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Contemporary Policy & Society Contemporary Policy & Society SOW 1043MSOW 1043M

Lecture 1Lecture 1

How do we Meet our Needs?:How do we Meet our Needs?:Understanding Welfare PluralismUnderstanding Welfare Pluralism

ororThe Mixed Economy of WelfareThe Mixed Economy of Welfare

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What is to be covered in the What is to be covered in the lecture ?lecture ?

i)i) Introduction – how do we meet our needs?Introduction – how do we meet our needs?

ii)ii) Descriptive – largely - account of all sectors of the mixed Descriptive – largely - account of all sectors of the mixed economy of welfare:economy of welfare:

• State SectorState Sector• Fiscal ( or Tax) WelfareFiscal ( or Tax) Welfare• Occupational WelfareOccupational Welfare• Voluntary Sector – including community actionVoluntary Sector – including community action• Informal SectorInformal Sector• Market or commercial/private provisionMarket or commercial/private provision

Will deal in each with some aspects that are important for rest of Will deal in each with some aspects that are important for rest of unitunit

iii)iii) Changing Welfare Mix – including explaining quasi-marketsChanging Welfare Mix – including explaining quasi-markets

iv) State Revisitediv) State Revisited

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i)i) How do we meet our needs?How do we meet our needs?

Think of Think of welfare welfare – automatically think of state provision– automatically think of state provision

Principally though of course we look to Principally though of course we look to our wageour wage – if in work – – if in work – or to our or to our familiesfamilies and and the statethe state if below or above working if below or above working

ageage

Most people….most of the time…..appear to want to enter the Most people….most of the time…..appear to want to enter the labour market – allowing them to enter other markets to labour market – allowing them to enter other markets to

meet their needsmeet their needs

Markets appear to allow ‘us’ choice and a wide variety of it – Markets appear to allow ‘us’ choice and a wide variety of it – and value - we try to select and pay what our budgets allowand value - we try to select and pay what our budgets allow

Of course, some things we cannot afford to purchase easily – Of course, some things we cannot afford to purchase easily – large operations; our primary and secondary educations; large operations; our primary and secondary educations;

our housesour houses

So the state – or private companies (mortgages) have So the state – or private companies (mortgages) have historically stepped in – why? – next weekhistorically stepped in – why? – next week

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ii) ii) Descriptive Account of Different Sectors of Descriptive Account of Different Sectors of Welfare ProvisionWelfare Provision1 1 State ProvisionState Provision

The British state principally provides 5 social The British state principally provides 5 social services:services:

1.1. Social Security – benefits, pensions etc – income Social Security – benefits, pensions etc – income maintenancemaintenance

2.2. Education Education 3.3. HealthHealth4.4. HousingHousing5.5. Personal Social ServicesPersonal Social Services

The state here of course, refers also to the local state The state here of course, refers also to the local state – or what is more commonly regarded as local – or what is more commonly regarded as local

governmentgovernment

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The State : not just a provider….The State : not just a provider….The state must be seen as The state must be seen as more thanmore than::

• A providerA provider…………………………

……alsoalso : :

• A subsidiserA subsidiser e.g. of voluntary organisations e.g. of voluntary organisations

• A regulatorA regulator e.g. legal rules – private pensions & e.g. legal rules – private pensions & health insurance; community care regulationshealth insurance; community care regulations

• An employerAn employer e.g. from civil servants to cleaners e.g. from civil servants to cleaners

The ways and mix of these four functions are slowly The ways and mix of these four functions are slowly altering – we will return this at (iii) and (iv) below, and altering – we will return this at (iii) and (iv) below, and

later in the unitlater in the unit

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Development of British Welfare Development of British Welfare StateState

The state has historically developed provision in many of The state has historically developed provision in many of these areas – notably housing and health - because there these areas – notably housing and health - because there was concern about the general population’s welfare….and was concern about the general population’s welfare….and market provision was unable or unwilling to meet such market provision was unable or unwilling to meet such needs…..i.e. did not think profits could be madeneeds…..i.e. did not think profits could be made

Expenditure on welfare by the state has grown from:Expenditure on welfare by the state has grown from:

• 2.6% of GDP in 1900 to2.6% of GDP in 1900 to• 11.2% by 1950 to 11.2% by 1950 to

• 22.6% by 1991……to 22.6% by 1991……to • approximately 25% nowapproximately 25% now

What other forms of welfare provision are there?What other forms of welfare provision are there?

Well obviously…….and secondlyWell obviously…….and secondly

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22 Fiscal WelfareFiscal Welfare

Of course the state pays for welfare Of course the state pays for welfare largely out of taxation largely out of taxation

Fiscal welfare was defined by Titmuss asFiscal welfare was defined by Titmuss as

welfarewelfare that derives from decisions that derives from decisions notnot to to collect resources from people i.e. tax relief collect resources from people i.e. tax relief

& allowances& allowances

Therefore this is welfare that can be seen as Therefore this is welfare that can be seen as largely ‘invisible’ but very important to largely ‘invisible’ but very important to

peoples’ welfare – let’s see some peoples’ welfare – let’s see some examplesexamples

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Think of, for example:Think of, for example:

• Working & Child tax CreditsWorking & Child tax Credits – which have – which have clearly helped lower income families since clearly helped lower income families since 20032003

• Tax free pensions savingsTax free pensions savings – last year – last year estimated that £12 billions set aside by rich estimated that £12 billions set aside by rich tax payers last financial year. Therefore tax payers last financial year. Therefore £4billions lost to Exchequer. This is ‘invisible’ – £4billions lost to Exchequer. This is ‘invisible’ – unless you know what to look for – and is - unless you know what to look for – and is - clearly helping create “two nations in old age”.clearly helping create “two nations in old age”.

• General tax credits & allowancesGeneral tax credits & allowances – in 2005-06 – in 2005-06 income tax reliefs totalled £24 billions – 18% income tax reliefs totalled £24 billions – 18% of all collected income tax!of all collected income tax!

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Different Responses to State and Fiscal Different Responses to State and Fiscal WelfareWelfare

There is considerable media and public unease about so-called welfare scroungers – There is considerable media and public unease about so-called welfare scroungers – benefit fraudbenefit fraud

But much less so about But much less so about tax evasiontax evasion – indeed companies and private individuals pay – indeed companies and private individuals pay accountants large sums to find clever ways to pay less taxaccountants large sums to find clever ways to pay less tax

Amount lost to Treasury :Amount lost to Treasury :

in in benefit fraudbenefit fraud – UK government estimates between £2 and 7bn – however as – UK government estimates between £2 and 7bn – however as Sainsbury R argues in Sainsbury R argues in PovertyPoverty, 108, 2001, CPAG 75% of fraud in Income Support , 108, 2001, CPAG 75% of fraud in Income Support

& Jobseekers Allowance claims is actually overpaying – i.e. errors by officials!& Jobseekers Allowance claims is actually overpaying – i.e. errors by officials!

in in tax evasiontax evasion – UK govt estimated in 2006 £60 bn underpayment into pension – UK govt estimated in 2006 £60 bn underpayment into pension schemes alone each yearschemes alone each year

Guardian estimates (23/7/02) £20 bn saved by use of corporate tax avoidance Guardian estimates (23/7/02) £20 bn saved by use of corporate tax avoidance methods re VAT alonemethods re VAT alone

Scase estimates that 40% of all UK tax payers are avoiding some paymentScase estimates that 40% of all UK tax payers are avoiding some payment

So our wage/earnings – and ability to keep our job, be taxed and gain rewards from So our wage/earnings – and ability to keep our job, be taxed and gain rewards from the wage and our contributions – are clearly vitalthe wage and our contributions – are clearly vital

Jobs are important to how we meet or needs – our welfare - in other vital ways as Jobs are important to how we meet or needs – our welfare - in other vital ways as wellwell

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33 Occupational WelfareOccupational WelfareThese are advantages people derive from their employment. These are advantages people derive from their employment. Some we all enjoy :Some we all enjoy :

• Paid holidaysPaid holidays• Maternity & paternity leave, etcMaternity & paternity leave, etc

Others are particular to certain jobs:Others are particular to certain jobs:

• Subsidised housing, canteens & gymsSubsidised housing, canteens & gyms• Company cars & housingCompany cars & housing• Occupational pensionsOccupational pensions• Life assurance policiesLife assurance policies• Private health insurance schemesPrivate health insurance schemes• etcetc

The extent of which is extensive – very tough to estimate but The extent of which is extensive – very tough to estimate but Farnsworth K (2004) Welfare through Work : an Audit of Farnsworth K (2004) Welfare through Work : an Audit of Occupational Social Provision at the Turn of the New Century, Occupational Social Provision at the Turn of the New Century, Social Policy & AdministrationSocial Policy & Administration, Vol. 35, No 5, pp 437-455……, Vol. 35, No 5, pp 437-455……makes an attemptmakes an attempt

The fourth aspect of welfare pluralism concerns voluntary donations The fourth aspect of welfare pluralism concerns voluntary donations and civic activitiesand civic activities

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44 Voluntary Action – including community actionVoluntary Action – including community action

The scale of UK voluntary activity is wide and diverseThe scale of UK voluntary activity is wide and diverse

Westall (2005, pp 76-8) suggests there are:Westall (2005, pp 76-8) suggests there are:

• 220,000 ‘not for profit’ organisations220,000 ‘not for profit’ organisations• 100,000 community groups100,000 community groups

• 600,000-900,000 micro groups600,000-900,000 micro groups

According to the Charity Commission, the total According to the Charity Commission, the total annual income for all registered charities was £34, annual income for all registered charities was £34,

863,247, 125 millions or 863,247, 125 millions or £35 billion£35 billion(Source (Source

www.cafonline.org/research/factsandfigures.cfmwww.cafonline.org/research/factsandfigures.cfm))

in 2003/04in 2003/04

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% Share given privately by cause, % Share given privately by cause, 2006/072006/07

1.1. Medical ResearchMedical Research 17%17%2.2. ReligiousReligious 16%16%3.3. Children & Young PeopleChildren & Young People 12%12%4.4. HospicesHospices 11%11%5.5. Overseas AidOverseas Aid 9% 9%6.6. EducationEducation 6% 6%7.7. Animal welfareAnimal welfare 5% 5%8.8. DisabledDisabled 4% 4%9.9. HomelessHomeless 3% 3%10.10. EnvironmentEnvironment 3% 3%11.11. SportsSports 3% 3%12.12. ElderlyElderly 2% 2%13.13. HealthHealth 2% 2%14.14. ArtsArts 0% 0%15.15. OtherOther 0% 0%

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Where Do Charities Get Their Money From?Where Do Charities Get Their Money From? Source of Income Source of Income 2003/042003/04

Income in £millionsIncome in £millions

FundraisingFundraising IncomeIncome 3,229 3,229

Legacy IncomeLegacy Income 1,0651,065

Income from LotteryIncome from Lottery 252252

Income from goods to shopsIncome from goods to shops 383383

Total Voluntary IncomeTotal Voluntary Income 4,9304,930

Government grantsGovernment grants 1,4051,405

EU grantsEU grants 507507

Other grantsOther grants 2,2502,250

Total Non-Voluntary Total Non-Voluntary IncomeIncome

4,1634,163

TOTAL INCOMETOTAL INCOME £9,093£9,093

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Changes in Giving HabitsChanges in Giving HabitsInternational issues have increased enormously in popularity since LiveAid International issues have increased enormously in popularity since LiveAid

in the 1980sin the 1980s

Tsunami Appeal raised £2bn in 2 weeksTsunami Appeal raised £2bn in 2 weeks

Some charities – Medicin Sans Frontiers – in Australia received £80 millions Some charities – Medicin Sans Frontiers – in Australia received £80 millions tried to redirect – some controversytried to redirect – some controversy

Cancer and animal causes always popular in UKCancer and animal causes always popular in UK

Charities for the physically disabled & blind people have become less popular Charities for the physically disabled & blind people have become less popular in recent yearsin recent years

In the USA people give 2% of their income to charities – in the UK 0.5%In the USA people give 2% of their income to charities – in the UK 0.5%

The corporate sector – 1% of companies income in US – half that in UKThe corporate sector – 1% of companies income in US – half that in UK

These appear HUGE sums of money – but they are TINY compared to what is These appear HUGE sums of money – but they are TINY compared to what is required to run an adequate state health service, education system or required to run an adequate state health service, education system or

income maintenance system as we will see over the weeksincome maintenance system as we will see over the weeks

Giving implies ALTRUISM – worth thinking about the UK’s blood donation Giving implies ALTRUISM – worth thinking about the UK’s blood donation system – see Titmuss R system – see Titmuss R The Gift RelationshipThe Gift Relationship

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Strengths & Weaknesses of Voluntary Strengths & Weaknesses of Voluntary SectorSector

StrengthsStrengths

- seen as more responsive – tackling issues - seen as more responsive – tackling issues stigmatised or ignored by mainstream servicesstigmatised or ignored by mainstream services

- less bureaucratic – are they?- less bureaucratic – are they?- often directly involving users- often directly involving users

WeaknessesWeaknesses

- difficult for some large charities not to also - difficult for some large charities not to also ossify into bureaucratic rigidityossify into bureaucratic rigidity

- maybe too focussed on their own cause – self - maybe too focussed on their own cause – self serving – and not equitableserving – and not equitable

CAF estimate that charities spend on average CAF estimate that charities spend on average 13/14% of their income on administration and 13/14% of their income on administration and

fund-raisingfund-raising

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55 Informal SectorInformal Sector

By the informal sector we mean the role played by family, By the informal sector we mean the role played by family, friends and neighboursfriends and neighbours

Of course, this support Of course, this support is assumedis assumed by the other sectors – by the other sectors – notably the state when planning community care; and the notably the state when planning community care; and the

private sector in selling residential care, health insurance and private sector in selling residential care, health insurance and pension provisionpension provision

Equally, of course, when the nature of the welfare/services Equally, of course, when the nature of the welfare/services supplied by the other sectors changes – this will in turn affect supplied by the other sectors changes – this will in turn affect

family life and supportfamily life and support

Obvious example, is the huge increase in women entering the Obvious example, is the huge increase in women entering the labour market to meet their needs in the post 2labour market to meet their needs in the post 2ndnd World War World War

periodperiod

Demographic changes and labour mobility have affected for the Demographic changes and labour mobility have affected for the worst our ability worst our ability to care forto care for our close and extended families our close and extended families

Not possible to examine any welfare provision – least of all this Not possible to examine any welfare provision – least of all this one – without being forced to notice………one – without being forced to notice………

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Gender Divisions in WelfareGender Divisions in Welfare

It is relatively easy to perceive a clear It is relatively easy to perceive a clear gender divisiongender division in informal sector in informal sector caringcaring

Cultural patterns around care of children, older & disabled people as well as in Cultural patterns around care of children, older & disabled people as well as in routine domestic work ‘suggest’ such work routine domestic work ‘suggest’ such work should should be carried by women be carried by women

This is a good example of This is a good example of an ideological beliefan ideological belief – women are ‘naturally’ better – women are ‘naturally’ better carers and therefore expectations about their roles – we will look further at carers and therefore expectations about their roles – we will look further at

ideologies in Week 5ideologies in Week 5

It is estimated that if every hour women spent on care and housework were paid It is estimated that if every hour women spent on care and housework were paid each year at the minimum wage – the costs would be much higher than the each year at the minimum wage – the costs would be much higher than the

total GDP !!!total GDP !!!

We will pay considerably greater attention to gender in later weeksWe will pay considerably greater attention to gender in later weeks

But we should also recognise that such gender divisions have clear effects in But we should also recognise that such gender divisions have clear effects in other sectors too – for example private or commercial provisionother sectors too – for example private or commercial provision

Married women – have a ‘gendered’ & inequitable access to pensions – their Married women – have a ‘gendered’ & inequitable access to pensions – their abilities to contribute being severely disadvantaged by being married, caring abilities to contribute being severely disadvantaged by being married, caring

for children, working part-time, etcfor children, working part-time, etc

Beveridge Report ‘defined’ men as wage earners and women and children as Beveridge Report ‘defined’ men as wage earners and women and children as dependents – another example of how ideologies workdependents – another example of how ideologies work

The role of carers now features more and more in social policy – see Adult The role of carers now features more and more in social policy – see Adult Community Care moduleCommunity Care module

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66 Commercial, Market or Private Commercial, Market or Private WelfareWelfare

Private market provision has historically existed Private market provision has historically existed alongside UK state provision – obvious examples alongside UK state provision – obvious examples

being public schools, and private health insurancebeing public schools, and private health insurance

Here people Here people choosechoose to pay their taxes but not use to pay their taxes but not use the public provision that is provided by them…the public provision that is provided by them…

……they pay extra fees or premiums for what they they pay extra fees or premiums for what they regard as a ‘better’ serviceregard as a ‘better’ service

They are not opting out – they still pay taxesThey are not opting out – they still pay taxes

There is much debate about the effects of such There is much debate about the effects of such purchases – do they promote inequality and/or purchases – do they promote inequality and/or sustain privilege?– particularly with regard to sustain privilege?– particularly with regard to

private schoolsprivate schools

We will discuss this in seminars todayWe will discuss this in seminars today

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On the other hand of course…..On the other hand of course…..

The majority of us appear to want to buy our houses in the private The majority of us appear to want to buy our houses in the private marketmarket

10% of British house dwellers were owner occupiers in 1910; 31% in 10% of British house dwellers were owner occupiers in 1910; 31% in 1951; 54% in 1981 and 68% in 2000…and growing….well until the 1951; 54% in 1981 and 68% in 2000…and growing….well until the

recent ‘credit crunch’!!!recent ‘credit crunch’!!!

This also is a process with huge inegalitarian effects – generating This also is a process with huge inegalitarian effects – generating much wealth for ownersmuch wealth for owners

Between 1981 and 2000 the number of publicly rented, council Between 1981 and 2000 the number of publicly rented, council houses/social housing has halved – from 34% of all housing supply houses/social housing has halved – from 34% of all housing supply

to 16%to 16%

A key function of social housing is to provide housing that is A key function of social housing is to provide housing that is affordableaffordable to people on low incomes. Rents in the social housing to people on low incomes. Rents in the social housing

sector are kept low by state subsidiessector are kept low by state subsidies

1.7 million families presently on waiting lists for social housing in 1.7 million families presently on waiting lists for social housing in England alone….predicted by The Guardian to grow to 5 millions England alone….predicted by The Guardian to grow to 5 millions

for the UK over next five years!for the UK over next five years!

There is a crisis in social housing in the UK for poorer people!!There is a crisis in social housing in the UK for poorer people!!

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Advantages of Market ProvisionAdvantages of Market ProvisionAs we are constantly purchasing in markets this As we are constantly purchasing in markets this

should not be too tough to work out – think of a should not be too tough to work out – think of a small village market and buying foodsmall village market and buying food

• Right wing thinkers describe the natural flow of Right wing thinkers describe the natural flow of markets – a natural social order & self regulatemarkets – a natural social order & self regulate

• Markets do bring together very diverse people & Markets do bring together very diverse people & commodities internationally at a attractive, cost commodities internationally at a attractive, cost effective prices e.g. Friedman’s pencil exampleeffective prices e.g. Friedman’s pencil example

• Markets contain 1000s of pieces of information Markets contain 1000s of pieces of information which no state regulator could ever have under which no state regulator could ever have under

their controltheir control• Market provision can clearly act as a powerful Market provision can clearly act as a powerful

catalyst to innovation in public and voluntary catalyst to innovation in public and voluntary provision – best value; customer care etc provision – best value; customer care etc

• For state provision can be very one dimensional and For state provision can be very one dimensional and paternalistic – one type of provision, no choice paternalistic – one type of provision, no choice

BUTBUT

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However……However……Disadvantages of Market ProvisionDisadvantages of Market Provision::

• Market production decisions are Market production decisions are alwaysalways driven by driven by profit considerations – not welfare ones – try getting profit considerations – not welfare ones – try getting private health insurance when very sick!!private health insurance when very sick!!

• Consumers face charges – which some will be Consumers face charges – which some will be unable or unwilling to pay – e.g. the need to put unable or unwilling to pay – e.g. the need to put down public sewers to prevent spread of down public sewers to prevent spread of cholera….many objected to paying in the 1820-30s, cholera….many objected to paying in the 1820-30s, c.f. home care nowc.f. home care now

• In a society with steep inequalities a pure market In a society with steep inequalities a pure market system will Appears inevitably fail to meet the system will Appears inevitably fail to meet the service demands of poor people – 16 millions with service demands of poor people – 16 millions with no health insurance in the USno health insurance in the US

• Access to more and more previous British state Access to more and more previous British state welfare provision is becoming welfare provision is becoming assessedassessed – meaning – meaning that those not seen as eligible have to resort to that those not seen as eligible have to resort to markets – e.g. private residential care & other markets – e.g. private residential care & other community care services. Also, 61% of resident’s community care services. Also, 61% of resident’s fees in private homes are paid for by the state! See fees in private homes are paid for by the state! See week 7week 7

• Markets appear to produce a great deal of ephemera Markets appear to produce a great deal of ephemera – useless tat….alongside vital commodities– useless tat….alongside vital commodities

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iii) New Welfare Mixiii) New Welfare Mix

Early 21Early 21stst Century Britain : New Mix of Private & Century Britain : New Mix of Private & Public ProvisionPublic Provision

Subsequent to the Thatcher/ Major years, 1979-1997, Subsequent to the Thatcher/ Major years, 1979-1997, both main political parties appear to have accepted both main political parties appear to have accepted

– to varying degrees – a new balance between – to varying degrees – a new balance between public & privatepublic & private

Might be interesting to explore your thoughts in Might be interesting to explore your thoughts in seminars about whether YOU think this is a good or seminars about whether YOU think this is a good or

a bad thinga bad thing

Also about what you think about the involvement of Also about what you think about the involvement of markets in public welfare provision generallymarkets in public welfare provision generally

Let’s remind ourselves of some of key aspects of this Let’s remind ourselves of some of key aspects of this changechange

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Key Aspects of Changing Welfare Mix : Key Aspects of Changing Welfare Mix : 1980 – 2005 (1)1980 – 2005 (1)

• Sale of Council Houses – not just to private Sale of Council Houses – not just to private individuals but also Housing Associationsindividuals but also Housing Associations

• Private provision in health has been encouraged – Private provision in health has been encouraged – over 650,000 people now with private health over 650,000 people now with private health insurance – just over 200,000 in 1974/5. 50 new insurance – just over 200,000 in 1974/5. 50 new private hospitals between 1979 & 1989private hospitals between 1979 & 1989

• Between 1974/5 & 1994/5 number of children in Between 1974/5 & 1994/5 number of children in private education reached a peak of 7.4% in private education reached a peak of 7.4% in 1989/901989/90

• Sick Pay & Maternity Pay transferred Sick Pay & Maternity Pay transferred social security social security protection from DSS to private employersprotection from DSS to private employers

• The use of charges increased generally in The use of charges increased generally in community & health care – 20p in 1979; 1979 over community & health care – 20p in 1979; 1979 over £3…..what next?£3…..what next?

• Public regulation of services such as Public regulation of services such as public public transporttransport was largely withdrawn – commercial was largely withdrawn – commercial providers now compete….big issues with Railtrack!providers now compete….big issues with Railtrack!

• Introduction of Introduction of quasi-marketsquasi-markets – particularly in social – particularly in social care. The state subsidising private care homes and care. The state subsidising private care homes and many for-profit organisations now involved in the many for-profit organisations now involved in the delivery of residential and day caredelivery of residential and day care

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Key Aspects of Changing Welfare Mix : Key Aspects of Changing Welfare Mix : 1980 – 2005 (2)1980 – 2005 (2)

The new welfare mix now involves:The new welfare mix now involves:

• Direct purchase of some services – e.g. houses and glassesDirect purchase of some services – e.g. houses and glasses

• Large usage of private based insurance in pensions and Large usage of private based insurance in pensions and healthhealth

• Large usage of occupational welfare schemes – sickness pay; Large usage of occupational welfare schemes – sickness pay; pension cover; cars; private health cover etcpension cover; cars; private health cover etc

• Increasing use of Increasing use of chargescharges to cover the costs of much to cover the costs of much provision previously offered free e.g. charges for personal provision previously offered free e.g. charges for personal social services such as home care and meals on wheels; social services such as home care and meals on wheels; dental services etcdental services etc

• Private providers delivering publicly funded services e.g. Private providers delivering publicly funded services e.g. residential care under contracts from state agencies/local residential care under contracts from state agencies/local authoritiesauthorities

• Increasing numbers of Increasing numbers of partnerships partnerships between private between private companies and government to invest in capital projects such companies and government to invest in capital projects such as new hospital buildings – the private finance initiativeas new hospital buildings – the private finance initiative

• Widespread use of quasi-markets – what are these?Widespread use of quasi-markets – what are these?

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What are quasi-markets?What are quasi-markets?

Both main political parties believe that the use of quasi Both main political parties believe that the use of quasi markets allows the advantages of state and market markets allows the advantages of state and market provision to be realised. Not really that new - such provision to be realised. Not really that new - such

processes have existed previouslyprocesses have existed previously

Based in state services – funding guaranteed by the state with Based in state services – funding guaranteed by the state with access to generally free services – so one excluded by lack access to generally free services – so one excluded by lack

of resources/povertyof resources/poverty

However a division is introduced between However a division is introduced between providersproviders &&

purchaserspurchasers (or consumers) (or consumers)

So that purchasers can So that purchasers can choose choose between providersbetween providers

Therefore providers have to pay attention to consumer Therefore providers have to pay attention to consumer preferences – and consumers have an organisation preferences – and consumers have an organisation

representing their interestsrepresenting their interests

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Examples of Quasi MarketsExamples of Quasi Markets

TWO EXAMPLESTWO EXAMPLES

• Local authorities are now Local authorities are now purchaserspurchasers of of residential care – residential care – providersproviders sometimes sometimes themselves; private providers; voluntary themselves; private providers; voluntary organisations – have to purchase 85% organisations – have to purchase 85%

from market/voluntary sectorfrom market/voluntary sector

• Providers such as Providers such as hospitalshospitals are are organisationally & financially independent organisationally & financially independent

trusts trusts & their care is & their care is purchasedpurchased by by primary care trustsprimary care trusts representing GPs representing GPs

and other community based patient and other community based patient servicesservices

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Dangers in Use of Quasi MarketsDangers in Use of Quasi Markets• The incentives of the private profit motive might distort The incentives of the private profit motive might distort

incentives - affecting the incentives - affecting the rationalerationale for public welfare delivery. for public welfare delivery. For example, the work of welfare professionals are increasingly For example, the work of welfare professionals are increasingly having to involve having to involve accountancyaccountancy and and budget management skillsbudget management skills

• Quasi markets may then introduce Quasi markets may then introduce price sensitivityprice sensitivity i.e. the i.e. the proper real cost of delivering a service - but at some cost to proper real cost of delivering a service - but at some cost to workers’ ability to do their jobworkers’ ability to do their job

• Need to remember that in a civilised society the state has Need to remember that in a civilised society the state has provided services for poorer people that private providers provided services for poorer people that private providers would not entertain supplying – important for welfare/moral would not entertain supplying – important for welfare/moral reasons….whatever the cost….think of NHS treatments….or reasons….whatever the cost….think of NHS treatments….or looking after the severely disabledlooking after the severely disabled

• The state may still wish to retain some services ‘free’ at the The state may still wish to retain some services ‘free’ at the point of delivery – it appears to me that the more accountancy point of delivery – it appears to me that the more accountancy procedures bite in – less and less may be provided free e.g. procedures bite in – less and less may be provided free e.g. social care for older peoplesocial care for older people

Key question what should be supplied ‘free’ in a civilised society – Key question what should be supplied ‘free’ in a civilised society – and why? Again one may like to take this up in your seminarsand why? Again one may like to take this up in your seminars

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iv) State Revisitediv) State Revisited

Clearly, we can no longer have just a Clearly, we can no longer have just a simple public/private split when simple public/private split when

analysing welfare provisionanalysing welfare provision

Purchasers and providers allow:Purchasers and providers allow:• State purchase of private servicesState purchase of private services• Private purchase of state servicesPrivate purchase of state services

Also methods of payment and delivery Also methods of payment and delivery are altering…are altering…

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Conclusion- what we now have…Conclusion- what we now have…

• Pure public services Pure public services • Publicly provided services paid for by user chargesPublicly provided services paid for by user charges• Publicly contracted out services paid for by consumerPublicly contracted out services paid for by consumer• Publicly contracted out services purchased by the Publicly contracted out services purchased by the

statestate• Publicly provided services bought with vouchersPublicly provided services bought with vouchers• Publicly provided services bought by individualsPublicly provided services bought by individuals• Free market servicesFree market services• Privately provided services bought with vouchers, tax Privately provided services bought with vouchers, tax

relief or grantsrelief or grants

In effect we have diverse forms of In effect we have diverse forms of providerprovider and and purchaserpurchaser provision with the state increasing its provision with the state increasing its

role in a role in a regulatoryregulatory capacity capacity