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Competitive tendering in the Scottish National Health Service
Was it compulsory, and did it make a difference?(*)
by
Robin G. Milne
Department of Economics
University of Glasgow
Glasgow, Scotland
G12 8RT
and
Robert E. Wright
Department of Economics
University of Stirling
Stirling, Scotland
FK9 4LA
Human Resources Research Programme
Centre for Economic Policy Research
90-98 Goswell Road
London, England
EC1V 7DB
March 1999
(*) Financial support from the Nuffield Foundation is gratefully acknowledged. We are
also grateful to various Health Boards and NHS Trusts, and to the Scottish Office
Department of Health, for supplying some of the data presented in this paper and
comments on an earlier draft. Mary Latham provided excellent research assistance. The
views expressed in this paper are however our own.
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Abstract
This paper examines the implementation of competitive tendering in the Scottish
National Health Service. Data relating to cleaning, catering and laundering services--
the three services targeted for competitive tendering--are examined. Our analysis
suggests that for the first four years the request to market test was largely ignored in
Scotland. In 1987 it become a management requirement, and within three years of its
fresh start implementation of this policy more than matched the corresponding
experience in England.
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Competitive tendering in the Scottish National Health Service
Was it compulsory, and did it make a difference?(*)
1. Introduction
It was commonplace in the 1970s for support services in the public sector to be
provided "in house" by direct service organisations. The arrival of successive
Conservative governments, initially under the leadership of Margaret Thatcher,
decided it would be appropriate to test the efficient provision of these support services.
A distinctive feature of this process was that support services were put out to
competitive tender. The economic motivation was that subjecting these activities to
competition should result in services being delivered at lower cost thereby