The public domain, argues David Marquand in his new book, Decline of the Public, needs reinventing. It needs reinventing so that it can be rid of inappropriate devices such as market proxies and performance targets, the things made fashionable by David Osborne and Ted Gaebler's book Reinventing Government, published in America ten years ago. This kind of reform, says Marquand, consumes the trust on which a civilised polity depends. The techniques of improvement (targets, league tables, pay for results) that are virtues in a market domain become vices in the public domain. A panoply of centralised control and inspection has directly caused the dilapidated state of public services and, in the process, hollowed out our sense of belonging to a common citizenry. The solution is a return to professional autonomy, democratic participation by active citizens and the reinvigoration of local government. All the Osborne and Gaebler stuff, says Marquand, was not reinvention; it was destruction.
This will be intoxicating reading for some people on the left. They will be heartened to hear that Marquand attributes the apparently poor state of public services to what he calls the kulturkampf, which has been waged by an aggressive, cross-party, market-fixated elite. But it is an odd judgement when you consider that the kulturkampf has been accompanied by large increases in public spending. In 1978, ?28bn (at 2003-04 prices) was spent on the NHS. By 2001 it was ?70bn. Education spending rose over the same period from ?33bn to ?57bn. And the biggest boost has come about thanks to a policy choice by the Labour party in 2001. Marquand does point out that public spending and the public domain are not the same, but it would be odd to suggest that public services have not been improved at all by new money.
It is also an odd judgement to make at a time when there seems to be pretty conclusive evidence that public services are improving. Violent crime has fallen from 3.6m incidents in 1997 to 2.7m in 2003; waiting lists have fallen from a peak of 1.3m in 1998 to below 1m in 2003; the rate of heart disease mortality has fallen steadily, from 142 per 1,000 people in 1997 to 115 per 1,000 in 2001. In 1988, under 40 per cent of children achieved five GCSEs at grades A to C. In 2002, 51 per cent achieved the same grades.
It is simply not true to say, as the "golden ageists" of the left do, that once upon a time public services were superb and now they are getting worse and that the culprit must be the market. It is a seductive thesis, and Marquand's prose is as fluent and as lucid as ever. But he is wrong. It is Osborne and Gaebler that we should look to, rather than to Marquand.
Reinventing Government became an instant classic of public policy and had some influence, mostly through Al Gore, on the Clinton administration. The authors made a passionate case for the capacity of an entrepreneurial state to change US society for the better. In their famous phrase, the role of government was to steer rather than row. No market proxies were to be forbidden, no orthodoxies to be unchallenged. The objective was improved service for users. There were chapters on the split between purchaser and provider, on choice and the power of exit, on participation and the use of complaint. The authors were sanguine about the use of targets in the public sector and championed intelligent audit and inspection.
To British readers already accustomed to the Tories' purchaser-provider split, Reinventing Government seemed a fairly modest set of proposals. Plans for the quasi-market approach to policy, the basis of much that has happened since, were already well developed in Britain. But the significance of the book was political. Osborne and Gaebler were able to pull off a trick that the British left has yet to manage. They allowed the left to feel comfortable with the new ideas of public sector management by being relentlessly optimistic about government. Their book was bursting with examples of the state's capacity to improve the lives of ordinary people: the budgeting regime in Visalia, California, community school district four in east Harlem, and so on. Look, it was saying to public service workers, you are already doing this in some places. Now just do it everywhere. The message was clear: the state doesn't work as well as it should and we need to reform it, but we are on your side.
Nobody has achieved this in British politics. As soon as anyone on the left begins to make the case for reform they feel horribly exposed. The vocabulary sounds all wrong. Marquand's book is studded with the lingua franca of the left (democratic participation, public domain, public service ethos, citizenship). To dissent is to invoke an alternative lexicon associated since the 1980s with the liberal right (choice, consumers, quasi-markets). This has made a sensible conversation much more difficult. The arguments over top-up fees and foundation hospitals are typical.
For all that, since 1997, policy has owed far more to Reinventing Government than to the spirit of Decline Of The Public. Since the Tories' 1988 Education Reform Act, parents have had the right to express a preference over choice of school even if they cannot always exercise it. Funding now follows the pupil so, in theory, popular schools grow and unpopular ones shrink. And more than 90 per cent of school funding is now sent directly to schools, bypassing local education authorities. The rationale behind Labour's city academies and specialist schools is that citizens will no longer accept uniform public services. Within schools, work is being done - with the help of classroom assistants - to tailor provision to the individual.
There is a similar story in health. There are now more points of access to healthcare, whether through the NHS Direct telephone advice service or better-funded A&E departments. There is also greater choice of hospital for operations, if you have had to wait beyond a certain period. And as with pupils, money will soon start to follow the patient, a point that was lost in the furore over foundation hospitals.
This so far rather limited attempt to introduce more choice into the two main public services has been accompanied by a big increase in scrutiny of the public sector professions. The audit commission was established in 1983 and extended to cover the NHS in 1990, the office for standards in education (Ofsted) was formed in 1992, and the commission for health improvement (CHI) in 2000. CHI is about to be replaced by a beefed-up commission for healthcare audit and inspection.
The better regulation task force recently asked government to tell it how many regulators now existed because it was struggling to count them. No doubt there could be fewer of them. And, of course, the inspectorate has never been exactly popular with professionals. David Bell, the chief inspector of schools, has recently responded to criticism by saying that Ofsted needs to become more rigorous in its methods, to drop in at shorter notice and leave well-performing schools alone. Inspection in the future will be less burdensome, less intent on naming and shaming and more directly concentrated on dispersing good ideas. This change of focus is possible partly because Ofsted's initial work, attacking entrenched failure, has been a success. Its alarming report on reading standards in London was the catalyst for the national literacy strategy in 1998. Ninety per cent of schools now show satisfactory improvement between their first and second inspection. The proportion of 16 year olds who obtained no GCSEs above grade D has fallen every year since 1994, when inspections were introduced. For all the anguish that Ofsted inspections create, most teachers would prefer to reform the system rather than abolish it. And the information provided is indispensable for parents. Britain probably now has the most transparent schools system in the world. As David Bell said recently: "It is easy to forget what the education system was like without the publication of examination and test results."
One of the creatures of the audit regime that is most easily mocked is the performance target. Three recent reports on the topic from the audit commission, the House of Commons public administration select committee and the education select committee, have suggested that targets for public services need to be reformed. But the conclusions of these three reports lend little comfort to the more intractable critics of targets. Philip Pullman published a typical tirade in the Guardian recently. It is echoed in the papers that have been coming out of Conservative central office. The critique has the following components: targets impair the morale of workers; they introduce perverse incentives; they encourage cheating; they elevate a simplistic measure to the status of objective; they encourage a Gradgrindian disregard of the imagination and attach value only to that which can be measured. In short, targets have nothing at all to do with the objectives of public service.
There is something in this critique. Targets are not always appropriate. The private sector uses them sparingly, as a form of internal managerial discipline. In some places, the application of targets has been pursued with what James Strachan, chair of the audit commission, has called a "slavish devotion." Tony Wright MP, the chair of the public administration select committee, has made the point that "top-down targetry has been used as a kind of shock therapy for public services." And far too many of the targets are set by central government. Morale has been harmed and there have been plenty of comical, sometimes tragic, stories about the antics of public servants. To take just two examples: in 2001 the national audit office described the practice of surgeons conducting quicker operations over time-consuming procedures as "widespread." The audit commission found that after introducing a target to reduce same-day cancellations of operations, there was a surge in cancellations the day before surgery was due.
The government is responding to these criticisms. There seems to be a real attempt to devolve more of the target-setting and audit function. Schools, for example, now set their own targets for test results and GCSEs. The health secretary has announced that hospitals will become less reliant on central targets as power gradually passes to staff, though regulated by published national standards. The hospital star ratings system will change accordingly in 2005. There are daily rumours that the treasury is in the process of abandoning even more targets. But targets must also be defended against false foes. A well-chosen target can concentrate the mind of the professional and exert pressure, on behalf of citizens, on the service provider. Besides, targets have helped to define the standards that public services ought to offer. They can be seen, as they are inside government, as an implicit guarantee to citizens of what we can reasonably expect. Tony Wright has recently suggested that this approach might be made explicit in "public service guarantees."
If we are to throw out targets, as Marquand wants, what form of pressure on public service providers is legitimate? Are public service ethics alone an adequate regulator? The romantic hopes of Philip Pullman will not do. The testing regime, he wrote, is producing a generation which "hates reading and feels nothing but hostility for literature." Like Pullman, and like Onora O'Neill in her 2002 Reith lectures on trust, Marquand believes that professional ethics and democratic participation will suffice. He is too sanguine about the risk of producers putting their own interests first. If there are derogations from vocational honour, if a service does go awry, he suggests that "voice" will be raised in protest. But the voice will be that of the articulate middle class. Eighty per cent of the chairs of school governors work in professional, managerial or technical jobs. Perhaps standards will be raised through middle-class pressure. But the best services are likely to become even more the preserve of the well off, and what about those parts of the country where there is no middle class?
Besides, it is wrong to suggest, as Marquand does, that choice and voice are alternatives. A voice raised in complaint is more likely to be heard if it is backed by the genuine threat of exit. Changing schools is a costly business and probably won't happen that often, even in a full-blooded choice system. But as Julian Le Grand points out in his book, Motivation, Agency and Public Policy, the threat of exit is usually enough to have a positive effect on organisational performance.
Osborne and Gaebler certainly thought that informed complaint was important. But not enough work has been done to show that the least well off will benefit from choice in public services. There is, in other words, no clear left of centre account of reinvented government. What might it look like?
First, the case for choice and market proxies as contributions to social justice needs to be made. Without roots in a higher purpose, reform is too easily characterised as managerial. It cannot be pointed out too often that countries, such as France and Germany, which offer more options to citizens in their insurance-based health systems, do not suffer from serious problems with equity in the delivery of health services. There are, of course, variations in standards (there always will be), but there is no systematic two-tier system.
Second, reformers need to frame the problem in a way that the left will respond to: that monopoly-supplied public services have led to a huge variation in provision, organised along the lines of social class. These inequalities arise because, in the case of health, poorer people have higher transport costs, face more difficulty in getting time off work, are less adept at manipulating the system, are more fatalistic about their health and less confident that the NHS can help them than the better off.
There are hundreds of examples of unequal access. In a review of the literature called "Is the NHS equitable?" Anna Dixon, Julian Le Grand, John Henderson, Richard Murray and Emmi Poteliakhoff present the evidence that lower-income, less educated and unemployed groups do not use health services as much relative to their need as their richer, better educated peers. There is good evidence to this effect in cardiac, diagnostic and surgical care, elective procedures for hernia, gallstones, tonsillitis, hip replacements, grommets, in-patient oral surgery, measles, mumps and rubella, diabetes clinics and diabetes reviews. A study of the former Yorkshire regional health authority between 1992 and 1994 found "affluent achievers" between 65 and 74 had coronary artery bypass grafts rates 40 per cent higher than "have-nots" in the same age group, despite far higher mortality from coronary heart disease in the deprived group.
There is a similar tale in elective surgery. A study of the North East Thames regional health authority showed that members of the most deprived population were the most likely to consult a GP for hernias, gallstones and osteoarthritis, but were the least likely to receive surgery.
As Brian Abel-Smith once wrote: "One of the main consequences of the development of the welfare state has been to provide free social services to the middle classes." This has been the main left of centre critique of the welfare state. Julian Le Grand established it decisively 22 years ago in The Strategy Of Equality. It is odd that it should need saying again, but it does.
Third, a British Reinvention would need to establish that greater choice does not pose a danger to the public service ethos. There are a lot of people working in public services who could be earning a good deal more in the private sector. The reason they choose not to is that they have an ethic of public service. Too great a stress on the supposed superiority of private management will impair the ethos. No doubt it is true that 20 ministerial speeches in praise of public sector workers will not be covered while two critical sentences will be blown up into a big story - but politicians know the rules of the game.
It is obvious that not all goods are market goods and that not all values can be quantified and obvious that an ethic of service is precious. But this should not lead to the conclusion that the professions be granted total licence. It is surely part of the public service ethos that services should improve.
To say that a service is "better" means that efficiency is improved with, at the very least, no cost to equity. And there is some evidence that the pressure from users with choice can improve services without exacerbating the gap between the best and the worst provision. It is possible to compare the NHS in Wales, which has held on to a more centralised "command and control" system, with England, which gives patients more information and through primary care trust purchasing power exerts pressure on hospitals. In June 2003 the audit commission reported that 16 per cent of patients in Wales were waiting more than a year for an operation, up from 13.7 per cent two years before. In England, waiting for a year has now been all but eradicated.
There is also some encouraging data emerging from the government's pilot experiments with choice of hospital for elective surgery. In July 2002 a national scheme began which covers all patients waiting more than six months for cardiac surgery. About half of all eligible patients have exercised their right of hospital choice and there appears to be no big class difference among those exercising that choice.
Such experiments in choice in British public services are still all too rare. The tight regulations governing the expansion and the opening and closing of schools in Britain mean that the school system is too inflexible to allow much choice. But there is solid evidence from abroad that choice can improve services without impairing equity. Other countries - including the Netherlands, Denmark, New Zealand, Sweden, Chile and various states in the US - have reinvented their schools in imaginative ways. These places generally now have much more diverse schooling systems, a mixture of providers and a range of learning styles. The results have been encouraging.
The Swedish case is especially instructive. In 1992, Sweden introduced a system of fully-funded public vouchers for independent schools. The Swedes have been careful to ensure that competition is deliberately designed to ensure equity and high academic standards. The performance of schools has risen markedly and there has been a significant fall in the number of pupils who gain no qualifications at all.
The point here is that the design of the market proxy is critical. It is not true to say that choice mechanisms can never serve social democratic objectives, just as it is false to claim that they always will. It depends on the constraints wrapped into them and whether the system is flexible enough to cope with the demands that the exercise of choice place upon it. When these conditions are satisfied, it is possible to design a choice scheme that can both improve efficiency and give priority to the worst off. The Milwaukee voucher programme, for example, restricts choice to children who are eligible for a free lunch. The Dutch system weights its vouchers in favour of the least well-off pupils.
These examples do not mean that all such schemes will work. If we simply allow the wealthy the option to buy a place higher up in the queue, no recognisable left of centre value has been served. This would be the upshot of the Conservatives' "patient's passport" idea. To open up parental choice in a system that is severely short of assets (teachers, classrooms) is to ensure that the effective choices are made by the admissions body rather than by the parent. Choice systems require extra capacity too. Capacity shortages in health and education currently mean that too often we simply rearrange the line in which we wait. In all probability, the well informed and the well off will find their way to the front.
A distinctively left of centre conception of choice can be derived directly from the different views that left and right have regarding liberty. For the right, liberty is the absence of constraint. If one is not forcibly prevented from doing something one is free. The left has found this conception lacking the idea of capability. One might be free but if one cannot act, one is still incapable. By direct analogy, the right sees choice as the removal of obstacles. If this results in damage to equity, as a result of uninhibited choices, then the right does not really mind. The left's idea of choice means that this is not good enough. A left-wing idea of choice would be supplemented with the idea of capability: the rich can choose already (relocating to be near the best schools and hospitals, buying extra tuition or care, going private), so let us extend the privilege to the less well-off and the poor.
But there may be a bundle of reasons why the poor cannot exercise choice. They may be badly informed. With the best will and most expensive advertising, the information may not reach them. Even if it does, they may lack the expertise or the confidence to act. They may be inured to poor standards and be more liable to put up with them. Choices in public services are often complex and the information may need decoding. Choices may need to be supported.
Thus part of the new public service ethos will be to put the professions directly at the service of the people. If we used professional expertise, not just as the deliverer of a service, but as the assistant helping to shape the choices of the citizens in their locality, we would marry the idea of the public service ethos with that of individual choice. Choice for the left should require support networks, to help individuals navigate the system rather than paternalistically take the decision out of their hands. It would be to recognise that all people in a democracy are agents but some are, for the moment, less well equipped than others. What better expression of the ideal of service than to act as an informed agent on behalf of someone who normally gets a raw deal? We employ brokers for products from holidays to financing. Why not a cadre of public service agents charged only with acting on behalf of the best interests of their clients?
This is starting to happen in several pilot projects on patient choice. Care advisers working in GP practices and primary care trusts are allocated to patients, drawing up a treatment plan in conjunction with the GP, and helping patients navigate the system and to manage transport support. The government has made good use of mentors in other contexts - in the Jobcentre Plus and the Connexions services, for example - and it is clear that care advisers are very popular with patients. They help to overcome one of the main objections to the extension of choice - that the poor are too ill-informed to take sensible decisions.
There is no reason to conclude that radical public service reform is incompatible with social democracy. But the argument has to be won. As Tony Blair acknowledged in a recent speech, there has been too much new policy and too little politics. The process of constructing the left of centre case for choice has to begin now because the forces of opposition are gathering. And if the process of reinvention does end here it will be the left that is the loser.
