The message is in the medium
A Capita/DfES case study

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Page 3: The external economic environment

The newly elected Labour Government made the raising of standards in education its stated number one priority.

Government policy is to provide Lifelong Learning for all, to create a knowledge driven economy. The key to economic success in the 21st Century will be a well-trained, highly skilled, flexible workforce. This cannot be achieved without a strong education system. Education UK is Economy UK. A society in which no one is excluded and everyone enjoys equal opportunities, needs a modern school environment, with the best technological equipment available to a modern economy.

Market Forces

Any economy consists of the public sector, being Government controlled and the private sector, containing privately owned firms. The private sector is ultimately controlled and determined by market forces. These ruthlessly penalise inefficiency. In a competitive market, the consumer chooses products and services, largely depending on the price. To remain competitive, a firm in the private sector must find the most cost effective, efficient methods of production. Loss making firms will simply be forced out of business.

There are however some products and services that, left to the market, would not be viable in their present format for the private sector to produce, although society deems these public goods necessary e.g. education, healthcare and defence. Governments have provided these public goods for many years. The public sector had earned a reputation for waste, bureaucracy and poor productivity. Without the pressure of market forces, there is no penalty for failure and therefore no tendency to change or improve. Since the 1980s in order to modernise and improve efficiency, many public sector organisations have been opened up to face the discipline of market forces, leading to the introduction of the concept of best value for local government services. This requires service providers and local authorities to undertake a fundamental review of their services and activities through the application of the four "Cs" - Challenge, Consultation, Comparison and Competition.


One solution to providing reduced costs and improved services in the public sector has been to examine carefully the services provided for the general public and see if any can be provided more efficiently by firms in the private sector. This is known as outsourcing. Recently all levels of Government have identified such services and have invited private firms to tender for them. The contracts are awarded to those offering the best product at the best cost. The theory is that competition at the tendering stage forces irms to be more cost conscious, efficient and productive. Thus the private sector brings its expertise, allowing the public sector to concentrate on its core services and, in the long run, the tax payer will benefit from minimising costs.

Capita Education Services

By providing outsourced services, companies like Capita can work with the public sector to improve the services the country needs.

A vital aspect of the Government's investment in education is the classroom, where teachers still play a central role. Teaching has changed radically in recent years, particularly with the advent of information and communications technology (ICT). This adds new dimensions to teaching as it becomes integrated into the curriculum and is used to support learning in all subjects. It is only through a programme of high quality professional development that it will be possible for teachers to keep up with the pace of technological advances and raise standards in the classroom. This is critical to any plan to ensure all school leavers are ICT literate.

The Government has allocated £230 million of Lottery money from The New Opportunities Fund (NOF) to pay for a training programme aimed at all Britain's 500,000 serving teachers. Thus every school can receive approximately £450 per teacher to train them in the most up-to-date use of ICT. This includes:

  • the use of computers, the Internet and other software
  • television and radio
  • video, cameras and other equipment.

How Does it Work?

The Department for Education and Employment (DfEE) drew up a list of criteria that each organisation wanting to provide these services to schools had to satisfy. In particular, the training had to achieve a number of necessary outcomes agreed with the Teacher Training Agency (TTA). To receive official approval, a service provider had to demonstrate that its product met certain requirements. These included providing the majority of training through school-based learning using ICT in the classroom and using ICT-based materials and on-line support where appropriate. It had to be subject specific and increase ICT skills whilst showing how best to use ICT in the classroom. Teachers need to know when and when not to use ICT in the effective teaching of particular subjects. Finally, the organisations had to provide on-going support for teachers and both internal and external quality controls.

Having outlined the appropriate training, the Government allowed the different organisations to develop their products, which then had to receive official approval and a kitemark. Schools are given the money from the NOF and they are free to choose their training provider or providers. This is where the market forces come into play and all the organisations involved had to be acutely aware of all the elements of the marketing mix. With about 50 different providers in active competition, efficiency and value for money will be key determinants of success in any bid. Some local education authorities have organised NOF fairs. With many consumers (in this case the schools) and many providers, this is a highly competitive market. Economists would predict that this would result in lower costs and prices and therefore the most efficient allocation of resources.

Capita/DfES | The message is in the medium