Understanding the Public Services Industy

Public Services Industry Review
Figure 1.4: GDP and Health and Education Spending
Health care expenditure and national
income per capita in 2004
Education expenditure and national
income per capita in 2004
7,000
12,000
Total health spending per capita (USD PPP)
6,000
5,000
4,000
3,000
2,000
1,000
TUR
USA
LUX
CHE NOR
ISL
CAN
BEL
FRA
AUT
DEU NLD
DNK SWEAUS
OECD-28
ITA
GBR
IRL
GRC
JPN FIN
ESP
NZL
PRT
CZE
KOR
SVK
MEX
Total health spending per capita (USD PPP)
1
1
1
1
Total education spending per capita (USD PPP)
70 75
10,000
8,000
6,000
4,000
2,000
USA
CHE
NOR
AUT
DNK SWE
FRAISL
BEL JPN ITA AUS
GBR
OECD-28 DEUNLD
ESPFIN
KOR
NZL IRL
PRT
GRC
CZE
MEX
SVK
TUR
0
0 10,000 20,000 30,000 40,000 50,000
Net National Income per capita (USD PPP)
0
0
0 20,000 40,000 60,000
Net National Income per capita (USD PPP)
Source: OECD Social Indicators 2006, Education at a Glance 2007
1.19 Much has been written about the ‘post code lottery’ in public service provision.
The term is shorthand for the seemingly random variations observed in the quality
of public service provision across the country. These disparities are almost always
highlighted in negative terms, focusing on those regions were the quality of services or
the level of funding, are relatively low compared to elsewhere.
1.20 However regional variations can also arise as an appropriate response to differing local
needs. For example the NHS authority of a region with a relatively elderly population
compared to the rest of the UK, might opt to shift its resources towards treatments for
aliments that are more common as people get older. As a consequence the resources
devoted to other areas of care will be reduced relative to the rest of the country.
1.21 If this situation led to variations in the degree to which health authorities met
minimum standards in healthcare this would clearly be an undesirable outcome.
However, over and above such minimum standards, there are benefits in allowing
local decision-makers the flexibility to respond to differing local needs. This will result
in regional variations in service provision which will increase the total health benefits
delivered for the same cost to the taxpayer.
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