Councils overlook benefits of competition and contestability

13 May 2007
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14 May 2007 | Antony Barton

Local authorities are failing to use competition to achieve value for money, according to the latest research by the Audit Commission.

Its preliminary findings revealed a lack of understanding about competition and contestability, and how to use them in the procurement process for local services.

John Kirkpatrick, director of studies for the commission, told an LGC conference in London this is an area "that isn't as well understood everywhere as it might be, nor is the evidence base for what works perhaps as good as we might have hoped".

The commission set out last year to establish a definition of the terms 'competition' and 'contestability' in local public services, develop practical tools to help local authorities use the two more effectively and estimate their potential value-for-money benefits.

Cardiff Business School has completed phase one of the research, which examined 10 local authorities.

The findings so far reveal there is no established definition of contestability, which one authority described as: "A mindset, and a mindset that informs a journey."

The commission suggests that contestability encompasses competition and is the use of market and quasi-market mechanisms to make challenge effective. This may include the construction of an in-house alternative to a contracted service to put some pressure on the external provider without running a competition.

The Audit Commission is encouraging people to respond to the findings, and the research will feed into guidance for local authorities.


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