Governments ‘must create markets for good’

Governments have a pivotal role to play in creating markets that innovate for the benefit of their citizens, the former chief of the Government Digital Service insisted last week at the launch of a new institute designed to promote “mission-driven” public policy. Julian Blake reports.

mike brackenMike Bracken, who led GDS from its inception in 2011 in its work to transform UK government services, said the break-up of what was then a cartel of large suppliers – paid billions through government IT contracts – would not have happened without a clear decision to start creating services that put users first.

“In 2011 our parliament produced a report which described the technology supply chain for government services as an oligopoly,” he said. “Like all good economists, you know that what follows an oligopoly is a cartel.”

Bracken said that 84% of the purchasing of government technology services, worth £16bn, had previously gone to “seven dots on a map” representing fewer than 20 companies. Three years later, in 2014, that picture had changed radically, so that 3,500 SMEs UK wide came to participate in the government’s digital service supply chain.

“That market did not just happen,” he explained. “The market had stopped that happening very well for 20 years. That had to be designed. We had to think about it and needed a philosophy and principles. That’s what we did: we designed it.” Bracken said the change, driven by a focus on user needs, saved the taxpayer £4.1bn.

Bracken was talking at the launch of the Institute for Innovation and Public Purpose (IIPP), a new UCL-run think tank created to promote “mission-driven” public policy. The IIPP argues that public policy is about “actively co-creating and shaping markets” rather than just correcting market failures.

The IIPP is led by economics professor Mariana Mazzucato, the author of The Entrepreneurial Statewhich says the most important tech innovations of our time – from GPS to the internet itself – have come about as the result of government intervention rather than free market forces.

The new institute, working out of UCL’s Bartlett school, says it wants to “rethink how public value is created, nurtured and evaluated”, encouraging public and private sectors to work together to drive innovation. It sees an active role for governments in shaping future markets and aims to “debunk the myth” that only the private sector takes risks.

Alongside teaching and research, the new institute aims to have a practical impact, including through a new ‘mission-oriented innovation network’ that engages the public sector and industry.

Bracken joined the IIPP as a visiting professor this summer after leaving his role as chief digital officer at the Co-operative Group less than two years in. Having helped digitise the Co-op’s membership and other services, he has set up Public Digital, a new consultancy helping large organisations transform through digital.

IIPP bagSpeaking at last week’s launch, Bracken said the GDS model was now recognised elsewhere around the world, including the US. “Generally the model is good,” he said. “All governments do roughly the same thing, and they are fast followers. So if you get the model right, everyone will do it.

“That’s why this institute [the IIPP] is so important. It can become a global institution for all the people around the world who are trying to change governments in this way.”

Mazzucato’s deputy director at IIPP is Estonian Rainer Kattel, who specialises in innovation in public institutions. The institute’s industry advisors include Acorn Computing and ARM Holdings founder Hermann Hauser and Arup Digital Studio chief Dan Hill.

UCL Institute for Innovation and Public Purpose