I do understand your concerns about the slippery slope, with it potentially leading to state services becoming inadequate.
I actually think the way the UK state is slowly becoming more and more about only redistribution - and only to the least wealthy - is equally problematic. In order to keep buy-in, the social contract requires that Welfare state must tax everyone and benefit everyone. And we're losing that. The sense of unfairness will inevitably lead to demands to reduce state spending, as a reaction.
But I disagree with your assumption that all government services should always be provided in kind. For a start, they aren't - even in the UK. And even if they all were currently, we wouldn't necessarily have got that right!
The state provides some benefits in kind:
- the NHS
- the fire service
- refuse collection
etc
The state running a shared capability - and providing the service to people free at the point of use - is appropriate when it's efficient to provision the service centrally. And especially where substantial up-front investment is necessary to build capability and/or it isn’t clear ahead of time (or consistent) who will need it.
But even medical services don't all fall into that bucket. In Europe, hospitals are free at the point of use and organised centrally by the state (big investment, emergency care needed unexpectedly and infrequently by an individual). But people book and pay for medical services like GPs, cardiologists, dermatologists, home-care visiting nurses etc up front, then get the cost reimbursed. That works absolutely fine as a welfare system.
Even the UK state provides some benefits as a direct financial contribution
- the state pension
- Universal Credit including housing element
- child benefit
etc
We know and expect these to be supplemented individually according to our means. The wealthy do have better pensions (which they saved up themselves). They do provide more for their children (from their salaries). They do get an extra private medical appointment: to get a mole checked out. That's normal and not wrong.
It's in no way a conflict or illogical for a welfare state to provide a basic level of some benefit - which we agree all citizens should have at some level at a certain time of their life (eg medical care, education, pension) - to everyone. It's neither here nor there for the state to provide it as a voucher that can only be used for that purpose, or as a financial contribution to be topped up. It's not even hard to organise (we already do it for childcare, and in Europe they do it for medical appointments).
I certainly agree that the aim for education in the UK should be to maintain choice in schools and educate everybody as well as possible. I'd add that like all state-provided benefits, it must also treat people fairly - which doesn’t always mean yet more redistribution..
You say that moving private schools from 7% to 6% participation wouldn't be a disaster. But that would be more than the 10% migration which makes this policy loss-making, as well as causing significant personal harm to 71,000 individual children. That seems pretty disastrous to me. We'll just have to wait a few years for the numbers to become clear. I hope you're right that it won't happen, but I'm not optimistic.