Public and private sector efficiency

David Hall
Jul 2014

It is often assumed that privatisation or PPPs will result in greater levels of technical efficiency. That is, the private sector can always deliver a given level of service with less input costs than the public sector. Politicians, media, academics and consultants frequently refer to ‘private sector efficiency’.  This assumption is often shared even by critics of privatisation.But there is now extensive experience of all forms of privatisation, and re-searchers have published many studies of the empirical evidence on comparative technical efficiency.The results are remarkably consistent across all sectors and all forms of privatisation and outsourcing: there is no empirical evidence that the private sector is intrinsically more efficient. The same results emerge consistently from sectors and services which are subject to outsourcing, such as waste management, and in sectors privatised by sale, such as telecoms.