Public provision or public finance
Blog: Blog - Adam Smith Institute
Britain has made the same mistake twice, first in education, and then in health. In both cases the laudable aim was to give everyone access to a valuable service. In 1870 it was the Elementary Education Act, commonly known as Forster's Education Act, which set the framework for schooling of all children between the ages of 5 and 12 in England and Wales.In 1948 it was the National Health Service Act. Free healthcare at the point of use comes from the core principles at the founding of the National Health Service. The 1942 Beveridge cross-party report established the principles of the NHS which was implemented by the Labour government in 1948.In both cases the problem was perceived as one in which a lack of means deprived the poorer part of the population from access to what were deemed to be essential services: education and health. In both cases the decision was taken that these services were to be produced and run by the state.The result has been that state provision has dominated both health and education. The NHS, admirable in many respects, has grown too big to manage. State education has been producer dominated, with parents allocated school places, some of which are clearly delivering a less than adequate preparation for life's needs or for further education or training.Choice and completion, the two factors that lead the private sector to improve its output in terms of both quality and efficiency, have been largely absent from state provision. In education, this lack has been redressed to some extent by the spread of academies and free schools that give schools more independence from local authorities and enable them to experiment, but the remaining state schools offer parents little choice.A more viable model to achieve free healthcare and schooling would be to combine private or independent provision with state finance. In this model, people would choose between schools or different healthcare providers, and in doing so, direct state funding to the providers they have chosen. The schools would receive their funding, weighted by age group, according to the number of students that parents chose to enroll there. Doctors and hospitals would receive their funding based on the number of procedures they carried out, with patients choosing between them, as happens in Australia, where large numbers of UK-trained doctors are choosing to live and work.In this way, the choice and competition so little found in state provision, would be incorporated while maintaining the important principle that the services would continue to be free at the point of use.In retrospect, this should have been done when state education and state health were first introduced. It was not, and because of that, there have been major problems with both services. A change to make it that the money should follow the parent or patient could vastly improve both services. It could correct the mistakes that made both of them under-perform.