Competitive Neutrality
Competitive neutrality policy is concerned with ensuring that there is a level playing field between different classes of providers - public, private and non-profit. If there is not a level playing field, then new entrants will be reluctant to compete, markets will be thinner and competitiveness will suffer. Despite its apparent simplicity, ensuring that markets are neutral as between different classes of participant proves to be somewhat complex.
This section brings together some of the policy instruments what have been used to assist with producing a level playing field in Europe and in the UK in particular. It also references some of the more comprehensive policy work that has been done in this area in recent years in Australia.
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General Principles
A Question of Balance: Reforming pensions practice in public services contracting (PDF) CBI Public Services Strategy Board, 2009 Confederation of British Industry (CBI) Public sector pensions policy is one of the main obstacles to levelling the public services playing field and attracting a diversity of independent providers. This report uses case studies to illustrate the problems independent providers face and sets out a series of solutions. UK
Counting the Cost: Full Cost Comparison Between Public Service Providers (PDF) Walker, David, 2008 CBI A report on the barriers to implementing a competitive neutrality framework so that public, private and third sector organisations can compete equally in public service procurement competitions. UK
A fair field and no favours: competitive neutrality in UK public service markets (PDF) Sturgess, Gary L., 2006 The Serco Institute & CBI Serco Institute Policy Study No. 1. As the UK Government moves to establish a 'mixed economy' of public, private and voluntary sector public service providers, it is vital that there is a level playing field between the various sectors. With this study, undertaken by the Serco Institute, on behalf of the CBI, and published by the CBI as a submission to Government, all three sectors come together to raise competitive neutrality as an issue. UK
Regulating Market Activities by Public Sector (PDF) Organisation for Economic Co-operation and Development (OECD), 2005 Proceedings of an OECD roundtable on competitive neutrality held in 2004.
Determining a Level Playing Field for Public-Private Competition (PDF)
Martin, Lawrence L. , 1999
The PricewaterhouseCoopers Endowment for The Business of Government
Competitive Neutrality: Ensuring a Level Playing Field in Managed Competitions (Excel) Eggers, B, 1998 Reason Public Policy Institute, Los Angeles A North American look at the issue of competitive neutrality. USA
Procurement Policy
EU Procurement Directive
Procurement Directive (PDF) European Union, 2004
1992 Council Directive on Public Service Contracts (Web Page) Council of the European Union, 1992
Fees and Charges Guide. Final Revised Text (Web Page) HM Treasury, 2004 Revision of 1992 Document, which has still not been formally promulgated. UK
Examples of Directions on CN in Procurement Policy Guidance
Successful Delivery Toolkit: Specification Writing (Web Page) Office of Government Commerce (OGC), 2005 Guidance on specification writing which cautions against features that discriminate against suppliers. UK
HM Treasury, 'Procurement Policy Guidelines', Government Accounting 2000 HM Treasury, 2003 Government Accounting 2000 Annex 22.2, section 3 provides an example of competitive neutrality UK
How to appoint and work with a preferred bidder (PDF)
Treasury Taskforce, 1999
Technical Note 4
How to follow EC procurement procedure and advertise in the OJEC (PDF)
Treasury Taskforce, 1999
Technical Note 2
Exploding Public Sector Pensions Myths: A briefing for trade union members (PDF) Trades Union Congress (TUC), 2009 This briefing is a response to public, media and political criticism of public sector pension levels in the UK. (Some such, including 'A Question of Balance' by the CBI, are also available in this library). It argues that private sector pension levels ought to rise to end so-called "pensions apartheid" rather than public sector levels falling. UK
Blackpool and Fylde Aero Club v Blackpool Borough Council 1 WLR 1195, 1990 The leading UK case on procedural fairness UK
Procedural Fairness - Australia
Government Contracts (2nd ed) Seddon, Nicholas, 1999 Leichhardt: The Federation Press, 1999 Textbook on the Australian Law. Chapters 7 & 8 provide a good summary of the state of Anglo-American law on procedural fairness. Australia
Hughes Aircraft Systems International v Airservices Australia (PDF)
146 ALR 1, 1997
Competitive Neutrality in the Procurement Process
Guidance Note on Public Sector Involvement in PPP Facilities Management (FM) Delivery (Web Page) Scottish Executive Financial Partnerships Unit, 2003 Scottish Executive policy on access to private sector bid documents. See especially pp.11, 20-21 UK - Scotland
Improving the Sourcing Decisions of the Government (PDF)
Final Report of the Commercial Activities Panel, 2002
US General Accounting Office (GAO)
Competition Policy
White paper on Services of General Interest (PDF) Commission of the European Communities, 2004
Competition Law
The Competition Act 1998 and Public Bodies (PDF) Office of Fair Trading, 2004 Policy of the OFT on the application of competition law to public bodies engaged in procurement, based in part on the BetterCare case. UK
BetterCare Group Ltd/North & West Belfast Health & Social Services Trust (Remitted Case) (PDF)
Office of Fair Trading (OFT), 2003
Decision No. CA98/09/2003: Competition Act 1998
Competition Commission Appeal Tribunal, Judgement (PDF) Competion Commission Appeal Tribunals (CCAT), 2002 Bettercare Group Limited and Director of Fair Trading, Neutral Citation: CAT 7
Decisions of the CCAT on the application of competition law to the BetterCare case.
Case No. 1006/2/1/01 UK - Northern IrelandCompetition Commission Appeal Tribunal, Judgement (Admissability) (PDF) Bettercare Group Limited and Director of Fair Trading, 2002 Competition Commission Appeal Tribunals Case No. 1006/2/1/01 UK - Northern Ireland
Notice of Decision of Director General of Fair Trading Summary (PDF) The North & West Belfast Health and Social Services Trust, 2002 Office of Fair Trading CP/0829-01
State Aid
European Legislation on State Aid (PDF) European Commission, 2005
Commission Decision on the Application of Article 86(2) of the Treaty to State Aid in the form of public service compensation (PDF) European Commission, 2005 Draft EC decision on the treatment of state aid to services of general economic interest.
The State Aid Guide (PDF) Department of Trade and Industry, 2005 UK government guidance on state aid. UK
Financial Transparency (PDF)
Department of Trade and Industry, 2005
Taxation & Regulation
Taxation
Treasury (Taxing) Directions (Web Page) H M Treasury, 2002 Latest Treasury directions relating to the business activities of government departments. UK
Value Added Tax Act 1994 (Web Page) UK Government Legislation, 1994 Sections 33 and 41 are relevant to competitive neutrality. ISBN 0105423947 UK
Notice 706 Partial Exemption
HM Customs And Excise, 2006
Sixth Council Directive on the Harmonization of Laws Relating to Turnover Taxes (Web Page) European Economic Community, 1977 6th Directive, Article 4(5) lays down the general principles relating to public authorities engaged in transactions.
Regulation
Regulatory Impact Statement: Local Government (Best Value Authorities) (Power to Trade) (England) Order 2004 Office of the Deputy Prime Minister (ODPM), 2004 Page 32 recognises the potential for a conflict of interest between local authorities power to trade and their power to regulate markets UK
Structure and Governance
Classification of Public Bodies: Guidance for Departments (PDF)
Cabinet Office, 2005
Charges for Information: When and How: Guidance for Government Departments and Other Crown Bodies (PDF) HM Treasury, 2001 The Guidance in this document sets out for government departments and other Crown bodies the implications for determining any charges for information expected as a result of the 2005 Freedom of Information Act. UK
The Incorporated Company as an Instrument of Government: A Quest for a Comparative Understanding Thynne, Ian, 1994 Blackwell Publishers Vol No.7 - pages 59-82 ISSN 0952-1895
Access to Information
Freedom of Information Act HM Stationery Office, 2000 ISBN 0 10 543600 3 UK
Local Government
Connexions - A Mismanaged Market McIntosh, Neil, 2005 A report into the introduction of PVI (Private, Voluntary and Independent) involvement in the business of providing carees guidance. UK
Structures for Collaboration and Shared Services (PDF) Department for Communities and Local Government, 2006 Technical Note: This publication has been produced by DCLG to assist those in Local government in England, and for potential public sector, voluntary and business partners to understand the various structures that might be used with a public sector partner. UK
General Power for Local Authorities to Trade in Function Related Activities Through a Company. Guidance on the Power in the Local Government Act 2003 (PDF)
Office of the Deputy Prime Minister (ODPM), 2004
General Power for Best Value Authorities to Charge for Discretionary Services (PDF) Office of the Deputy Prime Minister (ODPM), 2003 Powers to charge under the trading powers of Best Value Authorities in the 2003 Act. UK
Trading Funds
Equity-like Capital for Social Ventures (PDF) Howared, Laura, 2004 Bridges Community Ventures (BCV) UK
Guide to the Establishment and Operation of Trading Funds (PDF) HM Treasury, 2004 UK
Government Accounting, 2000 (Web Page) HM Treasury, 2003 Government Accounting 2000 Manual, as updated. Section 7 deals with trading funds. Section 8 deals with NDPBs. UK
Non Departmental Public Bodies
Non-Departmental Public Bodies: A Guide for Departments (Web Page) Cabinet Office, 2005 Policy on the establishment and operation of NDPBs. UK
Accounting and Control in Executive Agencies and Executive NDPBs in Scotland (PDF) Heald, David; Geaughan, Neal, 2001 The Association of Chartered Certified Accountants, 2001 Research Report No. 68 ISBN: 1 85908 346 3 UK
Selling into Wider Markets
Selling into Wider Markets: A Policy Note (PDF) HM Treasury, 2002 HMT policy on developing commercial activities using public sector assets. UK
Full cost pricing
Treatment of government capital
Departmental lending to sponsored bodies operating in competitive markets (PDF) HM Treasury, 2004 DAO letter describing Treasury policy. UK
Revised Cost of Capital Rate in Fees and Charges Recovery Policy (Web Page) HM Treasury, 2003 Policy on cost of capital charge in setting fees and charges. UK
Fees and Charges Guide (PDF) HM Treasury, 1992 Still the current HMT policy on charging by public sector bodies UK
Transparency of social policy
Public Subsidies (PDF)
Office of Fair Trading (OFT), 2004
Access to government data
Property Searches: A Market Study (PDF) Office of Fair Trading (OFT), 2005 An OFT study on the competition issues associated with property searches UK
Annexe E: Legal framework in England and Wales Office of Fair Trading, 2005 OFT810e UK
The Commercial Use Of Public Information (CUPI) (PDF)
Office of Fair Trading (OFT), 2006
Registering Complaints
Complain in Good Time (PDF) Public Procurement Network, 2005 Guidance on the complaints procedures available across Europe under the Public Procurement Network. UK
Investigating UK business experiences of competing for public contracts in other EU countries (Word) Wood, Alan , 2004 Office of Government Commerce Report of a review chaired by the Chief Executive of siemens plc on UK business experience in competing for public contracts in Europe. Further evidence of the reluctance to complain. UK
CCT Non-bidders: A Report on a Survey of the Views and Awareness of Non-bidding Firms (Web Page) BMRB International Ltd, 1996 Department of Transport, Local Government and the Regions A report on research commissioned by the Department of the Environment on potential contractors in three blue-collar service areas subject to CCT where the level of competition is low. UK
CCT: The Private Sector View. A report on a survey of private sector firms BMRB International Ltd, 1995 Department of the Environment UK
International Policy Regimes
Challenges/Obstacles faced by Competition Authorities in Achieving Greater Economic Development Through the Promotion of Competition (Word) Organisation for Economic Co-operation and Development, 2003 UK
Revised Clause 7 Statement on the Application of Competition Principles to Local Government under the Competitions Principles Agreement (PDF) Government of South Australia , 2002 This document contains a statement on the application of competition principles to particular local government activities and functions as required under clause 7 of the Competition Principles Agreement. It is also being published for the purpose of Part 4 of the Government Business Enterprises (Competition) Act 1996. Australia
USA
Manager's Guide to Competitive Sourcing: 2nd Edition (PDF)
Federal Acquisition Council, 2004
Federal Register - Vol 68: No 103 - Performance of Commercial Activities (PDF)
Office of Management and Budget, Executive Office of the President, 2003
Circular No.A-76 (Revised) (PDF) Office of Management and Budget, 2003 Reforms to federal procurement policy removing competitive advantages and disadvantages. USA
Improving the Sourcing Decisions of the Government (PDF)
Final Report of the Commercial Activities Panel, 2002
US General Accounting Office (GAO)
Australia
Reporting and Monitoring Policy for Government Businesses (PDF) New South Wales Treasury, 2005 Australia
Manual for the National Tax Equivalent Regime (PDF) Australian Taxation Office, 2005 Policy governing the national regime for taxation equivalence, necessary in a federal system where public undertakings are run by one level of government and corporation tax collected by another. Australia
Assessment of governments' progress in implementing the National Competition Policy and related reforms (Vol 1) (PDF) National Competition Council, 2004 The NCC reports annually on the performance of the states in implementing the competition agreements, including competitive neutrality. Australia
Assessment of governments' progress in implementing the National Competition Policy and related reforms (Vol 2) (PDF) National Competition Council, 2004 The NCC reports annually on the performance of the states in implementing the competition agreements, including competitive neutrality. Australia
Competitive Neutrality Policy (PDF)
Department of Treasury and Finance, State Government of Victoria, 2004
Commercial Policy Framework: Tax Equivalent Regime for Government Businesses New South Wales Treasury, 2003 ISBN: 0 7313 3227X Australia
Competitive Neutrality: Scope for Enhancement (PDF) National Competition Council, 2002 Staff discussion paper looking at the effectiveness of the existing system and recommending improvements. Australia
Policy Summary of the Competitive Neutrality Complaints handling Mechanism (PDF) New South Wales Cabinet Office, 2002 Australia
Policy Statement on the Application of Competitive Neutrality: Policy & Guidlines Paper (PDF) Office of Financial Management, 2002 New South Wales Treasury ISBN: 0 7313 3144 3 Australia
Annexure "E" NSW Government Policy Statement on The Application of Competitive Neutrality: Office of Financial Management Policy & Guidelines Paper (PDF)
NSW Treasury, 2002
Capital Structure Policy for Government Business (PDF) New South Wales Treasury, 2002 Australia
Financial Distribution Policy for Government Business (PDF) New South Wales Treasury, 2002 Australia
Competitive Neutrality Policy Statement (PDF) Government of South Australia, 2002 Australia
Full Cost Pricing in Queensland Local Government (PDF) Queensland Department of Communication and Information, Local Government and Planning, 2000 The Guide has been produced to assist all local governments in Queensland in implementing full cost pricing (FCP) and resolves issues raised in the Carpenter report. Australia
National Competition Policy: Local Law Review Guidelines and Examples Queensland Government: Competition Policy Unit, 1999 The guidelines and example reviews have been produced by the Government's Competition Policy Unit and the Department of Local Government in conjunction with the Western Australian Municipal Association and the Institute of Municipal Management. Australia
Compendium of National Competition Policy Agreements (2nd ed) (PDF) National Competition Council, 1998 The federal-state agreements on national competition policy, of which competitive neutrality was a part. Australia
Competitive neutrality reform: Issues in Implementing Clause 3 of the Competition Principles Agreement National Competition Council, 1997 Panther Publishing & Printing ISBN 0 642 26112 1 Australia
Pricing and Costing for Council Businesses: A Guide to Competitive Neutrality (PDF) Department of Local Government, New South Wales, 1997 Australia
Commonwealth Competitive Neutrality Policy Statement (PDF) Commonwealth of Australia , 1996 ISBN 0 642 26112 1 Australia
Competitive Neutrality and Queensland Government Business Activities (PDF) Queensland Government, 1996 Australia