The Welfare State We're In, The website of the book by James Bartholomew
February 22, 2005
Tuesday
The Reform manifesto

I went to the launch of the manifesto of the think-tank, Reform, today. Reform is an excellent organisation - very professional and with an effective approach. It closely analyses what is wrong with various parts of state provision, particularly healthcare and education so far. It offers key facts to opinion formers such as journalists. It offers a very useful daily email summary of the news. But the tough bit is when it comes to suggesting what should be done to make things better.

Medical care

Reform proposes: "Patients would be funded - either through the tax system or by way of universal insurance - to purchase healthcare from providers of their choice"

I am sure that a system such as Reform proposes would be an improvement on the NHS. But I fear there would be problems:

1. NHS hospitals would remain dominant and they are chronically inefficient. I wonder about the accountability and incentives of those who would be working in an NHS hospital which - under the Reform proposals - would no longer run by the centre and would also have no shareholders and not be a charity. Reform suggests that staff and managers would have a 'right to buy' their hospital, thus giving them a commercial stake in its success. But that could be a slow process and might not happen at all. If the staff was allowed to buy, say, St Mary's Hospital in Paddington, they would either not be able to afford it (if they were allowed to sell off some of the property assets) or else they would be highly resticted as owners (if they were not allowed to sell off some of the property assets).

2. As long as the Government was providing the money, it would call the shots. It would regulate and tell people what to do and how to do it - causing damage to the provision. Even though this is not what Reform intends, it is what would happen in due course. When some hospitals failed, there would be irresistible demands for the government to step in and take control. We would be back to square one - state management.

3. If a social insurance model is chosen (which Reform offers as a possibility), there would be a cost problem. In France, for example, the freedom of choice of patients has resulted in huge and growing costs which which the French government has been battling.

4. Those of us who want medical care of a sort that the State is unwilling to approve and pay for, would have to pay for it. We would therefore, as now, have to pay twice for medical care. Once through taxes and once through direct payment.

5. Reform suggests 'co-payment' - in other words getting the patient to contribute to the cost of treatment. Co-payment can get very complicated. It tends to be means-tested, one way or another - otherwise the impoverished person may not be able to afford any treatment. Means-testing by hospitals and doctors would be a major bureaucratic problem. Previous Governments after the war repeatedly looked at charging people for visiting a General Practitioner. Each time it was decided that the costs of administering small co-payments would be so high as to make such a system absurd.

Education

Reform proposes: "school funding would follow parental choice and allow children to be sent to state or independent school, topping up the fees if they so choose".

Problems:

1. State schools would remain dominant and they have major failings.

2. Once Government money was going to private schools, the Government would, in the end, demand more control over what private schools teach, how they teach and what exams they take. This would damage education.

3. Those who gave their children education that was not officially approved would - as now - have to pay twice (once through taxes and once through direct payment). This would apply, for example, to those who chose to educate their own children at home.

The key point with both medical care and education is that the Reform proposals would still leave a major role for the state. In fact, in one respect the state's power would be increased: much of the money curently spent directly by customers on private provision would be replaced by state funding. The true freedom, power and independence this offers - which lead towards competition and high standards for the lowest cost - would be compromised.

The history of the welfare state tells us over and over again that one bit of state interference - however innocently intended - leads to another. It was intended in 1917 that the Government should fund universities but still leave them fully independent. But gradually the independence of universities has been thoroughly undermined. Once the Government provides money, it wants to control how that money is used. It faces criticism if any of the money - taxpayers' money - is used in a way that the public does not approve. So it feels it must control the use of the money. So we are back to state control and the damage that state control causes.

Subsidies by Government to schools in the 19th century led, inevitably, to the demand that the schools accepting Government money should be inspected. Inspection, in turn, led to demands for changes to the schools. Those schools that would not accept the changes demanded, were not approved and therefore did not get the subsidies. Thus Government control arrived though, originally, it was not intended. One piece of State involvement leads to another.

I applaud Reform's courage in making concrete proposals. I readily agree that there is no such thing as an ideal system and that Reform's ideas would be a considerable improvement on what we have now. It is true, too, that we should not get hung up on the idea of a perfect system. It was the idea of perfection that led to state control of both health and education. The result has been much suffering, tens of thousands of premature deaths and mass illiteracy. So we should never be led astray by the vain idea that perfection is possible.

But Reform's ideas in a very particular political context. It is more and more widely agreed and understood that the welfare state has failed. People are therefore casting around for ways in which to change it or roll it back. There may indeed be movement on this at some point in the next decade. It is important that the proposals that eventually carry the day, should have been carefully analysed to see how they might fail to achieve what is intended.

Reform's website, with links to its manifesto, is here.

Posted by James Bartholomew • Indexed in Education • NHS

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