Despite the welcome sentiments of the Open Public Services white paper, it’s easy for the strategy to get derailed by failing to address the supply side issues
The government’s wonkish principles for public service reform – as set out in the Open Public Services white paper last week - are the right strategy. But the reform air war is being undermined by disorganised retreat in the ground war of practical policy. The mismatch is getting harder to ignore.
Open Public Services talked a lot about the virtues of choice. And that’s right. Aside from the empowerment that comes with the right to choose, by allowing individuals to take more control over the public resources that are expended on their behalf, it is possible to reward and propagate good practice and cut out poor services. Evidence suggests it is the poor, not the sharp-elbowed middle classes, who can be best served by this agenda.
But choice is a mirage unless policymakers deal with the supply side of the equation. We cannot have better and cheaper public services, nor can we have citizen choice, unless there is flexibility by which new providers can enter and failing ones leave the market, freeing up precious resources. Yet policy on the ground is failing to live up to the rhetoric. Three recent examples demonstrate worrying trends.
First, there’s the Napoleonic health reforms. Unfortunately, the cacophony of opposition to the proposed reforms risks undermining the best parts of the government’s plans: those that foster choice and competition. Last week it emerged that hospital failure procedures – previously planned to be a rigorous and speedy commercial-style regime – are to be relaxed at a cost of £500m per year, protecting poor performers at the expense of patients, and restricting choice.
Second, the reforms to higher education have caused the government a lot of pain without delivering the full benefits of a market. While the government has given universities freedom to charge much higher fees, quotas on student numbers heavily curtail the freedom for students to decide where to go. The dead hand of the quota, even under BIS’s proposed reforms to make it more flexible, will prevent the HE ‘market’ from delivering for students.
A third example is Michael Gove’s Free School insurgency. The government’s unwillingness to take on opposition to the involvement of private capital means that the scale of the reforms looks set to be limited. It is impossible, in the current fiscal climate – or indeed the post-2015 fiscal climate if the OBR’s fiscal sustainability report is considered – to imagine that school capacity will be sufficient to allow choice to operate without private finance.
On each front the pro-market agenda is being thwarted. It’s not an argument for unfettered free markets to recognise that liberalising the demand side without similar reforms to the supply side will result in few, if any, of the benefits that choice and competition can deliver.
Despite the welcome sentiments of the Open Public Services white paper, it’s easy for the strategy to get derailed by tactical or political necessity. That’s what we’re now seeing happen. The government needs to get a grip on these reversals if its reform programme is to be as effective as hoped. If it doesn’t, it won’t be just the reform programme that’s in full retreat, but the deficit strategy too.
