The 2020 Public Services Trust Blog

The Financial Times came out for their party of choice today in typically measured fashion.  Their editorial picked holes in all three parties’ agendas, but argued that the Conservatives were the best of the bunch.  Maybe the public will feel the same this Thursday, who knows.

The FT’s ideal-type model was what struck me as most interesting:

“We stand for a liberal agenda: a small state, social justice and open international markets. But we do have a vision of the changes needed for economic and political renewal. It is on this basis that we judge the fitness of the contenders for power.”

But is a liberal agenda, small state, social justice and open international markets a plausible mix?  I find it hard enough getting my head around Matthew Taylor’s trilemmas, but could this be a quadrilemma?  This would be a situation where three out of four objectives could be achieved, but not all four together.  Why?

• Do a small state and social justice mix?  Jury is out on that one.
• Does being economically liberal preclude corrective spending and positive discrimination?
• Who can monitor the liberal agenda when the state is small?
• Can open international markets be effectively navigated by a small state?
• And can social justice ever be achieved within this context?  Maybe within one country, but internationally?

I’m not sure whether this is actually a quadrilemma, but its certainly a bunch of big policy blocks with similarly big ideological and practical considerations.  For example, some have argued that development in some parts of the world depends upon the underdevelopment of the others.  Others have pointed to the weakness of small states within a globalised market economy.  In this country, economic liberalism and social liberalism have been difficult things for a government to achieve together.  I find it hard to imagine that the FT would ever get the government it wants given these criteria – but I guess we will find out!

I went to a policy launch this morning hosted by Ian Duncan Smith’s Centre for Social Justice.  It was packed out, which is a sign that they are doing some interesting and good quality work, but I guess also reflects the common perception that IDS has the ear of the leadership, and represents a ‘good angel’ on David Cameron’s shoulder, focusing him onto issues of poverty and social justice.

The event was good.  It was a launch of four or five new policy strands, each advised by a group of experts, and planned to be an exercise in consultation and community engagement.  A project on social returns from early investment sounded particularly interesting, and the centre is also working on elderly care, mental ill-health, sport and youth justice.  All ideas at early stages, but clearly some resources behind the projects, and a clear sense of overarching direction (based on the idea of early intervention) from the chairman.

What was really fascinating (to me, anyway) was the tone of IDS’s remarks.  At first parse, a world away from the stuff of Conservative reformers past.  I started to think about how the IDS agenda might match up to his party line on various things, and whether this is really what people mean by ‘progressive aims using conservative means’.  A few themes stuck out:

1. Focus on prevention and early intervention.  This was a key theme, cutting across all of the projects, and providing a narrative for the centre as a whole. Investing preventatively is proven to make economic and allocative sense, so this was largely good to hear.  But I also have some questions:  Would systematic early intervention require new national frameworks and guidelines set by Whitehall?  And if so, how does this square with handing greater autonomy to local authorities in a ‘post-bureaucratic state?’
2. A key role for the voluntary & third sectors.  This is again welcome, and consistent with an approach to public service reform that prioritises outcomes, rather than particular forms of service delivery.  But conspicuous by absence was a role for the (central or local) state.  In a more paternalistic model – which prevention can sometimes represent – the role of the state is key in terms of providing information, market shaping and also service delivery.
3. The elephant in the room.  The elephant in this particular room was the fiscal squeeze.  The long-term benefits of the CSJ approach is often very lucidly made – as in their recent paper on benefit reform.  But just as the case for up-front spending on social aims is being articulated, the shadow treasury team seem to be rolling their sleeves up for a very different agenda of rapid cuts to public spending.

Tomorrow I am at a Progress session entitled: ‘does localism hold the key to achieving efficiency while maintaining social justice outcomes in the downturn’.  I’m sure there will be lots of crossover (it will be interesting to see how much).  I just hope that the pressure being applied to these issues across the political spectrum is maintained, even as the calls for arbitrary cuts get louder.

Yesterday’s PBR, prompted by the global economic crisis, saw the return of zero-sum to mainstream political economy in the UK. For more than a decade New Labour has defied the idea that public policy necessarily has to involve choices which create winners and losers. This has been best exemplified by its use of the conjunction “and” as in “social justice and economy efficiency”, or “tough on crime and tough on the causes of crime”. The Cameron Conservatives also went along with this consensus, hence a policy based on “sharing the proceeds of economic growth” which allowed both tax cuts and high public service spending.

But what is now clear is that we are entering an era of hard, and probably increasingly clear choices, which will create winners and losers. The Government, in order to reassure financial markets, was explicit yesterday that while there will be short term winners from the economic stimulus package there will be long term losers, particularly high earners. Moreover, whilst in the short term some £3bn of capital projects will be brought forward to boost the economy, in the medium term public spending will be the loser as an even tighter straight jacket is put on public service spending from 2011 onwards.

But where the main political parties are still not facing up to the new reality is what this will mean for public services in the medium to long term. The general message is that the ‘party’s over’ for public services. But the demand pressures on public services will grow and grow. In the very short term this will be seen with much higher benefit bills, welfare spending was 35% of all public spending at the height of the recession in the 1980s, it was 25% of all public spending in the 1990s recession, but at present only stands at 15% of public spending. This is bound to rise as a result of unemployment.

But the long term pressures will be even more stark. The demographic timebomb is far more potentially explosive than the future tax plans unveiled in the PBR. We will have to find a way of paying for an increasingly elderly society, which will see a 50% increase in the number of people over the age of 85 by 2020. At the same time society will have to confront a number of behavioural challenges, such as obesity and re-offending, which current public services are ill equipped to deal with. On top of which will be the cost of mitigating climate change and managing risk, including systemic market failure.

To suggest that the only response to these new pressures is some variation on a cost-reduction exercise is to fail to grasp the extent of the challenge which public services will face in the future. Here too we are probably going to have to make some hard choices, about what is really important for society and what is less important. About what the state should be responsible for and what it shouldn’t, about how services should be paid for, how they should be delivered and how rights, responsibilities and risks should be allocated between the individual, society and the state. These are the big issues which the PBR failed to touch on. They will be the focus of our shortly to be launched Commission on 2020 Public Services.