Uk Public-sector reform
Economist (UK) 21/9/2024
“CHOICE IS CHOICE!” exclaimed Tony Blair. Shortly after the 2001 election, the prime minister had gathered his advisers at Chequers, his grace-and-favour residence, to discuss public-sector reform. Three principles—setting standards, devolving budgets and reducing barriers between professions—had already been established. But someone had objected to a fourth, the idea that parents and patients should be offered choice. Perhaps “preference” would go down better with the trade unions and the Labour Party? “Why mince our words?” asked Sir Tony.
Labour has entered office, as it did in 1997, with public services in a mostly dire state. Its prospects at the next election in five years’ time will depend, perhaps above all, on how much voters feel that has changed. The Blair government’s approach was to develop a rigid set of ideas about how to run schools and hospitals and apply them rigorously. The Starmer government’s plans are, at best, inchoate.
To see why that could become a problem, it helps to recall New Labour’s approach. Among those in the room at Chequers was Sir Michael Barber, an education adviser whom Sir Tony would soon poach to run a new “prime minister’s delivery unit”. Having spent years trying to reform failing schools, Sir Michael was disdainful of the idea—popular among unions and the wider Labour movement—that teachers or doctors should simply be trusted to run things. Too often, that meant accepting mediocrity.
At a minimum, Sir Michael argued, ministers needed three things: a clear strategy, a view of standards and capacity, and the data to monitor outcomes. This became the basis of the delivery unit. Ministers would be hauled into Number 10 and grilled on progress against tightly defined targets like reducing waiting times or improving exam results. They, in turn, published league tables and penalised underperformers. Underpinning all of this was a belief that the left had got two big things wrong: seeing public-sector workers as motivated purely by altruism and publicsector users as passive beneficiaries.
The method produced some brilliant results. Waiting times for operations fell much faster in England than in Scotland, Wales and Northern Ireland, which all rejected the reforms. English schools pulled ahead of Welsh ones. One study found that the drive to reduce A&E waiting times saved thousands of lives, especially among those who had suffered strokes. New Labour proved to be adept at turning bad schools and hospitals into adequate ones.
The approach was less good at freeing adequate or good performers to innovate, says Ben Glover of Demos, a think-tank. It could be “stultifying”. It also tilted spending towards short-term goals: in the case of health care, more money went into hospitals than into prevention of illness. It led to some gaming of the rules. And although results improved many doctors and teachers disliked the mix of “targets and terror”.
If New Labour’s ideas risked being too rigid, the current government’s problem is the reverse. It is hard to discern well-developed ideas about public services in the speeches of Sir Keir Starmer, the prime minister, and Rachel Reeves, the chancellor of the exchequer. High-profile failures
nd in areas like probation have made politicians wary of applying market methods to the public sector. If ministers do talk about reform, many prefer to talk about making services more “personalised” and “relational”, voguish but vague ideas developed in local government.
The government’s missions, which include ones focused on health and opportunity, are very high-level. They lay out nearand longer-term goals—such as reducing waiting lists and improving healthy life expectancy—with little sense of how they will be reached or how resources will be prioritised. On September 12th, responding to a grim review into the National Health Service ( NHS), the government floated some ideas about developing financing models that would shift money towards prevention. But there will be no detailed plan for NHS reform until next year.
There have been some signals of the government’s preferences. Ministers are closer to the trade unions than in Sir Tony’s day. Ms Reeves has agreed to large pay rises for public-sector workers without asking for anything in return. In education, Labour has decided to end one-word judgments of schools by Ofsted, a regulator. Unions had long argued that they put teachers under extreme strain. Yet they were hugely popular with parents. The problems could have been tackled by making changes to the inspection process and how the judgments were used, says Nick Davies of the Institute for Government, another think-tank. It is hard to imagine Sir Tony, who saw extending choice to parents as critical to winning the support of middle classes, making the same decision.
The absence of a clear strategy for the public sector is a big risk for the new government. Before raising taxes to fund the NHS, Sir Tony insisted that the government had a strong case that it would be “investment with reform”. The current government cannot simply reheat New Labour’s ideas: for one thing, the public finances are in much worse shape. But without a philosophy of its own and with tax rises expected in Ms Reeves’s budget next month, it will be vulnerable to attack. ■
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