Re: Some well made points
"The fact that some individuals have enough surplus income to be able to opt out of the state provision and into a private paid for alternative is largely irrelevant"
No - that's hugely dangerous. People who opt out of these services no longer care how well (or badly) they are run. Worse, they then resent having to pay for services that they aren't using.
Take education: my kids go to private school. We do this because the local primary schools aren't particularly good. All the parents at the school are very fussy and push like crazy to keep standards up. Now, imagine what would happen if these parents were let loose in the local state primaries: they'd be on the board of governors, they'd be pushing the school about school meals, the quality of the homework and lessons and bugging the hell out of their local councillors to ensure that the schools standards were maintained.
But, because they're not doing this, the local primary schools aren't pushed as much. If we want to keep services going we need to ensure people are bought into them.