Published:

Screen Shot 2012-11-27 at 07.22.08

Greg Clark high resolution 2Greg Clark is the Financial Secretary to the Treasury and MP for Tunbridge Wells. Most Tuesdays he will be writing this new 'Letter from a Treasury Minister' for ConservativeHome readers. Follow Greg on Twitter.

Whitehall has a long history of turf wars. Most vicious of
all was the struggle between Tony Blair and Gordon Brown, but political memoirs
are full of other tales of territorial conflict. The details differ from case
to case, but the general pattern resembles a fight between Larry and Freya, the Downing Street cats.

Undaunted by the experience of previous governments, David
Cameron took office determined that his administration should work along more
cooperative lines. For instance, while I was still in my previous ministerial
job – at the Department of Communities and Local Government – he asked me to prepare
a personal report on the progress made by thirteen Government departments (the
twelve domestic "spending departments" plus the Cabinet Office) towards the key
Coalition goal of decentralising power. Given the criss-crossing of
departmental boundaries that would be required, it was an unusual position for
a non-Treasury minister to be in. Nevertheless the work was done and the
report, published recently, can be read here.


The report gives a star rating to each of departments
assessed. For instance, a department that was making maximum progress on every
front would get a five star rating – "full speed ahead", while a department
that had yet to get going on any significant reform would get a one star rating
– "opportunities missed". There’s also a lot of additional analysis to show in
greater detail where progress is and isn’t being made. But I felt it would also
be useful to have a way of showing the big picture.

Some departments have made more progress than others. None
of them get full marks, but two get a four star rating ("well on the way")
while the remainder get either two stars ("getting ready") or three stars ("in
the pipeline").

That might seem a rather critical view of a Government that
is committed to the principle of localism – but, in fact, it recognises a
turning of the tide. For a century or more, successive governments have
centralised power in Whitehall and Westminster. Margaret Thatcher, of course, rolled
back the frontiers of the state in the great privatisations of the 1980s. However,
in terms of the public sector as we think of it today, it is this Government
that is undoing decades of centralisation – as documented in the progress
report.

But why now? How does localism fit in with our number one
priority, which is economic recovery?

To begin with, let’s remember that thirteen years of Labour
not only wrecked our public finances, they were also marked by an especially
obsessive attempt to micromanage the public sector. These two facts are not
unrelated. The Blair and Brown administrations represented a final, desperate
attempt to save the post-war model of bureaucratic government. Despite record
public spending, they failed. Precious resources were wasted in pursuit of
top-down targets instead of much-needed reforms that must now be pursued in the
most challenging of financial circumstances.

As well as providing immediate savings, our determination to
dismantle Labour’s bureaucratic legacy removes a key obstacle to long-overdue
change.

Last
week, I wrote
that the Government is currently on track to haul back the State’s share of the economy from the
ruinous 47.7 per cent of national income it reached under Labour to 39.5 per
cent within five years. However, this much lower proportion still represents a
substantial chunk of the economy. Therefore, the effectiveness with which these
resources are used will have a major impact on our long-term prosperity.

For instance, spending
on welfare can either provide a bridge to a productive role in the workforce, or
it can trap people in worklessness. Spending on education can instill the
knowledge, skills and discipline that the workers of the future need to succeed, or it can entrench low expectations. In short, the public sector can make its
own contribution to economic growth, or it can hold it back.

And so the
economic relevance of localism is this: A decentralised public sector is one
that allows choice and innovation, and thus competition, improvement and better
value for money. The ethos, incentives and ownership may be different from the
private sector, but diversity, experimentation and responsiveness as just as
important in making progress. The alternative to decentralisation is monopoly
control, a suffocating blanket of conformity that is as damaging to today’s
public sector as it was for the nationalised industries of the past. 

For this reason
it is vital that progress on localism continues. As I stated in the report,
“decentralisation is not what the Government is doing this year, but what we
are doing every year until the job is done.” Certainly, that’s why I’ve taken
my responsibility for the City
Deals
programme with me into the Treasury – and I’ll have more to say about
that in future letters.

Comments are closed.