A better wayApril 2003
Britain has some of the worst public services of any advanced country in the world. The Government's answer is to spend more money on them and to increase taxes. In the nine years to 2005/06, public spending is being increased by £203 billion to £512 billion - equivalent to an extra £100 every week for every household.
This approach is programmed to fail.
Spending hasn't improved the performance of public services:
- Public services have not been reformed, despite the Prime Minister's promise that extra money was conditional on reform.
- Over the last three years, the NHS budget has increased by over 20 per cent, but activity has risen by less than 2 per cent.
- Schools cost an average of £4,900 per pupil, but 17 per cent of children leave school functionally illiterate and 23 per cent functionally innumerate.
- Along with Sweden, Britain is the most crime-ridden society in Europe and London is now a more violent city than New York.
Since the trough of the ERM recession, there has been only one year when taxes fell as a proportion of GDP - the longest such period since the Second World War - with projections showing further increases every year.
National prosperity is driven by productivity, which is damaged by continuous increases in tax and government spending:
- Tax increases distort and blunt incentives.
- Public spending is inefficient, transferring resources from the higher productivity growth private sector to lower productivity growth public sector.
High levels of tax and spend and unreformed public services hit the disadvantaged most of all:
- Choice is a basic requirement of human dignity.
- The disadvantaged get the worst deal from existing public services, whether it is from the NHS, where the poor get less cancer treatment, to rock bottom standards in inner city schools, and are most affected by high levels of crime.
Britain is ready for change
Britain has changed immeasurably in the half century since the welfare state was designed - yet public services have not. An increasingly consumerist society is ready for change, but the public has never been presented with an alternative to nationalised healthcare and schools, or offered real choice.
Conventional focus group research sets out only to discover what people think about the services politicians currently offer. Reform commissioned ICM to conduct deliberative polling to discover if totally new ideas could be popular. This found:
- An enthusiasm for alternatives.
- A positive response to honest discussion which people saw as a break from sterile party political debate.
- An overriding wish to see services removed from political interference and control.
- A strong attraction to policies which enhanced choice.
Government spending on health and education is now nearly £5,000 per household. Real reform means:
- Switching this spending power from government monopolies and putting it in the hands of the consumer.
- Giving providers the right set of incentives to respond efficiently, so they can provide what people want.
A better way for health
The mission statement of the NHS is to improve the health of the nation as a whole. The result was that choice and individual patient entitlement or rights were simply designed out of the system.
There are three steps to reforming healthcare:
1. Change the NHS mission statement. From being about the collectivised provision of healthcare, it should change to being driven by individual patient need.
2. Liberate the supply side. The NHS would be transformed into a purchasing organisation, with money following the patient, freeing hospitals and other healthcare providers from NHS control and management.
3. Reform the demand side (funding). The Commission proposes two options with similar destinations in an insurance based system. The first, entitlement portability provides an evolutionary path within existing NHS structures and is funded mainly by taxation, whilst the second, compulsory insurance, is a new start.
A better way for schools
The schools system is being choked by increasing central control and a rigid funding mechanism which prevents good schools expanding, keeps bad ones in business and stops new schools offering an alternative. The constriction of supply means parents have very limited choice.
The two components of reform are:
1. Real choice for parents. School funding would follow parent choice - and allow children to be sent to a state or private school. At present funding per pupil only covers running costs and excludes funding for investment. By including capital costs, good schools would get the funds to expand and new schools could open.
2. Removal of central control, targets and intervention. Headteachers would have the freedom to run their schools as they see fit.
A better way to fight crime
The Audit Commission found no consistent link between more resources and better police performance.
The remedy is proper accountability and transparency, with politicians focusing on the outputs and police forces being given the freedom to deliver.
'Ofcop', a new regulator, would have a similar function as the utility regulators, working as a substitute for competition to improve efficiency.
The benefits of real reform:
- Failing public services are taken off the 'cost plus' escalator of ever-increasing taxes.
- Better healthcare and schools, lower crime and lower taxes.
- Parents and patients have real choice.
- The disadvantaged get a better deal as for the first time they have the same entitlements as everyone else and so get treated like everyone else.
- Dynamic and innovative health and schools sectors which add to the country's economic growth rather than dragging on it.
- Improved working conditions. Staff are no longer accountable to a public sector bureaucracy, but to patients and parents and rewarded accordingly.
- Politicians no longer manage public services.