Headlines: May 25th, 2006

There is no guarantee that offering more individual choice in local public services will mean either increased value for money or better quality services according to a report published today by the Audit Commission. Whether choice brings overall benefits depends on the services involved and how that choice is introduced, it says.Today’s report, “Choosing Well: Analysing the Costs and Benefits of Choice in Local Public Services”, says people as consumers want more choice and they have a clear view of which services should provide more choice but as taxpayers they are unwilling to pay more to get it. That the report says, means local authorities have to be more adept at understanding the economics of choice and competition so they maximise the benefits at the same time as minimising the costs.

The Commission has looked at three areas of service, customer access centres, choice-based lettings and direct payments. The report says in all these progress towards providing more choice is patchy. It does find, though, that some local authorities are already implementing choice successfully and it concludes that where choice is introduced under the right conditions, it can produce more efficient services as well as better matching of preferences and needs to limited supply.

Although the report looks in detail at the three specific services and functions, with greater choice in services, such as health and education outside its remit, it draws wider conclusions about the drivers and barriers to choice and it says the framework it outlines for analysing the costs and benefits of choice is applicable to other services. The Commission now intends to work with stakeholders to supply evidence to improve understanding of the effect of greater choice in all local public services.

Sir Michael Lyons, the Commission’s Acting Chairman, said the report was a contribution to the debate on how to improve services through the extension of choice. It demonstrated that choice could improve value for money and service quality, but only under the right conditions and it should improve understanding of when choice is feasible and desirable.

“Some councils already offer examples of best practice. They are adept at understanding the economics of choice and competition, and are single-minded in the way they exploit the opportunities provided in order to maximise the benefits and minimise the costs involved. Others need to follow their example, in order to be effective in using choice and competition as a lever for improving value for money,” Sir Michael said.