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      No choice but to have more choice

      by David Smith

      Choice is the theme of this edition of The Edge, and choice increasingly defines the present government's approach to public services. The greater the choice that the people who use public services have, the more they will drive standards higher. The customer, or client, always knows best, much more than the civil servant in his or her Whitehall office.

      Empower the customer and improvements will result, as sure as night follows day. And if anybody seriously doubts that choice is the way forward, think of the alternative. In a Hobson's choice world, one of no choice at all, customers have to take what they are given, however mediocre. There is no incentive for providers to improve standards and customers are unable to bring pressure to bear.

      The choice, then, seems simple. Give people the ability to choose and you will encourage excellence. Deprive them of that choice ­ the traditional model of public service delivery ­ and you preserve mediocrity.

      So why is it so difficult to translate that simple approach into reality? Why, 60 years into the modern welfare state, have we barely moved beyond first base when it comes to genuine choice in public services?

      The debate is not a new one, as Helen Coleman explains, and dates back at least to the 1950s. So too are the questions that choice brings up. How does the Government prevent choice from reinforcing disadvantage, in a real world where those most likely to take advantage of it are the educated middle-classes? And how do you prevent service providers from responding to greater customer choice by engaging in anti-competitive behaviour? In theory, in other words, hospitals should compete but in practice they may choose to collude.

      There is another factor, which is why governments have tended to approach choice in public services with caution. Given that the process of creative destruction will proceed only slowly ­ ministers are not about to embark on a strategy of closing expensive public sector assets such as hospitals and schools ­ some people will be forced to use public services that they know are not up to scratch. This is not an argument for a lowest common denominator approach to public services. But it does point to the fact that not all customers will end up satisfied with their choice. Most won't. This is particularly the case for public services, where choice is more obviously constrained by resources than in the private sector.

      Who gains most from choice in public services? This is a question on which intelligent people have diametrically opposite views. Thus, Simon Burgess, director of the ESRC Centre for Market and Public Organisation, argues that a properly designed system of school choice would empower children from low-income families and help tackle some of Britain's glaring educational inequalities.

      Stephen Ball of the Institute of Education disagrees. Choice benefits the 'choosers', in his view, and the choosers tend to be those who are able to put in the time and money; the better-off. School choice can be affected by something as straightforward as whether parents have a car ­ and can attend as many open evenings as they like ­ or have to use public transport.

      There is another aspect to choice, the providers' perspective, and it arises particularly in the case of healthcare. How do you stop new private-sector providers, operating treatment centres, cherry-picking the straightforward procedures, leaving traditional NHS hospitals with the complicated, expensive care? Will NHS patients really exercise the kind of choice that takes them to a hospital many miles away from family and friends?

      Choice is undoubtedly a good thing. There is no greater frustration for customers than being stuck with an inefficient monopoly provider. Designing choice systems that work effectively for public services is, however, extremely difficult. Trial and error plays a part, as the Government has discovered. But there is no strong argument against pressing on. There really is no choice.

      David Smith is Economics Editor of The Sunday Times.