Increasing choice can improve value for money in council services if managed carefully

Providing more individual choice in local public services can offer substantial benefits both in terms of quality of services and value for money, says an Audit Commission report published today. 

But the benefits are not guaranteed.  Whether choice brings overall benefits depends on the individual services and upon how it is introduced. 

The report, Choosing Well: Analysing the Costs and Benefits of Choice in Local Public Services, says that the public as consumer wants more choice and has a clear view of the services in which more choice should be provided. Yet the public as taxpayer is unwilling to pay more to get more choice.

Local authorities must become more adept at understanding the economics of choice and competition to maximise the benefits and minimise the costs.

In the three services examined in this report - customer access centres, choice-based lettings and direct payments - progress in providing more choice is patchy. But the findings show that some local authorities are already implementing choice successfully and that if choice is introduced under the right conditions, it can produce more efficient services and better matching of preferences and needs to limited supply.

Sir Michael Lyons, Audit Commission Acting Chairman, said: ‘This report is a contribution to the debate about how best to improve services by the extension of choice in public services. It demonstrates that choice can improve value for money and service quality, but only under the right conditions. It should enable public bodies to understand better when choice is feasible and desirable, as the opportunities and constraints in providing choice are not the same in every local authority service.

‘Some councils already offer examples of best practice. They are adept at understanding the economics of choice and competition, and are single-minded in the way they exploit the opportunities provided in order to maximise the benefits and minimise the costs involved.  Others need to follow their example, in order to be effective in using choice and competition as a lever for improving value for money.'

This report sets out a framework for analysing some of the costs and benefits of providing choice in local public services and draws upon evidence-based analysis.

This report has looked in detail at three specific services and functions, but it draws wider conclusions about the drivers and barriers to choice as a result of our research in these areas. The framework for analysing the costs and benefits of choice we have outlined is applicable to other services.

The introduction of greater choice in services, such as health and education, is outside the scope of this study. The Audit Commission intends to work with stakeholders to supply evidence to improve our understanding of the effect of greater choice in these and all other local public services.

Ends

Press release issued: May 25 2006