Select Committee on Public Administration Minutes of Evidence

Examination of Witnesses (Questions 580 - 599)




  580. A complete new school?
  (Dr Pirie) A new small one, a different type of school. If people are allowed to do so. If you try to start a new school it is extraordinarily difficult. For many years if you were in an area with very low quality schools and you attempted to start a new good school you were prevented from doing so on the grounds that there were unfilled places in the locality, which is like being prevented from starting a good restaurant on the grounds that there were unfilled tables in the bad restaurants.

  581. In a restaurant you are providing your own money, in this case that you are telling the state to provide the money.
  (Dr Pirie) If the money come as a result of choice it is just as good if you put it up yourself.
  (Mr Jacobs) The barriers to entry of setting up a school are considerable. The state would be very unwise to simply remove them all and say you can set up a school in any kind of building, buildings are a very important part of a school, and so on. It seems to me there are barriers to entry, even if they were eased in some of the ways Dr Pirie would like, which make that very difficult. At the moment, with the under-supply of resources for education, the idea in most areas of having sufficient spare capacity to have a system like that seems to me to be fantasy. The question you asked, which is what happens to the principle of non-exclusion, who does not get chosen for these schools, I think does become central. We need to think about the specificity of different services. I think there is a positive value in social mixing; that is it is an externality, if you like, of the education system. Society as a whole benefits from people from different backgrounds going to local schools. I think society as a whole does have a right to want this, and it is right, in my view, that it tries to create cohesive communities, and schooling is very particular in that regard. The danger here is that you have abstract models—schools, health and social services—as if these were not specific. But they are very specific. I think schooling requires certain kinds of models and health requires other kinds of model and different kinds of social services are all different. My other response to this is that NATS is a very interesting example of the inability to fail. It is precisely a case where the state comes in, and again where therefore you do not have risk transfer. The shareholders of NATS are going to go the same way as Railtrack did—consistently to demand more public money. And the public has to say yes because it cannot have catastrophic failure. I do think we must distinguish between the question of tax-funded services versus privately-funded services, and different ways of providing that service within them. That is just such a fundamental distinction. We can then be clear what we are talking about. My own view is that tax funding, with small exceptions round the edges (and I think they are rather interesting exceptions which we should be exploring) is the basis for public service. I am then interested in how we get contestibility and choice within those services. I suppose my feeling about this is that the public sector is different from the private sector and we need to think about it in itself, in its specifics. Then we can see how we can make it better, rather than simply saying, because it is not very good in some areas, let us import models from elsewhere. We need to see how we can make public services better, as public services, not as private ones. I think there is lots of interesting work being done on how you get contestibility, how you get choice within public sector institutions. It does not seem to me that the answer is that you simply import the private sector, though it may be in certain cases. We need to think about this sector for itself, it is different.

  Kevin Brennan: Can I declare and interest at the outset, I have been member of the Fabian Society for the last 22 years, but no more actively than receiving their pamphlets.

  Chairman: I am a member of the Fabian Executive.

Kevin Brennan

  582. I am sure whether that is relevant but it is on the record. Can I start with Dr Pirie, you made some very interesting observations about the role of the market and choice and the consumer with regard to education of public service as an example, who is the consumer in that case?
  (Dr Pirie) The consumer is the combination of the parents and the child.

  583. It is not really the parent that is the consumer of education at all, that is the whole reason why the state, is it not the case, gets involved in a way that means that the service that is provided is in the interests of society because of the externalities these we just described and the interests of the pupil. A lot of the parents given the choice, some parents given the choice probably would not send their children to school at all.
  (Dr Pirie) A certain percentage would neglect their responsibilities, a very small percentage. The idea that you should then run the whole system for everyone on the assumption that is going to happen because is wrong. You deal the exceptions as exceptions.

  584. The point I am making is that your model applied, the model applied as rigidly as you have described to a public service like education actually the outcome of that would be that it serves those parents who will act as consumers, the aspirational parents you consider to be the consumers of education, who are not the consumers of education at all, but it does not serve a large swathe of children whose parents do not and will never act as consumers. That is why your system, surely, as an outcome of that would be that those children would be failed.
  (Dr Pirie) The vast majority of parents want the best for their children in education. I accept it is their responsibility as parents to get them. When you asked the question, "Who is the consumer?" I replied, "The parent and the child" for very good reason, this is usually taken in the family context in discussion and very few parents will choose a school for their child without discussing it with the child and very few will allow a child to choose a school without any parental input. In practice, overwhelmingly, for most families it is a family decision.

  585. In the sense of being the consumer and receiving a service which will presumably be of benefit to you and raise your human capital, or whatever it is that you are going to provide, surely the child is the consumer?
  (Dr Pirie) The child is the main beneficiary. Parents consume things on behalf of their children, the child is the main beneficiary.

  586. I think conceptually we might part at that point. Can I just pursue a little bit more on the market, I would like to come to Michael Jacobs and David Lipsey as well on this point. It has been said that the market is, if you like, a good servant but a poor master when it comes to providing public services, would you agree with that statement?
  (Dr Pirie) Could you elaborate?

  587. In the sense that there may be ways in which it is appropriate to bring some of the benefits of the market to the delivery of public services, its flexibility, the way in which it can allocate resources without them having to be directed from the top, to put it another way, would you agree, for example, with the shadow chancellor that the National Health Service is an established organisation.
  (Dr Pirie) Yes, I said so. I have written that.

  588. Would you care to elaborate on that?
  (Dr Pirie) Yes, it is run in a very similar way to the way that Soviet state industries were run under Stalin, that is the allocation is quoted as priorities and targets are sent down from the top with the funding. The service is expected to take orders and deliver the output that was required at the bottom, that is essentially what the Soviet style economic organisation is.

  589. Not specific to Joseph Stalin, just Soviet style. In terms of the National Health Service how could you introduce your ideas about using the market and consumer choice to the Health Service without undermining the principle in which the Health Service is based, that of equity?
  (Dr Pirie) I would say that the important principle of the Health Service is that everyone should receive health care no matter how poor they are or how sick they are and they should not have to pay for that. I do believe within that principle it is perfectly possible for the NHS to make more use of the private sector production of health care. The agreement we saw two days ago for the new hospital could be repeated 100 fold over the next three or four years.

  590. What is your view on the Wanless Report?
  (Dr Pirie) It rather seems to open a debate by closing options, that was my first reaction to it.

  591. Could I ask Michael Jacobs, you referred to the fact that there is a shortage of resources in the Health Service, is it your view that with the current system that we operate in the Health Service in this country that if we allocated the proportion of GDP to the National Health Service as is allocated to health care in France under their system that we would end up with a Health Service that was more effective, efficient and better at doing its job than in France?
  (Mr Jacobs) Not if we simply did that. If that was all that we did, if you simply applied more money, it would certainly be better than it is now, there is no question of that. But it would still have major problems. I do not find very many people in this debate who would argue against that. The argument for some kind of reform has generally been won. The question is what kinds. My own view is that the NHS is a very curious kind of "Stalinist" organisation, because it is now devolving budgets at the same time as being given centralised targets. This creates a rather curious ambivalence in the way that it is being run. Devolved budgets should mean, in my view, the devolution of service delivery—that is the point of decentralising budgets. I am in favour of that. But that means that you need to limit the number of centralised targets that come down. Otherwise the devolution of budgets is merely administrative, and has very little impact on innovation, choice at a local level. I would like to see administrative decentralisation of the service.

  592. How do you do that without losing the central principle of equity?
  (Mr Jacobs) It depends on the geographical boundary on which equity is based. The debate about the "post code lottery" seems to me to be fundamentally misconceived.[1] It means that in different areas you get different standards of service depending on decisions made in those areas. That is a fundamental democratic principle. The post code lottery operates between the United Kingdom and France. You get different service levels in France and the United Kingdom because you have different democratic structures and we designed those. In my view the post code lottery is legitimate if it is based on democratically accountable decision-making.

  593. Is it all right for a drug not to be available to somebody in Chepstow that is available for somebody in Gloucester?  (Mr Jacobs) In exactly the same way as it might be available in France and not in the United Kingdom.

  594. That is not the same.  (Mr Jacobs) It is the same principle, because it is about where you draw the democratic boundaries.

  595. In that case you could have a boundary between the United Kingdom and Malawi.  (Mr Jacobs) The principle is drawing a boundary between Chepstow and Gloucester. The boundary is a democratic one. We need to decide where are these decisions made and to whom is the Health Service accountable. Personally, I would like to see regionally elected Health Authorities that make those decisions.

  596. You mean a regional health service, not a national health service.  (Mr Jacobs) If the people of Chepstow want a certain kind of service they should elect the people who make the decision. If that is different from Gloucester I am willing to accept that.

  597. That is already the situation.


  598. All of the evidence is that people want there to be a equivalent service and standard right across the country. If you ask people the question, do you want the same level of health service and the same level of education service, the answer overwhelmingly is yes.  (Mr Jacobs) Then the trade-off they must accept is that you will have a centralised system that does not create innovation, entrepreneurialism, the sense of ownership at a local level, because that is what you will get. There is a trade-off here. I would prefer a trade-off which had greater choice and innovation, and so on, at a regional and local level which traded off uniformity of all standards. I would of course have minimum standards.[2]

Kevin Brennan

  599. Did you say regional or local level?  (Mr Jacobs) Personally, I would like to see regionally elected health authorities. Within this I would have, I think, degrees of local autonomy. That is the trade-off that needs to be made. I do not think we can say that we do not like these centralised directives from Whitehall, which is what many people in the health service are saying, and then say we want completely universal and national standards.

1   Note by witness: In so far as the "post code lottery" results from different areas of the NHS being less effective or efficient at providing the same service, then it is a problem that must be addressed. But in part it is not a "lottery" at all-it is the result of different priorities being chosen, deliberately, in different areas with different needs. Back

2   Note by witness: Minimum standards that applied on a national basis. Back

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