Joint Memorandum from Minister of State
(Health) at the Department of Health; Minister of State for Local
and Regional Government; and Minister of State for School Standards
(CVP 24)
THE CASE FOR USER CHOICE IN PUBLIC SERVICES
Contents
1. INTRODUCTION
2. THE MEANING OF CHOICE
3.1 JUSTIFICATIONS FOR INCREASING USER CHOICE
3.2 What Users Want
3.3 Incentives for Quality, Responsiveness and
Efficiency
3.4 Conditions for Success
3.5 Choice and Equity
3.6 Choice and Personalisation
4. CONCLUSION: CHOICE AND POLICY DESIGN
REFERENCES
ANNEXES: CONTRIBUTIONS FROM DEPARTMENTS
***
'People should not forget the current system is
a two-tier system where those who can afford it go private, or
those who can move house get better schools… Choice mechanisms
enhance equity by exerting pressure on low-quality or incompetent
providers. Competitive pressures and incentives drive up quality,
efficiency and responsiveness in the public sector. Choice leads
to higher standards…The over-riding principle is clear. We
should give poorer patients…the same range of choices the
rich have always enjoyed. In a heterogeneous society where there
is enormous variation in needs and preferences, public services
must be equipped to respond'. Tony Blair,
South Camden Community College, 23 January 2003.
'Many on the Centre Left argue that, whilst services
should be responsive and user-friendly, the language and values
of choice have no place in public provision. I reject that dichotomy.
It would be foolish and politically suicidal, in my view, to reject
the concept of choice, and the importance of tailoring services
to individual needs'. David Blunkett (2003)
Towards a Civil Society. IPPR p.9.
'These choices will be there for everybody…Not
just for a few that know their way around the system. Not just
for those who know some-one 'in the loop' - but for everybody
with every referral. That's why our approach to increasing choice
and increasing equity go hand in hand. We can only improve equity
by equalising as far as possible the information and the capacity
to choose'. John Reid, 16 July 2003, Speech
to the New Health Network.
'Traditionally the left turned its back on choice
as the preserve of the right. In a consumer society where the
consumer is king, vacating this political terrain is not a feasible
strategy for progressive politics. A modern approach calls for
choice to be redistributed. Today people who can afford it buy
choice over health and education. Those without, do without. This
is unfair and must be changed. Expanding choice, then, is about
enhancing equity and opportunity not undermining it'. Alan
Milburn 'In public services too, make the consumer king' Wall
Street Journal 17 March 2004.
'Changing the way in which public services are
delivered can dramatically transform the relationship between
providers and service users - from passive dependency to active
participation in a process where the providers see their role
as responding to customers needs and aspirations, and helping
them to get the best available outcome'. Nick
Raynsford (2004) Enhancing user choice; a fair and just approach,
NLGN.
'…we need to set up a system that is not
based on the common denominator. The central characteristic of
such a new system will be personalisation - so that the system
fits to the individual rather than the individual having to fit
to the system…And the corollary of this is that the system
must be both freer and more diverse - with more flexibility to
help meet individual needs, and more choices between course and
types of provider so that there really are different and personalised
opportunities available.' Charles Clarke,
Department for Education and Skills: Five Year Strategy for Children
and Learners, July 2004.
"I come to this as a parent as well as a
politician …And believing that parents and children must
be at the heart of what we do and how we think. Parents helping
to shape the education agenda to deliver real opportunity for
their children. Parents supporting schools and supporting their
children's education. Parents with rights but with responsibilities
too. Rights to a top quality education for their child and to
a voice in how that education is delivered…The prize is a
real one. A system that is not only universally excellent, but
universally responsive to its users too. Where parents and the
community know they have a voice and that their voice will be
heard." Ruth Kelly, North of England
Conference Speech, 6 January 2005.
'Where the Government is committed to public services
free at the point of use and available to all on the basis of
need, it is important to ensure that choice is not promoted at
the expense of equity or efficiency, particularly where there
are market failures and capacity constraints'.
HM Treasury (2003) Public Services: Meeting the Productivity Challenge.
THE CASE FOR USER CHOICE IN PUBLIC SERVICES
1. INTRODUCTION
1.1 The Government is committed to extending choice
throughout public services where that is feasible and desirable.
The Government welcomes the Committee's enquiry into this important
area of public service reform and looks forward to hearing the
Committee's views in due course. The Committee has invited the
Ministers of State for Local and Regional Government, Health and
School Standards to give oral evidence to the Committee. They
will be happy to illustrate the way in which the general principles
outlined here are being applied to the particular public services,
as set out in the 5-year strategy documents and the 10-year vision
document for local government published last year. Further examples
from each Department are provided in annexes to this memorandum.
1.2 Both theoretical and empirical evidence points
to choice serving as an important incentive for promoting quality,
efficiency and equity in public services - and in many cases more
effectively than relying solely or largely upon alternative mechanisms
such as 'voice'. Choice emerges as both a means of introducing
the right incentives for improving services for users, and as
a desirable outcome in and of itself: that is, it is both intrinsically
and instrumentally valuable. In this sense, it is at the same
time both a tactical and strategic contribution to the drive to
improve services for the people who use as well as vote for them.
1.3 However, none of this is to say that extending
user choice is applicable to all services. Nor is choice unproblematic
even in those areas where it can be usefully applied. On the contrary,
there are some reasonably stringent conditions that have to be
met if choice is to achieve the aims of government policy in the
reform of public services. Good policy design will be integral
to its success. This paper therefore not only examines some of
the more general arguments for extending user choice but tries
to highlight the conditions necessary for choice to be effective,
the areas where progress is being made in appropriate policy development,
and the areas where more progress needs to be made.
2. THE MEANING OF CHOICE
2.1 There are a number of dimensions of choice in
public services: choice of provider (where?); choice of professional
(who?); choice of service (what?); choice of appointment time
(when?); and choice of access channel, such as phone, web or face-to-face
(how?). The principle of 'choice' in public services includes
decisions on all these dimensions (OPSR 2003).
2.2 These decisions are not necessarily independent.
In health care, a patient may choose a particular provider because
of its opening hours or shorter waiting times, or in order to
see a particular professional. In education, a parent may choose
a particular school for a child because of the type of curriculum
(e.g. specialist school) or style of pedagogy (e.g. Montessori)
it offers. However, it is useful to keep the distinctions in mind
because the arguments for and against extending user choice in
public services can vary according to which type of choice is
being considered.
2.3 It is also important to distinguish who is doing
the choosing. This could be the users themselves (such as patients
in elective surgery, the direct payments scheme, choice-based
lettings), relatives of the users (such as parents for schools
or curricula), or collective agents choosing on behalf of users
(such as local authorities awarding contracts to suppliers on
behalf of users). This paper concentrates primarily on choice
by users and/or their families, using examples from health, education
and local government.
3. JUSTIFICATIONS FOR INCREASING USER CHOICE
3.1 Extending user choice in public services may
be justified on four grounds:
§ It's
what users want
§ It
provides incentives for driving up quality, responsiveness and
efficiency
§ It
promotes equity
§ It
facilitates personalisation
Paradoxically, with the possible exception of the
last, it can also be criticised on all these grounds.
3.2 What Users Want
3.2.1 It is frequently asserted - often by those
who have a good deal of choice in their lives already - that users
of public services do not in fact want choice. This assertion
of the essential irrelevance of choice is often contrasted with
what is claimed to be an apparent preference for better quality,
often phrased as 'people don't want choice; they want a good local
service'. This argument has been bolstered by the recent publication
by a US academic, Barry Schwartz, The Paradox of Choice,
arguing that where consumer goods are concerned, people frequently
find excessive choice unsatisfying and de-motivating (Schwartz
2004).
3.2.2 We return to the question of the relationship
between choice and 'a good local service' below. In the meantime
it is important to note that, whatever may be true for consumer
goods such as jam or instant coffee, any assertion that users
of public services do not want choice is simply wrong. In fact,
there is substantial evidence that users of public services in
Britain desire increased choice. There is also evidence that this
support for choice is not confined to the middle classes. A recent
survey on local government services found that it is the lower
socio-economic groups who show the strongest support for increased
choice (Audit Commission, 2004).
3.2.3 The direct payments schemes are initiatives
in which local authorities make cash payments to individuals to
purchase their own community care services. The schemes were introduced
in the mid-80s in America, Canada and Scandinavia, and are now
widely adopted across Europe. Research commissioned by the NLGN
pointed to overwhelming evidence that direct payments are generally
very welcome, making a significant difference to the lifestyle
and basic rights of many people in need (Lent and Arend 2004,
p.29):
'The scheme gave me flexible, adequate assistance.
I became liberated, more fulfilled, and light hearted…I've
gone from non-involvement to choice'.
'Before I went on the scheme I felt I was just
existing, but now I can choose to live my own life'.
3.2.4 Giving a choice of provider is not always practical
or desirable, and examples from local government demonstrate that
the alternative dimensions of choice can also provide positive
outcomes for users:
§ Local
authorities have successfully implemented choice of access channels
for service users, including call centres, on-line services, one-stop
shops and computerised kiosks. Residents are also offered greater
choice of appointment time and home visits
§ The
Supporting People Scheme provides more choice to residents with
the greatest need by pooling together several housing related
funding streams into one pot for allocation to vulnerable users.
This removes the burden of applying for different benefits and
enables a more personalised benefit package to be designed.
3.2.5 Evidence from tenants making choice-based lettings
(CBLs) in social housing are equally positive. In CBLs, the decision
whether or not to apply for a property is taken by the prospective
tenant rather than the housing officer. Interim results of the
assessment suggest that user satisfaction has been raised considerably
by the schemes, and that properties that have been traditionally
hard to let have become occupied much more rapidly.
(Lent and Arend 2004, p.31).
3.2.6 In healthcare, the choice pilots in elective
surgery running from October 2002 to March 2004 had a very high
take-up of choice: 67% of patients accepted choice in the London
Patient Choice Project, 88% in Manchester and 50% of those involved
in the Choice Initiative in Coronary Heart Disease. From April
to the end of August 2004, choice at six months was rolled out
across the NHS and, since April some 30, 000 patients have accepted
an offer of choice.
3.2.7 MORI interviewed 1,208 members of the general
public in August/September 2003, asking what would best represent
their feelings if a GP had decided they needed treatment and offered
them a choice of hospital both in the local area and in the rest
of the country. 15% said they would like to make the decision
themselves, and 62% said they would like to make the decision,
but would need advice and guidance to help them decide. Just 23%
said the GP should make the choice. Interestingly, of this last
group, most were elderly (65 or over), and more were working class
and/or from ethnic minorities: a point to which we shall return.
3.2.8 A poll undertaken by YouGov for the
Economist on choice in both health and education is also illuminating.
This sampled 2,250 voters in 2004. The study found that 76% of
those with children in state schools consider it very important
or fairly important that they have more choice over which schools
their children attend, while 66% considered it important that
they have more choice over the hospital that treated them (see
Figure 1 below). With respect to health care in particular, 50%
thought that giving more control to patients was more important
for the NHS than giving it more money.
Figure 1
Source: The Economist April 7, 2004
3.2.9 With respect to more specific services, the
choice pilots in elective surgery have generated a high degree
of patient satisfaction with the processes and the outcomes (Le
Maistre et al 2003). Representative comments include:
'The patient choice idea is brilliant when it
means that the operation is available much sooner - definitely
to be recommended'
'I think the patient choice initiative scheme
is an excellent one. I hope it will continue and that other people
will be able to benefit from the scheme as I have done'
3.2.10 It is also clear from the research that there
are a variety of reasons why people value choice. For some, it
is because of the increased sense of power and control over their
lives that choice gives them: 61% of the Economist poll
felt that increasing choice in health care and education would
give them some or a lot more control over their lives. Also, it
seems likely that this is a major factor in the popularity of
the direct payments scheme.
3.2.11 For others, it is the more mundane concern
that thereby they can get a better or quicker service. In this
connection, it is fair to note that some of the MORI/NCC respondents
argued that choice ought to be unnecessary:
"If your local hospital is as good as it
should be, why would you want the choice?"
Male carer, 35+
3.2.12 And this brings us to the second part of the
'irrelevance' argument: that, instead of choice, people want a
good local service. But this dichotomy is false. Part of the justification
for extending choice is that it is more likely to create
a good local service - or at least a better service than a system
with no choice. To this we now turn.
3.3 Incentives for Quality, Responsiveness and
Efficiency
3.3.1 An important part of the reason for extending
user choice, concerns the incentives it gives for changes in provider
behaviour. Looking at the case of choice of provider, those
providers who are not chosen have a strong incentive to raise
their game. They will have to improve the quality of their service
(at least in the eyes of users), to increase their responsiveness
to users' expressed needs and wants, and to use their resources
more efficiently so as better to attain these ends. In such cases,
choice is acting as an instrument for achieving other desirable
social ends.
3.3.2 However, for organisational and political reasons,
choice of provider is not always a practical option, and it is
important to consider other models of choice that can provide
incentives for improved service delivery. Health and education
provide examples where a choice of service leads to more personalised
delivery and better outcomes for patients, pupils or parents.
In local government, choice-based lettings show that the provision
of choice by a single provider can drive up service quality and
improve customer satisfaction, while at the same time allowing
staff to play a more constructive and empowering role. Arrangements
for allowing council tenants the opportunity to vote on future
landlords under the large-scale voluntary transfer ballots have
also received a positive response. Similarly, the allocation of
direct payments to individuals in receipt of community care has
helped them to become independent consumers who organise their
own care around their own wants and needs.
3.3.3 Choice can also enable communities to get involved
in the services that affect them. Community involvement in managing
local amenities, for example through park trusts, gives local
people ownership over the use of public space. In some areas,
tenants groups have taken over the housing management system from
the council with positive results. Tenant Management Organisations
(TMOs) are representative and accountable tenant led bodies. They
must meet strict requirements on their constitution and governance
and be backed by tenants in a rigourous ballot. A 2002 evaluation
shows that TMOs not only perform very well in terms of housing
management but also provide a model of civil renewal and community
empowerment.
3.3.4 To appreciate the force of this argument for
choice as an incentive for service improvement, we must consider
the alternative, where no user choice is possible. To obtain a
good service users are reliant upon a combination of: (a) the
goodwill of the providers concerned not to abuse their monopoly
position - that is, in the metaphor of Le Grand (2003) that they
are altruistic 'knights' rather than self-interested 'knaves';
(b) 'voice' mechanisms, such as verbal persuasion, complaints
procedures, public participation, user consultation or, ultimately,
elections, to express their dissatisfaction and preferences; and
c) centrally driven commands and controls over performance, coupled
with some form of independent regulation.
3.3.5 While 'knightliness' (or, more generally the
public service ethos), central performance management, regulation
and 'voice' all have an important place in ensuring public service
delivery, the public could be forgiven for feeling them to be
fairly distant from their day-to-day experience or personal influence.
The public service ethos undoubtedly forms part of the motivation
of professionals and others working in the public service; but
it is only a part, with more self-interested or knavish concerns
also playing a significant role (Le Grand 2003, Ch.2). Moreover,
self-interest and public spiritedness often conflict for public
sector providers (as with private practice for hospital consultants),
and when they do it is far from clear that public spiritedness
always dominates.
3.3.6 Whatever activists' hopes and aspirations may
be, in fact far fewer people are involved in expressing their
views through formal mechanisms of 'voice', than through using
services. And those that do tell us that there is much more work
to be done to make such mechanisms satisfying and effective.
3.3.7 More specifically, voice mechanisms can be
collective - voting, or through other mechanisms of collective
decision-making - or individualistic: an example would be complaints
procedures. Collective voice mechanisms have the advantage that
they are indeed collective: that they take account of the interests
of the community. On the other hand, they are clumsy instruments
for dealing with the kind of individual decisions with which we
are concerned here. Parents who are dissatisfied with their local
school, or patients with their local hospital, can vote for local
elected representatives who are promising to provide better ones;
but for their votes to be effective, a number of conditions have
to be fulfilled. There has to be an election in the offing; their
views have to be shared by a majority of other voters; the issues
concerning the quality of schools or hospitals have to be the
principal factors affecting the election; politicians promising
better schools or hospitals have to be among the candidates; and,
if these politicians are elected, they have to have some effective
method for ensuring school or hospital improvement. It is rare
that all of these conditions will be met.
3.3.8 Further, despite their collective nature, these
mechanisms are often poor at dealing with under-performance. Voters
are rarely faced with the costs of meeting their service requirements.
When they are not faced with those costs, they can simply vote
to increase or maintain services at other people's expense. Indeed,
this often happens when school or hospital closure proposals are
put to a vote; the voters concerned usually do not have to bear
the costs of keeping the institutions concerned open and in consequence
usually vote the closure proposals down. And a majority can also
vote to segregate a minority, excluding them by formal or informal
means from the service concerned.
3.3.9 Individual voice mechanism such as complaints
procedures also have their problems. They require energy
and commitment to activate; they take a good deal of time to operate;
and they create defensiveness and distress among those complained
against. They favour the educated and articulate. Users who complain
are not necessarily those who have the most to complain about;
and adversarial relations between professionals and users, especially
tied to a threat of lawsuits as they often are, can lead to expensive
and inefficient defensive reactions on behalf or providers.
3.3.10 The Committee's recent work on targets argued
for greater bottom up and local demand to balance the limitations
of top-down targets and centrally drive performance improvement.
Choice provides such a local, bottom-up option. And though voice,
regulation and inspection can play a role, we are also well aware
of their limitations as far as generating timely service improvements
that matter for customers.
3.4 CONDITIONS FOR EFFECTIVENESS
3.4.1 That all said, as many commentators have pointed
out, it is clear that choice will only work as an effective incentive
for providers if certain, reasonably stringent, conditions are
met. The following discussion focuses largely on the choice of
provider model, but some of these conditions are also relevant
to models of choice which involve a single provider. For all models
of choice, it is necessary for users to be well informed about
the services available and for providers and policy-makers to
be user-focused from the design of policy through to delivery.
3.4.2 Information. For choice to act as
an effective driver of quality, it is necessary to rely upon the
user's judgement about the quality and responsiveness of the service.
This seems appropriate at a fundamental level, for it is that
judgment which ultimately counts. Professionals and policy-makers
of course make important judgements about service outcomes and
performance, but quality is ultimately determined by how the service
is experienced by individuals with their infinitely diverse preferences
and requirements.
3.4.3 But this does require that the user
be well informed. Research asking people what drives both their
satisfaction and their dissatisfaction with services, consistently
identifies effective information as a critical factor (OPSR,
2003a and d). Better-informed customers are more satisfied,
and poorly informed ones are dissatisfied. This is where choice
becomes an important incentive for users, for it is only when
customers have a choice that they have reason to become informed.
Without choice, why would they bother? They will get what someone
else has decided they will be given, or determined that they will
'need'. Without any choice, they are far more like the passive
recipient than the active citizen so often idealised by opponents
of choice. Whilst some have suggested that becoming better informed
about the range and quality of services available is a 'research
cost', it is one that most people could consider a legitimate
investment for effective citizenship.
3.4.4 Choice also provides an incentive for service
providers and policy-makers to become more user-focussed, and
translate their organisational and professional preoccupations
and language into information for users. Useful information sets
out the nature of the service, the options available, and who
might find which option most valuable in what circumstances. Designing
options requires providers to think about what the service needs
to be like to meet different requirements, and what they need
to do to reach the right people with an appropriate response.
3.4.5 Information is important factor in satisfying
customers, whether the choice is about the provider, the professional,
the type of service, the appointment time, or access channel.
Well-informed people making active choices about what they need
and how best to obtain it will not only be more satisfied and
confident about service quality. They are also powerful drivers
in making services more efficient (because services are used by
people who want them) as well as more effective (because services
are better targeted).
3.4.6 Consequences of choice. The incentive
argument in favour of choice is contingent on there being consequences
for the providers of being chosen or not. More specifically, there
need to be benefits to those that are chosen and costs to providers
who are not. Most providers of public services do intend, and
will certainly claim, to provide a good service, and choice provides
a powerful reality check on how far they are succeeding in doing
so as far as customers are concerned. And in many cases that feedback
will be sufficient incentive for the service to generate an improvement
in performance.
3.4.7 A more radical way of ensuring this is for
the money to follow the choice; for the providers not chosen to
lose resources, while those who are chosen gain resources. Although
this is a powerful kind of incentive, it has its problems if used
as the sole lever for improvement and if it jeopardises the viability
of a service without providing an alternative to its remaining
users. However, choice can provide an effective bottom-up pressure
for revealing poor quality and under-performance. Its impact on
a service over time can trigger intervention to turn round the
service, or to manage its closure before reaching the point where
users might be put at risk.
.
3.4.8 In all these cases, the exercise of choice
is acting as a clear signal of success or failure; a signal that
is not available in non-choice or monopoly systems, which in consequence
often find it difficult effectively to distinguish between good
and bad performers.
3.4.9 Alternatives. Of course, for choice
of provider to exist there must be alternative providers from
whom to choose. Here it is often argued that offering choice in
most public services is illusory, especially in health care and
education. London is usually cited as an exception; but most of
the population outside of London cannot realistically be offered
a choice of schools or hospitals simply because there are not
enough of them - or so the argument goes.
3.4.10 However, again the facts do not bear out this
claim. Take secondary schools. Departmental data show that 32%
of maintained mainstream secondary schools in England have
two or more schools within one mile of them, 70% within two miles,
and 80% within three miles. Since the National Travel Survey shows
that the average length of the journey to school for 11-16 year-olds
in England is three miles, this implies that four fifths of English
schools have at least two other potential choices, attendance
at which would entail little if any extra travelling. If having
one other school or more in proximity is regarded as sufficient
for choice, then the figures are even more impressive, with 61%
of secondary schools having one school or more within one mile,
82% within two miles and 88% within three miles. In short, barely
one in ten schools in England has no potential alternative within
three miles.
3. 4.11 Hospitals offer a similar picture - indeed
in some ways an even more striking one. A recent study found that
92% of population had two or more acute NHS trusts within 60 minutes
travel time by car. Further, 98% of the population have access
of up to 100 available and unoccupied NHS beds and 76% to 500
(Damiani et al 2004). The only areas that came close to
monopolistic provision were the relatively lightly populated parts
of Cornwall, North Devon, Lincolnshire and Cumbria.
However, the fact that many trusts offer
services on more than one hospital site means that, even in these
areas, patients will have a local choice over where they are treated.
In addition, they will of course be free to travel further to
alternative providers if they wish. In passing, it might be noted
that these figures also suggest that there may be considerable
under-utilised capacity in the NHS; capacity that could be utilised
with a well-designed policy of user choice.
3.4.12 What the argument that choice is illusory
ignores, but that is evidenced by these figures, is just how urbanized
is the British population. Almost 90% of the population lives
in urban areas, with over half the population resident in just
66 areas with populations of 100,000 or more (Denham and White
1998). Of course there remains the problem of rural areas where
users will often need to be prepared to travel further to take
up choice; and here other policies for ensuring quality will have
to be developed.
3.4.13 Entrance and Exit. The questions of
'exit' - how to deal with failing providers - and 'entrance' -
how to encourage new, innovative providers to emerge - present
perennial difficulties for all systems of delivering public services,
including those based on voice or hierarchy, as well as those
based on choice.
3.4.14 One effective entrance strategy is that involving
the provision of explicit, time-limited, subsidies to potential
new entrants. Another part of such a strategy would be to remove
the barriers to entry arising from existing rules and procedures
(as arguably was the case from the surplus places rule in education
- now indeed abolished). The most satisfactory exit strategy for
public services may not involve 'exit' at all, but rather special
measures types of intervention to turn the institution round.
3.4.15 Generally, further policy development is necessary
here, drawing upon British and overseas experience in these areas
as appropriate.
3.4.16 Capacity and Economies of Scale. Some
argue that there are negative implications for efficiency arising
from the claim that choice requires there to be excess capacity
in the system. This may be true under some circumstances but the
margin of extra capacity needed to permit contestability is likely
to be small. Moreover, it is worth noting that the choice-based
lettings schemes in social housing are operating with success
in conditions of scarcity (Lent and Arend, 2004, p.32). For there
to be choice, there will need to be diversity and that may prevent
the exploitation of economies of scale (but is everyone getting
the same service really an economy?). Overall, however, if there
are efficiency losses that arise from these causes, they may have
to be accepted in order to reap the gains in efficiency and other
areas that arise from the positive incentive effects of choice
on user and provider behaviour.
3.4.17 Evidence. Finally, it is worth noting
that hard evidence is accumulating from both the UK and elsewhere
concerning the net positive impact of choice on aspects of quality,
efficiency and responsiveness in health care and education. For
instance, the choice pilots in elective surgery have dramatically
brought down waiting times in the areas in which they operate.
Following the introduction of patient choice in London, average
waiting times fell by a substantial 19.4% compared to 7.6% in
the rest of England. (Dawson et al, 2003)
3.4.18 There is evidence from micro-studies of school
performance that choice and competition in the UK has a positive
effect on both quality - as measured by exam and test results
- and efficiency (Bradley et al 2001).
3.4.19 Internationally, there is evidence from Sweden
that standards in the education system have improved faster in
government-run schools that face a lot of competition from state-funded
but independent schools than in those that do not. Further, there
was no evidence that inequality in educational outcomes has increased,
although some evidence of increasing segregation, as those who
choose independent schools are likely to be more educated than
those who do not. In addition, there was evidence that satisfaction
with the education system has increased in areas that offer more
choice (Bergstrom and Sandstrom 2002).
3.4.20 In Milwaukee, Michigan and Arizona, the effects
on public schools of competition from 'choice' schools has been
examined. All three of those areas have experimented with allowing
parents to choose schools other than their local public schools
either through the mechanism of vouchers (Milwaukee) or charter
schools (Michigan, Arizona). It had been widely predicted that,
because of cream-skimming, public schools in the areas concerned
would suffer an overall drop in performance as the better students
were sucked into the choice schools. However, Hoxby (2000) found
evidence of strongly improved performance by the public schools,
from which she concluded that the efficiency-inducing effects
of competition were more than enough to offset any potential effects
of cream-skimming. She also examined the effects of competition
with private schools on public schools and of competition between
public schools through parents choosing place of residence. Again
she found that competition had a positive impact on performance.
3.5 Choice and Equity
3.5.1 Extending user choice creates two kinds of
concerns about equity. First, there is an argument that the poor
and other disadvantaged groups lack the capacity to make effective
choices. Several commentators (see, e.g., Appleby et al
2003, Hattersley 2003) have voiced concerns that, however effective
extending user choice may be in terms of increasing the efficiency
and responsiveness of public services, it will also worsen equity:
that it will privilege service utilisation by the articulate,
confident middle class and disadvantage the allegedly less capable
poor.
3.5.2 The second anxiety concerns cream-skimming
or selection. It is argued that providers, especially if they
are over-subscribed, will have the power to select the users to
whom they provide services; the easiest, the cheapest, those who
are most likely to boost their ratings in any league tables. User
choice thus turns into provider choice - with again particularly
adverse consequences for the poor and disadvantaged.
3.5.3 Incapacity and the poor. It is far from
clear that choice will disadvantage the poor and unconfident any
more than non-choice or 'voice' systems. The voice of the poor
is generally much quieter than that of the middle class. Their
ability to deal with professionals, to articulate their dissatisfactions
and to utilise complaints procedures if necessary, is significantly
less than that of the better-off.
3.5.4 This was substantiated in a recent review of
equity in the NHS, in areas where there is currently little choice
(Dixon et al 2003). This found substantial inequalities:
§ 'Affluent
achievers' had 40% higher Coronary Artery Bypass Grafting and
angioplasty rates than the 'have-nots', despite far higher mortality
from Coronary Heart Disease in the deprived group.
§ Intervention
rates of CABG or angiography following heart attack (Acute Myocardial
Infarction) were 30% lower in lowest SEG than the highest.
§ Hip
replacements were 20% lower among lower Socio Economic Groups
despite roughly 30% higher need.
§ Social
classes IV and V had 10% fewer preventive consultations than social
classes I and II after standardising for other determinants.
§ A
one point move down a seven point deprivation scale resulted in
GPs spending 3.4% less time with time with the individual concerned.
3.5.5 It is worth noting, too, that the principal
supporters and beneficiaries of opportunities to exercise education
choice in the United States are minority and ethnic groups, who
find that such arrangements give them much more control over the
education of their children than previous non-choice systems.
Their children appear to achieve higher standards of education
in schools chosen by their families, than they did in schools
they were previously obliged to attend. And as Nick Raynsford
argues in his essay for NLGN on choice and fairness, the experience
of direct payments for social care provides no evidence that the
extension of choice to poorer service users results in 'bad' choices
which undermine the quality of service provision (Raynsford, 2004).
3.5.6 That said, it is likely that extending user
choice of provider may create some problems for the exercise of
choice by the less well off, including a need for help with transport
costs and with information and advice. The Government is thus
considering assistance policies targeted on poorer families that
can be grouped under the heading of Supported Choice. This
could involve assistance with transport and travel costs for users
and families of users, and identifying a key worker who would
act as an adviser to those users and families.
3.5.7 In health care, patient support services may
include direct support for choice from the GP or referring primary
care professional, support from practice staff, the Patient Advice
and Liaison Service (PALS) or from voluntary sector organisations.
For those few patients with the greatest needs, this might build
on the highly successful Patient Care Adviser experience in the
choice pilots or from voluntary sector organisations and the experience
of other similar patient advocacy and support roles in the NHS.
Responsibilities of this role could include monitoring care plans,
offering choices of provider, discussing treatment options, identifying
special needs regarding travel, disability (mobility) and language
(communication), providing information and updates about the care
pathway (including assessment, treatment and aftercare), booking
appointments with providers, arranging transport, helping patients
navigate the system, and supporting /coaching patients on self-care,
self-management and behavioural change.
3.5.8 Cream-skimming. The second equity problem
for choice, cream-skimming or selection is likely to be a significant
problem for choice, especially in education.
3.5.9 The problem of 'cream-skimming' is closely
related to restrictions in entrance to the choice system and in
the expansion of existing providers. In education the ability
of a school to engage in such behaviour only arises where restrictions
in capacity of some schools lead to a need for rationing of available
places among applicants. For example, comprehensive schools must
accept all who apply if spare capacity exists - only if there
is excess demand for places can admissions criteria be applied.
Another important point is that even if a school is not deliberately
'cream-skimming', the criteria applied often lead to inequitable
outcomes - admissions criteria are primarily based on geographical
factors (see e.g. West and Hind 2003) and many studies have shown
how over-subscribed school places increases house prices in catchment
areas as a result of this (see e.g. Cheshire and Williams 2000,
Leech and Campos 2001), excluding the less well-off from the best
schools. If school capacity was more responsive to demand for
school places, there would be a resultant improvement in equity
in the choices available to parents. Policy options to address
this include the Expansion of Successful and Popular schools program
introduced by the DfES and other mechanisms for improving supply
responsiveness. Inequity in the choices available to parents is
to a large extent caused by restrictions in supply.
3.5.10 There are variety of policy options for addressing
cream-skimming. These include:
§ stop-loss
insurance
§ restrictions
on the admission freedoms of providers
§ weighting
funding formulae, so as to favour the less well off.
§ Improving
the responsiveness of capacity in popular providers to demand
from service users
3.5.11 Stop-loss insurance is a scheme whereby providers
faced with a user whose service costs lie well outside the normal
range are allocated extra resources once the cost has passed a
certain threshold. This has the advantage of removing the incentive
to discriminate against high cost users, but carries with it the
problem that the providers concerned have no incentive to economise
on service once the threshold has been passed.
3.5.12 A second possibility is to restrict the amount
of freedom providers have over admissions to reduce the potential
for cream-skimming. In this case, a careful balance would need
to be struck between local autonomy and central policy to achieve
more equitable outcomes.
3.5.13 A third alternative is to risk-adjust the
pricing system such that higher cost users have higher costs associated
with them. Using the example of the national tariff system for
health care (based on Health Related Groups or HRGs), it would,
in principle, be possible to increase the sensitivity of the tariff
by ensuring that the complexity or morbidity of the patients is
included within the price mechanism. This could take the form
of an adjustment to the price for the number or nature of the
co-morbidities that a patient presents. This would still present
the potential for HRG "creep" (upcoding patients to
more lucrative high cost categories) but would increase the ability
of the price mechanism to reflect the cost of care. A further
option would be to adjust the price for deprivation. In the work
being done to develop HRGs, consideration is being given to the
use and ease with which it would be possible to derive groupings
of conditions that take account of socio-economic and other factors.
3.5.14 A form of risk adjustment that would be rather
simpler and help assuage any socioeconomic inequities arising
from cream-skimming would be to deprivation-adjust the tariff
or price. The tariff could be associated inversely with an area
deprivation index such that treatments for users from deprived
areas would carry a higher price than treatments for those from
wealthier ones. This could in fact be a form of risk adjustment
since it is widely believed that poor users have greater need
than better-off ones.
3.5.15 The policy challenge is to identify which
of these options is likely to be most effective and most consistent
with other government policies.
3.6 Choice and Personalisation
3.6.1 As with choice, personalisation has many meanings.
At one end of the spectrum, it can mean simply the tailoring of
services to meet individual needs and wants. In that case, it
comes close to what we have described above as responsiveness.
At the other end, it can imply joint involvement of both user
and provider in the development and implementation of the service
as it is to be rolled out: what has been termed 'co-production'
(Leadbetter 2004).
3.6.2 In either case (and for those in between) it
is difficult to see how personalisation can be implemented without
choice - in this case, choice of service, and/or choice of access
of service. The concept of personalising a service for an individual
implies that there are alternative ways of providing the service
and that one is better than the other for the individual concerned.
The question as to who makes the choice may vary (the professional,
the user, an interaction between the two); however, in every case
some form of choice is integral to the concept.
4 CONCLUSION: CHOICE AND POLICY DESIGN
4.1 Both theoretical arguments and empirical evidence
point to being choice being an effective instrument for promoting
quality, responsiveness, efficiency and equity in public services
- and in many cases more effective than alternative methods of
doing so, such as relying upon voice mechanisms. However, none
of this is to say that extending user choice is applicable to
all services, or that it is the principal determinant of reform.
Nor is choice unproblematic. On the contrary, there are some reasonably
stringent conditions that have to be met if choice is to achieve
the aims of government policy in the reform of public services.
Good policy design is the key to extending user choice; undertaking
such design is a key task of the current Government.
January 2005
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