Examination of Witnesses (Questions 580
THURSDAY 6 DECEMBER 2001
580. A complete new school?
(Dr Pirie) A new small one, a different type of school.
If people are allowed to do so. If you try to start a new school
it is extraordinarily difficult. For many years if you were in
an area with very low quality schools and you attempted to start
a new good school you were prevented from doing so on the grounds
that there were unfilled places in the locality, which is like
being prevented from starting a good restaurant on the grounds
that there were unfilled tables in the bad restaurants.
581. In a restaurant you are providing your
own money, in this case that you are telling the state to provide
(Dr Pirie) If the money come as a result of choice
it is just as good if you put it up yourself.
(Mr Jacobs) The barriers to entry of setting up a
school are considerable. The state would be very unwise to simply
remove them all and say you can set up a school in any kind of
building, buildings are a very important part of a school, and
so on. It seems to me there are barriers to entry, even if they
were eased in some of the ways Dr Pirie would like, which make
that very difficult. At the moment, with the under-supply of resources
for education, the idea in most areas of having sufficient spare
capacity to have a system like that seems to me to be fantasy.
The question you asked, which is what happens to the principle
of non-exclusion, who does not get chosen for these schools, I
think does become central. We need to think about the specificity
of different services. I think there is a positive value in social
mixing; that is it is an externality, if you like, of the education
system. Society as a whole benefits from people from different
backgrounds going to local schools. I think society as a whole
does have a right to want this, and it is right, in my view, that
it tries to create cohesive communities, and schooling is very
particular in that regard. The danger here is that you have abstract
modelsschools, health and social servicesas if these
were not specific. But they are very specific. I think schooling
requires certain kinds of models and health requires other kinds
of model and different kinds of social services are all different.
My other response to this is that NATS is a very interesting example
of the inability to fail. It is precisely a case where the state
comes in, and again where therefore you do not have risk transfer.
The shareholders of NATS are going to go the same way as Railtrack
didconsistently to demand more public money. And the public
has to say yes because it cannot have catastrophic failure. I
do think we must distinguish between the question of tax-funded
services versus privately-funded services, and different ways
of providing that service within them. That is just such a fundamental
distinction. We can then be clear what we are talking about. My
own view is that tax funding, with small exceptions round the
edges (and I think they are rather interesting exceptions which
we should be exploring) is the basis for public service. I am
then interested in how we get contestibility and choice within
those services. I suppose my feeling about this is that the public
sector is different from the private sector and we need to think
about it in itself, in its specifics. Then we can see how we can
make it better, rather than simply saying, because it is not very
good in some areas, let us import models from elsewhere. We need
to see how we can make public services better, as public services,
not as private ones. I think there is lots of interesting work
being done on how you get contestibility, how you get choice within
public sector institutions. It does not seem to me that the answer
is that you simply import the private sector, though it may be
in certain cases. We need to think about this sector for itself,
it is different.
Kevin Brennan: Can I declare and interest at
the outset, I have been member of the Fabian Society for the last
22 years, but no more actively than receiving their pamphlets.
Chairman: I am a member of the Fabian Executive.
582. I am sure whether that is relevant but
it is on the record. Can I start with Dr Pirie, you made some
very interesting observations about the role of the market and
choice and the consumer with regard to education of public service
as an example, who is the consumer in that case?
(Dr Pirie) The consumer is the combination of the
parents and the child.
583. It is not really the parent that is the
consumer of education at all, that is the whole reason why the
state, is it not the case, gets involved in a way that means that
the service that is provided is in the interests of society because
of the externalities these we just described and the interests
of the pupil. A lot of the parents given the choice, some parents
given the choice probably would not send their children to school
(Dr Pirie) A certain percentage would neglect their
responsibilities, a very small percentage. The idea that you should
then run the whole system for everyone on the assumption that
is going to happen because is wrong. You deal the exceptions as
584. The point I am making is that your model
applied, the model applied as rigidly as you have described to
a public service like education actually the outcome of that would
be that it serves those parents who will act as consumers, the
aspirational parents you consider to be the consumers of education,
who are not the consumers of education at all, but it does not
serve a large swathe of children whose parents do not and will
never act as consumers. That is why your system, surely, as an
outcome of that would be that those children would be failed.
(Dr Pirie) The vast majority of parents want the best
for their children in education. I accept it is their responsibility
as parents to get them. When you asked the question, "Who
is the consumer?" I replied, "The parent and the child"
for very good reason, this is usually taken in the family context
in discussion and very few parents will choose a school for their
child without discussing it with the child and very few will allow
a child to choose a school without any parental input. In practice,
overwhelmingly, for most families it is a family decision.
585. In the sense of being the consumer and
receiving a service which will presumably be of benefit to you
and raise your human capital, or whatever it is that you are going
to provide, surely the child is the consumer?
(Dr Pirie) The child is the main beneficiary. Parents
consume things on behalf of their children, the child is the main
586. I think conceptually we might part at that
point. Can I just pursue a little bit more on the market, I would
like to come to Michael Jacobs and David Lipsey as well on this
point. It has been said that the market is, if you like, a good
servant but a poor master when it comes to providing public services,
would you agree with that statement?
(Dr Pirie) Could you elaborate?
587. In the sense that there may be ways in
which it is appropriate to bring some of the benefits of the market
to the delivery of public services, its flexibility, the way in
which it can allocate resources without them having to be directed
from the top, to put it another way, would you agree, for example,
with the shadow chancellor that the National Health Service is
an established organisation.
(Dr Pirie) Yes, I said so. I have written that.
588. Would you care to elaborate on that?
(Dr Pirie) Yes, it is run in a very similar way to
the way that Soviet state industries were run under Stalin, that
is the allocation is quoted as priorities and targets are sent
down from the top with the funding. The service is expected to
take orders and deliver the output that was required at the bottom,
that is essentially what the Soviet style economic organisation
589. Not specific to Joseph Stalin, just Soviet
style. In terms of the National Health Service how could you introduce
your ideas about using the market and consumer choice to the Health
Service without undermining the principle in which the Health
Service is based, that of equity?
(Dr Pirie) I would say that the important principle
of the Health Service is that everyone should receive health care
no matter how poor they are or how sick they are and they should
not have to pay for that. I do believe within that principle it
is perfectly possible for the NHS to make more use of the private
sector production of health care. The agreement we saw two days
ago for the new hospital could be repeated 100 fold over the next
three or four years.
590. What is your view on the Wanless Report?
(Dr Pirie) It rather seems to open a debate by closing
options, that was my first reaction to it.
591. Could I ask Michael Jacobs, you referred
to the fact that there is a shortage of resources in the Health
Service, is it your view that with the current system that we
operate in the Health Service in this country that if we allocated
the proportion of GDP to the National Health Service as is allocated
to health care in France under their system that we would end
up with a Health Service that was more effective, efficient and
better at doing its job than in France?
(Mr Jacobs) Not if we simply did that. If that was
all that we did, if you simply applied more money, it would certainly
be better than it is now, there is no question of that. But it
would still have major problems. I do not find very many people
in this debate who would argue against that. The argument for
some kind of reform has generally been won. The question is what
kinds. My own view is that the NHS is a very curious kind of "Stalinist"
organisation, because it is now devolving budgets at the same
time as being given centralised targets. This creates a rather
curious ambivalence in the way that it is being run. Devolved
budgets should mean, in my view, the devolution of service deliverythat
is the point of decentralising budgets. I am in favour of that.
But that means that you need to limit the number of centralised
targets that come down. Otherwise the devolution of budgets is
merely administrative, and has very little impact on innovation,
choice at a local level. I would like to see administrative decentralisation
of the service.
592. How do you do that without losing the central
principle of equity?
(Mr Jacobs) It depends on the geographical boundary
on which equity is based. The debate about the "post code
lottery" seems to me to be fundamentally misconceived.
It means that in different areas you get different standards of
service depending on decisions made in those areas. That is a
fundamental democratic principle. The post code lottery operates
between the United Kingdom and France. You get different service
levels in France and the United Kingdom because you have different
democratic structures and we designed those. In my view the post
code lottery is legitimate if it is based on democratically accountable
593. Is it all right for a drug not to be available
to somebody in Chepstow that is available for somebody in Gloucester? (Mr
Jacobs) In exactly the same way as it might be available in
France and not in the United Kingdom.
594. That is not the same. (Mr Jacobs)
It is the same principle, because it is about where you draw the
595. In that case you could have a boundary
between the United Kingdom and Malawi. (Mr Jacobs)
The principle is drawing a boundary between Chepstow and Gloucester.
The boundary is a democratic one. We need to decide where are
these decisions made and to whom is the Health Service accountable.
Personally, I would like to see regionally elected Health Authorities
that make those decisions.
596. You mean a regional health service, not
a national health service. (Mr Jacobs) If the people
of Chepstow want a certain kind of service they should elect the
people who make the decision. If that is different from Gloucester
I am willing to accept that.
597. That is already the situation.
598. All of the evidence is that people want
there to be a equivalent service and standard right across the
country. If you ask people the question, do you want the same
level of health service and the same level of education service,
the answer overwhelmingly is yes. (Mr Jacobs) Then
the trade-off they must accept is that you will have a centralised
system that does not create innovation, entrepreneurialism, the
sense of ownership at a local level, because that is what you
will get. There is a trade-off here. I would prefer a trade-off
which had greater choice and innovation, and so on, at a regional
and local level which traded off uniformity of all standards.
I would of course have minimum standards.
599. Did you say regional or local level? (Mr
Jacobs) Personally, I would like to see regionally elected
health authorities. Within this I would have, I think, degrees
of local autonomy. That is the trade-off that needs to be made.
I do not think we can say that we do not like these centralised
directives from Whitehall, which is what many people in the health
service are saying, and then say we want completely universal
and national standards.
1 Note by witness: In so far as the "post
code lottery" results from different areas of the NHS being
less effective or efficient at providing the same service, then
it is a problem that must be addressed. But in part it is not
a "lottery" at all-it is the result of different priorities
being chosen, deliberately, in different areas with different
Note by witness: Minimum standards that applied on a national