How Labour can redefine the public sector debate

Reform will get nowhere if it starts and ends with confrontation with the workforce.

The public sector now looks set for months of bitter confrontation between the government and the unions. The doctors have announced a day of industrial action  -  their first in more than 40 years. Meanwhile teachers are set to strike in the autumn over changes to pensions.  Earlier in May tens of thousands of public sector workers including police and prison officers, lecturers and civil servants took part in a day of action and union leaders have warned of more to come.  It is clear that the mood among public sector workers is one of anger – and in their fight against the coalition’s programme of cuts and reforms the unions are looking to Labour for strong, unequivocal backing. 

How should the Labour leadership respond?  According to the former cabinet minister, Charles Clarke in a new article for IPPR’s journal Juncture, by adopting its own radical reform strategy for  public services. Clarke's prospectus is bold and much of it controversial: he calls for tight control over pay and spending, greater hypothecation of tax and an extension of user charging and competition.  He acknowledges that many of these reforms are unlikely to win the support of the industrial wing of the labour movement but argues that Labour shouldn’t allow "vested interests, even including some of its own members and supporters" to stand in the way of change. He does however offer new forms of institutional dialogue with unions and professional bodies to get agreement over areas such skills development, pensions and working arrangements.

Clarke is right that a future Labour government would have to make tough decisions. This is underlined in a new briefing published by IPPR today in conjunction with the CBI. The report highlights the fact that long-term trends, especially an ageing population, will increase demand on public services, while reducing future tax revenues.  The analysis is based on projections from the Office for Budget Responsibility showing how Britain’s budget balance is likely to move from a surplus of 1.3 per cent of GDP in 2015-16 to a deficit of 0.6 per cent of GDP in 2030-31 and then to 3.2 per cent of GDP in 2060-61: a deterioration of 4.5 per cent of GDP or £66 billion in today’s terms. 

These pressures are not unmanageable, still less an excuse for cutting back on providing high quality universal services. But they mean that any future government will have to make very difficult choices. The way forward is to create a broader, more sustainable tax base, take big strategic decisions about which services we as a country should prioritise and get serious about raising public sector productivity over the long term.

In terms of prioritisation we should be investing in universal affordable childcare: the success of the Nordic countries shows that this has massive long term pay offs in terms of reducing educational inequalities, as well as helping to expand the tax base by raising the female employment rate. In short, investment in early years is a massive win/win. But if we put our eggs in that basket it means that other services will face a tighter funding settlement over the long term.

That brings us to productivity. The electoral success of New Labour was built on the idea that social justice and economic efficiency could go hand in hand. It is my contention that the success of a future Labour government would depend on making public service productivity and the values of social justice, association and democratic empowerment go hand in hand.  

Lets be clear: being serious about productivity means being hard headed about reducing costs. In particular that means looking at where new technology can deliver services in a less labour intensive way. For example, new technologies in health mean that people will be able to monitor their own conditions much more actively without the need to consult a doctor. In another example, increasingly universities in the United States are opening up their degrees to the public by allowing online access to teaching material.  This could radically transform the nature of a university education by allowing wider access at lower cost. 

But delivering better value also requires the engagement and enthusiasm of those who deliver our public services day to day.  An agenda that seeks to marry the values of cooperation and employee participation to the need to improve efficiency has the potential to secure the buy-in of public service professionals. 

For example, could staff be rewarded by collective bonuses when a service improves? Or for example could we create new forms of not for profit service delivery organisation in which staff and users are jointly in control? The prospect that social care users could mutualise their personal budgets to create community led care providers is an enticing one. 

Of course user and producer interests will still clash and it is for that reason that we need robust forms of accountability in public services. We should also be realistic: it will be impossible to achieve agreement on every reform. And Clarke is right that before working out how it can better engage staff in the process Labour will need to be much clearer than it has been about its overall strategic approach to reform and the kind of changes that are necessary.  But it is important to remember that reform will get nowhere if it starts and ends with confrontation with the workforce.

Rick Muir is IPPR's associate director for public service reform

A future Labour government would have to make tough decisions on funding. Photograph: Getty Images.

Rick Muir is associate director for public service reform at IPPR.

Photo: Getty Images
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What do Labour's lost voters make of the Labour leadership candidates?

What does Newsnight's focus group make of the Labour leadership candidates?

Tonight on Newsnight, an IpsosMori focus group of former Labour voters talks about the four Labour leadership candidates. What did they make of the four candidates?

On Andy Burnham:

“He’s the old guard, with Yvette Cooper”

“It’s the same message they were trying to portray right up to the election”​

“I thought that he acknowledged the fact that they didn’t say sorry during the time of the election, and how can you expect people to vote for you when you’re not actually acknowledging that you were part of the problem”​

“Strongish leader, and at least he’s acknowledging and saying let’s move on from here as opposed to wishy washy”

“I was surprised how long he’d been in politics if he was talking about Tony Blair years – he doesn’t look old enough”

On Jeremy Corbyn:

"“He’s the older guy with the grey hair who’s got all the policies straight out of the sixties and is a bit of a hippy as well is what he comes across as” 

“I agree with most of what he said, I must admit, but I don’t think as a country we can afford his principles”

“He was just going to be the opposite of Conservatives, but there might be policies on the Conservative side that, y’know, might be good policies”

“I’ve heard in the paper he’s the favourite to win the Labour leadership. Well, if that was him, then I won’t be voting for Labour, put it that way”

“I think he’s a very good politician but he’s unelectable as a Prime Minister”

On Yvette Cooper

“She sounds quite positive doesn’t she – for families and their everyday issues”

“Bedroom tax, working tax credits, mainly mum things as well”

“We had Margaret Thatcher obviously years ago, and then I’ve always thought about it being a man, I wanted a man, thinking they were stronger…  she was very strong and decisive as well”

“She was very clear – more so than the other guy [Burnham]”

“I think she’s trying to play down her economics background to sort of distance herself from her husband… I think she’s dumbing herself down”

On Liz Kendall

“None of it came from the heart”

“She just sounds like someone’s told her to say something, it’s not coming from the heart, she needs passion”

“Rather than saying what she’s going to do, she’s attacking”

“She reminded me of a headteacher when she was standing there, and she was quite boring. She just didn’t seem to have any sort of personality, and you can’t imagine her being a leader of a party”

“With Liz Kendall and Andy Burnham there’s a lot of rhetoric but there doesn’t seem to be a lot of direction behind what they’re saying. There seems to be a lot of words but no action.”

And, finally, a piece of advice for all four candidates, should they win the leadership election:

“Get down on your hands and knees and start praying”

Stephen Bush is editor of the Staggers, the New Statesman’s political blog.