Economist DeAnne Julius wrote the report, which was commissioned by business secretary John Hutton.
It said that competitive tendering has led to cost savings of between 10% and 30% and improved service quality.
Dr Julius called on the government to demonstrate its long-term commitment to opening up public services to competition.
But Gail Cartmail, assistant general secretary of Unite, said: ‘This report treats our public services like a cash cow rather than a provider of essential services.
'It is unquestioning in its presumption that private sector involvement in the public sector is a good thing and pays scant attention to the workforce and the services they provide to end users.
'Public services are about the experiences of public service users - its not about profit.
'This report is a thinly disguised case for privatisation which fragments public services and does not deliver value for money. It is time for an end to this market madness. Unite is campaigning for the retreat of private sector involvement in our public services.’