Following his victory on the tuition fees vote in January, Tony Blair vowed to carry on the process of public service reform. When looking at our neighbours across the Channel, his determination is well founded. Across Europe, but most notably in the Netherlands and Denmark, progressives have been punished for their failure to deliver on reforms to the public sector – suffering at the hands of liberal and conservative coalitions whose policies seem more in tune with the aspirations of the public.
Major reforms are needed because an ageing population combined with a less deferential public who expect more from their public services has brought about simultaneous increases in demand and expectations. In response, progressives across Europe are adopting a two-pronged approach: one that promotes a greater diversity in the services offered, and opens new avenues of funding.
Many on the left in Britain have criticised the introduction of choice into universal systems – claiming that it will lead to little more than the marketisation of the public realm, transforming the citizen into a consumer, and thus, apparently, leading inexorably to greater inequality. But this view is misguided.
First, social democrats are not in the business of introducing greater choice in public services for its own sake – the ultimate test of any proposal will always be whether or not it advances equity. Universal, one-size-fits-all public services never produced the equality we had initially hoped for.
Second, it is not simply that choice and the values of public service can be compatible, but rather that releasing public services and public sector workers from oppressive central controls can actually increase motivation and improve the public service ethos. In Sweden and Norway, for example, the introduction of voucher-like systems into education and care for the elderly has increased the quality of the services provided and produced greater levels of job satisfaction among service staff.
If we reject choice in public services, then not only do we risk losing support for them within the middle classes, we also fail to respond to the aspirations and needs of those who feel marginalised or constrained by the current system, including public service workers themselves. If social democrats are looking to help their citizens embrace the future with optimism and to motivate service workers, then rejecting the aspirations of both seems rather unwise.
Critically, of course, the introduction of choice is not simply about improving the responsiveness of public service providers to the needs of individual citizens, it also aims to drive innovation and efficiency gains – and here again, devolving professional judgement to services providers can be key.
Of course, slower growth in GDP combined with ageing populations and declining birth rates is forcing social democrats across Europe to rethink and redesign their traditional funding systems as well. Today, healthcare spending in OECD countries directed to the over-65s amounts to between 40 and 50 percent out of the total health budget. Over the next decade, the baby-boom generation will pass the 65 threshold, and these tensions will escalate.
The response to this impending crisis appears common, almost regardless of the funding system that predominates in a particular country. For example, those systems that are in the main financed through general taxation, such as Sweden, have been steadily raising co-payments and widening the scope of private insurance. Similarly, in Germany, where social health insurance contributions form the bulk of the funding system, co-payments have also been augmented.
In the UK, of course, increased investment in higher education has been achieved through tuition fees, while in the health sector increased taxation in the form of national insurance payments has been the preferred method. However, whether achieved through taxation or user charges, the key goal of sustainable reforms remains the same: excellent public services, universal to all, tailored to each.