How can the government avoid government failure?
1) Introduce profit incentives/ performance targets into the government sector
a. Schools can be given targets to achieve minimum exam standards and climb league
tables
Evaluation
b. It can be difficult to introduce profit incentive due to their social aspect and may result in
unintended consequences like excluding less intelligent pupils and sacrifice other
aspects of an all-round education to get better exam results
c. Managers may be able to cut costs but at the consequence of additional pressures on
nurses and doctors which would compromise the standards of health care
d. They are not natural profit-oriented businesses
2) Encourage competition
a. Competitive tendering
i. Conservative government did this in the 1980s meaning local councils lost their
monopoly provision of public services like school meals and refuse collection
ii. Council services could still bid to run refuse collection, but lost out to better
competition from a private company
iii. The threat of competition provides incentives to public sectors to act like a
private company and cut costs
Evaluation
iv. Cheapest services may not be the best
v. A private company may offer cheap goods at the expense of a reduction in
quality and a government body must be responsible for checking standards of
service
vi. Many public services are natural monopolies, so competition is hard to
introduce
vii. It could also decrease efficiency as it may lead to the duplication of services.
This was during the 1980s when public bus companies lost their legal monopoly
and had to share services with private companies like Stagecoach which
increased congestion. Fare increases also led to higher profits for private
companies instead of benefitting the local council
3) Public private partnerships
a. This means that for projects, the government could try to involve the private sector. This
means they pay part of the cost and brings expertise and incentives for the private
sector into the project.
Evaluation
b. Private companies tend to cherry pick projects that mean they get the profit rather than
the government
4) Rely on good will
a. Some public sector services like education, the usual profit motive is not all dominant
b. Reducing bureaucracy and creating a well-funded service is a powerful way to get the
most from government funds
5) Employ outside private sector consultants to make decisions about how to cut costs
6) Delegate certain decisions to non-political bodies e.g. setting interest rates was given to the BoE
as politicians often set interest rates for political reasons. This meant they had political
neutrality.
1) Introduce profit incentives/ performance targets into the government sector
a. Schools can be given targets to achieve minimum exam standards and climb league
tables
Evaluation
b. It can be difficult to introduce profit incentive due to their social aspect and may result in
unintended consequences like excluding less intelligent pupils and sacrifice other
aspects of an all-round education to get better exam results
c. Managers may be able to cut costs but at the consequence of additional pressures on
nurses and doctors which would compromise the standards of health care
d. They are not natural profit-oriented businesses
2) Encourage competition
a. Competitive tendering
i. Conservative government did this in the 1980s meaning local councils lost their
monopoly provision of public services like school meals and refuse collection
ii. Council services could still bid to run refuse collection, but lost out to better
competition from a private company
iii. The threat of competition provides incentives to public sectors to act like a
private company and cut costs
Evaluation
iv. Cheapest services may not be the best
v. A private company may offer cheap goods at the expense of a reduction in
quality and a government body must be responsible for checking standards of
service
vi. Many public services are natural monopolies, so competition is hard to
introduce
vii. It could also decrease efficiency as it may lead to the duplication of services.
This was during the 1980s when public bus companies lost their legal monopoly
and had to share services with private companies like Stagecoach which
increased congestion. Fare increases also led to higher profits for private
companies instead of benefitting the local council
3) Public private partnerships
a. This means that for projects, the government could try to involve the private sector. This
means they pay part of the cost and brings expertise and incentives for the private
sector into the project.
Evaluation
b. Private companies tend to cherry pick projects that mean they get the profit rather than
the government
4) Rely on good will
a. Some public sector services like education, the usual profit motive is not all dominant
b. Reducing bureaucracy and creating a well-funded service is a powerful way to get the
most from government funds
5) Employ outside private sector consultants to make decisions about how to cut costs
6) Delegate certain decisions to non-political bodies e.g. setting interest rates was given to the BoE
as politicians often set interest rates for political reasons. This meant they had political
neutrality.
