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Why does the discussion of choice in public services lead to so much...

Why does the discussion of choice in public services lead to so much tension and polarisation in todays Labour Party? By far the best fringe meeting I attended at this years party conference was Compass look at renewal when both Angela Eagle and David Miliband spoke on this theme. They both said they supported choice and voice in public services, yet they had different policy prescriptions, based on these principles. Why should this be? I believe it is because the word choice is now being used to mean two very different things.

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Ultimately, all public services are subject to voice political agreement on how they should be run but we need to address the meaning of choice.

One size does not fit all

The first kind of choice is when the citizen wants one thing rather than another a student, say, who'd rather do GCSE geography than history. Sometimes such choices can be provided by one institution, but sometimes, only another institution can provide the choice. For example, a child who is being bullied in one school may need to move to escape a pattern, make new friends and a fresh start. The state should be capable of delivering this sort of choice. The New Labour Government is improving these sort of choices. For example in Plymouth people receiving NHS psychotherapy can now choose between a male and female counsellor. Such choice means a real quality improvement in the service. But we could do more. The only request for a choice I have had from a constituent in the first six months as a MP falls into this category: it came from a woman who wanted a say in who should provide personal care for her elderly, infirm mother. This is an eminently reasonable request. We need more choices like this.

Choice as a market mechanism

But sometimes choice is being advocated as an instrument to raise standards across the board for a service, where basically everyone wants the same thing. I believe it is this sort of case that makes people nervous about choice. These two sorts of choices are frequently elided I believe unhelpfully and this leads to misunderstanding and resistance. On one hand, choices to meet differing needs may be denied in the wrong headed belief that they are an attempt to smuggle in choice as a market mechanism. On the other hand, there may be a pretence that there are different services on offer when in fact they are the same, but from different providers.

A paradigm of choice as a market mechanism is the forthcoming Choose and Book policy in the NHS. From next year for certain types of treatment a patient will be able to choose which of five or six hospitals they may attend. All will price the operation on the same tariff and in any case the patients ability to pay is irrelevant to the choice because of our commitment that care should be free at the point of use (unlike the Tories top up voucher schemes). So this is a quasi market without a price mechanism, which is a very unusual sort of market.

In practice the factors which will govern peoples choices will be speed, location and reputation. The weight people put on these different factor will presumably depend on what the problem is. For rapidly deteriorating conditions or where a person is in serious pain, speed will presumably be the over-riding factor. Where these do not apply, and the condition is very complex, reputation may be more important. For people who wish to be near to home, location may be significant. One anxiety is that social factors may determine the choice, for example anxiety or poverty could drive some people towards a local hospital, when better treatment is available elsewhere. Another problem is that in rural areas location is the over-riding factor it simply is not economic to provide choice. To be effective, a choice (or a market) needs to be made on the basis of good information: again people may not be equally well-informed or the patients choice may be totally empty because the GP gives the guidance as to reputation. Ideally though, speed and reputation will be good in all cases, because really everyone wants both.

Will this choice as a market mechanism provide a spur to better treatment? By better I mean faster, more convenient healthcare where the medical outcomes see a general rise without at the same time triggering an increase in unequal outcomes or being hugely wasteful of resources. How might this happen? Essentially through a two stage process the first would be via an increase in transparency which would show what patients prefer and ex-hypothesi where treatment is currently good or less good. In itself this would not mark an improvement (but it would parallel the advent of school league tables). That would only come at the second stage, as management took action to raise standards and this could come either by good hospitals expanding output or by less good hospitals raising standards.

This raises a large number of questions:-

(1) If there is scope for improvement, why doesn't it happen now? (Since presumably while we the public are uninformed, the medics themselves know the issues).

(2) Are the barriers to improvement under management control? (eg. is there a shortage of specialists? Are pay rates negotiated annually?)

(3) Do managers have the necessary freedoms to raise standards? Or are other obligations they face (like a fixed target for independent sector provision and the need to pay PFI charges on some hospitals) going to limit their options?

(4) Will managers have the time to raise standards? Or will the statutory obligation to breakeven annually, mean that if deficits arise because of lower levels of usage, they may make service cuts to hit their financial targets, thereby reducing healthcare overall.

(5) Will the increase in transparency motivate or demotivate staff? Lord Browne, BP Chief Executive, said earlier this year that they would damage professional people who probably should not be subject to these pseudo markets and they really are pseudo markets because markets and organisations are different things with different functions and behaving like a market internally is a recipe for disaster for any organisation. For example, to reach their goals they can sacrifice present efficiencies for the sake of larger gains in the future. Thats why they spend money on R&D. Or they can choose to subsidise weaker parts of the business while they build them up to the point where they become self-sustaining. They can choose not to outsource a department or function to a cheaper specialist because the expense is outweighed by the contribution it makes to the wider whole.

(6) There are penalties for failure in this new system, but are there rewards for success? Should there be? What would they be?

The role of the private and voluntary sectors

It should be noted that involving the private or voluntary sector in providing alternative frontline services is a wholly separate matter from introducing choice. Some of the pros and cons of this are illustrated by an area where private involvement is longstanding: the law. In the legal arena citizens can make some choices. Within certain financial limits citizens choose their own legal representation and considerable effort (though we may still think not enough) has gone into ensuring that for this reason the ability of the well-off to buy this service does not also mean they buy justice. Here decisions as to the way schemes operate are a constant balancing act between liberalism (the need to ensure every lawyer is not a state employee) and equal access to justice, as well, unfortunately, as the need to keep on side a powerful profession.

More generally, the competing demands of the professional ethos, financial incentives and public policies demonstrate why setting up new contract arrangements needs to be pursued cautiously. Concern about the risks of profit maximisers taking on public service delivery has influenced the design of the Choice and Voice policy of giving council tenants a chance to vote whether to move to Housing Association Management. Much has been made of Sedgefield tenants decision to stay with the Borough Council. This was not because they are dyed in the wool socialists (only three months earlier they elected Tony Blair!), it's because the Council has been under Labour control since it's inception and has quite a good housing department. At the other end of my constituency in Teesdale, the local authority is too small to run a good department, not surprisingly people voted for change. It is, however, unfortunate that the government was seen to load the dice by offering differing support for the two options.

It is important that private involvement does not become a counsel of despair. For example, the suggestion that individual council tenants be given the money to finance repairs could be seen as saying well this council can't do the service so well put the responsibility onto the tenants. Quite apart from the fact that some people couldn't cope with this and the likely upshot would be a bureaucratic system ( a man to check the repair was needed, a man to cost it, a man to check it after etc.), it is possible to run services efficiently in the public sector and we all know there are inefficient private organisations what about those men who can't say when they'll come to fix the washing machine?

Worries about inequitable access are much less likely to arise where the private sector provides the infrastructure for public services. Because the individual citizen is shielded from the responsibility for the choice, which is made on their behalf by a public body. Here, there is a good cause for saying we need more competition.

In July the Commons Public Accounts Committee noted that 11 firms account for 80 % of the government market saying, this limited field potentially restricted competition and may discourage innovative new entrants. It recommended changes to the procurement process. A similar trend is evident in public buildings. Whereas in the 1960s there we're frequently open architectural competitions, which gave young architects a chance, now these are few and far between. So-called partnership arrangements made by local authorities and public bodies with large building firms are excluding small and medium sized building to the detriment of local economies.

But choice is not always possible

Finally, there are areas where individual choice is impossible and decisions must be taken collectively, preferably through processes which are truly democratic and provide real accountability.

Core Functions of the State

The first set of services where individual choice is impossible is in the core functions of the state:- the law, justice system, courts, border control and money:- the currency, tax, benefits and subsidy arrangements. Plainly a person found guilty of burglary cannot say they'll choose a six month sentence instead of a twelve month sentence and nor, as the late Brian Redhead memorably said, can they ask the judge may I go privately? Fortunately, Elizabeth Fry put an end to a penal system where conditions we're dependant on your family bringing what they could afford for you to eat. One of my colleagues with a London seat highlighted this brilliantly with the remark oh yeah I'm sure all my asylum seekers would love to be able to chose an alternative to the Home Offices rules and INDs administration. Yet despite this lack of choice, services can be well administered, as the recent turnaround in the efficiency of the Passport Agency has shown. It is welcome news that the man who achieved this is now heading public sector reform.

The other core function of the state not amenable to private choice is the maintenance of the currency, tax and benefits or subsidies. Prior to the establishment of the Bank of England in 1694 there we're of course competing Bills of Exchange and during the 1980s when some Tories advocated a retreat to the core state it was even suggested that a decision on whether or not to join the ERM could be avoided by introducing competing currencies. Fortunately, it was quickly realised that this could seriously disadvantage the financially unsophisticated and would be expensive and the idea was banished to the wilder shores of laissez faire liberalism.

In a global economy, states have to put more energy into protecting the revenue from leakages through overseas loopholes and by setting competitive tax rates for business, but the basic truth remains that nothings certain but death and taxes and one person can't choose a lower tax rate or higher benefits than another in the same position.

What all this means is that the operation of the legal and financial systems are decided collectively through voice not privately through choice.

Public Goods

The second area where individual choice is impossible is in public goods. The public space may be physical, such as street lighting, or cultural, such as the rules pertaining to advertising and the TV viewing rights for major football matches. I can't choose to have better street lighting than my neighbours, of necessity we consume it together. Latterly, social and technological changes have led to some erosion of the public space and it's privatisation, which of course facilitates individual choice here. For example, the advent of gated housing estates may mean that those who live in them are less concerned with the safety and cleanliness of streets beyond the gates. The arrival of pay as you go satellite and cable TV channels combined with the financial pressures on sporting bodies is going to take cricket out of many living rooms. There are also tricky boundary issues, the environment and public health are public goods, but we need also to guard against free riding. It may be best for an individual that they have an urban 4X4 and no-one else does, but the worst option is that everyone has one, so the real best option is the second best that no-one has an urban 4X4.

I believe we need to defend the public space, because ultimately we are mutually inter-dependent. We are trying to build a join in society, not one of exclusions for some and privileges for others. This is one boundary of clear red water against the Tories. And while technology may sometimes appear to be taking us in the wrong direction, a greater understanding of our inter-dependence on each other and the planet, and the need for shared responsibilities and policies on the environment is reinforcing the scale and significance of the public space. So here we need policies determined by voice, because otherwise, we have no sanctions against freeloading, which is why the government has been right to pursue Climate Change internationally and would do well to heed the calls from senior businessmen for tougher regulation.

So public goods which we all share and consume together like clear air or safe streets need to be decided through voice. In the contested space - in areas such as the health service and education we need to spell out more clearly what is meant by choice. Only then can we create services where the user is in the driving seat, but the distinctive ethos and structural coherence of public provision are protected.

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Posted in Law Post Date 08/09/2016


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