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 director of the Police Foundation

Photo: Getty
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Forget planning for no deal. The government isn't really planning for Brexit at all

The British government is simply not in a position to handle life after the EU.

No deal is better than a bad deal? That phrase has essentially vanished from Theresa May’s lips since the loss of her parliamentary majority in June, but it lives on in the minds of her boosters in the commentariat and the most committed parts of the Brexit press. In fact, they have a new meme: criticising the civil service and ministers who backed a Remain vote for “not preparing” for a no deal Brexit.

Leaving without a deal would mean, among other things, dropping out of the Open Skies agreement which allows British aeroplanes to fly to the United States and European Union. It would lead very quickly to food shortages and also mean that radioactive isotopes, used among other things for cancer treatment, wouldn’t be able to cross into the UK anymore. “Planning for no deal” actually means “making a deal”.  (Where the Brexit elite may have a point is that the consequences of no deal are sufficiently disruptive on both sides that the British government shouldn’t  worry too much about the two-year time frame set out in Article 50, as both sides have too big an incentive to always agree to extra time. I don’t think this is likely for political reasons but there is a good economic case for it.)

For the most part, you can’t really plan for no deal. There are however some things the government could prepare for. They could, for instance, start hiring additional staff for customs checks and investing in a bigger IT system to be able to handle the increased volume of work that would need to take place at the British border. It would need to begin issuing compulsory purchases to build new customs posts at ports, particularly along the 300-mile stretch of the Irish border – where Northern Ireland, outside the European Union, would immediately have a hard border with the Republic of Ireland, which would remain inside the bloc. But as Newsnight’s Christopher Cook details, the government is doing none of these things.

Now, in a way, you might say that this is a good decision on the government’s part. Frankly, these measures would only be about as useful as doing your seatbelt up before driving off the Grand Canyon. Buying up land and properties along the Irish border has the potential to cause political headaches that neither the British nor Irish governments need. However, as Cook notes, much of the government’s negotiating strategy seems to be based around convincing the EU27 that the United Kingdom might actually walk away without a deal, so not making even these inadequate plans makes a mockery of their own strategy. 

But the frothing about preparing for “no deal” ignores a far bigger problem: the government isn’t really preparing for any deal, and certainly not the one envisaged in May’s Lancaster House speech, where she set out the terms of Britain’s Brexit negotiations, or in her letter to the EU27 triggering Article 50. Just to reiterate: the government’s proposal is that the United Kingdom will leave both the single market and the customs union. Its regulations will no longer be set or enforced by the European Court of Justice or related bodies.

That means that, when Britain leaves the EU, it will need, at a minimum: to beef up the number of staff, the quality of its computer systems and the amount of physical space given over to customs checks and other assorted border work. It will need to hire its own food and standards inspectors to travel the globe checking the quality of products exported to the United Kingdom. It will need to increase the size of its own regulatory bodies.

The Foreign Office is doing some good and important work on preparing Britain’s re-entry into the World Trade Organisation as a nation with its own set of tariffs. But across the government, the level of preparation is simply not where it should be.

And all that’s assuming that May gets exactly what she wants. It’s not that the government isn’t preparing for no deal, or isn’t preparing for a bad deal. It can’t even be said to be preparing for what it believes is a great deal. 

Stephen Bush is special correspondent at the New Statesman. His daily briefing, Morning Call, provides a quick and essential guide to domestic and global politics.