Tory man cannot live on Brexit alone

The Conservatives have become completely focused on Brexit. The announcement last week that government will now clear the deficit at some point into the next decade went through with barely a murmur. As the ever-perceptive Charles Moore pointed out last weekend, in many areas Brexit can be used to a unifying narrative that also would ensure other ideas supported by Theresa May pass (e.g. post-Brexit, grammar schools are necessary to equip Britain with the best educated workforce possible).

Yet I think Theresa May’s analysis that Brexit is the symptom of a more fundamental dissatisfaction, regardless of whether you agree with all her solutions, is the right one. Not everything can be reduced to Brexit. The Conservative Party needs to see Brexit within the wider picture of rising dissatisfaction at the current economic and social model.

One key point is that Brexit means that civil service reform and reform of the very structure of government has become more, not less urgent. In the last few weeks, John Manzoni, the Chief Executive of the civil service, and Bob Kerslake, its former head, have both said that the civil service is simply unable to cope with the difficulties of Brexit and running the country: the civil service is already doing “30 per cent too much”. While it is true that government is already doing too much, it is also true it is doing too little to tackle the problems that our society and economy face.

The dysfunctional Troubled Families Programme

A perfect example of government failure is the Troubled Families scheme. The most government-dependent families in the UK cost government much more than the average household. For many of these families, it is the result of a troubled and dysfunctional lifestyle that leaves them unhappy (as well as inflicting suffering on the communities around them). While they come into repeated contact with multiple government bodies (at high cost) this complexity itself is a struggle for them. The plan was for Troubled Families to create a case worker who would help the family in question get to grips with root causes around drug use, family instability, basic interpersonal skills and so on. This would make the family more stable, and save money by reducing crime, health, social care and possibly one day even welfare costs.

But from the start, Troubled Families was plagued with difficulties. As so often with government, the data for troubled families was poor. For the top 120,000 most troubled families, one estimate by the civil service found a cost of £76,000 per household or £9 billion, while another attempt found a cost of £26,700 per household or £3.2 billion. This gap of around £6 billion is a huge sum – and the level of spending would necessitate very different levels of prioritisation and approach.

There was no systematic effort to collate the costs and data around these expensive households within or between agencies. This reflects the bizarre situation whereby we pay government experts at the OBR to pretend they can tell you precisely what inflation and wage growth will be in three years, but have no idea of the cost of dysfunctional families today.

On the ground, the incentives for cross-agency working for each troubled family were limited. Despite these families absorbing disproportionate levels of government resource, they were largely processed through the same channels as everyone else, at a high cost, because there was no incentive to change things. Moreover, the savings were spread across welfare, local authorities and the police and justice systems. In addition, notional ‘education’ savings were included – despite these being illusory. At the top of government, the incentive was to declare the programme a success (and the metrics for success were designed to ensure that it would be). Once it had been declared a success, it was hard to redesign the programme.

Thus the Troubled Families programme was working in a vacuum with awful data, where the incentives to succeed were weak throughout government, from the bottom to the top. It was a perfect example of how the state that is set up to administer funds and bureaucracies not to solve problems.

Redesigning the State is More Necessary than Ever

No company could avoid bankruptcy for long with no data on costs, no incentives to achieve the right outcomes, and flawed corporate information at the centre. Unsurprisingly, Troubled Families never really managed to succeed. The tragedy this was that David Cameron and those around him pushed against the machinery of the state to set the Troubled Families programme up because there was the opportunity to try to reduce state spending in a way that also helped those who are currently failed by it.

It is going to be very hard to redesign the programme. But it is possible. You would have had to be honest about the limited success so far, redesign the costing structure, force through data sharing, align the incentives, allow different areas to try different approaches, potentially use private sector competition (not monopoly providers) and do much besides. In effect, you would need to start thinking of this system as being more like a market, with the goal being to use data, competition, and incentives to improve outcomes. But this was not something the civil service or political framework could manage. The system instead just redesigned the programme with tweaks around data. Yet it was always likely if we did not take the radical course in 2015 it would wither the moment that Cameron left Downing Street – which is indeed what seems to be happening.

The virulent anti-establishment sentiment sweeping Western countries exists in part because people realise that governments and establishments which claim technocratic superiority are increasingly unable to cope with the problems of the modern world. Government does manage to provide core services (at a high cost), but people are realising those who pretend to have the answers often don’t even understand the questions. If we are to solve the dissatisfaction which Brexit is part of, then we need not only to listen on issues such as immigration or Europe, but to tackle the nature of government itself.