Why evolution, not revolution, is the key to public service reform

As Andrew Adonis argues, successful reforms are incremental and build on existing best-practice, rather than trying to reinvent the wheel.

The coalition government, and in particular its Conservative wing, has been described as "Maoist" on public service reform. They have taken inspiration from Tony Blair’s lament that the only thing he regrets is not moving further and faster on the reform of the public sector. To remind himself of this, Michael Gove even has a picture of Lenin on his office wall.  Across government, there has been a premium on radical structural change undertaken at great speed.

Public services need reform: taken as a whole they are still not meeting the expectations of the modern public and they are poorly configured in particular to tackle complex problems that cut across different social domains. The state has got pretty good at things like reducing hospital waits and strengthening basic levels of education. It is pretty ineffective at tackling problems like anti-social behaviour, mental illness and long-term unemployment. So the need for reform is not in doubt - the question is what kind of reform and how it is to be carried out.

And it is here that the government’s record looks pretty poor. If we look across departments we find big structural changes undertaken at great speed, which have ended in predictable trouble. The NHS has spent three years undergoing a vast and expensive reorganisation, which has wasted time and distracted professional and managerial energy that should have been focused on improving services.

This is not the only car crash: the implementation of Universal Credit has got into the familiar trouble that bedevils big IT projects, the Work Programme is failing to help those who are sick or disabled into work, and the rush to get as many new free schools as possible has come at a price in terms of quality. The Ministry of Justice itself now says that Chris Grayling’s high speed probation privatisation will put the public at risk. These problems are not just embarrassing for ministers, they affect millions of people.

Instead of taking inspiration from Mao, ministers would have done better to listen to one of Labour’s most successful public service reformers, Andrew Adonis. In a little noticed speech three years ago, he set out six lessons for successful reform. Good reforms, he argued, build on failed ones and learn from their mistakes. They are incremental and do not try to achieve 'whole-system' transformation all at once. They are based on existing best-practice, rather than trying to reinvent the wheel. They require huge political drive, considerable support from stakeholders and create a new consensus in the general public.

Adonis's argument is backed by research across disciplines including economics and the behavioural sciences that social systems improve most if they are allowed to evolve incrementally. In this way, actors and institutions can try things out, learn from their mistakes and improve their practice continuously over time. Look at the recent public service reforms that have really lasted: Teach First (now the largest graduate recruiter in Britain) and academy schools. Both started small, both built on previous reforms and both grew gradually over time. Compare that legacy to what has happened in health: over the last 20 years, the whole structure of the NHS has been reorganised four times - often in an attempt to reverse the mistakes made in the previous reform. Very few people would claim that any of those structural reforms were the main reason for improved clinical outcomes.

If this is true, why are politicians so addicted to top-down structural reform? Because there are big political incentives to introduce 'look at me' reforms, to show through speed and scale that one is being radical, and to focus on structure as something muscular that politicians can directly get their hands on. The content and the timetable of Chris Grayling’s misconceived reforms to the probation service are a classic example of this pathology in our political system.

The first order challenge is clearly to decide what type of reforms are required for our public services. As Rafael Behr points out, Labour has yet to settle on a public service reform agenda.  In the new year IPPR will be publishing a paper that sets out our prospectus. But politicians also have to address themselves to the question of pace and scale, revolution or evolution.  Labour would do well to eschew Mao and listen to Adonis: start small at first and then grow out across the system, allow for trial and error, do not change all of a system’s 'tectonic plates' at once but be clearly focused on driving through reform in those areas that need to change, and build coalitions to sustain reform over time.  If Labour does that, the changes it will introduce will last and ultimately have greater effect.

Rick Muir is Associate Director for Public Service Reform at IPPR. His new paper Many to Many: How the relational state will transform public services will be published in the new year. 

Justice Secretary Chris Grayling speaks at the Conservative conference in Manchester. Photograph: Getty Images.

Rick Muir is director of the Police Foundation

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I was wrong about Help to Buy - but I'm still glad it's gone

As a mortgage journalist in 2013, I was deeply sceptical of the guarantee scheme. 

If you just read the headlines about Help to Buy, you could be under the impression that Theresa May has just axed an important scheme for first-time buyers. If you're on the left, you might conclude that she is on a mission to make life worse for ordinary working people. If you just enjoy blue-on-blue action, it's a swipe at the Chancellor she sacked, George Osborne.

Except it's none of those things. Help to Buy mortgage guarantee scheme is a policy that actually worked pretty well - despite the concerns of financial journalists including me - and has served its purpose.

When Osborne first announced Help to Buy in 2013, it was controversial. Mortgage journalists, such as I was at the time, were still mopping up news from the financial crisis. We were still writing up reports about the toxic loan books that had brought the banks crashing down. The idea of the Government promising to bail out mortgage borrowers seemed the height of recklessness.

But the Government always intended Help to Buy mortgage guarantee to act as a stimulus, not a long-term solution. From the beginning, it had an end date - 31 December 2016. The idea was to encourage big banks to start lending again.

So far, the record of Help to Buy has been pretty good. A first-time buyer in 2013 with a 5 per cent deposit had 56 mortgage products to choose from - not much when you consider some of those products would have been ridiculously expensive or would come with many strings attached. By 2016, according to Moneyfacts, first-time buyers had 271 products to choose from, nearly a five-fold increase

Over the same period, financial regulators have introduced much tougher mortgage affordability rules. First-time buyers can be expected to be interrogated about their income, their little luxuries and how they would cope if interest rates rose (contrary to our expectations in 2013, the Bank of England base rate has actually fallen). 

A criticism that still rings true, however, is that the mortgage guarantee scheme only helps boost demand for properties, while doing nothing about the lack of housing supply. Unlike its sister scheme, the Help to Buy equity loan scheme, there is no incentive for property companies to build more homes. According to FullFact, there were just 112,000 homes being built in England and Wales in 2010. By 2015, that had increased, but only to a mere 149,000.

This lack of supply helps to prop up house prices - one of the factors making it so difficult to get on the housing ladder in the first place. In July, the average house price in England was £233,000. This means a first-time buyer with a 5 per cent deposit of £11,650 would still need to be earning nearly £50,000 to meet most mortgage affordability criteria. In other words, the Help to Buy mortgage guarantee is targeted squarely at the middle class.

The Government plans to maintain the Help to Buy equity loan scheme, which is restricted to new builds, and the Help to Buy ISA, which rewards savers at a time of low interest rates. As for Help to Buy mortgage guarantee, the scheme may be dead, but so long as high street banks are offering 95 per cent mortgages, its effects are still with us.