essay: public service reform

Stefan Rousseau/PA Wire

Ministers reforms have lost focus after Camerons intervention, but can he define what the agenda is?

Labour intensive
O
nly months ago the coalition was being lauded for its radical agenda on public service reform. Even critical commentators on the left seemed awestruck by its speed, scale and intensity. But with the government in full-blown retreat on its plans for nHS reform and with the public services white paper delayed, rewritten, and then delayed again, that momentum has been lost. Few would now argue that the coalition has a cogent or coherent agenda for public services. This represents an opportunity for labour, but also a threat. It can score political points attacking the government, but without its own strategy for reform of public services, it will remain in the comfort zone of opposition, not on the road to power. During the labour leadership campaign, none of the candidates had an incentive to raise difficult reform arguments for fear of alienating union and grassroots voters. That might have been tolerable if labour had renewed its pitch on public services in its last years in office. But despite repeated attempts, it only came close to a new, post-Blairite paradigm with manifesto pledges on citizen guarantees
Progress July 2011

With the coalitions public services white paper delayed and rewritten, Labour faces both an opportunity and a threat, argues Nick Pearce
or entitlements and public-sector takeovers of weak providers by strong ones. Fresh thinking was rare. The coalition made a lot of early running dismantling the worst elements of new labours statecraft: the plethora of indicators and targets, anaemic localism, and a latter-day preference for stakeholder management over bold reform. But it has said very little about the big strategic choices facing public services. There is no sense in the coalitions programme about: which services best support full employment and an affordable welfare state; of the challenges that an ageing society poses for reform of the nHS and social care; or how real innovation and productivity can be secured in universal services that face enormous cost pressures. labour needs to start from these challenges, recognising that universal public services face a significant cost squeeze from increased costs and limits to the electorates willingness to pay more tax to fund them. First, it should make strategic choices about which services to prioritise. If we want to secure full employment, prepare for an

ageing society, and help raise family living standards, then universal, affordable childcare must come centre stage. This is a key lesson of the nordic countries success. Countries that invest heavily in affordable childcare and labour market activation policies have increased the labour supply, particularly among women, and generated higher employment rates and broader tax bases as a result. Labour has a big Childrens centres are also popular institutions that help opportunity to steal build community life and, once a march on the established, are hard to cut, coalition. It should unlike income transfers (like the childcare element of the working step up to the tax credit which has already mark and set out a been cut). The universal services provided at childrens centres, definitively centrelike stay and play clubs and left agenda on breastfeeding classes, mix social reform. Oppositions groups and bond communities together. And the evidence that always default high-quality early years services to woolly talk of boost childrens life chances collaboration and and strengthen their schoolreadiness is overwhelming. They partnership. But are a win-win for investment. competition has Second, a future labour its place government will have to give much more thought than the last did to ways of making public services more productive and efficient. This is hard: public services are labour intensive and require a skilled workforce. While spending increased and outcomes improved in health and education between 1997 and 2010, there was a marginal decrease in productivity in both sectors. The ageing of our society will add cost pressures of up to six per cent of GDP to public services. So if we are to invest more as a country in early years education and childcare, we will have to find a way of making the big mainstream public services the nHS, education and the police more efficient. It is here that labour now has a big opportunity to steal a march on the coalition. It should step up to the mark and set out a definitively centre-left agenda on reform. Oppositions always default to woolly talk of collaboration and partnership. But competition has its place. Tony Blairs 2006 nHS reforms which gave patients the right to choose from a list of five hospitals and which led to competition for patients between nHS trusts successfully improved outcomes measured by length of hospital stay and deaths from heart attacks. But labour should be clear that there are some services where profit-seeking is not justified or necessary to raise standards, such as schooling. labour should also look to encourage a genuine diversity and ecology of providers by promoting sustainable mutuals and not-forprofits, so that public services such as social care have resilient, competitive provider markets and are not vulnerable to assetstripping or too-big-to-fail mergers and acquisitions. But it should retain political accountability for steering competition, not seeking to denude public services of their essentially democratic character by elevating markets beyond their appropriate role.

While managed markets have their place in delivering public services, competition is not the only way to drive improvement. A focused number of core service entitlements (rather than multiple targets) are necessary to guarantee equity and minimum standards. These should ensure that where services are performing poorly, there is robust action by local or national government to bring them up to standard, instead of allowing them to wither away on the market model. So, in education, labour should support the higher minimum threshold for school performance that the government proposes, while arguing for better forms of school accountability and a new pupil premium entitlement. labour should be focused on narrowing inequalities in a way that the coalition is not: supporting academies but giving local authorities more control over school admissions and holding schools to account much more aggressively for what they are doing with the pupil premium to help the most disadvantaged pupils. It should put much greater emphasis on the empowerment of the service user, rather than the professional, so instead of just handing over the health budget to GPs and clinicians, it should extend personal budgets to those with long-term health conditions, possibly integrating them with personal budgets for social care. Finally, labour should carefully feed off some of the new thinking that has emerged from within the blue labour camp, which is critical of both top-down statism and markets, but interested in fostering new forms of associative democracy that can share power between citizens and professionals and more effectively hold service providers to account. Social care is a good test case: can labour build on the Dilnot reforms to ensure genuinely sensitive, family-led and community-based care of the elderly, in contrast to the undertone of the big state created by their pre-election proposal for a national Care Service? labour should also explore how parents and patients could democratically trigger takeovers of existing services where provision is poor. And it should back greater powers for local elected mayors over service provision in their areas, including over school improvement. Vested interests always hold more sway over parties in opposition, because they lobby in the here and now, while the ballot box is still far off in the distance. But elections are won when voters conclude that parties are addressing the right questions and have the right answers. An alternative public service reform agenda is vital to a credible and popular account of the future. Nick Pearce is director of ippr

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Progress July 2011

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