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Priority Boarding for Public Services

Douglas Fraser | 20:59 UK time, Tuesday, 30 March 2010

Could Ryanair point the way to the future of Britain's public services?

Just as you pay extra for priority boarding or to check in bags, you could pay more for your own hospital room instead of an open ward, a premium rate to use your local swimming pool when it's less crowded, or for a better quality university degree course?

Not controversial enough? Well, how about a tenner for a visit to your GP?

A premium rate to skip hospital waiting queues on non-emergency operations?

Or fees to get a place at a council school with smaller class sizes and better exam results?

Don't expect them to feature in any of the imminent party manifesto launches.

But the idea of more charging for use of public services is being seen (by some who don't have to appeal for votes, of course) as one of the approaches to the gigantic challenge facing Britain's public finances.

Specifically, the idea is being highlighted by the public sector team at consultants PricewaterhouseCoopers.

In analysis published today, they argue that if Britain were to raise the level of non-tax revenue from around 4% of GDP to nearly 6% - in line with Australia, Canada, Japan and the US - it could close half its huge fiscal gap.

But then, these countries have a lower tax take.

The European way currently brackets Britain closer to France, Germany and Italy, with higher tax revenue and lower user charges as a share of GDP.

Congestion charges

There could be benefits besides increased revenue: it would reduce demand and cost, it could change behaviour (fewer missed medical appointments and reduced car use) and it could enable greater choice to citizen consumers over service levels.

PwC only suggests where increased charges might fall in four broad categories;

In health: prescription charges and dental care.

In education: fees for university tuition and adult skills.

In transport: congestion charging, with road and bridge tolls.

In local authorities: more for parking and leisure.

You'll note that the first three of those present something of a problem for the Scottish government, in that its first two years in office have seen moves in the opposite direction.

Tolls have been removed from bridges and university endowment fees have gone.

And today saw another tranche fall off prescription charges.

SNP ministers have chosen to make such services free for all, while removing means-testing.

But in conceding very tough times ahead, they're going to have to decide where cuts should fall, or taxes and charges should increase.

And without much tax-varying potential, charges may prove a relatively attractive option.

More means-testing could become the least of several evils.

And it's at the heart of a debate opened up last week by the Scottish government and engaged today by the UK government, as Labour set out plans for funding long-term care for the elderly.

When we talk about care being free for such care in Scotland, of course user charges are already there for the so-called 'hotel costs' of an elderly person renting a room and paying for food.

Nothing off limits

It's worth noting the contribution to the public spending debate from Crawford Beveridge, former Scottish Enterprise chief executive, now California-based business executive and leader of the task force asked by finance secretary John Swinney to "consider the implications" of forecasts of public spending reductions in Scotland.

It's also worth noting those terms of reference.

"Considering the implications" doesn't mean coming up with a programme of cuts.

But it does let Beveridge's team prepare the ground for the Scottish government to introduce some unpalatable measures, and perhaps a U-turn or two.

In an interview for Newsnight Scotland, Crawford Beveridge agreed with independent calculations that Scotland will have to find more than £3bn in real terms cuts over the next three years, saying that's the same order of cuts reckoned by the Scottish government's chief economic adviser.

That's roughly a 10th of all spending.

And he stressed nothing is off limits.

He made it clear that he's already looked at the possibility of selling off Scottish Water, and found one significant problem would be that the proceeds would go to the Treasury rather than St Andrew's House.

Here are two quotes from the interview that give a clear view of his direction of travel:

"We've been given a remit that we should not exclude anything. Local authorities, the NHS and civil service have done a very good job and exceeded the efficiency savings they've been asked to make over the past couple of years.

"Now we're down to not being able to meet these cuts through efficiency savings alone.

"And so we're going to start making some hard choices. It's not our job to make those choices, but to lay out what they might be and then allow parliament to consider what the choices may be."

Salami slicing

What's his view of taking the same cut out of every departmental budget?

"My personal view is that salami slicing is a very difficult way to go because it usually means that you're asking people to do a lot more with a lot less resources," says Beveridge.

"When we do this in industry, we try and set priorities and say 'these are the things it's essential we protect and these are the things we need to take some cuts in'."

The same view of efficiency measures is taken by PwC: "The lesson from history is that a focus on efficiency is rarely enough to turn around major fiscal deficits - governments must transform their approach and seek radically new ways of doing things".

Along with user charges, it suggests there should be extension of a health service pricing mechanism to other services.

That means some procedures have a tariff set, for which rival hospitals have an incentive to compete.

Could that apply to schools? To social care?

We'll have to wait until June to see if Crawford Beveridge is putting a strong emphasis on user charges.

As a clue, in his Newsnight Scotland interview, he pointed out some better off pensioners could afford to pay their bus fares.

    Out of the silo
    In the business of government, one of the challenges is how to get ministers to think beyond their departments and give up budgets for lower priority programmes?
    PwC's report includes two novel ideas, at least for Westminster and Whitehall.
    One is to get them to agree to the scale of departmental cuts before allocating departmental portfolios. It's not clear how you could do that without having leaderless departments for a prolonged period.
    But Scandinavian governments has already shown how you can take ministers out of their departmental, or so-called silo, mindsets by taking them out of their departments - putting them all together in one office block.
    Indeed, isn't that what the Scottish Government already does? So already, maybe it's half way to solving its problem.

Comments

  • Comment number 1.

    Mr. Fraser:

    Could Ryanair point the way to the future of Britain's public services?

    Very much, true regarding the Ryanair programme will be the "future" in the British public services....

    (D)

  • Comment number 2.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 3.

    Mr Fraser
    Ryanair approach to Public services great idea, however there may be a few hiccups i.e
    1, There will be a £10 booking fee to see your Doctor ( Non - refundable )bookings can be phoned in £1 per minute.
    2, To see your Doctor make your own appointment online failing to do so you will be charged 40 Erus at reception.
    3, If you are seriousley ill there will be an extra charge.
    4, If your are over the the average Wheight there shall be a extra charge
    per Kilo.

  • Comment number 4.

    I hope so.

    Please note though that this and the Scottish (plus Welsh) approach are NOT incompatible.

    The lowering of tolls, charges and university fees are great ideas, as is introducing higher fees for preferential services. Simply put keep the free prescriptions, but offer extra services such as telephone or online repeat prescription requests (at £1 per request) and weekday evening appointments (at £10 each). On the whole increase the range of options available, the base option being cheape for more inclusion with premium options for those willing and able to pay for the priveledge. But most importantly let US choose, do not impose some illogical means testing on us and then expect people not to try and fiddle the system. People do not mind paying more for a better service, but they refuse to pay more just because they earn more and rightly so.

  • Comment number 5.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 6.

    My mind boggles at the selfishness of all this. Obviously the posters have excellent health and a large disposable income. What next, a cull of the elderly and the sick? Now where did I hear this kind of thing before...ummm ah...YES, The Third Reich!!!!

  • Comment number 7.

    Douglas,

    I suspect these three wise men do not, in fact, have an 'open remit'. All Mr Beveridge has said so far indicates that they are assuming that we need to cut public services. This is simply a big business driven assumption.

    In fact, a) UK debt is not significantly larger than other comparable European countries, b) the deficit is not as large proportionally as after the War, when we were able to create the NHS.

    What has happened is that a very large amount of public cash has been given to failing, private businesses (mainly banks) to stop them going bust. Now they and other private companies (including PriceWaterhouseCoopers – and what is their responsibility for auditing these failed banks one wonders?) say we have to cut other public sector spending to pay for this.

    I think the people of Scotland (and the UK) would rather like to consider other alternatives. For example:
    We could make the sector that caused the imbalance in public sector spending, (if imbalance it is) contribute rather more than they currently are doing to pay off the money they owe. (Either by increased taxes, or by paying back loans etc). Indeed Ryanair themselves might consider a realistic payment to compensate for the climate damage they do.

    We could look at the whole public spending package and see if there are genuine items of waste - UNISON has recently suggested cutting the use of private consultants by the public sector, not replacing Trident, or introducing ID cards, abolishing the Scottish Futures Trust and other forms of PFI. Are the three going to consider these options?

    It may well be that (boosted by the continuing investment by the public sector)return to growth is faster than predicted. There are some signs of increased growth already. If taxation is fair, that is one method of cutting the deficit.

    However the likely truth is that it will require some of all of this. What it does NOT need is for damaging cuts to be speedily implemented on our increasingly in-demand public services. That way lies increased poverty and suffering, more demand on public finances (via increased demand for benefits etc) and a real risk of a return to recession.

    Are these items on the three's aganda? If not, they should be.

  • Comment number 8.

    So the Tories want to run the UK in accordance with the no frills policy of Ryaniar.
    I guess this means that anyone who wanted a little frill or two would have to pay extra? I want to be clear that I understand this. Does it mean, for example, that if you need an oxygen tank, you can get the oxygen tank but the air inside the oxygen tank is a frill?
    Sounds good for the affluent, but somewhat catastrophic for the poor.
    Here I thought the Uk was trying to bring about a more classless society. Has anyone told the Conservatives about this "classless society"?
    Ryanair once investigated the possibility of putting people in the cargo hold, if they just wouldn’t freeze to death. I guess this is what you would call "Cargo Class" without frills (or heat).
    Call me socialist, call me worse than socilaist, but I believe in the dignity and worth of each and every human being, regardless of his/her financial position; so, I am affronted that some people will be able to pay for frills and get them; and some people will not be able to pay for frills and will not get them - in fact, may even get their service a little slower than the wealthy.
    Sorry, Conservatives. Sorry, David Cameron: This Ryanair stuff is not visionary; it simple sees the rich and shuts its eyes to the poor.
    Count me out.
    A Public service, as its name suggests is is a service to the public, all of the public…with the same level of service.

  • Comment number 9.

    I am tired of hearing about airlines' problems and how some companies are experiencing profit losses. I just want them to fly on time and stop causing chaos in the skies. I regularly travel on business with BA and I must say, usually the service is great. But other airlines such as Ryanair are frequently late and I have had a number of vacations ruined thanks to their mishandling of my luggage. Many of the last minute sites listed on www.dozenvacation.com offer better deals than the airlines' direct websites. I just wish that the airline operators can limit their delays so passengers like me do not face any more travel misery.

 

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