As four years of the Coalition approach on 11th May, this week we examine its record to date in five key policy areas. In the second piece in the series, Andrew Haldenby assesses the Government’s performance on public services.
Andrew Haldenby is director of the independent think tank Reform. Its recent reports by Norman Warner and Jeremy Browne are available at www.reform.co.uk
There is much to say about the Coalition’s successes and failures in public service reform. The starting point, however, is that the public sector is now changing and reforming faster than it has for many years, driven primarily by financial pressure due to the state of the public finances. Important themes of reform are being implemented across government, including the breaking down of traditional distinctions between public services when they are no longer relevant or helpful. The Labour Party has significantly shifted position over the last year and will now contest the election on a platform of value for money and reform. This is undoubted progress and, generally speaking, it is the opponents of change that are downbeat.
But these achievements are not in any way secure, because reform is not being driven consistently across government and not from the top. For some services, ministers rightly criticise the Opposition for making the antediluvian case that only more employees and higher budgets can lead to better results. Yet throughout this Parliament at PMQs, the Prime Minister has made exactly that antediluvian case, on the NHS.
The Government has never managed to produce a common statement of its approach to public services. Its main attempt, the Open Public Services White Paper, became a painful process for all concerned and, on its much delayed appearance, sank without trace. For all that the Chancellor and the Prime Minister speak of a “permanently smaller state”, their support of big increases in pensions and healthcare mean that they have programmed in public finance crises in decades to come.
As a result, while some departments certainly deserve a ten out of ten, for the Government as a whole the score is more like a five out of ten. The successes in areas such as policing and education give a sense of real regret over what could have been had a more coherent approach been followed. Put another way, those successes give a great deal of hope about what can be achieved after the election and in particular in the 2015 spending review.
The financial pressure has been a positive cause of change. At a recent Reform policy dinner, a trustee of one of the main London museums described how the museum, which receives tens of millions of pounds in public support, had received a cut in its budget of around 6 per cent. As a result, for the first time the museum staff had started to measure the profit and loss on each of the ten major exhibitions that it runs each year. During the years of steady budget increases, it had never seemed worth doing that kind of basic accounting before.
The effects go deeper than a sense of financial reality. Sir Ken Knight said the following in regard to fire services, but he might have said it for the public sector as a whole:
“I was struck in my conversations that the financial pressures of recent years seem to have been the driving force behind many of the changes and innovations I have seen.”
The services that have seen the greatest financial pressure have seen the best debate about change. Local government is furthest ahead. There is real momentum in policing, other areas of criminal justice and defence. The cuts in the schools capital budget have had tremendous results. Whereas the Building Schools for the Future programme used to build schools for £20 million, new schools are now being built for half or even a quarter of that.
But the ring-fenced budgets, i.e. schools’ running costs and the NHS, have seen nowhere near the same kind of energy. Norman Warner, the Labour Peer and former Health Minister, argued powerfully last week that the NHS has made little progress on change. The NHS workforce is still growing, spending on new providers is falling and central government still seeks to control NHS institutions for all of the talk of liberating the service before the 2010 Election.
Ministers have done best when they have challenged traditional arrangements of public services which are no longer in the best interests of their users.
They have changed parts of the public service workforce, because the workforce is the biggest cost in public services and is clearly essential to delivering outcomes. The Coalition should be particularly proud of its efforts in policing, where the Winsor Review set out a blueprint of how to modernise and make more flexible that workforce.
They have questioned old-fashioned distinctions between public services. Here the Treasury has played its part by providing funds for the Troubled Families programme (which brings together help from many different agencies for very vulnerable people) and for care for frail, elderly people (which needs a combination of NHS and local government provision).
Ministers have removed central government targets because those targets, even if well-intentioned, tie public services into a pattern of provision that makes change difficult. Schools (via the freedoms of academies and free schools), local government and policing have benefited amongst others.
They have brought in new providers on the basis that what matters is the quality of the provider even if it is for-profit or third sector. The Ministry of Defence has found new ways to involve private sector companies, for example to manage defence infrastructure. The Ministry of Justice’s reforms to probation build on Patrick Carter’s pioneering work for the previous Government.
The Government has recognised the importance of institutions. George Osborne’s new framework to secure the public finances could be his most important achievement as Chancellor. Civil Service reform started too late in this Parliament to make any great difference, but the issue is certainly on the agenda.
Lastly, ministers have done extremely well to challenge the wrong-headed idea that only higher budgets can deliver better outcomes. As Theresa May said at the Conservative Party conference in 2013:
“In the Home Office, we’re playing our part in dealing with the deficit by reducing spending. But we’re proving – through reform – it is possible to deliver more with less. Crime is down.”
For the other Coalition partner, Danny Alexander said to Reform last year:
“That challenge – delivering more for less – doesn’t finish with the Spending Round …no matter the economic circumstances – it should remain a challenge for all future governments.”
These are crucial arguments because they will allow the UK to develop in future public services that are not only innovative but also affordable.
The impact of the Government’s reforms can be seen in the change in Labour’s position. In June last year, Ed Balls announced that a 2015 Labour administration would show an “iron discipline” and govern “in a very different way with much less money around”. And at the Labour party conference in September, the then shadow work and pensions secretary, Liam Byrne, defined successful reform “not by the money we spend but the difference we make. There is no moral credibility without financial viability.”
Yet against all this success must be placed the Government’s contradictions and hesitations. They are seen most clearly in the big spending areas of the NHS and pensions.
Since becoming Leader of the Opposition, the Prime Minister has presented himself as the protector of the NHS against change, whether that applies to medical training, the method of the funding of the service, the number of hospitals in the country or the service’s budget. Given that the NHS is the biggest public service by far, and the most politically important, his opposition to change means that the Government cannot be said to support public service reform as a whole.
Some may say that the politics of NHS reform are too difficult. They might want to read the relevant sections in Jeremy Browne MP’s book today (“We cannot avoid the debate about where to draw the boundaries of free-at-the-point-of-delivery healthcare, and about which treatments might legitimately be subject to a charge”). Equally the incoming head of NHS England, Simon Stevens said last week that the NHS has to change, for example by taking good ideas “from other industries, or cherry-picking from other countries”.
There is no reason to leave the NHS out of the reform agenda – in fact it is crying out for political leadership.
The same applies to pensions. The idea of a welfare cap is neither here nor there if it does not include pensions, which are half of the welfare budget.
Public service reform is not easy. Because it requires challenge to existing ways of working, usually involving organised labour, it is not for the politically faint-hearted. The achievements of the Coalition in areas such as policing, local government, defence and education are real. The task for the next Government is to maintain reform in those areas, in particular by sticking to reasonable spending levels, and extend it to areas such as the NHS. It would be gratified to find how effective a coherent reform programme across government would be.