The Work Foundations warns that coalition policy is failing to deliver the public service innovation that could dramatically boost value for money.

The Foundation’s report argues that the private sector should be used as a model rather than a substitute for public service innovation. It warns that a narrow focus on cuts and the ‘outsourcing’ of innovation to the private sector risks neglecting the potential of the public sector itself. Instead, the coalition should use the lessons of the private sector to reach a better understanding of how public spending can support innovation and boost value for money through investment, networks and nurturing innovation ‘ecosystems’.

Drawing on case studies from the UK’s international education and healthcare sectors, ‘Making the most of public services’ puts forward a model for achieving a better understanding of public service innovation. In its analysis of the international education sector, it looks at how this area can be viewed as a knowledge-based, public service ‘export’ which generates billions of pounds for the UK economy. It examines how the government is managing this sector and looks particularly at how new visa policies and spending cuts are likely to impact negatively upon income.

In its examination of the healthcare sector, the report looks at the how the NHS connects to the private sector. It argues that while there is great potential to drive innovation through public procurement, the NHS currently performs poorly in terms of how it supports innovation through its supply chain. As yet this debate has had a very low profile within the current reform agenda.

The report argues that public services must be viewed as a key part of the knowledge economy. It concludes that only with this understanding can the government ensure public funds are being invested in a way that drives innovation and boosts performance across the public and private economy.

Lead author Charles Levy said, “Public service innovation has the potential to radically improve value for money at a time of growing demand. In spite of this, there has been very little research into how public services invest in and support innovation. Putting services out to tender avoids the issue, and with rapid, swingeing cuts now being made across the board, there is a real danger that innovation will be cut along with spending. This would be counterproductive for both public services and the wider UK economy.”