Coping with co-payments

Gordon Brown's budget on Wednesday will be intended to show how sound management of the public finances leaves the government in a strong position. But the recent rapid expansion of public services through taxation cannot go on forever. The Whitehall negotiations over the next three-year spending round, to be published this summer, have been very tough.

So the talk in the corridors of power is about other ways to fund future projects. Hence the increasing chatter among policymakers about "co-payments". The idea is that those who benefit from particular public services may have to pay a greater share of the costs as a way to square the circle of paying for better public services while tightening the fiscal belt.

But this will prove a political hot potato. After all, it was the principle behind university tuition fees - so its potential to divide Labour MPs is clear. Nor are the public likely to be enthusiastic about shelling out more.

So, if we are going to hear more about co-payments after Wednesday, ministers will need to make sure they prepare the ground rather more carefully than they did in the university fees debate. Here are five rules for reformers which could help to begin a more constructive debate about the principles at stake:

1. Talk in a language that people can understand
"Co-payment" is among the worst examples of wonk-speak - and will not resonate at all beyond the thinktank seminar room or the pages of Progress. "User charges" has the virtue of telling voters what we are talking about, although ministers may prefer to try the more touchy-feely "shared contributions" as part of a broader story about renewing the social contract between the citizen and the state.

Those who argue that the government's agenda often appears too managerial and technocratic are not saying that competence doesn't matter. But this government has often been better at policy than politics - and left-of-centre politicians can never be satisfied simply running a competent administration. While Margaret Thatcher had a strong story about the individual, encapsulated in flagship policies from council house sales to privatisation, "third way" progressives have not been able to emulate this clarity in telling voters where they fit in to the "vision thing".

2. Win the debate about general taxation first
The reflex of some on the left of centre will always be for funding from general taxation over any form of user contribution. We need a clearer and honest debate about spending priorities and the choices between different desirable outcomes.

Meanwhile, the general public might see user charges as the latest "stealth tax". Many will ask "so what's all my tax for, then?" if they have to pay again for those services they use. This risks fuelling the various myths that most public spending is wasted on pen-pushers, dole cheats or asylum seekers. Progressives have to be more transparent about tax if we want to take on Michael Howard's libertarian, minimal state agenda. Adopting the Fabian tax commission's proposals on making tax transparent - including a "tax contract" for every citizen - could help to make the tax "deal" between citizen and the state more legitimate.

3. Deliver clear and tangible added benefits
People might pay more for something new. They will resist paying again for something they have already got. The government won the argument on tuition fees within the parliamentary Labour party in the final weeks only because a credible case was made for the need for extra money to finance the expansion of universities. It would not have been possible to make the same case if student numbers were static (and opposition was loudest among the middle classes who already go).

So parents who can get the good, affordable childcare they want for the first time would be prepared to share some of the costs - shared contributions in that case might well be both legitimate and popular. User charges may be used creatively as much to change behaviour as to raise revenue - but road charging to prevent gridlock, like London's congestion charge, will only be legitimate if the package seems a fair one and if the benefits delivered are clear.

4. Set clear boundaries and baselines
The Fabian tax contract approach - including the ring-fencing of core services already provided out of general taxation - should help to police an approach of applying co-payments only to new services or expanded provision.

A sensible debate about co-payments requires clarity about what they are not about. The government seems keenly aware of this - hence Tony Blair's speech ruling out user charges in the NHS. This may well be politically prudent - to avoid this agenda being caricatured as one of marketisation of core public services. But when "co-payments", including prescription charges, have long played a role in the NHS, it is difficult to see what the objection of principle would be to raising additional resources (while absolutely protecting clinical priorities) by, for example, offering additional choices such as individual rooms rather than shared wards.

5. Broaden the horizons of the debate
The conservatism of much British public debate is underpinned by its insularity. The different ways in which good social democrats and democratic socialists in Sweden, the Netherlands, France and elsewhere fund high-quality public services ought to lead to an honest acknowledgement that there are a great many ways of organising and delivering public services, each with their own strengths and weaknesses.

· Sunder Katwala is the general secretary of the Fabian Society. This is an edited version of a piece which appears in the March issue of Progress. Email: sunder.katwala@fabian-society.org.uk