Article on public services by John Spiers in the Yorkshire Post

John Spiers: We must face the facts over cash and choice

CHOICE in public services is now a key offer from all three main parties. Gordon Brown’s billions, thrown at education and healthcare, have not adequately improved services and have lowered productivity. There have been too few incentives to do enough to enable Janet and John to learn to read, or their families to get good health care.

The voters are frustrated, angry, and disappointed. “Choice” is seen by politicians as the antidote, but they are too timid. Choice can only be effective if we give people back their own money or give the poor tax-credits so that they too can spend on health and on education, just like the middle-class consumer.

For choice to be an instrument rather than an aspiration we need real levers and incentives which work. The key to choice is patient (and parent) control over mobile money.

Take healthcare. First, the individual must have control over a personal tax-based individual healthcare fund. These would be spent by taking the fund to one of a number of competing, co-operative, mutual purchasers of care. It cannot be spent on lottery tickets. These organisations could be called Patient Guaranteed Care Associations. They would attract willing members with their tax-based funds.

There is no greater reality check than a cheque. Choice, if it is to be an effective incentive, must offer to bring more funds to the good provider, less to the bad. Choice must make a certainty of cash ebb for declining service. This, too, will then reveal poor quality and under-performance.

The party which will be believed on “choice” will be the one which argues the case for such a market and which refers every failing in health and in education to the lack of an effective market.

Politically, the task is to reshape tacit assumptions about what can count as conventionally reasonable, sane, politically deliverable, commonsense realities in care and education. The Conservatives ought to have seen this when they first went into opposition. Some key Labour advisers see it now.

The challenge is to deliver choice to achieve high quality, efficiently managed, responsive and accountable and equitable local services. Crucially, we want incentives for improvements embedded within the system.

The most essential element is that every individual has control over a tax-based fund. Then there must be competing providers, who seek to attract those willing and mobile funds.

To make this market work, we need spare capacity, good information and advice. The job of government is to encourage the conditions for that. And then to protect competition, both from monopoly and from political interference.

But no one wants choice, do they? And they can’t make it work, can they? And they aren’t informed, or informable, are they? And when they have choice, they don’t use it, do they? And if they do use it, they decide what we, the managers who know their interests better than they know themselves would have done anyway, don’t they? So why all the fuss?

The clinical evidence, unsurprisingly, shows that choice is good for you, too. A sense of control has a powerful effect on the ability to respond to treatment and on speed of recovery.

The evidence shows, too, that people with the same condition make very different choices with regard to preferred treatments, likely experiences and outcomes, and the consequences with which they choose to be able to live. In addition, effective choice can be more socially inclusive and be designed to give greater funds and power to the presently disadvantaged.

Choice has thus both an intrinsic and an instrumental value. It is about a better society and about better, more effective services for individuals. It can, too, deliver those eternal British verities of fairness and of services free at the point of use. The challenge is to design a system of effective choice with both many personal and public benefits.

Too often, the alternative to facing the facts about cash and choice has been stand-still policies which buy three apples for two pence, and sell two apples for three pence.

The challenge to politicians is to set out a clear statement of values, to explain what incentives and real levers do, and to lead opinion and understanding.

Choice then asks us to decide who, what, when and how. And to distinguish clearly who is doing the choosing. Indeed, the issue is, crucially, who decides who decides?

So, when the candidate knocks on your door, put competing policy proposals to the test. Ask: do they financially empower the individual consumer? Or do they just vaguely talk of choice as an aspiration?

There should be a clear mantra for effective choice. Choice, competition, and capacity are a trinity. Preference and price are twins. Money talks and preference walks.

Professor John Spiers is a visiting fellow of the Institute of Economic Affairs.

See also
Towards a Liberal Utopia, edited by Philip Booth.