Thatcher, Blair and Beauty Pageants – moving mainstream politics

Dan Hannan’s recent Telegraph piece described how Classical Liberal ideas have become part of mainstream UK politics over the course of a generation. It seems apparent that through Thatcher, and arguably continued via Blair, that the case for private enterprise providing services previously run by government has become mainstream.

From my perspective as a GP who provides care, but also is party to those who buy the care on behalf of the NHS, it seems only half the battle has been won. That is the principle that any new service goes out to tender and any organisations, NHS or otherwise, can bid to provide it. The purchasing, however, remains a centralised affair.

Unfortunately the tendering process with public money, above all else, demands that those who make decisions can prove the fairness of their decision making processes. This means that tendering decisions are made on the basis of things that can be measured, and monitored only by targets that can objectively be measured. Often the fact that an organisation has provided a shoddy service elsewhere can’t be assessed in a tender, as this is not easy to demonstrate if challenged in court.

The result is an incentive structure that rewards those who are good at bidding. Like an antiquated beauty pageant the bidders dress up their bids, mention all the buzzwords (replace ‘world peace’ and ‘loving animals’ with ‘integrated care’ and ‘patient empowerment’), yet have no incentive to perform during the contract itself.

No doubt the private providers are more efficient and dynamic than the public organisations they replace, but faced with an unimaginative purchaser, using someone else’s money, the difference between dealing with a single regulated union and a single provider working to contract might be less than hoped.

The answer needs central state controllers to give up their treasured control. I am a crypto-classical-neo-liberal and it is the market mechanism itself that I treasure most, rather than who pays for or provides the services. Thus wherever possible those using services, regardless of who pays for them, should have dynamic choices in which services they utilise, at every possible junction. In health this might mean using Any Qualified Provider (AQP) contracts as the default, rather than the single provider tendering, so that patients can choose, on whatever criteria they wish, supported with relevant data, as to who they access. This can be extended to who administers benefits, provides care services, schooling etc.

This competition at the individual user / customer level is the only way to truly improve such services by making them responsive to the needs of the users. Emerging efficient IT and payment technologies can contribute by helping to unbundle previously large state industries into more efficient, more responsive, more specialised parts.

Of course many will argue that this destabilises providers, making arguments that poorly performing schools need more money, rather than allowing good ones to expand to cope with demand, or that bad hospitals in well served urban areas can’t possibly close. Destabilisation is part of the point of this, in that poor providers don’t thrive, but the argument needs to be repeated in political circles.

More destabilising would be to allow top up or additional services for many of these services. Like 1st class tickets on a train, or freemium phone apps, this helps differentiate the market whilst still providing the core service to all. Only with both provider and purchaser competition in place would these industries fully thrive, and over time the state component could be frozen as more innovative funding, including self pay, insurance, friendly societies and online group purchasing, came into play.

Non government innovations, such as cryptocurrencies and digital autonomous corporations, will provide shocks to help these processes along, but for those who wish to influence the incumbent political landscape a reaffirmation of the desire to open up the markets both for purchasers and providers is no bad way to advance the cause of Liberty.