One of the reasons, it was reported, that Gove could not go through with his plan to create a single exam board for each subject, which he hoped would end the competitive pressures between boards which it is alleged in the present system leads to grade inflation, was that this would fall foul of EU competition law. Gove was apparently warned that the exam boards would sue the Department of Education for breach of procurement rules.
If this is true, it is further evidence of an extraordinary conflict which now lies at the centre of public service provision, between democracy and the EU single market. The organisation of school examinations is part of the core business of government. If in order to raise educational standards a democratically elected government wishes to institute a single examination board it should surely have the right to do so. EU competition rules designed for commercial markets should not be relevant here.
And indeed they weren’t, before government first instituted a market in examination provision. Before that decision was made, EU law would have regarded examinations as a ‘social’ purpose carried out ‘not for profit’; and therefore not subject to procurement rules. But now that a market exists, EU law prevents that decision being repealed, since it would breach the market rights of the present players.
This flouts an important democratic principle. A government which makes a decision to create a market in public services should have the right to reverse such a decision, so long as due process is followed (such as giving market players time to adjust). If it cannot, this means that in making the initial marketisation decision, Government was effectively transferring sovereignty over this area of public provision from Parliament to EU competition law.
The same prohibition would occur if a future Government sought another possible reform – a requirement that all market providers in the NHS or in education were non-profit. Given that much of the risk in marketisation lies in the distortion of the public interest from the operation of the profit motive, this might be regarded as a sensible safeguard. But it too would be illegal under EU law, once market procurement of any kind had been instituted.
The problem here lies in EU competition law. It is obviously right that businesses in commercial markets face a level playing field when competing for public business. And EU law does recognise that social purpose allows public services to be exempt from competition and procurement law. But it does not currently allow the reversal of public decisions to create market competition. It should.
In his masterful study of ‘the strange non-death of neo-liberalism’, Colin Crouch shows how the creeping marketisation of public services over the last two decades has undermined the very basis of the public sphere, creating an effect he calls ‘post-democracy’. Michael Gove has unwittingly revealed its further advance.