AbstractThe public sector in Britain has been subjected to over a decade of major reform aimed at breaking up public service monopolies, at containing costs while at the same time opening services up to greater consumer choice. Health and social services have not been exempt from this revolution in the organization and management of public sector services. The long‐standing policy of care in the community is being subjected to market principles and the introduction of a ‘contract culture’ very similar to the NHS reforms introduced in 1991.This paper reviews the origins of these developments in the doctrines of ‘new public management’, a movement which has proved attractive to policy‐makers in many countries. Local authority social services departments have been identified as the lead agency for the development of a mixed economy of care following a review of community care policy by the government's health adviser, Sir Roy Griffiths, and a subsequent white paper. This paper examines the limited empirical evidence available on how managers and providers are meeting the challenge bestowed upon them, and concludes that most authorities are moving ahead cautiously if at all. Only a handful of authorities studied have embraced the reforms with any degree of enthusiasm.The paper concludes with an assessment of the reforms from two perspectives: a pessimistic one and an optimistic one. There are many worrying features of the reforms, not least among these being a lack of clarity over their intended purpose. Tensions and contradictions are plentiful, which places in jeopardy the certainty of the reforms in becoming user led rather than provider driven. A more optimistic scenario is that the changes are leading to a loosening up of services and practices which have often suffered from sclerotic tendencies, paternalism and sometimes complacency. If the reform process is skilfully handled and not rushed and if the ends are clearly established and communicated then users and carers could prove to be the principal be