The Netherlands

The Dutch model has borrowed extensively from Australia and a number of Dutch organisations such as Maatwerk are running contracts in England.  Though Dutch programmes tend to be run through municipal government a number of lessons are similar to those in the USA and Australia:

• Annual contracts but some use of preferred suppliers;
• Incentives to deal with inactive people efficiently by retaining central government resources if they do so;
• Small number of large contractors (but lots of smaller sub-contractors);
• Costs have increased for outcomes as harder to help groups have been encountered.

A number of conclusions can be drawn from the operation of these ‘quasi-markets’ over a number of years:

• There are distinctive purchaser/provider arrangements in each country;
• Competition is for markets, not within markets;
• Tender selection has not just been on price and has looked at other issues, but competition has helped keep prices down;
• There are significant differences in payment systems between those paying for processes and those paying for outputs;
• There are unresolved issues about how to create a level playing field between different sectors;
• Contracting out services does not reduce management time in public procurers but changes the management skills required;
• There is a steep learning curve for public agencies and a need to re-regulate as contractors get smarter about ‘working the system’;
• There is a trade off between continuity and high barriers for new entrants;
• The introduction of market mechanisms places risks on contractors who then develop strategies to shift or reduce those risks down the line to sub-contractors;
• Creaming, and in particular, ‘parking’ remain issues even for sophisticated payment systems.  Creaming is where only those most likely to get a job are chosen, parking is where those unlikely to get a job are offered the minimum in training and support to reduce costs;
• There is evidence of convergence and an innovation plateau in providers unless procurers ‘freshen up’ the process;
• There are dangers of ‘mission drift’ for the voluntary sector towards becoming an arm of the public sector and being driven by financial goals.