Tony Blair knows what has to be done: "If we, who believe in public services, do not reform them so that they offer not the basics but excellence, then those who don't believe in them will use their shortcomings to destroy them altogether."
But can excellence be achieved within the constraints of the current tax take? There's an awful long way to go. NHS waiting lists still run to more than a year, waits in A&E are hours and hours, the premises are often rotten and forbidding, the working practices archaic and slow. Secondary classes are far too large, teaching standards very variable, many (or most) schools are ones to which the middle classes wouldn't send their children. The roads are jammed, the railways break down, the tube is a horror.
Excellence, at least if it is to be measured in public satisfaction and confidence, is a long, long way away. Can this really be achieved in four or five years with spending increases from taxation running at what ... 5% or 6% a year? I'd be amazed. Even if the economy remains strong and the government is able to up the annual spend on the NHS to the European average by 2006/7, there is still the backlog of decades of underspend.
Without excellence, a reinvigorated Conservative party will be ready with plans for wholesale privatisation. An exasperated public will be ready for a radical change. Those who can afford to do so will already have been deserting the public sector for private alternatives. Others will dream that they too could get higher standards if the same approach was taken as they are used to in most other spheres of their lives. Why can't the NHS deliver, like Tesco - what I want, when I want it, at a place close by and reasonably pleasant?
The truth is that these services need extraordinary sums of money to get them to a decent level. This government's generosity to the NHS has given medicine nearly 9% extra a year over the past year and getting on for that the year before. Overall, it has made hardly a dent after paying for salary increases and medical inflation.
The salary bill and capital expenditure will have to grow by amazing amounts to create an excellent service. Demand seems to grow exponentially. How much would it cost to deliver the NHS plan? Twenty per cent a year for at least five years? No government anywhere in the west could hope to get elected on the proposition that taxes would be raised at the rates necessary.
Nor can the answer be found just in greater efficiencies. Manufacturing and retailing can find savings as technology allows more and more volume to be put through. Average prices in manufacturing and retail have fallen by 8% over the past 10 years. This just isn't possible with personal services, and technology in medicine tends to produce better, but not quicker or cheaper, solutions.
You can see the same effect in legal costs, vets' fees and, indeed, the private healthcare sector. Average prices in education, health and the hotel trade, all personal services, have grown by 60% over 10 years. As non-personal services (and switches from personal to mechanical, like banking) become relatively cheaper, a greater share of GDP will go to skilled personal services. So better public services will need to take a continuously higher share of income. Skilled staff won't get any cheaper and we won't be pleased if they spend less time with us nursing, teaching or whatever.
The government knows it must deliver excellence if the middle class aren't to desert the public sector for private en masse, leaving a sort of poor law rump behind. Yet no government can dare to raise the necessary sums through tax. The Fabians had a look at this last autumn and made proposals centring on the old idea of hypothecation. If we paid a special health tax we probably would be a bit more generous. But the problem feels much bigger than that.
In the search for higher funding we are inhibited by the terrible disconnection between paying taxes and getting anything back. A more radical solution is needed. One way would be to restore some semblance of a transaction. In other aspects of our lives we are used to paying and then receiving more or less immediately, so the relationship between what we pay and what we get is clear. If the costs involved are very clear to both sides in the transaction, then the recipients of the service are likely to treat it with more respect and, in turn, feel a transactional relationship gives some certainty of being taken seriously by the provider.
Taxes, in contrast, are just a black hole. Even with hypothecation you are buying a type of insurance policy, from a body in which you have minimal trust (a government) to spend it well and you never receive any return that has a price on it. You may get some services at some stage, but not with any idea of their value. You do, however, have a very vivid idea of the cost. No wonder there is a reluctance to pay more.
What can we learn from elsewhere? How do others escape the low tax trap?
In Jospin's France, with its higher tax base and broader social security, you pay for visits to the doctor and claim the money back from the state. The result is mixed. They have a better availability of good healthcare, but they have a much more expensive system with some oversupply of beds and doctors and the overhead of handling all the bills. Could Britain get the advantages without the disadvantages?
Insurance companies can now handle the admin at a fraction of the costs of 10 years ago. Phone companies can afford to detail even our most trivial calls on the bill and I believe that the personal card in your Wap phone will be able to be used, for instance, to buy a can of Coke from a machine - to be billed to you later. If computer billing systems can be profitably employed billing you for a 30p purchase, then they could certainly do so for your medical costs.
Is such a system just creeping privatisation? Does it, inevitably, lead to wasteful oversupply? I understand that the French approach provides care free to those who can't afford it and rebates only a proportion of the cost to those who can. This is no more privatisation than is the fact that we already charge for the optician, for prescriptions, for much of dentistry and is better than forcing many to wait for months for an operation - so that they choose to pay even though they can't afford it.
It is free for those who need it to be free and subsidised for those who don't. The big gain, I believe, is the awareness of the costs involved that motivate all to fund the service more appropriately than they are willing to do under the British "free" provision, as well as generating extra income from the proportion paid directly by some.
People who can afford to pay for treatments have to weigh the benefit to them of another holiday in the sun or a - non-urgent - operation. It restores health to the user/supplier relationship that is good for the behaviour of both sides. I don't know if it leads inexorably to oversupply. I can't see why it should and I do know that the current running at 95% plus capacity leaves the UK's system hopelessly unresponsive to the ups and downs of demand, which is why you can't always get to hospital when you might want.
Whatever the answer, I'm sure that the gap is so great that we need a radical approach that is as big as the gross, historic, underfunding of the public services. Something must be in place before the end of this parliament and prevent wholesale privatisation - effectively a splitting in two between the middle class and the rest - of provision.
The government has shown its determination to deliver excellence in the public services. It made hospitals and schools the central promise of the election campaign, it has found unprecedented levels of extra funding, it has swept aside many of the shibboleths of custom and practice and even dared to propose to allow alternative suppliers from the private sector.
For the NHS there's one more shibboleth to go: new sources of funding can allow radical reform and improvement. Constant capacity shortage enormously inhibits the scope for change and the service is so far behind the standard required, after so long without decent levels of investment, that more money than it is electorally possible to raise from taxes must be found. The NHS modernisation programme and the involvement of the private sector have shown what imagination can do.
There now needs to be some bold thinking to find new sources of income that are more acceptable to the electorate than general taxation.
Chris Powell is chairman of BMP DDB Ltd, the advertising agency which advised Labour on its 1997 advertising campaign
Useful links
Results
Ask Aristotle about your constituency
Talk about it
Who should lead the Tories? Should Hague have quit?
Video
See Hague make his resignation statement
Election headlines
Triumphant Blair reshuffles cabinet
Hague: I quit
Comment and analysis
George Monbiot: Labour's victory rings hollow
Austen Chamberlain: history's first Hague
