‘Marketisation’the shift from supply-led to demand-driven

Rob MacmillanThird Sector Research Centre

University of Birmingham

The Impact of Infrastructure 2012 conference

London, 25th April 2012

Welcome!

In this workshop…

•an overview of the ‘marketisation’ of infrastructure (Rob)

•charting the experience in Norfolk (Brian)

•small group discussions and feedback (you)

Questions…

•What are you doing or planning to do about the changes we’ll be discussing?

•What experience can you share?

•What is needed to make it work?

Overview of marketisation…

1.Context… the great unsettlement

2.What is ‘marketisation’?

3.Towards a demand-driven environment

4.‘Building Capabilities for impact and legacy’

5.Issues for:o Customerso Supplierso Market makers

Context: the great unsettlement

Shake-out? - organisations and projects contracting or coming to an end

Shake-up? - being more enterprising- rationalisation/reconfiguration- demonstrating value

Room – is there enough room for everyone?

Decoupling the state and the VCS? - partial/gradual withdrawal of state support?- e.g. ‘strategic partners’ and ‘TLI’

What is ‘marketisation’?

Five sector trends bundled together as marketisation:

1. increased competition for public service contracts and funding2. growth in earned income and commercial trading 3. changing expectations of funders and institutional donors, for more

accountability and transparency4. emergence of social enterprise5. adoption of private sector management practices

VCOs are adopting management approaches and values of the private (for profit) sector as a means to respond to their changing environment, in particular to market based government policies, which are aimed at reforming the perceived inefficiencies in public service provision

(Bruce and Chew 2011: 155)

Towards a demand-driven environment

Towards a demand-driven environment

•ChangeUp (2004-2011, R.I.P.)o Hubs, consortia and (block) grants to infrastructure organisations

•“Building Blocks” (Harker and Burkeman 2007)o Critical examination of second tier support in London

•Real Help for Communities – Modernisation Fund (2009-2010)o Bursary scheme viewed positively by recipients

•Office for Civil Society - “Supporting a stronger civil society” (2010)

•New developments:o Big Lottery Fund “Building Capabilities for Impact and Legacy”o Local experiments – local authorities and ‘TLI’

Query – has infrastructure really been ‘supply-led’?

Changing business models in (local) infrastructure

0% 20% 40% 60% 80% 100%

Reducing operating costs

Bidding consortia

Building/premises

Charging fees for consultancy

Non-infrastructure contracts

Local businesses

More member-only benefits

Selling to each other

Trading company

Philanthropists/individual donors

Commissions

Doing it already Not doing it,but plan to

Not doing it anddon’t plan to

Source: NAVCA – annual survey of Chief Officers, May 2011, by kind permission

Towards a demand-driven environment

Office for Civil Society (2010)“Bursaries put the organisation in control, enabling it to access the advice that is right for its circumstances and choose from a range of providers”

Big Lottery Fund (2011)“we need to be realistic about where we spend our limited resources to achieve the best effect…[in the future] approaches should engage with customers and help them find the advice and support services which best meet their needs”

BIG: ‘Building capabilities for impact and legacy’

• To guide a c.£20m complement to the £30m Transforming Local Infrastructure investment

• Less money around - existing arrangements and structure unsustainable

• Four demand-led proposalsi. Assessment – grant – approved list of providersii. Assessment – voucher – any qualified provideriii. Online information to help find a support provideriv. Bursaries to fund peer to peer support

• Supported by the £6m Assist programme for a three-year national framework to support local infrastructure in the new environment

Issues for….customers

• What support do we need/want?o what for? (e.g. fundraising, business planning, governance)o what kind? (e.g. more or less intensive support)

• How much can or should we shop around?o how do we assess the quality of providers before we choose?o what is the role for trust and existing relationships?o how important is local knowledge?o what would be a reasonable price?o what can we afford?

• Can we be confident that the support we receive is any good?o what difference did it make?

Issues for….suppliers• Who are the customers?

o what do they need or want?o how do we ‘reach’ them?o do they understand what it is we can provide?o are they prepared to pay for our services?

• What services can or should we provide?o what resources/expertise do we need to provide our services?o what are our costs?o how do we set and adjust prices for our services?o how do we undertake non-marketised activities? (e.g. voice,

representation)

• What is our relationship to other providers?o how much do we know about them?o how much do we signal to them what we offer and how?o are they competitors/potential partners?

Issues for….market makers (1)

• Is there actually a market for capacity building and infrastructure support?o how much does it need to be promoted and fuelled?

• What kind of emerging (extending) market is it?o a status market – i.e. one operating more around the status and

regard of providers than the nature of the product or service

• How should the market be constructed and managed?o a ‘free for all’ or a managed market (vouchers, approved lists)?o how is quality to be judged?o what information about providers is needed and how should it be

circulated and used? (‘judgement devices’)o how are prices determined?

Issues for….market makers (2)

• How will the supply side be reconfigured?o providers trying to find their footing and place in the market (in

relation to each other)o opening up the geography and scale of infrastructureo generalists and specialistso voice, advocacy, representationo hollowing out (freelancing development support)o brokerage

• How will we judge the emerging system?o on what basis might we evaluate the emerging market?

For discussion…

In small groups:

1. What are you doing or planning to do about the changes we’ve been discussing?

2. What experience can you share with each other?

3. What is needed to make it work?

• for customers – i.e. front line VCOs• for suppliers – i.e. infrastructure organisations• for ‘market makers’ – i.e. funders, statutory bodies, etc

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