One of the main architects of Labour's public service reforms defends choiceby Julian Le Grand / January 22, 2006 / Leave a comment
When I first read the title of David Lipsey’s recent Prospect article (“Too much choice,” December 2005), my heart sank. I thought it would be yet another of the many recent polemics against extending choice in public services—but this time written by someone whose views I generally respect.
In fact, it turned out to be a thoughtful and balanced piece. Far from making a blanket condemnation of all forms of choice, Lipsey says choice in public services “may have an important role to play,” and he endorses collective choice by primary care trusts, choice in social care through the direct payments scheme and individual choice of GP.
But of course, the general thrust of his argument is against more choice. In particular, he appears to dislike key aspects of current government policy, especially choice of hospital for elective surgery and parental choice of school. Here, as one of the architects of these policies, I have to take issue with him.
Although he later calls for experimentation and evidence, Lipsey’s opposition to extending choice is formulated mostly on theoretical grounds. He has three basic arguments. First, the areas concerned are characterised by market failure, meaning that owing to externalities and poor information, individual choice cannot work as it does in a supermarket. Second, to extend choice properly requires the provision of excess capacity, thus creating waste and inefficiency. Third, the exercise of choice will increase inequality, with expert choosers choosing the better schools and hospitals, thus rendering them even better off while the worse off are left with sink providers.
The fact that there are long-standing private sectors in healthcare and in education suggests that the specific kind of market failure that he adduces cannot be too onerous a problem. Most healthcare does not generate externalities, and such that it does is best dealt with not by denying patients choice of hospital, but by providing the care free at the point of use—a principle which remains at the heart of government policy. Education externalities are best addressed not by denying parents a choice of school, but by compulsory school attendance and a national curriculum; both of which again are long-standing government policies.
Poor information is a genuine issue for choice—although no more so than with other methods of giving power to users, including their ability to exercise “voice” through measures such as complaints procedures or voting for school boards. Here…