falls into line. Market testing, however, appears to focus only on the interests of the shareholders (the public as tax payers) and of the customers (the public as recipients of public services).
The interests of employees have been ignored in a manner that would make most businessmen shudder: civil service workers whose sections are undergoing market testing are expected to work normally while the status of their jobs is questioned for periods of anything up to two years; alternative suppliers are being urged publicly to replace chunks of civil service staff; and the criteria on which bids are judged rarely include the ongoing treatment of existing staff. As employees become disgruntled (or worse) the quality of the service to the customer drops, defeating the underlying purpose of the process.
If the first step to successful implementation of market testing is to show appropriate respect to the staff, the second is to reduce the absurd timescale of the process. Each government agency or department has to find its way through the complexity of the legislation that surrounds the public sector. Agency chief executives and department heads talk of steep learning curves and the need to allocate appropriate resources.
The solution must be the use of teams specialising exclusively in market testing, drawn from outside the civil service. These specialists would apply a standard template to each market test; and templates would be adjusted to fit individual cases following discussions with departments. However, responsibility for the operation up to the point of deciding which bid to accept must lie with the outside team. The Office of Public Service and Science (OPSS) should supply these teams and use them to monitor and advance market testing across the agencies.
The third stage is to ensure that the market-testing programme is regularly assessed, with the aim of continually improving the specialist teams' methodology. Such assessments should also be honestly reported to the shareholders (the public). The 1994 Citizen's Charter Report records proudly that the overall savings in market-tested activities are £135 million, or 22% of previous costs, while fewer than 100 staff have been made redundant by the civil service or retired early. Scratch deeper and a footnote in the report warns that the £135 million refers to projected savings.
Properly handled, market testing should improve public services. To achieve this, greater consideration should be given to those whom it affects most directly, the OPSS must supply the agencies with decisive engineers rather than toolkits and the results must be recorded and disseminated responsibly. In time, perhaps, the civil service could be ready to teach the private sector something about improved efficiency.