Competitions are not unknown here in the UK.

They are common in the brass band world and also in piping.

Folk Festivals in Northumberland often seem to include competitions.

Nevertheless, I understand Martyn Ryan's reservations about competitions. They can introduce distortions by rewarding particular styles of performance over others. OTOH, I sometimes look at video clips on the Comhaltas website and am generally impressed by the high standard of musicianship displayed by the young players featured.

Another road that could be explored is the graded music exams used in the classical music world and which are now being extended into Jazz. They are not perfect, and also can result in distortions by focusing on some aspects at the expense of others, but the system is well established and understood and, done properly, could help to raise the status of folk music in England.

This page is worth a look.

Geoff