Kevin Beeston is a man on a mission. It is a mission to convince us all that competition is the key to improving public services – and by doing so, improve the state of the economy.

Mr Beeston is chairman of the CBI’s Public Services Strategy Board, which represents those private companies contracted by the Government to provide services in the public sector. “Competition and choice are good for citizens, and the Government should pursue an agenda that encourages competition in order to drive up the standard of public services,” he said. “I’m not saying the Government hasn’t pushed ahead with reform – because it has. I’m just saying we’d like more of it and we’d like it faster.”

The huge size of the public services industry – which runs a wide range of services from schools and hospitals to prisons and transport – was revealed in July with the publication of a government-commissioned review, which found that it accounted for almost 6 per cent of GDP, directly employed 1.2 million people and generated revenue in 2007-08 of £79 billion. What is more, it delivers services about 20 per cent more cheaply than the public sector, according to the review by DeAnne Julius, the chairman of Chatham House, the international affairs think-tank.

The industry has come far since the 1980s, when the Conservatives’ championing of private provision within the public sector met much hostility. The Private Finance Initiative (PFI), in particular, drew vitriol.

“There are always going to be things that don’t go well, but by and large, the overwhelming body of evidence suggests that PFI has been a very effective model to ensure on time, on budget delivery of capital assets,” Mr Beeston said. He concedes, however, that there are still people who would prefer the private and public sectors to remain distinct. “There are a number of stakeholders, including public service unions, for instance, who typically would not want public services provided by private contractors.

“But our fundamental philosophy is that the role of government is to set policy. It is not necessarily the role of government to carry out all the services itself . Citizens don’t care [who provides the services]. At the end of the day, what citizens want is access to high-quality services and they want them at a price that they can afford to pay in the context of general taxation.”

Mr Beeston has many examples of how, he believes, the public services industry has or could deliver value for money for taxpayers. He said: “There are 120 prisons in the UK. Ten are run by the private sector and 110 are run by the public sector. Now the cost of running the private sector prisons is over 20 per cent cheaper than the public sector ones. As well as that, they provide more out-of-cell time for prisoners and more progressive programmes for integration back in the community.

“And if health were a service business, run as a market, there would be GPs out there opening the hours that suited patients. And you’ve got 400 councils in the UK, does it make sense for them all to have their own back-office functions – payroll, admin, HR? Of course it doesn’t, it makes sense to create economies of scale. There is an awful lot that can be achieved by continuous innovation and competition.”

Mr Beeston hopes that Britain’s economic climate and political leadership problems do not derail the process of private businesses providing public services. He said: “At election time what will people judge government on? The economic condition of the country and the state of public services because they are the two things that touch everyone. It would be easy to call a halt to things at the very time when you should be accelerating.”

The lowdown

Who? Kevin Beeston, 46, the chairman of the CBI Public Services Strategy Board and chairman of Serco

What? The 16-member CBI board represents private companies contracted to provide public sector services. It was formed six years ago when the Government promised to transform the public sector

When? The board is working with a number of public sector organisations to implement the recommendations of the Julius review, including working with the Local Government Association on commissioning skills

Why? “Unlike other industries, its growth is not self-sustaining simply by being successful. At the same time, the public service industry can do more than any other industry to help government achieve its core objectives.

“Despite its size and importance, however, it has received little focused attention and its relatively few failures are better reported than its many achievements.”

Dr DeAnne Julius

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