House of Commons - Public Administration

Select Committee on Public Administration Written Evidence

APPENDIX 1

ANSWERS TO THE COMMITTEE'S SPECIFIC QUESTIONS

DEFINING WHAT CHOICE MEANS IN THE PUBLIC SECTOR

1. How is choice in public services to be defined?

Choice is a complex concept. A practical working definition of choice is:

The delegation to service users, of decision-making powers about where, when, by whom and how, public services are provided.

The definition of service users can include: clients; customers; carers; patients; residents; pupils; students; parents. It includes individuals, groups exercising collective choice (such as parents of pupils at one school, residents in one street or members of a particular care group), and society at large, which exercises community choice on a wider scale at local and national levels through the democratic process.

"Public Services" are not clearly defined. The public still has a tendency to consider railways to be a public service even though privately owned, and many publicly-funded services are provided by private businesses or non-for profit organisations.

2. Will the nature of choice vary depending on the type of provision or service?

Yes, inevitably. Some services can only be provided in one geographic locality (street sweeping) where as others can be provided elsewhere (elective surgery). Many services lend themselves to a variety of choice about the precise nature of services to be provided (maternity, social care).

3. Is "choice" simply a euphemism for competition and market mechanisms?

No, competition, like choice, is one of the elements that make markets work effectively.

The concept of consumer choice comes from the private sector. Generally, in the private sector, individuals exercise choice through decisions on whether or not to spend their own money. If products and services are not seen as competitive, they are unlikely to succeed, and thus competition in the private sector drives improved quality and value for money. Choice acts as a powerful spur for quality and value for money.

It is possible to transfer some aspects of choice as it is understood in the private sector, to the public sector. However, the nature of the public sector makes it impossible to transfer all elements of private sector choice. The key issue for government is identifying how best to develop choice as a force for improving public services.

The choice exercised by a few citizens can create a more general pressure to improve service delivery, although only in some aspects. [45]

THE CONCEPT OF CUSTOMERS OF PUBLIC SERVICES

4. Is it possible to have customers of public services as well as active citizens and democratic accountability or are they mutually exclusive?

The concepts are not mutually exclusive. Active citizens will be a subset of "customers" of public services. Democratic accountability is the mechanism by which citizens can hold those responsible for the nature, scope and quality of public services to account.

5. Is it necessary to devise a more precise and generally acceptable definition of who the user or customer for each service is? For example is it the pupil who is the user of the school system when it is the parent who exercises the choice?

There are multiple users (or "customers") for many public services. Pupils and parents are customers for education, but so is society at large which needs a skilled workforce.

Public services need to understand the needs of all the customers for their services and balance their interests appropriately.

6. Is it possible to identify a customer for the entire range of government functions or is it limited to public facing activities as envisaged, for example, in the Next Steps approach of the late 1980s?

No, it is difficult to apply the concept of the "customer" to some government functions. For example, who is the customer for defence? What choices do they have? Voting may change governments, without changing defence priorities.

See also answer to Q5 above.

MECHANISMS FOR EXPRESSING CHOICE

7. Are targets and league tables, customer surveys and complaints systems sufficient for ensuring adequate responsiveness to consumer preferences?

No—other mechanisms are also required.

Targets and league tables perform different functions from those of customer surveys and complaints systems. They all have a part to play in improving public services. Currently, however, these elements do not operate as one integrated system for ensuring quality and responsiveness in public services.

The published products generally have little relevance or applicability to individual consumers, except where it is possible to translate them into timely and relevant information that will help the consumer in making choices.

Most league tables are produced at a high level of aggregation. Aggregated scores, such as the NHS star ratings, have little relevance for individual users. [46]Education scores are highly controversial, but they do have some credibility with the general public and relevance for parents.

Provided they are well-designed, customer surveys and other consultations can be important ways of gathering citizen and customer views. Currently, few public sector organisations make good use of such information to help them improve their services, or to increase choice.

Targets can be used to reflect collective choices (arguably, the waiting times target is a collective choice for the NHS. Also, it would help if the targets and league tables reinforced customer responsiveness: A & E is not really a "choice" service, but the 4 hour wait target could be better developed as a customer satisfaction survey and reflected in the targets and league tables. Thus, how one responded to customer preferences where choice wasn't really an option, would become important.

Complaints are a vital source of information, but few public sector organisations use them well. It will be interesting to see if including an intermediate complaints function in the new Healthcare Commission helps encourage better use of this source of intelligence in the NHS.

There is a danger in using the volume of complaints as a measure of performance, rather than as a source of information about performance. The aim should be to encourage feedback, rather than to stifle it.

8. Is contestability a further requirement to make choice fully responsive? If so, to what degree?

Where new suppliers are likely to enter a market, the threat of potential entry constrains the existing suppliers and prevents them from raising prices—in other words the market is "contestable". In theory, in contestable markets, existing suppliers charge low prices, even if they have very high market shares.

Attempts to introduce competition to the public sector have sometimes failed because of the absence of viable alternatives to existing provision (as experienced in local government during Compulsory Competitive Tendering). This suggests that in order to promote a competitive environment and secure the cost and choice benefits afforded by competition, a necessary first step would be to promote contestability; even where, for the time being, other constraints (eg statute) prevent full competition from operating; ie we must create the conditions for competition. But this then raises questions about the amount of surplus capacity that the market can bear. [47]

9. Can individual choice, collective choice and choice on behalf of the citizen (by Government or Local Authorities for example) operate successfully alongside each other?

Yes, but it is important to be clear who exercises choice over what.

In the private sector, individual choice tends to be restricted mostly by the ability of suppliers to meet consumers' wishes and by consumers' ability to pay for them. Even so, society exercises some community choices to enable the market economy to operate. These community choices are enshrined through a variety of legal and regulatory mechanisms such as the activities of the Financial Services Authority; rules about pollution; and legal restrictions on the availability of alcohol, in order to minimise the anti-social effects and the costs of alcoholism.

By their nature, public services involve more significant community choices: about entitlements; obligations; taxes; charges; forms of provision; and value for money. Community choices therefore constrain individual choice in the wider public interest. There is always some degree of trade off between the extent of individual and of collective choice. It may be desirable to constrain individual choice in the interests of economies of scale or to maximise overall value for money, as seen in the guidance issued by the National Institute for Clinical Excellence. Our report on Primary Care Prescribing[48] highlighted the costs of prescribing drugs of limited clinical value or of over-prescription, often influenced by patient pressure.

We need a more sophisticated understanding of the actors exercising choice. At the individual level, people exercise choice both on their own behalf and on behalf of others for whom they have responsibility or duties of care, for example parents on behalf of children. At the collective level there are, for example:

— Communities of special interest, eg RNID campaign for digital hearing aids.

— Communities of diverse but related interests, eg local businesses in business improvement districts opting and paying for more frequent refuse collection.

— Communities based around geography, eg residents in a particular street campaigning for the introduction (or removal) of traffic calming measures.

10. Are all these forms of choice equally effective in ensuring (a) efficiency and responsiveness and (b) equity and fairness?

No, they have different roles. Within a framework created collectively, individual choice can bring a range of benefits:

A pressure for better quality and individually tailored services, leading to improved outcomes and satisfaction;

A better balance between rights and responsibilities;

Increased engagement of citizens with their public services and a consequent increase of active citizenship;

Opportunities to develop more varied forms of service, for example—giving greater access to services 24/7, through e-government initiatives.

Individual choices may work against efficiency or equity; and therefore society may need to constrain individual choice through community choice in a ballot box. Because collective choices constrain the nature and extent of individual choices, as well as determine how public services will be paid for, people need to have the opportunity to influence them. Citizens exercise voice through voting at local and national elections, and in a range of other ways, including though consultation, [49]lobbying and a variety of forms of "Active Citizenship". There is some evidence that the more people are actively involved in the process of procuring or providing services, the more they understand the difficulties, choices and trade-offs involved. Users of services have other ways to exercise voice, including direct discussions with providers and through complaints.

CHOICE AND EQUITY

11. Is there a generally understood definition of what equity means in respect of public services?

No; the term means different things to different people. There is confusion around the use of the terms "equity", "equality" and "equality of opportunity".[50] Most public sector workers would understand what "equality" means in terms of fair access to employment; some understand the implications for service delivery.

Does equity currently exist in public service provision? If not who have been the main beneficiaries and why?

No, equity does not truly exist in public service provision at present. "Equity" is not absolute; it can only ever exist in part. [51]At present, there is a "postcode lottery" for some services, where some providers in one geographical area operate differently from those in other areas, perhaps due to different resources. A crude, profit-driven market will tend to militate against equity, for example in the provision of affordable and reliable public transport in rural areas. Also, those people who are better resourced (in terms of their education, income, ability to choose etc), are often able to obtain better services and outcomes. The key issue here is how best to reduce the inequalities.

12. Must there necessarily be losers in a system involving choice and contestability?

No, there should be no "losers", always provided that the system contains appropriate safeguards. There will, however, be greater variety of services provided if they are better tailored to the needs of individuals. This will require a tolerance of variation. Some variations will be chosen by communities (local priorities) and some by individual preferences (to tailor services to their needs).

See paragraphs 33-38 above.

A crude, profit-driven market will tend to militate against equity, for example in the provision of affordable and reliable public transport in rural areas.

The main issue for providers is what happens to poor performers, who need support to improve. The Audit Commission has been keen to share the learning from its CPA work as quickly as possible. [52]

13. How can a choice-based provision of public services avoid providers "cream-skimming" the less difficult or resource intensive users of the service?

There is a need for minimum standards and entitlements and mechanisms to ensure they are provided. There is also a need to provide some form of help for those who are less able to exercise choice by themselves.

INFORMATION FOR USERS

14. To what degree is the ability to evaluate different providers necessary for consumer choice?

The ability to do this is critical. But that ability is absolutely dependant upon the provision of robust, timely and accessible information. It should be local; timely appropriate to the options available; and sufficiently detailed. Studies show that this is rarely the case in public services.

This also begs the question of what is meant by "different providers"?—Different hospitals? Or different doctors in one hospital? This can make a vital difference to individual patients, but enabling them to make informed choices where service delivery touches on professional competence, is very difficult. It may be very hard for public service users to make sensible choices, especially if there is uncertainty over the consequences of different choices. [53]

It should be noted that the possibility of having one's preferences met within a service may be just as important to the user as a choice of service provider, for example, the choice of a general or spinal anaesthetic for certain medical procedures and the choices available in childbirth.

15. How should those users less able to make informed choices because of their income or situation be empowered to do so? What form should the provision of information take?

There may be institutional and professional barriers to the exercise of choice by some user groups, such as people with learning disabilities, older people and children with disabilities. [54]

There is a need to empower such people. At its most basic level this could be providing assistance by way of translation into a minority ethnic language, but other situations may require providing the individual with advice on different options or even advocacy in decision making. Their situation is not an adequate reason for failing to provide as much choice as possible; rather it is a pressing reason to provide help, so that they can exercise their right to choose. Question 14 outlines the need for good information—this will support not only the individual but also their advisors and advocates.

16. How is satisfaction with and the performance of services to be measured, by whom and how is that information to be made available?

Measuring customer satisfaction should be a function of service managers. At their best, service providers actively seek feedback from customers and other stakeholders and use this information to inform decision making and thereby drive continuous improvement. Regulators have an important role to play in validating this information and providing reassurance to a variety of stakeholders about its reliability.

Comparing public services adds value and can partly compensate for the lack of competition in most public services. Information about user satisfaction should be comparable, to show users the performance of various service providers.

VOICE AND PUBLIC SERVICES

17. What mechanisms (complaints, feedback) exist or should be created for exerting influence on providers? Are they available to all?

A number of mechanisms exist and are used to a greater or lesser degree, depending upon the type of service: [55]

Consultation;

Scrutiny;

Performance management from top management;

Peer pressure;

Pressure groups of service users;

Democracy.

The Audit Commission report Listen Up! contains a wealth of advice for public sector organisations on effective consultation. The key issue is whether provider organisations respond to the news they receive.

18. Does the complaint system operate effectively and equitably in the public sector? If not what should be done to improve this?

No because complaints systems operate in favour of the most articulate and resourceful. In health services, the introduction of Patient Advice and Liaison Services (PALs) is helping to resolve problems for some of the people who would not naturally be inclined to pursue a complaint to achieve a resolution.

19. Is decentralised decision making and "direct user engagement" an expression of "new localism" or will it lead back to a Victorian-style future of education, health or sanitation boards of the local great and good?

There is a need to achieve a judicious balance between loose/tight, between the national framework and local flexibility. Local services for local people should mean a greater variety of services provided that are better tailored to the needs of individuals.

It is important to recognise the democratic role of local authorities here. In addition to national priorities, local Councils will have included local and regional priorities in their performance plans, following consultation with residents on local spending priorities and charges for services, in advance of setting the annual council tax. [56]

The new Foundation Trusts will provide an interesting experiment with a different form of accountability and engagement with the local population. It is too early to judge the level of interest in this opportunity for people to stand as representatives for the trust boards. However, there is a risk that in creating a multiplicity of arrangements, there is a loss of co-ordination and costs may rise as economies of scale are lost.

DEVOLUTION AND DIVERSITY

20. At what levels can choice and voice operate within public service provision? Do they reinforce greater localism and devolution?

Choice and voice can operate at local, regional and national levels within public sector provision; they can reinforce greater localism and devolution.

21. Is diversity a prerequisite for choice? If so does diversity refer to good and bad performers or to the requirement for some unique selling point from the provider such as faith or specialist schools?

Diversity of requirements means that there is a need for diversity in provision, before choice can be available.

Choice is simply one mechanism for helping to ensure that there is the right provision to meet citizens' diverse needs.

22. Does choice risk reinforcing the so-called "postcode lottery"?

No. The term "postcode lottery" refers to current differences in basic entitlements and the quality of provision, across the UK. Some degree of local variation is inevitable—and, if intentional, it can be desirable (for example to reflect particular local circumstances). Community and individual choice can provide legitimate reasons for local variations.

There is a problem where variability is unintended or where it undermines equity, for example differences in the availability of particular prescription drugs or treatments, between different health regions of England.

CHOICE AND THE PUBLIC GOOD

23. Can the consumer be "sovereign" in the public services? If not, why not?

No, because of availability of services, budgetary constraints, the need to consider the interests of the wider community, etc. However, it is possible to create cultures and systems which enable users to be "queens" rather the "pawns" in the provision of public services. [57]This could be done by empowering users with information on service quality and the availability of options, training staff to provide a supportive service for users, exercising choice and introducing financial incentives for services, which ensure that money follows users.

The consumer could and should have a great deal more choice than at present, in terms of what they have, when they have it, and added services. For example, access to routine GP appointments outside of normal working hours and at weekends, as well as for emergencies; more options on waste collections for recycling; levels of community policing.

24. Is there a risk that a consumerist approach to public services will undermine the public service ethos?

There is no reason why it should; the public service ethos should motivate staff to provide high quality services. Giving people as much choice as possible is one element of quality service.

25. Does the creation of individual consumers for public services put social cohesion and the idea of the public good at risk? If so what alternatives are there to the consumer choice agenda for public service reform?

This should not be an issue if the choice is exercised within a clear framework which ensures equity and supports social cohesion. For example, people may be obliged to use public services in the wider interests of society (offenders, mental health problems; people with infectious diseases). Whilst they have to lose some freedoms, they remain citizens of society with rights and therefore some choices. It is important to enable them to exercise those choices.

CAPACITY IN THE PUBLIC SERVICES

26. Will the extension of choice create unmanageable demands on the capacity of public services to provide? If so is some degree of excess capacity necessary for choice to operate effectively?

Public services will need some excess capacity in order for some (but not all) choices to be meaningful. There is a need to balance choice and efficiency. [58]Politicians however, at both local and national level will need to take a view about the quantum of surplus capacity that can be sustained and if it is affordable, recognising that without at least some surplus, some choices may be denied. Choice can also help to manage or divert demand, for example—GPs exercise a gatekeeper role in the health service, for example in their prescribing decisions. [59]In some cases exercising choice can reduce the drain on the public purse. For example, people whose property has been stolen may prefer to report it by telephone than have to wait at home for one or more police officers to visit. [60]

27. What are the cost implications of this? Should it lead to an extension of Private Finance Initiatives?

The extension of choice does not necessarily imply the need for substantial new capital investment. It is often the availability of choice in relatively simple matters that influences user perception of service delivery and the level of satisfaction with public services.

Giving people more choice will not always be costly. It would cost virtually nothing to allow people to choose different GPs when it suited them, for example to attend near the workplace in some circumstances and near home in others, rather than be confined to one practice; provided that the information and financial infrastructure was capable of supporting such choices. However, it is a major challenge to create the conditions in which citizens can exercise more choice.

In some instances, there is a risk of increased costs caused by the loss of economies of scale[61] or the diversion of resources to supporting unused surplus capacity.

PFI is a mechanism for funding public services; it does not have a specific impact on choice.

28. Are user charges an inevitable outcome of greater choice? Might user charges help widen choice?

Charges play a part in expanding choice and rationing demand. It may be useful to extend choice beyond a basic minimum. In some instances people's willingness to pay can be an indicator of the real value that they place on a particular choice. [62]

The growth of private education and healthcare are examples of individuals with money exercising choices at local level. Other examples are: the increasing availability of over the counter medicines; car parking; music lessons in schools; arrangements between local authorities and their residents, to share the cost of additional street cleaning at the residents' request and the introduction of pay-TV in hospitals. The latter is an interesting case where providing more individual choice can have negative side-effects. Patients have complained that they cannot turn off the continual advertising on pay-TV screens even if they choose not to use the facilities; TV in wards can be intrusive and distressing for seriously ill patients and their relatives.

There is scope to use changes more creatively. In private hospitals, patients pay for better hotel services, such as meals and alcohol (if medically acceptable). Since paying for car parking and TV is common in the NHS, why not extend the choice and charge for them?

29. Would enforcing equity in a co-funded, choice-driven system imply a proliferation of regulators on the model of the Office of Fair Access for the universities?

Equity in service delivery is as much a matter of winning hearts and minds as it is of legislation and service standards. Therefore, it may prove difficult to attempt to enforce equity through regulation. It is too early to say whether the OfFA will prove effective.

The Audit Commission is committed to strategic regulation that is proportionate to risk. Government may find this model of regulation useful here.

RAISING STANDARDS

30. What is the nature of choice within a framework of uniform standards?

There need to be uniform minimum standards for service delivery which ensure an acceptable level of service and safety.

Clearly, these standards cannot cover everything comprehensively; they cannot take account of individual circumstances and preferences, for example, whether someone is willing and able to travel to a hospital outside their own region, in order to reduce the waiting time for an operation.

Uniform standards do not have to preclude choice—they merely specify the choices that can be offered to users.

31. How can an individual's choice enhance national standards and accountability?

People define what they value by the way that they vote. However, "public value" also includes intangibles such as perceptions of fairness, choices that will affect for future generations, etc. These voting choices are then translated into expectations of basic entitlement; and government sometimes further translates these into national minimum standards against which public sector providers may be held to account.

EVIDENCE BASE

32. Is there already sufficient evidence, research and experience to judge the effect of greater choice on equity in public services?

Research evidence is available, including studies by Perri 6; [63]the Local Government Association; [64]The New Local Government Network; [65]and The European Foundation for the Improvement of Living and Working Conditions. [66]

There has been relatively little work looking at the issue of choice across services, or exploring the implications for collective decision-making processes. Most policy analysis and evaluation has been service specific, for example—Parental choice in schools; Patient choice in the NHS; Choice based lettings in social housing; and Choice in social care.

There is research in progress, which may have a bearing on equity, including an Audit Commission study on choice; [67]the London Patient Choice Project; [68]The Open University study; [69]and the Social Market Foundation study. [70]

33. Does the functioning so far of parental and patient choice support the argument that it promotes equity?

It is possible to find champions for each side of the argument. Several academics,[71] ,[72] [73]and many of the leading think tanks in the policy community have published material that deals with the arguments for and against choice. For example the Fabian Society; [74]The Kings' Fund; [75][76] and the Social Market Foundation. [77]

34. Are there lessons that can be learned from other countries and if so are they readily applicable here?

Over the last 25 years there has been a strong focus on public sector reform in Australia, with improvements in service delivery being an important part of this reform. Drivers of improved service delivery include a better informed, better educated and more demanding public, and improvements in technology, which have increased the capacity to provide more immediate and responsive services. Competitive pressures have also demanded increased productivity, and facilitated higher quality and effectiveness. The increased focus on improving service delivery is reflected in the approaches of a number of agencies.

One example is the Job Network, a system of non-government organisations, both profit and non-profit, which have won tenders to provide employment-related services to unemployed people on behalf of DEWR. The Job Network seeks to tailor services more to individual needs, and provides an element of choice for individuals over their service provider. Evaluations of the Network have concluded that the new system is substantially more cost-effective than the former employment services arrangements, and that the quality of service has improved.

Another example is the Australian User Choice policy. This is a national policy governing the flow of public funds to training providers that works in conjunction with the New Apprenticeships System. The objective of the User Choice policy is to make the vocational education and training system more responsive to the needs of industry and employers and therefore of more benefit to people receiving training. In principle, the flow of public funds to individual training organisations reflects the client's choice of provider. The User Choice policy was endorsed by the Ministers for vocational education and training in May 1997 and amended in November 2000.

Under the User Choice policy, the "client" is the employer and employee identified in the training contract, acting jointly. This definition reinforces the ideal that vocational education should benefit both the people being trained and the companies that employ them. Each state and territory is responsible for implementing User Choice in its jurisdiction. The User Choice policy sets out guidelines that the states and territories follow.