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Milibandism's next chapter: reforming the state

The Labour leader is, after much hesitation, ready to contemplate the problem of running public services in austere times.

Ed Miliband is ready to talk about public sector reform. It has not been a theme of his time so far as opposition leader but that will change on Monday when he delivers the annual Hugo Young memorial lecture. Transforming the way government provides services will, we are led to understand, be a significant theme.

It will be about a lot more than that, apparently – this is a traditionally an event where eminent politicians are invited to elaborate at length on their guiding philosophies – but the presence of even a loose précis of what Miliband thinks is wrong with the state and how he intends to change it will be significant.

To understand why, it is worth starting with Miliband’s big conference speech last year. Then, he spelled out the argument he wanted to make about the long-term systemic failure of Britain’s economy to fairly or evenly distribute the proceeds of growth. For the benefit of the vast majority of people who don’t tune in on rainy Tuesday afternoons to hear a disquisition on the obsolescence of the neo-liberal paradigm he also promised to freeze energy bills.

The effect of that intervention, ramping up the salience of cost-of-living issues and disorienting the Tories, has been well documented. Once the initial spasm of reds-under-the-bed denunciation had passed, moderate Conservative MPs and commentators even began to recognise that Miliband’s agenda was based on a plausible reading of the public mood and a serious analysis of market failure. They hate the prescription, but that doesn’t mean the diagnoses is all wrong.

For Miliband’s closest supporters this recognition of a coherent and consistent argument behind the leader’s political gestures is vital. It is what elevates all of the speeches, op eds, press releases, appointments and amendments of the past three-and-a-quarter years into The Project – an agenda for radical social and economic change whose intellectual origins can be traced all the way back to Miliband’s leadership campaign. It shows that he had a plan all along. (The alternative view is that the whole thing has been cobbled together out of tactical compromises and capitulations to the recalcitrant left, and that “Milibandism” is an elaborate rationalisation of core vote/comfort zone politics. But even the most hardline sceptics on the Labour side and Tory critics now accept that there is more strategic acumen in Miliband than they thought back in 2010.)

But a notable omission from The Project has been an agenda to reform the state. The story Miliband has told thus far about Britain’s misfortunes focuses on mismanaged markets, exploited by private sector villains – energy companies; banks; payday lenders – abusing their positions and neglecting their social responsibilities. There hasn’t been much about people’s suffering at the hands of dysfunctional government agencies – the petty “computer says no” humiliations and institutional neglect that, say most MPs, account for a lot more of their case work than maltreatment by corporations. Miliband has hinted a couple of times at the need to tackle the “unresponsive state” but it hasn’t been high on his to-do list.

There are various reasons for this. Alternative models of public service delivery were not something Miliband engaged with much in government, nor is it an area where he has strong personal instincts. Meanwhile, in opposition, it has been fraught with danger. There is a segment of the Labour left that hears the words “public sector reform” and thinks “wicked Blairite triangulation, buying into a Tory agenda to privatise everything, demolish trade unions and let G4S, Capita and Serco run all the schools and hospitals.”

So the Labour leader has not wanted to go there without having something distinct to say on the subject. But he is also sensitive to the charge that silence indicates a failure of imagination. Some of Miliband’s closest advisors accept in private that The Project is lopsided when it only talks about markets and vested interests in the private sector. Although Miliband would never go so far as to identify any state actor as equivalent in villainy to Rupert Murdoch or British Gas, he does, apparently, accept the need for Labour to engage with the way the state lets people down.

The task is then to move the conversation away from the mid-Nineties and early-Noughties arguments about using consumer choice and markets to break up state monopolies. Even among many Labour supporters of Blair-era reforms there is growing recognition that it is a fallacy to presume that private providers are always more efficient than public ones or that service users want to pick and choose among providers of public goods the way they shop for private pleasures. Certainly, the current Labour leadership will not go further down the road of using private sector competition as the device to drive up performance. Miliband isn’t persuaded that it does. His friends say it would be “inauthentic” if he used Blair-era language on public sector reform when, frankly, he doesn’t believe that’s the right way to go.

So the challenge then becomes finding an agenda that deals with state inadequacies in terms that can be offered as indigenously Milibandite.

Two interlocking themes are emerging. One is “the relational state” – a concept nurtured by IPPR and explored in a report that the centre-left think tank is publishing next Wednesday. As ever in wonkland, relational statecraft is not a digestible pledge-card nugget but the underlying concept is fairly straightforward. It starts by confronting the sheer complexity of contemporary social problems and noting the failure of both the traditional bureaucratic model and market reforms to deliver results.

“Relational” thinking puts the emphasis on building institutions, integrating services, pooling resources and deploying professionals at a local level across different areas and in collaboration with charities and volunteers. If that sounds like abstract jargon, well, it is. But the IPPR report does flesh it out with intriguing case studies from the UK, Canada, the US and Finland, covering innovative and effective ways to deal with children’s special educational needs, nursing and anti-social behaviour. The key ingredient seems to be having a dedicated professional team, based in a specific neighbourhood, whose authority is not limited to one departmental silo. That enables service providers to build enduring, trusting relationships with the people who depend on those services.

The opposite of “relational” service is the “transactional” model that treats citizens as consumers, shopping for the right public service; or distant Whitehall bureaucrats as managers trying to purchase the best social outcome. To anyone who has followed Miliband’s thinking over recent years it is easy to see how this analysis appeals. It has definite tinges of “Blue Labour”, putting the emphasis on communities and institutions that nurture enduring social stability as the remedy against atomisation, social fragmentation, anomie (which can, if you are that way inclined, be traced to the corrosive impact of market forces).

That thinking informs the second strand of an emerging Milibandite view of the state, which is the work that Jon Cruddas has been overseeing for the party’s policy review. Although the various commissions and committees that make up the review process are not due to report until the summer, it is already clear that devolving power to a local level will be a significant part of it all.

Localism, it must be said, is something that oppositions always promise before occupying the offices of central government where they discover how little power they actually have and soon change their minds about giving any of it away. Still, we’re in the bit of the cycle where Labour can afford to be idealistic about this sort of thing and so, for now, Cruddas is steering the party towards some variant of people power. In practice that means control of budgets potentially handed down to local authorities, city regions and, potentially, individuals. (To make that work financially, there would surely also have to be accompanying devolution of revenue-raising powers but that kind of thing is never very popular with the Treasury, which in opposition means Ed Balls.)

There have been persistent questions in Labour circles over the extent to which Cruddas was really setting the agenda for a Labour government or just cooking up exotic dishes in a lonely kitchen somewhere that Miliband might just nibble at or reject entirely. The leader’s office now seems keen to dispel that doubt. This too is a reason why Miliband’s lecture on Monday is important. It won’t contain much in the way of new policy detail but it will, I expect, signal that those in the party who want to talk about innovation and local devolution in public services have the leader’s blessing.

This shouldn’t be underestimated in Labour culture. There can be all sorts of ideas and policy notions floating around, with nudges here and kites flying there. But no-one feels certain citing something as a firm Labour position until the helmsman himself has publicly said it is so. Effectively, the people who have been talking on the fringes for ages about public sector reform – Cruddas, Andrew Adonis, Liz Kendall, Ivan Lewis –are being licensed as qualified Milibandites. State reform, as of Monday, will be formally admitted into The Project.

Not everyone will be happy, of course. There may be criticism from the left that this is all Blairism by the back door. (It isn’t.) There will be criticism from the right that it is all airy posturing that ducks the really big challenges ahead.

That is the more problematic charge. One thing Miliband certainly won’t do is try to prove his reforming zeal by attacking the professionals who deliver public services. He won’t mimic Michael Gove’s scorn for mediocrity in the classroom or bemoan jobsworthy heartlessness in the NHS. But it will be hard to get much attention for a state reform agenda beyond the wonkosphere without some resonant account of what is currently wrong with the state. Where are the vested interests and concentrations of power that must be broken up? Miliband will want to talk about an agenda for citizen empowerment but he’ll be reluctant to drill into the detail of who might lose out if newly empowered citizens were ever really to start flexing their budgetary muscles.

Then, of course, there is the fiscal problem. One of the strongest arguments for the kind of state reform that IPPR and Cruddas are looking at is its potential to deliver a much more financially sustainable level of service. Salami slicing budgets – the current way – delivers ever worse services that allow problems to fester, generating deeper social crises that ultimately cost more to remedy. In theory, a pre-emptive, relational approach weaves a more secure social safety net, allocating resources in the right way and faster to tackle the roots of social malaise and thus save money for the long term. At the simplest level, it is the difference between have a mechanism that arranges for a volunteer to come round and install a bath rail, costing a few quid, in the home of an elderly neighbour instead of waiting for the elderly neighbour to fall, alone, and then spend months in hospital.

It sounds plausible. But making it add up on a Treasury spreadsheet will be tricky. So will phrasing it in a campaign in a way that can't be satirised as dodging the question of where future cuts might fall.

Still, at least the message has got through to the Labour high command that having something to say about innovation in public service is potentially one way to claw back some trust when it comes to public spending. Miliband now recognises that Labour needs to prove that it can govern – and deliver the kinds of well-meaning social change that are the traditional brand strength of the party – without simply getting into Whitehall and pouring money down the same old chutes. As one confidant of the leader put it to me recently: “You’ve got to show that you can do transformation in an era when there isn’t much money.” This may not be the primary argument when Miliband talks about reforming public services but it certainly informs the decision to break his long silence on the subject.