Evidence on how to make the £40bn ($78bn)-a-year market in outsourced government services work better is being sought by a government inquiry into the scale, scope and potential for growth in the private supply of public services.

DeAnne Julius, the economist heading the inquiry commissioned by John Hutton, business secretary, said the growth of outsourcing of a steadily widening range of public services from National Health Service operations to prison places, welfare-to-work, IT and payroll was unsurprising, given private-sector experience.