Although economic management is important, how Labour delivers efficient public services, whilst using some expertise drawn from the private sector, will determine whether we have a successful second term – and deserve a third.
I have been at the sharp end of the private-public debate, as transport lead of a Labour group grappling with the London Underground Public-Private Partnership. The debate on this PPP and others has become fevered, but there are some useful lessons that can help us forge the future direction of the party.
It is perhaps useful to look at how others fund and manage their transport systems. The American and French systems are very different, but in comparing them with our experience in the UK there are two very simple, and obvious, political messages. First, both recognise that there is a severe economic price to be paid for not keeping public infrastructure up-to-date (the Americans have to re-learn this every so often). We sort of recognise this in the UK, but as a nation are still attracted by the idea that we can have public services without paying for them. Second, they each have a national consensus about how to achieve this, while we currently do not.
The first key challenge is to win an argument about spending money on public services. On the left we know that our public services have been starved of funds, but the wider public remain sceptical. In defeating this cynicism, we need to demonstrate that we understand concepts like value for money and economic efficiency, alongside our traditional and easier territory of social justice and good universal public services.
The French do not privatise much, but they do invest in, and give status to, public sector managers. In the United States, on the other hand, they privatise a lot and adopt hard-line private sector methods in public services. I know which I prefer but, interestingly, although from very different directions, both are drivers of economic efficiency. One through the market, the other through strengthening the capacity of the public sector to deliver. We need to recognise that if two-fifths of our national wealth is spent on public services, it needs to work hard and deliver or someone else will find another way of doing it.
Which brings us to the second key challenge: building a new national consensus. It sounds very grand but really it is not. Although its decay started earlier, after 1979 the Tories smashed the post-war consensus on how we should fund and provide public services. The challenge for Labour is to build a new consensus that will endure.
What should the new one look like? Obviously it won’t be like the old one. But there are two foundations we must always keep in mind. First, at every step our policies must be driven by our principles. So there can be no compromise on access, equality, fairness in employment, public safety, and social justice. After all, there’s no point in being in politics if we don’t validate our actions against our principles. This includes, for example, the principle that private involvement should not be a backdoor way of slashing pay, conditions and job security.
The second, trickier, foundation is that for a public service to be useful it needs to genuinely meet public needs for the highest quality. This means being demanding, challenging and sometimes taking decisions which may offend traditional methods and interests. In order to survive in a politically challenging world we need to show that we can meet that challenge in a principled, consensual and forward-looking way. One of the joys of London’s new government is that we could be a test bed for developing these ideas and putting such principles into action.