Examination of Witnesses (Questions 40
- 59)
THURSDAY 18 NOVEMBER 2004
LORD BLACKWELL,
MR PHIL
COLLINS, SIR
CHRISTOPHER GENT
AND MR
NICK HERBERT
Q40 Chairman: Just get a cheaper
mobile phone?
Sir Christopher Gent: Absolutely
right. Tell me about it.
Lord Blackwell: Chairman, can
I come in on this? It seems to me that if you reduce the arguments
that are being put forward to the extreme you get to the situation
that the Soviet Union tried for a long time, that is to say, the
most efficient thing is only to have one brand of car and one
brand of television or whatever because then you do not have all
the costs of producing all these different models and all that
excess capacity and all that stock sitting in shops. The trouble
is, it did not work because without the pressures of choice and
competition things get to be very inefficient. All we are saying
is yes, there are theoretically additional costs of building choice
into the market and people may not immediately get the choice
they want any more than they can necessarily book the most popular
restaurant, but over time what that market does is drive efficiency
and quality, and therefore if a restaurant is bad it closes and
a better one opens and you end up with good quality restaurants
around town. We want to have good quality schools around town
driven by exactly the same thing and any perceived additional
cost will be more than offset in the long run by the fact that
you end up with a much more effective and efficient system but,
more importantly, you get better schooling.
Q41 Chairman: I am not sure we are
persuaded that there is only the pure market over there and the
Soviet Union over here and nothing much in the middle. I think
it is the middle that we are most interested in exploring.
Mr Herbert: Can I agree with you
about that because I think there has been a tendency to polarise
this debate in exactly the way you describe. This is not about
a choice between a wholesale state monopoly, which we do not have
at the moment, and the complete withdrawal of the state and the
privatisation of these services. If one thinks about the continental
models of health care, for instance, these are what you might
broadly describe as public systems which have rather greater equity
than we are providing in health care in this country in the sense
that there is rapid access to and choice in health services. People
of poorer means do not get worse quality health care than better
off people as they do, for instance, in this country where
health inequalities are a serious problem, and yet these are systems
in which, for instance, in Germany 50% of the hospitals are not
actually owned or run by the state; in France it is 30%. We mentioned
schools in Scandinavia. You have what are essentially public systems
which are delivering services equitably but where there is not
a hang-up about whether the providers should be run and owned
by the state. It is possible to design systems in that way. They
are systems in which choice is a practical reality, so I do not
think we have to theorise about this or believe that it is some
kind of Hayekian nirvana on the one hand or communism on the other.
What we actually see, I think, is a much fairer system in operation
because they do not have some of the ideological hang-ups that
we have had in this country, I would argue, for too long.
Q42 Mr Prentice: I am interested
in limits to choice. Where do you draw the boundary and say to
customers, consumers, citizens, whatever the nomenclature, "You
cannot exercise choice here"? Someone mentioned earlier the
Netherlands, that the whole country is the catchment area. I do
not know how they deal with transport costs, for example, but
it is legitimate, is it not, for the state to say, "You can
exercise choice but only up to a limit. Otherwise it is going
to cost too much"?
Mr Collins: Of course, yes. You
do not want the state to subsidise outlandish choices. You have
put your finger on one of the obvious limitations to choice, which
is transport. Actually, you find that when you give people choice
they by and large do not want to choose to send their child to
a school in the next town. They tend to choose a school which
is quite close to them, so in most cases the problem does not
occur. Where it does, however, you need guidelines. In my view
you have to subsidise transport; otherwise the effective choice
is completely reduced for people who cannot afford to get from
A to B. The bottom 10% by income in this country travel half a
mile to school; the top 10% travel three and a half miles to school.
That is just because they have got cars and their choices are
much greater for that fact, so you have to subsidise transport
and you have to come to some arbitrary and clunky view about how
far you are going to subsidise people within the existing transport
infrastructure, how far you are going to allow them to travel.
There is no obvious principle on which that can be decided; it
will be different from area to area, but you have to come to some
decision on it.
Q43 Mr Prentice: Someone in the centre
will decide what the boundaries are?
Mr Collins: They may not be at
the centre. I am just saying that somebody has to decide. It is
a limitation on choice and that decision has to be arrived at
because otherwise it is not going to work. It is not an insurmountable
problem. There are another two limitations on choice linked to
that. First of all, geography, the fact that we organise our public
services according to rigid local boundaries, is a severe limitation
on choice, particularly for those who live in poor areas which
have always tended to have the poorest services. Secondly, a very
big limitation on choice is information to people and the expertise
required to use that information. The patient care advisers and
the London Choice pilots have been very good examples of trying
to fill in that gap, so this again is not an insurmountable problem
but people do need guidance through the process. The crucial thing
there is that the patient care advisers are independent from GPs.
They essentially are agents for people going through public services.
In that way you can get over what would otherwise be very severe
information problems.
Q44 Mr Prentice: Lord Blackwell,
you told us earlier about the form-filling, that that is a great
burden on teachers. In your regime how would audit and inspection
information work because in order for parents to exercise choice
they have to know what is happening in a school? That implies
form-filling by someone, does it not?
Lord Blackwell: Not the current
kind of form-filling. It is perfectly reasonable that a school
should have an audit in the same way as any other organisation
does to tell the outside world some objective view of what is
going on. Whether Ofsted or some other organisation does that,
it seems to me perfectly reasonable that parents would want some
objective view on what they are buying. That is not the bureaucracy
that most head teachers now are complaining about. What they are
complaining about is filling in plans, revisions of plans, requests
for money that have to go into umpteen pages of detail, reporting
on a whole range of different targets which have all grown up
with the best of intentions by a central administration that says,
"We have got problems here. Let us have an initiative to
deal with it because we are responsible". This is the point
I made initially. In any centrally run organisation you build
up layer after layer of attempts by the centre to control what
is going on. What I am suggesting is that if you cut through all
of that, have an accountable local organisation, accountable to
the parents because it is the parents who can exercise choice,
yes, you will want some external inspection regime and yes, if
it is being funded from the state (which we are all agreeing,
that the core part of education and health should be funded from
the state), there has to be somebody in the middle who is setting
the boundaries around what that funding can be used for and therefore
what are the limits to choice, but you can cut out an awful lot
of the middle levels of administration and bureaucracy which at
the moment are only there to look over shoulders and impose the
kind of performance standards that parents are much better equipped
to do.
Q45 Mr Prentice: To what extent does
the school owe a responsibility to the wider community? We heard
on the Today programme this morning Charles Clarke tell
us that all schools would have to take their fair share of unruly
pupils, I think it is about four per school. Are you relaxed with
that?
Lord Blackwell: That is a policy
issue which cuts across whichever kind of system we are talking
about. You can argue the pros and cons of the current system or
that system. I can see reasons why head teachers might wish to
say, "There are pupils here who are genuinely going to be
disruptive to the rest of the pupils in this school and if they
are going to disrupt delivery of the kind of quality education
I want, then those pupils have to be dealt with in a different
way", and I think there is a good argument for having special
facilities to deal with those pupils rather than trying to pass
the problem around. That is exactly the same under the current
system as it would be under the system we propose.
Q46 Mr Prentice: To what extent should
choice be constrained by a government's wider goals? Let me give
you a specific example. A group of Muslim parents want to set
up a single sex Muslim school for girls and that clashes
with the government's community cohesion agenda. Should those
Muslim parents be encouraged to set up their single sex school?
Mr Collins: No.
Lord Blackwell: I think it is
perfectly reasonable for the government, in using taxpayers' money
to fund education, to put limits around what they think that money
should be used for.
Q47 Mr Prentice: But that would be
a big deal for the Muslim parents because they would say, "Hang
on a minute. We have Church of England schools, we have Catholic
schools, we have Jewish schools—"
Mr Collins: You would have to
get rid of all those too.
Q48 Mr Prentice: "— and
all of a sudden, because of some other reason, you tell us that
we cannot set up our single sex school".
Lord Blackwell: I have not yet
addressed your specific question. I was just agreeing that the
government does have the right to decide how public funds are
going to be used. Whether or not it should be used for a particular
kind of religious group or not is a decision that has to be made
by society and by Parliament looking at that particular group.
I would probably tend to err on the liberal side of that question
in terms of saying that there should be as much diversity as possible
so long as they subscribe to a core set of standards and curricula
which would include ensuring that they are part of a cohesive
national culture.
Mr Collins: I have said before
that it is a crucial question about who chooses. If you allow
schools to set their own selection criteria, whether they are
intellectual or religious, then you are violating that principle,
so I will be quite clear about it: no, they would not be allowed
to and that would imply the abolition of all the others too. Whether
or not I would say that if I were an elected politician faced
with doing it is a totally different question. If you are asking
me what would consort with the evidence and what would be the
best outcome, it would be that.
Q49 Chairman: On the Lord Blackwell
model, just so that we are clear, is it schools that are going
to be doing the choosing or is it going to be the people wanting
to use them who are going to do the choosing?
Lord Blackwell: It is the people
wanting to use them who set the demand and it is the head teacher
and his governors, in looking at what is demanded of them, who
decide how they are going to respond to them. A school ultimately
will decide its proposition to the market. If it had a proposition
that attracted lots of pupils and made lots of parents happy then
that would probably be pretty satisfactory. If it had a proposition
which did not attract lots of pupils and made parents unhappy
then it would change.
Q50 Chairman: So if its proposition
to the market, as you put it, is, "We only want to deal with
bright children", or, "We only want to deal with well-behaved
children", that would be perfectly fine?
Lord Blackwell: I think there
is scope for schools that want to offer that but clearly there
would be a lot of children who would not fit that category and
the school would have to make sure that it could attract enough
pupils to fill its classrooms.
Sir Christopher Gent: This is
not an unusual choice. I personally fundamentally disagree with
the idea of shutting down schools which are religiously based,
because if a group of parents come together and say that they
wish to have a school which suits their denomination but within
the overall exam framework and structure that we have I do not
see that it is right for us to say, "You shall not".
The political difficulties of unwinding Catholic and Jewish and
other schools are immense but that is beside the point. Diversity
is important and should be respected.
Mr Collins: Can I just clarify
why it is important to be against selection in the context of
choice? It is because it undermines choice. The purpose of choice
is in order to make schools get better. The way it makes schools
get better is by exerting a pressure on them: the pressure that
parents might go somewhere else. If you allow schools to select
pupils who are easy to teach you undermine that pressure, so the
very case starts to unravel if you allow that. The paradox of
this is that a very traditional political argument opens up in
this tiny space that only I seem to occupy, which is on the anti-selection
side of it but pro-choice.
Mr Herbert: There are some Scandinavian
systems in which selection is permitted but they are sufficiently
diverse that it is not, if you like, the kind of political issue
that we have here. I have one thing to say on information. At
the moment we have a system where information is provided largely
by the state but is of no use to patients or parents who can do
very little about it. You may be told that a hospital is under-performing
in some way, and these are imperfect provisions of information
anyway, but there is very little you can do because you have few
choices in the system. The fact that information is provided to
you as a parent in Scandinavia or as a patient in France or Germany
matters because you can choose your insurer and decide which service
you would prefer. There would, of course, then be the potential
for far greater sources of information from the private sector
which we simply do not have here at the moment. We have guides
to a range of other activities in our lives but relatively few
in relation to health care and education because we have a constrained
system in which the provision of that information is unfortunately
of little use to the patient or the parent.
Chairman: What we are testing is whether
there is going to be more real choice, particularly for those
people who do not get much choice at the moment. I think that
is the test that we are trying to apply to the system. Gordon,
are you done?
Mr Prentice: Yes.
Chairman: David?
Q51 Mr Heyes: I confess my attachment
to public sector provision. I came into politics through the trade
union route. I suppose I would be amenable to the criticism that
people coming from your perspective would make, which is that
the provider interest was my bias, I openly confess that. I just
wonder to what extent you would confess your bias. Clearly Sir
Christopher's position as a leading light of the market is very
clear. Who funds your organisations?
Lord Blackwell: The views I have
expressed are my personal views, they are not an organisational
view.
Q52 Mr Heyes: Your interesting booklet
that we have read says that you have a range of business interests.
Could any of those be seen by somebody like me, who wanted to
be critical, as giving you a bias towards a particular business
interest which would drive you to want to open up the market to
create more market opportunities?
Lord Blackwell: I think it is
more the other way round in that we attract support, as I am sure
other organisations do here, by people who agree with the philosophy
we have been putting forward. The bias I have is towards consumers
as opposed to producers. My bias is towards the pupils and the
patients, I want them to have the best schools and the best hospitals
and I think we are constraining the delivery of that by the way
the current system is structured. I am very happy to declare my
bias but it is a bias towards the end user.
Q53 Mr Heyes: So none of the organisations
who are active in trying to get into the form of public services
that are now privatised, well known names, is funding your type
of organisation?
Lord Blackwell: Not that I am
aware of. It is not something I look at, frankly.
Sir Christopher Gent: Reform certainly
has private donations rather than company donations at the present
time, although all donations are welcome. The fact of the matter
is that we are driven by customers in the first place, but unless
our people feel really satisfied with what they are doing the
customers go somewhere else. There is no doubt, there are appalling
levels of morale within our public services. If my customers have
not got above a 95% satisfaction level with the service, if the
employees working in the company do not feel levels of above 80%
satisfaction with both their job and the people they work with,
you will not gain the kind of performance that produces a satisfactory
service for your customers. What we have at the present moment,
and this is something which is brought home to us time and time
again by people we meet in the health service and the education
service, is people who have poor morale, who feel unappreciated,
who feel under pressure and who know that they are not doing the
job they would like to do for their clients, be they patients
or pupils. You say you come from a producer background and I can
understand where you are coming from, but the producers are not
happy any more than the consumers are and that is the thing that
you should be thinking about. It is very motivating for the people
providing the service that they have a direct relationship with
their customer and they will not be answerable to tiers of
organisations and bureaucracy, which is the current case. You
might just reflect on that coming from where you come from.
Q54 Chairman: Do you think a refrain
which says that public services are appalling and they cannot
get better, which is what your literature says, is designed to
improve morale?
Sir Christopher Gent: The fact
of the matter is that they are working in a structurally inefficient
and ineffective way. People inside the service know this, consumers
know it and yet they have been a prisoner of this situation for
years. Is it any wonder that people get depressed in those circumstances?
There is no break out that is happening, there is no fresh supply
coming and there is no opportunity for the consumer to exercise
choice for the vast majority, and I am not talking about the few
that can opt out.
Mr Collins: One aspect of the
comparison between public and private sectors is completely misconceived.
We are asking public services to do something which is intrinsically
much harder than those private sector businesses are doing, which
is to take people who are intractably difficult to reach, very
hard to educate, with all sorts of problems and do something good
for them. If that was a business proposition you would go and
work somewhere else. We need to remember that when we make these
easy comparisons between the two. Let us think of the most difficult
business problem ever and see how people cope with that one.
Q55 Chairman: It is harder than selling
mobile phones, is it not?
Mr Collins: I think it is.
Mr Herbert: Fifty per cent of
the hospitals in Germany are not owned by the state. Private companies
are running the hospitals in Germany and in France. I think this
artificial distinction between there is either a public sector
or there is a private sector—
Mr Collins: I did not mean to
imply that because in answer to David's question I was completely
agnostic on who does it. I suppose I have got all sorts of biases
which are incoherent. I run a place which came out of the SDP
which makes us pretty friendless and we have been funded on occasion
by companies involved in this and we have also been funded by
trade unions and we are also funded by charitable sources. We
try and take money from all of those people, but I do not think
the bias is evident. The one crucial bias is agnosticism about
who provides. I just do not think it matters.
Chairman: I am not sure it makes you
friendless. It makes you well connected in Downing Street.
Q56 Annette Brooke: It does seem
to me, particularly with the schools situation, that we are looking
at so many aspects of market failure that you are trying to overcome
and you have mentioned the transport costs and I am not sure that
one can ever overcome these. I would like to give you another
real world example. We spoke about what happens if the school
expands and it changes its character. Let us suppose I am the
parent. I have chosen a small school for my children, I am there,
but there are a lot more parents outside choosing this school
and there is a conflict. I accept in the business world the head
teacher might take that on, but the reality is that a group of
parents inside the school—in this particular instance it
was not me as the parent, I was the poor politician in the thick
of it—persuaded the head teacher that the school should
not be expanded. How does the market model work in those circumstances?
Lord Blackwell: The only solution
to that is not for that school to expand. As Nick was saying,
we under-estimate, because it has not been our experience here,
the scope for other people to come in and provide alternatives
if there is an opportunity for funding to be provided for those.
People do not set up new schools to take state pupils at the moment
because they cannot get paid for it. It may be perfectly reasonable
for that school to say it would change its character if it got
larger, but if there is a group of parents who want that kind
of school then why should somebody else not provide that sort
of school as well?
Mr Collins: It does happen elsewhere.
It does seem odd to us that that is a good answer. One of the
most remarkable things about what happened in some of the states
in America was precisely the flourishing of new providers. We
have probably the most regulated school entry market in the developed
world. If you look at Scandinavian countries, it is much easier
to set up a school there than it is here and it does work. The
answer would be that there would have to be another small school.
Annette Brooke: I just cannot see it.
Q57 Chairman: We have had a memorandum
from the Audit Commission on all of this which says, "There
is no `big bang' solution to increasing choice; maximising choice
should be an integral part of a culture of continual improvement."
You are "big bang" people, are you not? You are not
interested in continual improvement. You just think there has
got to be a great big bang that blows the system wide open.
Sir Christopher Gent: Objective
assessments of the so-called "continual improvement"
would not give a very good judgment on that.
Q58 Chairman: You do not point to
any improvements that are going on in your literature, you simply
point to the infirmities of the system and the need for this "big
bang", which is contrary to what the Audit Commission tells
us is the sensible approach.
Mr Herbert: It does sound rather
like Sir Humphrey might have minuted it to a minister prior to
the liberalisation of telecoms. "There is no `big bang' solution.
We are engaging in a constant process of improvement."
Q59 Chairman: So the Audit Commission
people are the bad guys as well?
Mr Herbert: I think they are wrong
about it. We do not have to rely on the ideology here, it is worth
looking at the experience of systems overseas. I appreciate that
you said, for instance, you could not see that new schools would
come in, but we can see evidence of that having happened in the
United States of America and in Sweden and the evidence is rather
compelling. If you talk to the parents and the teachers in those
establishments, one of the things that is very clear is that,
as Sir Christopher was saying, often these stories are quite moving
ones about the way in which aspirations have been transformed
for pupils and so on, but their morale is very high and they feel
an intense sense of satisfaction for the service which they are
able to provide to the community. That evidence is all available
on our website and on others. One of the things that I would very
much like to do is to make sure that it is available to the Audit
Commission.
Sir Christopher Gent: By the way,
we do support initiatives, such as the tuition fees, such as the
foundation hospitals, that takes the overall policy direction
in a way which we think is going to be better for the service
and better for consumers. By the time those measures come through
the legislative process they may look rather different from how
they started out and as a result of that we might express disappointment
about what happened to initiatives which we think are well thought
through and effective in the first place. Our fundamental point
is that being both the producer and the payer is going to lead
to inefficiencies and we see it time and time again.
| 
