Market facilitation

Mr Hobson (1544-1631) developed an intriguing way of offering choice to his customers. Hobson ran a business hiring out horses and would offer the customer any one of his forty horses ‘so long as they chose the one next to the door’.His ploy has given rise to the phrase “Hobson’s Choice” to mean offering a choice where there isn’t anything to choose between.

The story of Hobson is dramatic, and a little ridiculous, but it carries an important point about facilitating real choice. It is crucial to ensure there is a range of support for people to choose between. Free market apologists argue that ‘the market will sort it out’ but observers of the marketisation of other sectors (e.g. utilities) have noted that this hasn’t necessarily led to increase choice and quality for consumers.

Local authorities, in their role as commissioners, have a challenging role in facilitating the market, This activity  is distinct from market control measures (e.g. price controlled provider frameworks) but equally does not mean artificial support for duplicated or ineffective support provision.

The IPC market analysis centre describes market facilitation as:

“Based on a good understanding of need and demand, market facilitation is the process by which strategic commissioners ensure there is diverse, appropriate and affordable provision available to meet needs and deliver effective outcomes both now and in future.” (NMDF/DCMQC)

The market facilitation task breaks into three areas:

Market intelligence: a shared (co-produced) understanding of local supply and demand
Market structuring: a clear statement of how the local authority intends to behave/perform in the market
Market interventions: the activities the local authority will undertake to do this.

Co-production of market solutions is a key theme recognising that knowledge of need, demand, mapping of local assets and understanding of support quality and effectiveness is enhanced when it comes from a range of sources.

IPC’s paper also makes clear that at the heart of market facilitation is better use of data and evidence in service commissioning,. This means using need and demand data effectively and transparently to communicate to providers where the need is; using outcomes and quality data to understand service success; and commissioning on quality and effectiveness not solely on cost.