Prospects for Encouraging Competition in the Public Social Services Market

Abstract

The article examines the practice of engaging private providers to deliver public social services in Russia, as well as the legal regulation applicable to those activities. In addition, it outlines the evolution of the legislation and incentives affecting the access of private providers to the public services market, what their actual share in this market is, and the benefits and risks from expanding it. The author’s overall conclusion is that involving private providers to deliver public services is advisable, but it should not be an end in itself. The consequences of this policy for the state budget, public infrastructure, and consumers should be considered. In keeping with this recommendation, the author suggests legislative amendments designed to eliminate artificial incentives for expanding the share of private providers in the public services market while maintaining state control over the volume of financing of the public infrastructure in order to prevent its degradation. The article also analyzes the Russian system for independent assessment of the quality of public services (IQA) which began in 2015 and assesses its suitability for comparing the quality of services from public and private providers. The author finds shortcomings in the IQA methodology, which artificially inflate the overall level of assessments. This becomes a disincentive for providers to improve the quality of their services and also reduces public confidence in the results of IQA. This analysis of IQA is used to generate proposals for improving its methodology by making its results more objective.