Simon Hughes
Stephen Byers' speech at the Social Market Foundation
While the media attention and that of the political class is focussed on the European Convention, the Single European currency and the Chancellor's statement on 9 June, I don't believe that these will be the issues that will determine the outcome of the next General Election.
It is jobs and the economy; crime and asylum; health and education that are the key issues as far as the electorate is concerned.
With the significant extra investment going into our public services we are already beginning to see incremental improvements but for there to be a major advance we need not just investment but reform. This must not mean change for the sake of it. Reform needs to be based on clear objectives and principles.
So today I want to look at some of the questions concerning public service reform and next week to look specifically at the part that might be played and the advantages and disadvantages of public private partnerships and the Private Finance Initiative.
At the time of the last General Election there was one major policy that should have been at the heart of the campaign. That was the choice between long term increased investment in public services or short term tax cuts.
In fact it never really took off as an issue despite the Prime Minister making direct reference to it at the launch of Labour's Manifesto and linking investment with reform and the need to see a greater role for the private sector in the delivery of public services.
It is only since the election that the debate has been engaged. This has taken place at two levels. The political Right challenging the increases in public spending and their allegations of failure to deliver and the political Left resisting many of the reforms seen as necessary to secure improved quality and higher standards of provision.
Progress has already been made with more teachers, doctors and nurses compared to 1997 and the highest ever number of police officers. Helping to achieve a 27% fall in crime overall since 1997. According to the independent Commission for Health Improvement the N.H.S. is as a whole getting better. Our 10 year olds have been ranked third in the world for literacy in an international study published in April.
Yet despite these real and important improvements the public perception is often different. With last month's national insurance increases people are going to want to see a return on their investment and for the government time is running out. The pressure is on to deliver real and tangible improvements.
The modernisation and renewal of public services is one of the major challenges facing the Centre Left in politics.
The debate that we need to have about the best way forward has all too often been conducted in an over simplistic way. In fact the issues involved are complex and difficult. I want to consider the broad picture of public service reform. To see if we can define the boundaries between the public and private sectors. To identify how standards can be raised and quality improve. Whether we can win people over to public services by offering choice from a diverse range of provision.
At the beginning it is important to recognise how difficult it can be for many on the left to easily embrace fundamental changes to the way public services are run.
It is because they believe in and value public services.
Seeing them as social justice made real, providing people with opportunities, offering security and support when it is needed. With the potential to unify not just communities but the whole country.
Due to this depth of support any change can be seen as a threat to that which people cherish. As a result even minor reforms are fought over as if an issue of principle and so progress can be painfully slow.
This state of affairs has come about because many people are unsure about the direction of the reform agenda.
They are concerned about the extent and range of the changes to be introduced.
There seem to be no limits and because they cannot see the ultimate destination and how we intend to get there they are reluctant to take even the most tentative step on the road of reform.
For the government time is running out. At the time of the next election the criticism won't be that the government has been too ambitious or too radical it will more likely be that it has been too modest and too timid in its approach.
CONDITIONS FOR REFORM
For progress to be made at a pace we need to offer re-assurance to those who value public services. This needs to be done without compromising the reforms that will be essential to secure improvements.
We will need to establish boundaries to provide a framework within which changes can take place.
Failure to do this will allow those who oppose change to misrepresent the government's position in order to spread dissent and maximise opposition in an effort to maintain the status quo.
For me there are two conditions for public service reform against which proposals for change should be justified. These will form the boundaries for the debate.
The first condition is that in relation to essential services like the N.H.S. and schools no charges or co-payments will be introduced. They will – as now- remain free at point of use and provided on the basis of need and not ability to pay.
The second condition is that there must be no privatisation. This does not deny a role for the private sector but the crucial test has to be to whom is the private sector accountable. If it is to the public through adding value, innovation, providing greater diversity, improving quality then the involvement of the private sector should be welcomed. But public interest must always come first.
The introduction of these conditions would re-assure those who have genuine concerns and would expose those who wish to protect vested interests by keeping things as they are at present.
Within the boundaries created a radical reform agenda can still take place but now it would be underpinned by a clear statement of its limits.
I have no doubt that the recent debate around Foundation Trusts in the N.H.S. would have been far more constructive and focussed had these two conditions for reform been in place.
There is nothing in Alan Milburn's proposals which run counter to the two conditions. Nevertheless allegations have been made that Foundation Trusts would only benefit those with a fat wallet or that the changes amount to a privatisation with hospitals being taken outside of the N.H.S. Both untrue but in the absence of any limits people have been prepared to accept the myth and ignore the reality.
But even within the boundaries created by these conditions there are still difficult issues to be tackled which will be uncomfortable for many on the Centre Left.
I want to address some of these in the remainder of my remarks – what is the role of the market; is choice and diversity possible and the extent to which decision making can be devolved from the centre.
ROLE OF THE MARKET
At the heart of the reform debate is the role to be played by the market. In this area people see things in black and white terms. The Right seeing market forces as the way forward for public services, the old Left denying any role for the market whatsoever.
We need to move beyond this sterile approach. There are some areas in which the market can work to improve quality and raise standards but there are others where a wholesale reliance on the market would be inappropriate.
I largely agree with the analysis given by Gordon Brown in his speech to the Social Market Foundation on 3 February.
He asked whether the public interest is best advanced by more or less reliance on markets. I support his broad conclusion that at a time when the relationship between the state and the market is constantly changing it is vital to make sure that both work as well as possible. That to do this we must renegotiate the relationship between markets and the government.
The crucial test that must always be applied is what is in the public interest.
This will mean that in some situations the role of the market should be extended into areas which previously had been the absolute preserve of the public sector; in others it entails placing limits on the market and leaving the state to provide.
This distinction is I believe crucial. However while we must recognise the limits of the market and does not mean that we tolerate an unreconstructed public sector. Indeed many of those elements that we often identify with the market – choice, innovation, diversity can be useful tools in making public services more efficient and responsive.
CHOICE
The Conservatives use the language of choice but fail to empower the individual. When in office they introduced the grant maintained school system which resulted in schools being able to exercise choice over the pupils they admitted. In the N.H.S. fund holding gave new powers to G.P.s but not to patients.
For a genuine choice to be on offer a diverse range of provision needs to be available, centred on the needs of the individual.
Patients should be able to switch between G.P.s and dentists; to make informed decisions about the hospital they wish to be treated in. Pupils should have schools with different specialisms available to them so that education is tailored to a pupils individual strengths and abilities.
Now there is concern that by moving away from the monolithic, one size fits all approach, inequity is created in the system.
That it is unfair not to treat all in the same way. By providing choice you introduce an element of competition, of difference, which is corrosive of public services.
I reject these criticisms. To deny choice would lead to the break up of public service provision as we know it today. It would create real two-tierism, as those who could afford it would flee to the private sector in order to be able to exercise choice.
If this were to happen it would put at risk universal provision funded through general taxation. We cannot allow this to happen. Offering choice is one way in which we can bind into the public sector those that can afford to go private.
For this to work choice has to be real and tangible. From the N.H.S. there are two very good examples of this. From next summer patients on a waiting list for more than six months for any form of elective surgery will be offered a choice of treatment in the public or private sector. By the end of 2005 patients needing elective surgery will be able to choose from at least 4 or 5 N.H.S. or private hospitals when they need an operation.
This mixed economy approach operating under the overall umbrella of the N.H.S. makes real the exercising of choice.
The opponents of choice sometimes argue that it is only the self confident and assertive middle class who will be able to work the system. As a consequence they will be able to jump the queue to get the best treatment in the best hospitals; ensure that their children attend the top performing schools.
I don't think those concerns can be dismissed lightly. There is an issue here that has to be addressed.
I certainly do not agree with the view that poor people are not interested or simply do not care about the quality or standard of the public services they receive. But I do accept that for some making a choice of say a hospital or a school can be a daunting prospect.
The solution must be not to deny choice to all but to provide guidance and assistance to those that need it.
Take health as an example. An individual may be unable to make the complex choice of the hospital which is best suited to meet their clinical needs. But with the guidance of their G.P. or through their Primary Care Trust they should be able to make an informed choice.
The same would apply in education. Consider the choice of secondary school. Why not assistance from those primary schoolteachers who know the strengths of the child concerned so that the most suitable school can be identified.
A system of mentors or advocates available to give support would ensure that all would be in a position to exercise an informed choice.
When we move beyond those essential services like those provided by the N.H.S or our schools choice is no less important.
It is perhaps in these other areas that we can be at our boldest. For example, by identifying ways in which it might be appropriate to exercise choice through the purchasing power that would come from having a financial entitlement in respect of a specific service. There could also be the potential to experiment with the introduction of co-payments.
Let us consider how such an approach might apply to the whole area of care and support of the elderly.
Local councils are already under a duty to offer Direct Payments to individuals in order to meet their community care needs. But the present system is bureaucratic, cannot be used to purchase local authority services or to employ partners, close relatives or someone living in the same household where the relationship is of a personal nature.
We need to sweep these restrictions to one side and allow the individual to make their own choice.
For the elderly this is particularly important in terms of self-image and their own confidence. They would be able to take control themselves and not just have things done for them and be a passive recipient.
So why not a financial entitlement to a number of hours of home-help. With the pensioner deciding for themselves who that home-help is to be and if they want to putting in some of their own money to extend the hours or pay a higher rate.
The same could apply to home adaptations. With the choice of contractor being left to the individual with the option of adding to their financial entitlement with their own money if they wanted a more expensive type of tiling or different lighting.
The provision of meals on wheels is another example. Why not the choice between the normal service or being able to use the financial entitlement to purchase a take-away meal delivered to your door at a time of your choosing. Once again with the power to top up the value of the financial entitlement.
As we extend the right of choice over public services we must have regard to the responsibilities that follow.
Missed appointments cause delay and cost the N.H.S. hundreds of millions a year. In 2001/2 over 20 million appointments in primary care were missed. In secondary care over 6 million appointments saw patients simply failing to turn up.
We do need to consider imposing a penalty in such circumstances.
At long last action is being taken against parents who allow their children to truant from school.
A debate needs to be held as to how we can marry rights with responsibilities in relation to the provision of public services. And whether it is appropriate to introduce sanctions on those who abuse the system.
One final word on choice. If it is to be available then capacity will need to be increased. This is not a cost free option. There is no point in designed new structures for public services if the fundamental problem of inadequate capacity is not tackled.
With the additional investment now going in it is vital that it is part of a coherent and managed programme of change that recognises the need to increase capacity in order to provide choice as part of a modern consumer focussed service.
DEVOLUTION – NEW LOCALISM
For public services to be responsive they need to reflect the needs and aspirations of the communities in which they are based. This will require moving away from the central command and control approach.
Instead power and responsibility will need to be devolved to those on the front-line of service delivery.
Such an approach would be a significant departure from that adopted when Labour first gained office in 1997. After long years of waiting Ministers couldn't wait to get their hands on the levers of power in Whitehall. They would be pulled to drive up standards by diktat from the centre.
So a myriad of targets were set, local plans demanded, inspectors sent out, action zones imposed and pockets of finance ring-fenced only to be used as the man from Whitehall determined.
In the early days this approach had some successes – especially in those areas where performance had been poor. The targets set for 11 year olds in literacy and numeracy is a good example. Backed up with a clear strategy improvement was rapid over the first few years. But then a plateau was reached and further improvement stalled.
The lesson to be learnt, which is of general application is that whilst national targets, standards and inspection remain important a balance has to be struck because long-term sustained improvement will only come about when front-line staff have the power and responsibility to affect change.
This does not mean that we should embark on the wholesale scrapping of national targets. On the contrary targets have an important role to play.
Targets which are well-defined provide direction. They reflect the priorities of the government. Targets provide the electorate with a practical statement of what will be delivered.
Targets can be uncomfortable for politicians – that is no bad thing. They are the means by which they can be held to account. For a Minister they can provide a very public demonstration of failure.
Targets get themselves a bad name when they are vague and ambiguous. Or when there are so many that it becomes an exercise in micro-management; or when they become purely a form filling, box ticking exercise.
The removal of targets may make life easier for some but is that really what we want to do? The public sector needs to be put under the pressure that comes from public scrutiny.
Where there are no targets public services can often be slow and unresponsive. Just consider the recent closure of the Central Line on the London Underground.
No targets were set to get the line up and running. So progress was at the convenience of London Underground managers and engineers not the travelling public.
Under no pressure delay followed delay. An example of where properly used targets could have brought a real benefit to the public.
National targets work best when they are underpinned by devolution to front-line staff.
This is why the debate about new localism is so important. By bringing an end to destructive and inhibiting centralism we will shift away from a nationally determined model. Instead new freedoms will allow the best to innovate and expand whilst at the same time by intervention when necessary the underperforming will be given the necessary support and assistance to help them raise the quality of service they provide.
Such an approach has led to accusations of two-tierism because not all will be treated in the same way. But not all providers are the same at the moment and you simply do not assist the weak and under-performing by holding back the best.
I reject the view that uniformity is necessary in order to secure equity. Diversity does not have to lead to unfairness.
We are giving new freedoms to all councils and even greater freedoms to the best performing.
We need to do more to recognise the important community leadership role played by local government and that it is best placed to mediate between conflicting interests.
So as we consider new localism we must always have at the forefront of our thinking the part that can be played by local government.
As we give greater freedom and flexibility to accountable local government we need to do the same in education and the N.H.S.
Foundation Trusts are a step in the right direction but we need to go further.
Primary Care Trusts are the bodies charged with the responsibility of identifying the local health needs within an area and then to commission the appropriate provision. They are in the prime position to integrate primary and hospital care.
As the commissioning body it is important that P.C.T.s have the power and status that comes from election and accountability.
It follows that P.C.T.s should be elected. Perhaps with a mix of directly elected and indirectly through nomination by the relevant local authority. This would help overcome the silo mentally that presently hinders the N.H.S and local authority services and care provision.
Because health care varies across the country and the needs are significantly different from one community to another – health inequalities are widening not being reduced – serious consideration should be given to providing an elected and accountable P.C.T. with a limited tax raising power so that they can commission and fund health provision in their own locality.
CONCLUSION
The government has adopted a high risk strategy toward public services.
With people paying more, a heavy political price will be paid if we don't see significant improvements.
The Right will criticise the investment, say that it's not working, that the improvements are not being delivered and in the process undermine the whole basis of public service provision funded through general taxation.
So the government must be resolute. It has to succeed. Not just for the selfish reason of its own survival but to deliver the quality of public services that will provide opportunity and security for our people and unify and bring together our country.
