The central advance for progressives in the last decade has been the creation of a new consensus on the importance of well-funded public services to modern Britain. This consensus is now threatened by economic reality. The exact scale of the post-recession fiscal squeeze is not yet fully apparent, but what is not in doubt is that we are likely to see the most significant reduction in public service spending for a generation.
However, this central fact is the one thing which progressives appear to least want to talk about. Labour progressives fear that admitting the likely impact of the fiscal squeeze on public services will undermine their ability to run with a public service improvement and investment message. Progressive Conservatives fear that speaking the truth might leave them trapped on the wrong side of the investment versus cuts dividing line. Yet the very thing that will make swingeing public service spending cuts inevitable is not planning for retrenchment now.
A progressive strategy will not be about muddling through and hoping that traditional Whitehall cost-cutting measures can help ensure that the pain is felt equally across all public services. Rather it will be about making tough and clear choices to achieve progressive ends. This will not be win-win, it will be zero-sum. That is the only way in which public services will be able to achieve more for less.
For the first time since the 1980s there is no longer a majority in favour of paying more in taxes to spend on public services. This is partly because public services have improved and satisfaction levels are higher than for many years, but it is also because this general improvement in public services has not been sufficient to transform some of our major societal problems.
Public services in the future will also have to cope with new demand pressures. By 2025 half the UK population will be over the age of 50 and NESTA has estimated that the total cost of an ageing society could be more than £300bn a year. And we must also count the cost of meeting our obligations on carbon emissions. This ‘perfect storm’ of rising demand coupled with a squeeze in spending should force a much more open debate about the nature of our public service settlement.
The Beveridge framework of universal entitlements and monolithic services was right for Britain in the 1940s, but society looks very different today. We demand much more choice and control in our lives, and need a new public service settlement that reflects this. Yet we can still learn from Beveridge. His report grew out of war and the recession of the 1930s, and forged a new consensus that lasted for a generation. We are now at another pivotal moment, in the middle of the deepest recession for decades.
As for Beveridge, the question for our times is about what sort of state, society and market we want. Beveridge argued for a ‘social insurance state’ that would remove fear and insecurity from people’s lives. While we should retain the idea of risk-pooling that underpinned this, we should aim for more than an absence of fear. We need an enabling state for the post-bureaucratic era – one which, as Amartya Sen has proposed, equips its citizens with the capabilities they need to succeed in the lives they choose. Such an approach sees public intervention as the means to achieving social ends, with the precise nature of intervention varying according to the capabilities of the people and communities concerned.
Fundamental to this approach is the theme of responsibility – the overriding value of the post-crunch era. The success of resilient communities will depend upon greater social responsibility, on the contribution we make as social citizens and on our willingness to take responsibility for our own behaviour.
A combination of responsibility, fairness, sustainability and security could provide the potential basis for a new progressive settlement, but it is necessary to spell out how this could be applied in an era of austerity. Progressives need to show they can make the tough decisions to deliver better public services more equitably, but also more efficiently. A new settlement in this climate will need to pass four tests: it will need to generate substantial efficiency savings; it will need to fairly redistribute resource and opportunity to enable people to transform their lives; it will need to support individual responsibility and mobilise social resource; and it will need to localise initiative, control and accountability.
The starting point for progressives will be to demonstrate that they have a strategy for managing costs, reducing debt and minimising tax rises. The scale of the challenge is immense – we will need better outcomes, which respond to new demands, but with less funding. This implies not just efficiency savings but transformation – achieving huge productivity gains, using technology to share back office functions across Whitehall and local public services. We should neither abandon markets, nor leave it to markets. Instead what is needed is a much clearer strategy of public service market making and regulation, with a new focus on commissioning for better outcomes that embraces the third sector. And we must be clearer about the types of state intervention that will not be prioritised.
At the heart of a new approach to public services should be fairness and the principle of redistributive funding. This should be about promoting social mobility through explicitly targeting funding at those in most need in order to focus on capability building. Academies already do this by putting more educational funding into disadvantaged communities. But other ideas such as the pupil premium, which redistributes more funding to poorer pupils and creates a demand pressure for better schools, should also be embraced. And the principle of individual budgets to transform life chances should be extended, for example to training at a time when the recession will make skills a critical capability issue. At the same time, the new consensus about the need to reduce inequality should be mobilised to make the case for fully funding commitments to reduce child poverty. The progressive deal on fairness should be based on redistributive funding backed by supply side liberalisation and extending the scope of co-payment for those who can afford to contribute more.
Underpinning this new deal should be a new emphasis on individual and social responsibility. When financial resources will be tightly stretched, a crucial role for the state should be to help mobilise and build social capacity. The challenges we are going to face as a society – preventative healthcare, carbon reduction, caring for the elderly – will only be successfully met if we can successfully tap into and release the potential for co-production. So public services will need to be much more focused on how they can help people help themselves. The recession also creates some opportunities of its own – for example, declining land values can enable social innovation, which is why community land trusts and other forms of community ownership and management of assets should be encouraged. We should also sweat the assets that have already been invested in. New schools, hospitals and other public projects should be seen as multi-purpose community assets – to be utilised 24/7 for the benefit of local communities, not just traditional public service centres adhering to public service hours. And we should look at how contribution can be encouraged and measured, both through ideas like social value and through reinforcing and extending the contributory principle in national insurance.
Finally, a new approach to public services should be about localising control and responsibility. The question should no longer be is it safe to decentralise but how much longer can we tolerate an inefficient central state? Big market and big state approaches have failed in banking, housing and large-scale public sector IT projects. In each of these areas local solutions may well be better. There is a strong case for establishing local investment trusts, for looking at the role of credit unions and local authority backed mutuals in underpinning the mortgage market. A new approach will have to be developed on housing, with more local control, more community and social housing, and better local incentives to encourage housing development. And the development of city regions represents a real opportunity to create a more powerful tier of local government, firmly rooted in place and capable of bringing together public services, economic development and community leadership under accountable elected mayors.
These are just the fragments of what a future public service settlement could look like. The Commission on 2020 Public Services will be working cross-party and with service users and providers to develop a new vision for public services for the next decade. This is a debate which progressives must lead.
Individual training budgets? This is treading in dangerous water.
I see no need for people to get training outside of what is available in apprenticeships (and GCSE’s and A-levels).
1. The central advance for progressives in the last decade has been the creation of a new consensus on the importance of well-funded public services to modern Britain.
If that were true then the threat posed by what Ben calls ‘economic reality’ (which is in fact a set of fiscal choices and trade offs) would feel different. The contours of public opinion – viz British Social Attitudes and similar reputable surveys – are not much different now from 2000. Labour never told much of a story about tax as a precondition for spend which is why today’s debate is so half baked. If Ben is right and taxpayers will not pay more than x % of GDP (US 35%?) then the scope for government action is much reduced. It’s not clear that, as he says, public services would have to cope with the demand pressures of an ageing society: they could fall on the personal and household sectors. His observation that recent increases in spending on public services ‘has not been sufficient to transform some of our major societal problems’ will be read by many as a recommendation for less spending and, as the Tories say, more room for society to heal its own wounds, without the ministrations of the state. He seems himself to believe in this Tory nostrum, with his production of the theme of responsibility and his assertion that post crunch we will all become more responsible. But then, for Ben, it’s back to the future. Markets in public services will do things cheaper – a 1980s proposition that is not underpinned by the subsequent evidence. Why should Ben’s ‘individual responsibility’ trope be friendly to redistributive taxation of any kind, let alone the new local collectivism he espouses. He needs a more robust argument in favour of localism, surely. In a context of fiscal constraint, centrally ordained reductions in spending are more likely than a philosophy of letting a 1,000 flowers bloom, many of which could be extremely expensive. One of the points of localism has to be that some councils acquire the freedom to do less, once liberated from central edicts.