Voucher system would be fair for all

"Wanted: an education policy for the Labour party, to start as soon as possible. The successful candidate will be affordable, popular with voters and fair."

The debate about VAT on private school fees is a sideshow. Even the talk of removal of charitable status does not get to the heart of the issue. It serves only to remind voters of the absence of any radical or imaginative policy. What follows is one possible approach.

Equality of opportunity is supposed to be Labour's goal. What would that mean? Usually, it means that the same resources - teacher-pupil ratios, textbooks and computers, field trips, library spending - should be available for all pupils. Deviations from equality are acceptable, if they compensate the disadvantaged or those with particular needs, or if they just cannot be avoided. Rather than getting hung up on fairness between private and state schools, we should concentrate on fairness between pupils. That must mean opening up the schools market including giving all pupils a more equal chance of getting into private schools. Labour should propose a voucher scheme, designed to give both equal opportunity and choice.

This calls for rethinking on both sources of school income: charitable donations and fees.

Let's take charitable donations first. Labour's traditional concern abut private schools is that the charitable donations market will undermine fairness. But one cannot prevent people from giving to whatever they please, or seize their gifts and redistribute them. Getting rid of charitable status for private schools is not the answer. If schools in neither sector can seek donations, then private fees and public spending would be forced up. Gifts bring useful additional resources into the system: banningschools from seeking them is pointless.

The only solution is to allow state schools to compete with private ones in the donations market. Parent-teacher associations are one way in which state schools compete for gifts of volunteer labour time; some have set up charitable funds to seek cash donations, too. If all schools were able to attract tax-exempt donations, then gradually the advantages of the private schools would be eroded. Private schools, of course, have a head start in building up endowments. One way to compensate might be to use some National Lottery funds to offer grants to schools in disadvantaged areas.

Turning to school fees, we already have two state voucher schemes and a private market serving 7 per cent of pupils. Since 1988, parents in the state sector have been in a position to choose a school and, if their child is accepted, the school bills the Government for the centrally set cost of their education - in effect, a voucher system. For private schools there is a small assisted-places scheme. Labour should unite them into a single, full-blooded voucher scheme for all parents, open to al l schools, whether state, grant-maintained or private. The voucher would be for specified hours of schooling under the national curriculum. For fairness, vouchers for pupils from disadvantaged backgrounds or with particular needs would carry more money.

Then schools would have an incentive to compete for those pupils.

Some safeguards will be needed to make sure the schools market works. Some parents would inevitably pay top-up fees to buy additional hours in order to send their offspring to private schools. International and European human rights conventions mean thiscannot be prevented. However, a well-designed voucher scheme should gradually make topping-up less attractive.

Vouchers would certainly mean a once and for all increase in spending: fees in the private sector are typically much higher than state school capitation. Private schools can only be entered into the system if vouchers meet at least some of their higher costs. If Labour is serious about equality of opportunity it should adopt the Liberal Democrats' idea of 1p on income tax to pay for it. Thereafter, the education market must be designed to hold down costs. This requires several measures. The nati onal curriculum would apply to all schools and a single league table would show the costs of tuition, technical support and administration set against grades achieved in each subject. Tables would show how far there was genuinely more value for money in topping-up privately.

It is time for Mr Blair to stop tinkering with minor aspects of private school finance and being defensive about state schools, and to offer policies about fair opportunities for all pupils. There is a powerful case for choosing vouchers.

The author is associate research director at the independent think-tank DEMOS.