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Miliband offers a radical third way on public service reform

Rather than an approach defined by the centralised state or the untamed market, Miliband is committing to a progressive agenda defined by localism, transparency and accountability.

Ed Miliband delivering his speech on banking reform at the University of London last month. Photograph: Getty Images.

After addressing market reform in his speech on banking last month and party reform last week, Ed Miliband's energetic start to the year will continue when he shifts his focus to public service reform in the Hugo Young memorial lecture tonight (previewed by Rafael on Friday). His decision to do so is in part an acknowledgment that Labour has done too little to outline its own distinctive vision for schools, hospitals and local government, rather than merely criticising the coalition's approach. The aim of the speech will be to answer that charge and to present his proposed reforms as part of a consistent drive to increase transparency and accountability in all areas of public life. As he will say:

I get as many people coming to me frustrated by the unresponsive state as the untamed market. And the causes of the frustrations are often the same in the private and public sector: unaccountable power with the individual feeling left powerless to act. So just as it is One Nation Labour’s cause to tackle unaccountable power in the private sector, so too in the public sector.

Rather than an approach defined by the top-down state or by the unbound market, Miliband will offer what you could call a third way on public services.

The time demands a new culture in our public services. Not old-style, top-down central control, with users as passive recipients of services. Nor a market-based individualism which says the answer is to transplant the principles of the private sector lock, stock and barrel into the public sector. Instead, we need a new culture of people-powered public services. We should always be seeking to put more power in the hands of patients, parents and all the users of services. Giving them voice as well as choice.

As representative of this new approach, Labour is this morning emphasising its plans for education, which will see parents acquire the right to "call in" specialist teams to improve school standards when an institution is failing. Miliband will say:

Every user of a public service has something to contribute and the presumption should be that decisions should be made by users and public servants together. Having promised to share power, this government has actually centralised power in Whitehall and is attempting to run 1,000s of schools from there. That doesn’t work. And as a result some schools have been left to fail without intervention. Just last week we saw the Al-Madinah Free School in Derby close, because its failings were spotted far too late. We need greater local accountability for our schools. And in the coming months, David Blunkett will be making recommendations to us about how to do this.

As part of that plan, we must also empower parents. They should not have to wait for somebody in Whitehall to intervene if they have serious concerns about how their school is doing, whether it is a free school, academy or local authority school. But too often they do. In all schools, there should be a parental right to 'call in' intervention. This would happen when a significant number of parents come together and call for immediate action on standards.

More broadly, he will outline four principles for change: "information is power", "connecting people", "shared decision making" and "decisions closer to people". The policies that flow from these include a dramatic expansion of open data, with new powers for users of public services to track their case, and the opportunity for parents to access real-time information on their child's progress at school and for patients to access their health records; the introduction of a basic principle that that users of public services – such as a patient suffering a chronic condition or a parent of a special needs child - be put in touch with other people who share that service and are in a similar situation; and radical devolution to local authorities and city and country regions. 

It is the latter that is by far the most striking. All governments in recent history have been rhetorically committed to localism but none have delivered it in practice, with the result that the UK remains one of the most centralised states in Europe. Miliband, though, seems to really mean it when he promises a "radical reshaping" of services that breaks Whitehall's monopoly. When I asked one shadow cabinet member whether Labour would genuinely deliver on its localist promise, I was told: "follow the money". The party's local innovation taskforce is expected to to conclude that local authorities should be given the power to control three to five year budgets in areas including crime and justice, social services, the Work Programme, and social care - a huge change. 

The age of austerity, with Labour set to inherit a deficit that will still stand at £96bn, has made such reform not just desirable but essential. As Jon Cruddas, the party’s policy review co-ordinator, noted in his speech on "one nation statecraft" in June, "Labour will inherit a state that in many areas has reached the limit of its capacity to cut without transformational change to the system." This means devolving power downwards from Whitehall and reorienting services such as the NHS around prevention rather than just cure. Andy Burnham’s proposal to integrate physical, mental and social care into a single budget and single service ("whole person care") is perhaps the best example of the kind of reform required. By allowing more patients to be treated outside wards and freeing up to 40 per cent of beds, an integrated service could save the NHS around £3.4bn a year. In speeches on Wednesday, Cruddas (speaking at the New Local Government Network conference) and shadow care minister Liz Kendall (speaking at IPPR) will both flesh out the theme of devolution. 

Miliband will say tonight:

Wherever possible, it is right to devolve power down. Because the centralized state cannot from Whitehall diagnose and solve every local problem. By hoarding power and decision-making at the centre, we end up with duplication and waste in public services - and fail to serve the people.

That is why the next Labour manifesto will commit to a radical reshaping of services  so that local services can come together and make the decisions that matter to their own communities.

Driving innovation by rethinking services on the basis of the places they serve not the silos people work in. Social care, crime and justice, and the how we engage with the small number of families that receive literally hundreds of interventions from public services but too often don’t get to the heart of the problems they face.

The other notable theme of the lecture will be a reaffirmation of Miliband's promise to lead a government committed to reducing inequality ("I deeply regret that inequality wasn't reduced under the last Labour government," he has said). In an echo of Barack Obama's recent speeches on the subject, he will say: 

Walt Whitman wrote that democracy was about people looking"carelessly in the faces of Presidents and Governors, as to say, Who are you?". In other words, whoever you are, wherever you come from, you are of equal worth to the most powerful. This is the foundation of my commitment to equality too.

For decades, inequality was off the political agenda. But there is growing recognition across every walk of life in Britain that large inequalities of income and wealth scar our society.

But in a important shift, Miliband will commit not just to reducing inequalities of income and opportunity but also to tackling those of "power". As he will say: "Everyone – not just a few at the top – should have the chance to shape their own lives." It is that progressive insight that lies behind a public service agenda that, for once, truly merits the epithet "radical".