The 2020 Public Services Trust Blog

Obama’s healthcare plans are enduring a slow and painful birth. The President himself has claimed that parties are in ‘broad agreement’ over his proposal to inject a public player into the US healthcare insurance market, but congressional committees are apparently still debating how to structure and fund the scheme.

We have written on this blog before about the potential value of a public sector player in a mixed market – and in this case the government option proposed by Obama has potential to pull down costs for the consumer (see this excellent New Yorker article for info), and set a bar in terms of quality and access. As Paul Krugman spells out today, a wholly private market has the potential to skew incentives away from user interests:

“The key thing you need to know about health care is that it depends crucially on insurance. You don’t know when or whether you’ll need treatment — but if you do, treatment can be extremely expensive, well beyond what most people can pay out of pocket. Triple coronary bypasses, not routine doctor’s visits, are where the real money is, so insurance is essential.

…Yet private markets for health insurance, left to their own devices, work very badly: insurers deny as many claims as possible, and they also try to avoid covering people who are likely to need care.”

It is easy to see why those with a vested interest have spoken out against the scheme, but some on the American right are also arguing from an ideological perspective – that a free (or rather unregulated) market is preferable, and it is actually Medicare and Medicaid that have contributed most to escalating costs.

This is fair enough, but arguing for less regulation in the aftermath of the banking crisis seems a bit foolish. What Obama has developed is a plan that is fundamentally market-friendly, and there is little evidence that a truly free market for healthcare would work anyway. As Krugman argues:

“To the extent we have a working health care system at all right now it’s only because the government covers the elderly, while a combination of regulation and tax subsidies makes it possible for many, but not all, nonelderly Americans to get decent private coverage.”

Policymakers in this country will be eyeing the debate carefully, and especially because real limits on public spending may ultimately be the catalyst for more diverse means of providing public services. Despite being played out on fundamentally different terrain, the US healthcare debate shows that getting the right mix of providers and incentives – and thus being careful about market design and regulation – will be key skills for any future government.

The BBC reported this morning that economists are not the only people having trouble forecasting the future.  Apparently we can forget the ‘barbecue summer’ we were promised earlier in the year, and look forward to ‘unsettled weather’ through much of August.  According to this morning’s report, “this news will raise questions about the Met Office’s ability to make reliable seasonal forecasts.”

Of course, the Met Office have got it wrong before (most notably before the 1987 hurricane), but lets give them a break this time.  The reason why so many of us are holidaying at home this year is because cash is tight – not because we were all convinced that the UK will resemble the Costa del Sol during the next 4 weeks. 

My tenuous link to a wider political issue is about the rights and wrongs of prediction.  We are ourselves engaged in a degree of forward thinking about the challenges and opportunities that will shape public services ten years from now.  Some things we are fairly sure about – that we will be a more diverse, sophisticated and demanding citizenry, for example.  But in scoping the fiscal landscape, or reflecting on how new technology might reshape public service delivery, we can be far less certain. 

There is little we can do about this.  We can (and we do) ask the experts – but the experts largely failed to predict the global financial crisis, and the experts didn’t see the rain coming this summer.  So perhaps the answer is to go back to the source. 

We want public services and a political system that reflects the needs of our citizens, and that enables them to become resilient, capable, productive and social people (amongst other things).  So we need to think about how to service these aims, but arguably more important are the means through which citizens themselves can hold their public services and their political representatives to account.  Less prescription; more responsiveness, consultation and accountability. 

Through our wet and windy August I will be reflecting on these aims, and the wise words of Gazza – “I never predict anything, and I never will do.”

Equality has been the hot political issue of the month. This started with John Denham’s interesting speech about equality and fairness, in which he reflected on Joseph Rowntree Foundation research which showed a lack of public sympathy towards poverty. He argued that progressives needed to move away from a symbolic commitment to equality, which he believes that Labour in practice has never really set out to deliver, and instead to focus on fairness, which runs more with the grain of popular sentiment and is as much about resentment towards the undeserving rich as it is about redistribution. This week Alan Milburn published the report of his review into social mobility and the professions and James Purnell launched a new initiative called “Open Left” at Demos, which is a sort of “Future of Socialism” for the 2010s.

The Milburn review provides powerful evidence about why and how social mobility has stalled in Britain. It’s the old story that the vested professional interests have pulled up the drawbridge, so that the professions have become family firms. Practices such as internships simply accentuate this. So does grade inflation in admissions policy at the top universities. Milburn makes the point that his generation were part of the first great wave of social mobility in the professions, when the rapid expansion of the professions created the potential for people like him to break through the glass ceiling. He proposes a second social mobility revolution as Britain rebuilds itself after the recession and responds to globalisation and new opportunities in the digital, creative media, and financial services professions.

Meanwhile, James Purnell says that he wants to start fleshing out a new approach to equality based on Amartya Sen’s concept of freedom as capability building. The idea being to focus not just on income but on equipping people with the capabilities that would allow them to be in control of their own lives, creating their own life outcomes.

All of this fresh policy thinking is to be welcomed. It follows an earlier foray into equality policy from the Conservatives, in which David Cameron accepted that relative inequality was as significant as absolute poverty. Britain is a strikingly unequal society and this is not only an affront to social justice it is also bad for the social health of society. As the authors of the Spirit Level argue, inequality is bad for society as a whole because of the strong correlation between unhappiness and inequality.

But there’s one word which seems to be missing altogether from the renewed interest in equality – ‘class”. It used to be that the idea of class was at the very heart of discourse about equality in Britain. It was only in the 1980s that the old left grudgingly came to accept that tackling gender and race inequality were also important priorities. For the left, building class consciousness was a critical element of egalitarianism. There were powerful working class institutions such as the Workers Education Association (WEA), trade unions, the co-operative movement, working mens club and mutual societies. These institutions gave working class people collective agency, some measure of control over their lives, strong social networks and routes for collective and individual advancement through education and training.

Despite research showing that a majority of British people still consider themselves working class, many if not most working class institutions are now in steep decline and class itself is rarely discussed by politicians. Much of this profound change is attributable to the decline in manufacturing and the fact that the social institutions which were created around mass production have now lost their raison d’etre.

This huge cultural change is both cause and consequence of 21^st century inequality. The era from the second world war until the 1980s was one of social and cultural mobility. It is impossible to disconnect “Billy Liar”, “Saturday Night and Sunday Morning” and “Whatever Happened to the Likely Lads” from the social mobility they both represented and helped to propel. The dominant mood of the time was in favour of change, John Lennon’s “Working Class Hero” was what everybody wanted to be and it was only antiquated class barriers which stood in the way of change. The objects of ridicule were middle class mores and outdated customs. But in recent years all that has changed. In much popular culture today the joke is on the working class – with the exception of Jimmy McGovern’s “The Street”, working class characters are more likely to be depicted as ‘chavs’ than ‘heroes”.

None of this is to argue for turning the clock back to an era which was in most important respects far less progressive than our one. But it is to say that class is still an important factor in thinking through new policy on equality. It is particularly odd that class should be so little discussed at a time when both sociology and behavioural economics are enjoying such a renaissance. You cannot get close to creating new social norms and building new social capacity without an appreciation of the impact class has on behaviour.

The challenge for those who want a more equal society is to find the right ways of enabling people to live the lives they choose. Income transfers have a vital role to play and renewing the commitment to eradicate child poverty is clearly critical. But what is also required is bottom up social change, which helps build individual and social agency and creates new social institutions rooted in modern times. This should involve fusing the idea of multiculturalism with individual and collective empowerment – looking to find new ways in which local communities can take ownership of assets ranging from housing to schools. Not only can this help liberate potential and build social capacity it can also enable public services to tap into social resource at a time when public funding will be under very tight pressure. Developing this new frontier should be the priority for all those who are engaged in thinking through how to create a fairer society, from “Open Left” to “Progressive Conservatism” and to “Red-Toryism”.

I had a great discussion with a colleague last week on one particular aspect of the multi-layered problem of accountability in political life, and across public services. We had just attended a seminar led by John Dunford, the General Secretary of the Association of School and College Leaders, and one attendee had made a point about the value of school boards.

Post-seminar, we discussed the value of representation versus expertise – of the need for effective policy scrutiny, versus the need for an accountable body properly reflecting the diversity of values, background and opinion being represented. Ideally, we would have both. But this is not always the case.

This got me thinking about the diversity (or otherwise) of the world that policy wonks (sorry), civil servants etc inhabit. It isn’t particularly diverse, and, anecdotally at least, is very Oxbridge and home-counties centric. But is this a problem? In some ways, I think yes. Perspective, values, expectations and experiences – we benefit from diversity in all of these things. On the other hand, good ideas are good ideas…and we can’t really admonish thinktanks, government departments or quango boards for recruiting what they see as the best and most qualified candidates.

The difficulty of arriving at a solution is explored today in a nice article by Catherine Bennett, which would be better read than summarised here. But at its root, the issue is about social mobility. As Alan Milburn said this week, the route into university (and the opportunities this opens up) are key. According to the BBC today,

“Recruiting more students from a wider range of social backgrounds into university has been seen as a key to social mobility. But the report suggests that much more needs to be done – with fears that the university system can reinforce disadvantage rather than reduce it. It will call for leading universities to take into account the social background of pupils – particularly when pupils from low-achieving schools are competing against independent school pupils with a tradition of very high grades.”

The report will be eagerly awaited – especially by those who heard Mr Milburn talk about its emerging findings at a recent 2020 seminar. This might be an initiative born in downing street, but with a message that will hopefully ripple across the political spectrum.

The Centre for Cities published a new report this week on the potential impact of public spending cuts for some of the UK’s main urban centres.  As one might expect, cities heavily dependent on public sector employment – such as Newcastle, Swansea, Liverpool – will be in deep trouble.  The report speculates that ‘public employment could shrink by 240,000 to 290,000 jobs between 2009 and 2014.’ 

Those three cities listed above (and many other, particularly northern, examples) already know what a biting recession feels like, and will look to the future feeling pretty desperate.  Trouble is, the alternatives to public sector employment hardly look better.  The report suggests that “one implication will be the increased importance of facilitating low-and mid-skilled employment growth in the private sector.”  But the private (and particularly service) sector is still in retrenchment, so the means to facilitate this sideways shift of the workforce is hardly clear. 

For many in cities like Newcastle, there is a bitter irony felt towards the notion that a ‘bloated’ public sector must inevitably pay for our fiscal crisis.  The public sector has been a fundamental driver of economic growth during the last 15 years, with inflows for infrastructure and job creation providing the platform for private sector investment to capitalise on. 

Cutbacks in these cities are not just about eliminating waste and imbuing a culture of efficiency; they are about people, jobs and livelihoods.  There is clearly much pain to come, especially outside of the south-east.  Some of it will be unavoidable.  But we should never trivialise the problem, particularly sitting within the London bubble.  This recession is no longer about a few city bankers needing a bail-out, and those big issues we debated last year about the need to better protect people against the real risks they face, have not gone away.