Freedom to choose – the Swedish experience
The Conservative-Liberal Democrat coalition is proposing to introduce ‘free’ schools, with parents, churches and charities setting up new non-fee-paying, state-funded schools. It argues this will improve parental choice and standards. Free schools were introduced by a Swedish centre-Right government in the early 1990s and now educate one in eight children aged 11–16.
Sweden had a very limited choice of schools before then and businesses were keen to invest in them – unlike in the UK, where businesses will not be allowed to run the schools for profit and parents already have a choice. One problem will be common to both systems, however: what to do about schools that are left with empty spaces? In Sweden, few schools closed but lack of funding could damage unpopular UK schools.
The Centre for Economic Performance at the London School of Economics suggests there have been only small positive effects in attainment across the Swedish school system, which might not last. Some research has also suggested it might lead to greater social segregation, with free schools being favoured by better educated parents.
Sweden also introduced some element of competition into health care with greater use of private providers – although this varied between county
and aiming not just to break even but to make a small surplus. This means that government spending must continue to be squeezed even after the immediate financial situation has resolved. The focus must not just be on structural deficit reduction, but also on the stock of debt countries already have. With inter- est rates at very low levels and likely to rise in the medium term, servicing that debt will become more expensive, he says.
In Sweden, the pain of spending cuts and tax increases was partly offset by in- terest rates falling. That sort of payback is not going to happen in the UK. Persson admits it was not just govern- ment action that lifted Sweden out of re- cession – it benefited from a strong world economy, which increased demand for ex- ports and led to new IT-related jobs. As a strong pro-European, Persson saw the Swedish economy become more integrated with the rest of Europe, but the public voted against adopting the euro in 2003.
22 PUBLIC FINANCE MAY 28–JUNE 3 2010
councils – which led to significant cost savings. Spending was also capped by the local authorities.
A waiting time guarantee and patient choice were introduced and led to drops in waiting lists; but this was abandoned in the mid-1990s. Waiting times increased again. In 2005, the guarantee was resurrected.
Persson admits to some concerns about privatisation and his government retreated from many of the market reforms of its predecessors. Big teaching hospitals are ‘more or less a national asset’ he says. ‘It’s not only buildings and equipment, it’s a culture which has been built up over hundreds of years. You can’t privatise that, it’s dangerous.’ But further downstream, private providers can play a role in the more everyday health services, he says. And it gets good outcomes by spending around 9% of GDP on health – a moderate amount by international standards. The difficulties of having half a market in a state-funded system are well-known but Sweden has managed to sustain co-payments (for example, while in hospital or to see a doctor) within its welfare system. It also has an exemplary record in keeping older people in their own homes with packages of help and integration between health and social services. But it achieves this by high tax rates and generous benefit payments.
The proportion of income paid to the state at close to 50% is around 10% higher than in the UK: one part of the Swedish model that it is unlikely to be adopted here.
Hand’s up: Sweden’s ‘free’ schools have failed to significantly raise attainment levels
Critics argue that Sweden has been left with a core of long-term unemployed peo- ple and high youth unemployment, and has not escaped the current downturn. In 2009, its GDP fell by 4.9% and it had a deficit of 4.4% of GDP. Unemployment in March this year was 8.7%.
But Persson insists that political courage and a willingness to put one’s job
‘You must realise, it is not an economic issue, it’s a political one. It’s not so diffi cult to fi gure out what to do’
on the line made it possible to at least tackle the 1990s economic crisis. There was certainly political fallout. His party’s support fell through the floor in the midst of the cuts, and in 1998 it had the worst electoral results for 70 years. It continued ruling as a minority government, but in 2006 it did even worse and a centre-Right coalition took over.
‘You must realise it is not an economic issue, it’s a political issue. It’s not so difficult to figure out what to do – the difficulty is to do it. It ends up in the po- litical process,’ he says. The difficulty is building a majority in support of harsh measures and structural reforms, which will endure for 10 or 15 years. ‘This is for real. If you mismanage this it will end up in a disaster. There is no room for making mistakes.’
■ Göran Persson is
speaking at the CIPFA annual conference in
Harrogate on June 8–10 on ‘Lessons from Sweden’
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