Are choice and competition Labour?

Choice and competition can help create self-reforming public services and secure traditional social democratic values.

Today's public debate of politics is trivialised and sclerotic. When we discuss policy at all, we rarely move beyond false choices. But most of the time, political debate has become a dialogue of the deaf: voters feel they're not listened to; politicians feel they're talking into the void. Gossip, rows and personality fill the vacuum.

Many have railed against the media for this. But politicians are the last people who can or should dictate how the media approach politics. Instead, politicians need to concentrate on the part of the debate that we can influence — what we say (and how we listen).

Part of the reason we have a superficial political debate is that we have too often caricatured the positions of others.

Triangulation cuts the path to trivialisation. This is because it sets up false choices — our left wing critics would do this odd thing; our right wing critics would do this bad thing, so the only option is to do our reasonable thing.

By definition, such false choices cannot be debated. Those who disagree with us do not feel we are representing their position fairly or accurately, so do not engage with our arguments. We fail to convince them when we're right and fail to hear them when we're wrong. The result is detachment and frustration.

Of course, there will always be issues where politicians disagree sharply with each other's views, and attack each other's policies robustly. But there is also space for genuine debate, where we argue not with the worst depiction of others' positions, but with their best formulation. Discussion with a strong opponent can only improve our own position.

This candid, rounded debate is particularly important within the Labour Party, because we face real decisions about our direction of travel. This article focuses on reform of public services, but there are similar debates to be had about liberal interventionism in foreign policy, or security and civil liberties in domestic policy.

To date, the debate on public service reform has often been shadow boxing — with New Labour politicians saying we are just doing what works, but doubters suspecting that our attachment to choice is more than pragmatic.

The truth is that we do believe in using choice, both for pragmatic and ideological reasons. Our pragmatic reason is that our experience in government has convinced us that choice and contestability improve quality, and can reduce inequality, if the policy is designed correctly. But our commitment to choice is also based on values: we believe in autonomy and, other things being equal, choice gives individuals power.

The traditional social democrats

Those doubters include people like Frank Dobson or Roy Hattersley, who I hope will be happy to be called the traditional social democrats. I'll start by trying to summarise fairly their view of running public services. I've taken these views from articles and Parliamentary debates. I'd be happy to correct this description if they or others have comments.

The traditional social democrats start from a desire for equality of treatment between individuals and believe that the best way to achieve that is for publicly-owned public services to operate within a framework of democratic accountability. Extra resources for public services will allow them to deliver better services, thanks to a public service ethos that means good managers and front line workers will adapt their services to the needs of their users. By providing good quality services, schools and hospitals can serve the whole of the population. This universality will underpin society's willingness to vote for the necessary funding and also ensure that everyone is treated equally — because richer groups won't want to purchase better schools for their children or quicker treatment for themselves. If there are good quality local schools or hospitals funded out of taxes, why would anyone pay to opt out into private services?

This is a powerful moral vision. It is based on a real commitment to equality, liberty and solidarity. It underpins Labour's proudest achievements, the roll call of institutions that can still send shivers down the spine of a Labour Conference audience. It motivated generations to vote for the Labour Party — indeed, it inspired me and other New Labour politicians to join the Party in the first place.

When things go wrong

As well as being a powerful moral vision, it can be a successful method of implementation. Excellent public services do function in this way, and have done since the creation of the welfare state.

But that leaves the question of what to do when public services aren't excellent — when things go wrong, who fixes the problem and how?

For the last two decades, public services have been under-funded. When there was failure, insufficient funding was at least partly to blame, and therefore could be blamed. But now public funding is rising to the level of other industrialised countries. When public services go wrong, or fail to be as good as they could be, extra resources won't always be the answer.

In other words, appropriate funding is necessary but not sufficient. Public services can go wrong for other reasons, including:

  • Management: badly designed systems, poor organisational culture, low expectations of users
  • Uniformity: services operating in organisational silos, rather than designed around the needs of the individual
  • Inflexibility: failure to spread best practice and innovation; services persisting after they have fulfilled their purpose

 

These problems have a common root — running a public service is much more complex today than in 1945. There are many more options from which citizens can choose — from the thousands of degree courses to the bewildering pace of medical innovation. Consumers are demanding choice — we are better informed, thanks in part to the Internet and broadcast media, and we are much more questioning of expert advice, as deference ebbs away. The patient who knows more about her illness than her doctor, the student who wants to study golf course management, the extended family that wants re-housing, are all reasons why one size public services no longer fit all.

I think it is common ground that public services face these challenges. I don't think there is a disagreement about that, though I'm happy to be corrected.

The disagreement is about what to do. One option is of course democratic accountability — the voters can always choose another Party. But that is a symptom of failure rather than a recipe for improvement.

I can see three solutions the traditional social democrats could use:

  • Front line managers: but if the problem has been allowed to develop by the current managers, it won't always, or normally, be solved by them
  • Giving users a voice: this can work well — for example regeneration projects that have been led by community members, or community panels for neighbourhood policing. There are policy areas where we could be giving citizens a more effective voice (see below). But what happens if the voice is ignored? Without a power for users to make their voice effective, it can just lead to frustration — the voice can become a scream. Involving users is more likely to help good managers succeed than it is to correct the mistakes of poor managers.
  • Reform from the centre, whether Whitehall or local councils: this can work — and indeed we've done much of it since 1997, e.g. the numeracy and literacy strategy in education, cancer and coronary disease strategy in health

 

The first two options are more likely to work where the public service is already well-run. Where problems persist, that leaves reform from the centre. The next section argues that although this can work in some circumstances, it can have real downsides as a long term strategy.

Leadership not control

Some public services are best run from Whitehall — and many are extremely well managed in this way, such as The Pension Service, which has transformed its service to pensioners while reducing staffing by a third.

But public services such as health and education are too large and decentralised to be run from the centre. The NHS is the world's 33rd biggest economy — no one would expect central planning to work for an economy of that size.

That leaves Ministers and officials with an unappetising choice. They can try centralised management over a decentralised system. Centralised management, relying on targets, inspection and regulation, has worked in some cases. It's been effective where there have been one-off issues that needed to be addressed — such emergency waiting times in A&E.

However, many feel that this kind of centralised management can have real downsides, particularly if used on a long term basis — these are argued to include perverse incentives; excessive bureaucracy; misuse of productive time; the stifling of initiative and innovation.

But if Ministers reject centralised management, they risk being powerless when public services fail to deliver the public's objectives - and neither politicians nor the electorate could accept that.

The Government has increasingly used choice and contestability, because it is a way out of this impasse, an alternative to the rock of centralised management and the hard place of abdicating responsibility

Public services like heath and education need leadership from the centre. Sometimes they need intervention from the centre, to address one-off, fundamental problems. But they do not need constant intervention from the centre. That becomes control, rather than leadership - and control is ineffective, and demotivates front-line professionals.

In these public services, the centre needs to focus on leadership and policy. But leadership is about vision, values and goals; and policy is about creating a system that will deliver those goals — neither is about controlling what happens within the system. The system needs to be able to adapt to change, to eliminate failure, without the need for detailed intervention from the centre. In other words, it needs to be able to adapt, to reform itself.

Self-reforming public services

How do we create such self-reforming public services?

Centralised management is based on a flawed model of public services. As Jake Chapman argues in System Failure[1], top down reform thinks of public services as a machine that needs to be driven. But, as argued above, that risks entrenching existing problems, or creating new ones. In fact, public services are much more like organic systems, with many independent actors, information distributed throughout the system, and continuous adaptation in response to change.

A self-reforming system would recognise that, and create incentives for those independent actors. That's why choice and competition are so important — they create incentives within the system that will make it more likely that services that are failing will have to adapt, and that services that are working will expand. They make it possible for the system to reform itself without intervention from the centre.

Choice and competition are not incompatible with the other methods available to the traditional social democrats — voice and better management. On the contrary, they complement them — contestability can give good managers more freedom to innovate and expand; voice becomes more effective when it is backed up by the possibility of choice. Indeed the existence of choice often means it doesn't need to be exercised — its very availability can changes the incentives and therefore the performance of the provider.

A self-reforming system gives us real scope to lift many of the centrally-imposed burdens to which frontline workers object. The centre can specify whatis expected, the professionals can work out howto deliver it, and the citizens can decide whether they have succeeded.

These are radically new methods for the Labour Party. To convince people that they are right, we need to show both how they further values such as equality but also how they support individual autonomy — a value which is arguably more important today than it was in 1945.

Meeting the equality test

Many members of the Labour Party aren't comfortable with choice and competition. They worry that because they were first used in the UK by the Thatcher government, they can only be used for right wing goals. But left-of-centre governments all over Europe have been using choice and competition for decades — the Swedish social democrats have a choice system that allows pupils to opt for a private school; the last Dutch social democratic-led coalition brought contestability into the delivery of back-to-work services.

That shouldn't surprise us — these are methods, not values. They are ways of achieving policy goals — and they can be used to further either Conservative or Labour values. This could easily be seen at the last Election, where the Conservatives wanted to use health vouchers to allow individuals to buy operations from the private sector. The reason we objected to that policy was not that it gave individuals more choice — it was that it gave more power to those with more money.

The difference between the Parties was one of values — we objected to the policy because it would undermine equality. We didn't think it was appropriate to subsidise richer individuals to get themselves faster treatment than was available through the NHS.

But the disagreement within the Labour Party isn't fundamentally about the origins of choice. It's about its effects. The traditional social democrats worry that choice and contestability will result in services of variable quality, and that the better off will access the better services. To avoid this inequality, we need uniform, good quality public services. These arguments are reflected in statements about parents wanting a good school, not a choice of school, or about choice leading to services becoming a postcode lottery.

I suspect that much of this disagreement can be traced to different views of the status quo. The traditional social democrats think that current public services are delivering relatively equal outcomes and that moving away from choice would reduce inequality.

In contrast, New Labour social democrats worry that uniform public services appear to have a middle class bias. Left of centre critics such as Nick Barr[2] and Julian le Grand[3] have provided strong evidence that traditional public services serve the middle classes better, because they have better contacts to navigate the system, or more resources to get the service they want (for example, moving to the catchment area of a good school). And if they can't get what they want within the public sector, many can afford to pay to opt out anyhow.

New Labour social democrats start from the position that the middle classes have always had choice — whether through informal systems in the public sector or by paying to go private. By making the system more transparent (for example, through information and league tables) and sharing the power of choice more fairly, we believe we can produce a more equal system.

Some argue that low income groups don't want choice. But the evidence suggests the opposite — lower income groups want choice more than other groups. The 2005 British Social Attitudes Survey asked whether patients should have a choice of treatment, hospital and outpatient appointment time. 69% of those with no educational qualifications wanted this choice, compared to 56% of graduates. 70% of those earnings less than £10,000 per year wanted choice compared to 59% of those earning more than £50,000 per year[4]. The Audit Commission found a similar result for local government, where those in favour of choice were ‘the least privileged, women and those who lived in the North and Midlands'[5].

But for choice to achieve egalitarian outcomes, it needs to meet three conditions. There needs to be progressive funding — those with greater need merit greater resources. That is exactly what is happening in the NHS and schools, where we have changed the funding formulas to recognise deprivation more effectively.

Second, there has to be a choice of providers, so the individual is choosing the provider, not the other way round. And third, access to information has to be equalised, with some groups supported in making choices. Our recent reforms to health and education, such as choice advisors and helping existing providers to expand or new providers to enter, aim to put those conditions in place.

There will be variable quality in public services, whether or not we allow choice and competition. But a system with choice is more likely to eliminate under-performance — for example, in schools, where the current reforms have reduced the gap between the worst and best performing schools, or in health, where systems with choice have reduced waiting lists faster than those without.

But variation itself is also necessary for equality. The best way of treating people equally is sometimes to treat them differently. Seeking equal capability for people with disabilities requires wildly unequal intervention. Some students may want to go to a school with a music specialism, others to one with technology. Some patients may want to be prescribed medicine, others to have non-drug treatments.

Personalising services in this way will require flexibility and innovation from providers. This doesn't come from state planning. It does come from giving people the freedom and incentives to innovate. But it also comes from pluralism in the supply side. A range of providers - public, private, voluntary - will create a greater range of services. And choice will give users the ability to personalise the service to their own specific needs.

Meeting the autonomy test

So, there is a disagreement about how choice and competition will affect equality.

But New Labour social democrats value choice because it helps meet another key test for public services — the autonomy test. We are committed to choice because we believe it gives users power. In other words, it's not just about distributing power better between groups of users. It's also about redistributing power from providers to users.

This is not entirely new. Many parts of the Labour movement have emphasised the importance of autonomy — freedom and power to choose, not just freedom from interference (see Choose Freedom by Roy Hattersley for example).

But our traditional model of public services too often failed to match up to those values. Traditional public services were often paternalistic, telling council tenants what their front door should look like, parents where they should send their children to school, patients when and where they could have their operation.

Today, we can't afford to ignore autonomy, because we live in an autonomous society. Deference is going. Collective organisations are less powerful. Lives and tastes are more varied. People want to do, they don't want to be done to.

We must continue to tackle unjustified inequality. But we must focus just as much on giving power to individuals to pursue their hopes and aspirations. And that means giving them choice — the ability to choose is a pre-condition for real autonomy.

A quiver of tools

New Labour's critics sometimes argue that we are obsessed with individual choice. I'd like to think that we're not – that instead this is the area which has been most controversial, and therefore the one where the controversy has focused.

There are limits to where individual choice will work, including where we can't meet the conditions set out above. Where there can't be a choice of providers, such as for local policing or bin collection, we will need to find other methods. Collective choice — including new mechanisms such as neighbourhood councils or citizens juries — can help here, and have perhaps been under-used.

Democratic accountability will always be the backstop behind choice. The voters can always decide to change their political provider. But far from eroding democratic accountability, choice can support it. Collective choice systems can lead to better decisions, and allow difficult trade offs to be made. Individual choice can help politicians run public services better.

Nor is choice a panacea. In many areas, this agenda emphasises partnership between the individual and the State and joint responsibility for outcomes. Recognising and supporting individual autonomy emphasises the reality that the state cannot do everything. Thus in health and education, we know that individual behaviour (diet, smoking, exercise, parental engagement with children etc) often matters as much or more than what goes on in schools or the NHS. Our policies are therefore increasingly designed with this in mind.

Conclusion

New Labour and the traditional social democrats have much in common. We share history and values — equality, liberty, solidarity, maybe autonomy too. We have the same passion for improving public services or eliminating child poverty. We want to win the next Election.

But there is a clear disagreement about the role of choice. I've argued that choice and competition will deliver Labour values better than previous models of public services. That approach to public services achieved huge amounts in the 20th century — it created universal access to health, education and welfare for the first time. It supported social mobility and reduced extreme poverty.

Elements of that traditional approach remain important — progressive and sufficient funding, appropriate pay, an ethos of service. But it is not sufficient. That traditional model has not done enough to deliver equal access to public services, or to personalise services.

So, there are pragmatic reasons for wanting to use choice and competition. But there are also ideological ones. Today's public services need to reflect the way society has changed. People want to do, they don't want to be done to. Individual choice will support that desire for autonomy — in fact, is virtually synonymous with it. By giving citizens greater autonomy, choice can strengthen public services, not undermine them.

Of course, individual choice is not always appropriate, and rarely sufficient — and we need to explore methods of collective choice and individual responsibility.

But those methods are not an alternative to individual choice. They are fellow travellers in the same direction of travel. That direction of travel has already reduced poverty, waiting lists, school failure, and narrowed inequality. That direction of travel gives us a way through the unappetising choice between centralised management and abdicated responsibility. And, if I'm right, that direction of travel may deliver traditional social democratic values more effectively than the methods of the traditional social democrats.

[1]http://www.demos.co.uk/publications/systemfailure2

[2]Nicholas Barr (2004), The Economics of the Welfare State, 4th edn, OUP, Chapters 12 and 13 (on health care and school education, respectively)

[3]Julian Le Grand (2006), The Blair Legacy? Choice and Competition in Public Services, Public Lecture, LSE, 21st February

[4]Quoted in Julian Le Grand, above.

[5]Same source


James Purnell is Minister of State for Pensions in the British Labour Government.

Responses to this article (up to 1000 words) or questions to the author (up to 200 words) should be sent to Alan Johnson, Social Democratic Futures editor, at Alanjohnsonsdf

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