Published by Sir Amyas Morse KCB on 19 March 2015
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Britain has some of the worst public services of any advanced country in the world. The Government’s answer is to spend more money on them and to increase taxes. In the nine years to 2005/06, public spending is being increased by £203 billion to £512 billion – equivalent to an extra £100 every week for every household.
This approach is programmed to fail.
Spending hasn’t improved the performance of public services:
Since the trough of the ERM recession, there has been only one year when taxes fell as a proportion of GDP – the longest such period since the Second World War – with projections showing further increases every year.
National prosperity is driven by productivity, which is damaged by continuous increases in tax and government spending:
High levels of tax and spend and unreformed public services hit the disadvantaged most of all:
Britain is ready for change
Britain has changed immeasurably in the half century since the welfare state was designed – yet public services have not. An increasingly consumerist society is ready for change, but the public has never been presented with an alternative to nationalised healthcare and schools, or offered real choice.
Conventional focus group research sets out only to discover what people think about the services politicians currently offer. Reform commissioned ICM to conduct deliberative polling to discover if totally new ideas could be popular. This found:
Government spending on health and education is now nearly £5,000 per household. Real reform means:
A better way for health
The mission statement of the NHS is to improve the health of the nation as a whole. The result was that choice and individual patient entitlement or rights were simply designed out of the system.
There are three steps to reforming healthcare:
1. Change the NHS mission statement. From being about the collectivised provision of healthcare, it should change to being driven by individual patient need.
2. Liberate the supply side. The NHS would be transformed into a purchasing organisation, with money following the patient, freeing hospitals and other healthcare providers from NHS control and management.
3. Reform the demand side (funding). The Commission proposes two options with similar destinations in an insurance based system. The first, entitlement portability provides an evolutionary path within existing NHS structures and is funded mainly by taxation, whilst the second, compulsory insurance, is a new start.
A better way for schools
The schools system is being choked by increasing central control and a rigid funding mechanism which prevents good schools expanding, keeps bad ones in business and stops new schools offering an alternative. The constriction of supply means parents have very limited choice.
The two components of reform are:
1. Real choice for parents. School funding would follow parent choice – and allow children to be sent to a state or private school. At present funding per pupil only covers running costs and excludes funding for investment. By including capital costs, good schools would get the funds to expand and new schools could open.
2. Removal of central control, targets and intervention. Headteachers would have the freedom to run their schools as they see fit.
A better way to fight crime
The Audit Commission found no consistent link between more resources and better police performance.
The remedy is proper accountability and transparency, with politicians focusing on the outputs and police forces being given the freedom to deliver.
‘Ofcop’, a new regulator, would have a similar function as the utility regulators, working as a substitute for competition to improve efficiency.
The benefits of real reform: