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July 9, 2010 8:35 pm
The benefits of choice and competition in public services “are by no means guaranteed”, John Fingleton, chief executive of the Office of Fair Trading, has warned, as David Cameron advocated the merits of both for schools, hospitals, welfare-to-work and other public services.
The political impossibility of closing some services, such as schools and hospitals, even if they were performing badly, might prove “a fatal impediment” to introducing successful market mechanisms in the public sector, he said.
In a speech this week to the Reform think-tank, Mr Fingleton nonetheless firmly backed the greater use of choice and competition as a means of driving improved performance and innovation, but added that three key issues would be “crucial” to success.
Entry and exit must be easy. Consumers must have simple and understandable information to allow them to exercise choice. And there must be a level playing field between public, private and voluntary providers, he said.
Those buying public services “must address upfront questions such as what happens when a provider fails,” Mr Fingleton said. Could others take it over? And if so, how? For schools, the government appeared to have part of the answer, he said. But it was less clear for other services.
Choice worked well in employment zones, where the long-term unemployed were able to select their welfare-to-work provider. But in health, the complexity of information needed to judge a hospital’s quality was a bigger barrier.
Much remained to be done to create a level playing field in pensions, taxation and regulation to ensure “competitive neutrality”. If the government did not address those, “there is a serious risk that potential new markets go unexploited [and] that service delivery ossifies”.
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