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Star ratings have succeeded in opening up services to public scrutiny and judgement, writes Lisa Harker, but whether performance can actually be improved by such systems remains unclear.

The phone rang as I was writing this article. It was my GP. I had complained about the treatment that I was receiving at my local hospital and was there anything she could do to help?

Similar conversations echo across the land. Rather than put up with shoddy public services, we are no longer reticent about speaking out. There has been a profound decline in public deference. Boundaries between professionals and citizens have been stripped away. Deference, ignorance and powerlessness are giving way to dialogue, discovery and, occasionally, defiance.

An explosion in the use of performance measures - league tables, benchmarking, Best Value and now star-rating systems - has driven this transformation. Once we judged public services on local reputation. Now facts and figures abound. The successes and failures of services are exposed, public scrutiny is encouraged and the balance of power in the relationship between citizens and services has shifted.

But for government, performance measures are not only about enhancing public accountability. Alongside increased investment, they are seen as key to achieving improvements in public services. By providing information about the quality of services, along with greater choice, it is argued that citizens will be able to select the best, thus driving up standards. In addition, public measures of performance may themselves have a direct effect, providing incentives for services to improve (or be shamed into doing so).

Do they work? The evidence is mixed. First, there are concerns about their fairness. There is an unavoidable trade-off between simplicity (necessary for public accountability) and comprehensiveness (necessary for robustness). Measures such as star-rating systems, which favour simplicity, inevitably suffer from a lack of precision. Last year, the NHS Confederation strongly criticised the health service star ratings, arguing that they were too reliant on inadequate data and failed to take account of whether NHS trusts were improving.

Simple classifications of public services blur the distinction between differences in performance. The meaningfulness of the star-ratings system was questioned when more than half of English local authorities were awarded a one-star rating.

But there are also concerns about the impact that performance measures can have on practice. In truth, we still don't know enough about the relationship between measurement and performance. But there are some worrying signs. Aside from the impact on staff recruitment and morale (not to mention the implications for communities who are having to rely on zero-rated services), there is some evidence of perverse effects. In the US research suggests that although external evaluation can lead to improvements in services, it can also encourage services to select their clients with their rating in mind. Hospitals, for example, have been found to select patients for treatment in line with enhancing their performance rating.

Another perverse effect is much in evidence: the impact of school league tables on house prices. You only have to glance at house property websites to be convinced that school league tables are distorting the housing market.

Such effects are worrying, but they will be marginal if public sector performance improves across the board. This may be as much determined by how government chooses to act on performance ratings. Increasingly, policy makers are favouring a system of reward and punishment: earned autonomy and extra resources for those who do well; special interventions (and the threat of being taken over by private sector) for those who do not.

Meanwhile, the search continues for the holy grail of public sector performance measurement. But while simple, fair and effective performance measures may well remain elusive, the role of better public information about the performance of public services should not be overlooked.

Regardless of whether performance measures prove to be the key to achieving a step change in the quality of public services, they have the potential to continue to change the relationship between citizens and services. And in the end this may prove more important in shaping the future of our public services than anything else.

Lisa Harker is deputy director of the Institute for Public Policy Research.