Progress | Centre-left Labour politics

Ready to reform

Labour must rediscover a zeal for public service reform, argues Sonia Sodha

The June spending round set out the extra cuts each government department will need to find in 2015 to meet George Osborne’s trajectory for public spending. It is a grim settlement for public services. But there will be even tougher news to come, with further savings to be realised after the election.

There will be a degree of protection for schools and the NHS. Both parties will almost certainly go into the election pledging to ringfence spending in these areas. But the truth is even a modest real-terms increase will feel like a cut, because of long-term demographic trends and because deep cuts to other services, such as social care and children’s services, will load more onto the NHS and schools. The alarm bells are already ringing on the NHS’s pressure gauge – such as the falling proportion of patients seen within four hours of arriving at A&E – as high bed occupancy rates have a knock-on impact on emergency departments.

This means that, as much as some on the right would like 2015 to be an election dominated by immigration or Europe, the NHS and public services will almost certainly feature prominently. At face value, this might be to Labour’s electoral advantage. The NHS is the issue on which Labour consistently outpolls the Conservatives, and by the time of the election people will be feeling the impact of deep and cumulative cuts to services. It could be tempting for Labour to settle into a 1997-type narrative: we will save the NHS and the education system from the Conservatives.

There are two dangers associated with this. First, it is unlikely to wash electorally. If both parties go into the general election with the same position on NHS and schools, and committed to cuts in other areas, the Today programme health question will be: ‘You say you are going to turn around the NHS, yet you’ll be spending the same amount of money – so how?’ Labour needs an answer as to why a Labour government could offer better services with less money.

Second, Labour needs a public service plan for if and when it wins. Much of the party’s policy development up until now has been focused on ‘predistribution’: making markets work more fairly for the majority of people so they get a better deal on wages and in consumer markets. This must be at the heart of Labour’s offer for a fairer Britain. But long-term economic structural reform takes time. To make a difference within five years, Labour will have to lean heavily on improving public services, as difficult as that might be in a time of austerity.

Jon Cruddas recently gave a speech setting out three principles for public services: devolving more power locally; spending more on preventative services, like primary school reading tuition to reduce spending on remedial services, such as for youth offenders; and encouraging more collaboration across different services – for example, the plan set out by Andy Burnham to integrate health and social care budgets.

Much of this is understandably broadbrush. But over the next year the policy review will need to develop how Labour would grapple with some of the difficult trade-offs it must navigate. Devolution and localism are great principles: but how to avoid postcode lotteries and poor services in some areas if there is not robust accountability to Whitehall as well as local communities? Preventative services can often take several years to deliver benefits, and banking savings as a result of improved outcomes is often very difficult in practice: so where will the upfront investment needed for prevention come from? Removing budgetary silos is much needed: but how is this to be achieved without imposing another big structural reorganisation on the NHS?

A good starting point would be sharpening the critique of what the government is doing, as Stephen Twigg recently did in his speech on schools. Labour should stay away from the critique that increasing the private sector’s role is the biggest flaw. This would back Labour into a corner of arguing that the state is always best, and private provision is always bad (which is as flawed as the reverse statement would be). There is a more nuanced critique: the government has significantly weakened accountability of services to users and local government. For example, it remains unclear what happens when an academy chain or a private health company fails. Its reforms are riven with conflicts of interest: GPs can commission services from companies in which they have a stake; academies are directly accountable to the Department for Education, despite one education minister himself being involved in an academy chain. So top-down and expensive structural reforms that are distracting managers from improving services are unlikely to achieve much in the long term.

Labour needs a public service reform agenda for government that recognises that the most important thing is getting the relationship right between central government, local government, service providers and citizens. There needs to be flexibility for service providers to innovate and deliver, but tough accountability to users, local and central government to ensure people get the best services. Labour should re-embrace some of the fundamental insights of New Public Management, like the importance of publishing simple and transparent performance data so members of the public do not have to wade through mountains of data to figure out how their GP surgery is doing. But it should also ditch the elements that were about applying market mechanisms like choice with little understanding of their limits; in the case of choice, lack of funding for excess places, not to mention parents’ justified unwillingness to switch their child’s school on a regular basis to create competitive pressures.

The job of central government must be to set priorities for how we want schools and hospitals to develop in light of the national debate and to ensure there is transparency against national priorities and smart targets (the A&E four-hour target, for example, has its flaws, but without it there would be less clarity about what is going on in the NHS). It should be responsible for simplifying performance data and for ensuring the public have the power to put that information to good use when services are not delivering: why can parents not trigger an Ofsted inspection, for example? It should design off-the-shelf outcomes-based contracting models (such as payment-by-results contracts) for local commissioners to select from, rather than imposing one (hopelessly flawed) model like the work programme in a top-down manner. One thing it must not do is stray into telling service providers how to deliver improvements: something that works at a small scale cannot be scaled up nationwide overnight without losing its effectiveness (neither the Labour nor coalition governments could resist trying, however).

The job of local government would continue to be to commission services tailored to local needs, using joined-up budgets. Despite lots of talk about commissioning services that measurably improve outcomes rather than that just tick a box, this remains a distant reality in many areas. This is partly because local commissioners, who surely have one of the most important roles in government, often do not have the right skills to undertake this complex role, and there is not enough support from central government to help commissioners get it right.

This would leave the job of service providers, whether foundation trusts, not-for-profit academy chains, teacher cooperatives or state-funded private healthcare providers, to focus on the fundamental task of managing and delivering excellent public services centred around the needs of those who use them.

The challenges facing services like schools, healthcare and social care are, of course, different, and for each Labour needs a convincing narrative and detailed plan to put into action from its first day in office. But in developing those plans, it makes sense to start from a common set of principles that can provide a roadmap for managing the difficult trade-offs involved in improving services while reducing spending. Since 2010 much of the debate has been about reflecting on the weaknesses of some aspects of the Blairite public service reform agenda. But it is crucial that some of its most important insights are not also lost.


Sonia Sodha is a former policy adviser to Ed Miliband and writes in a personal capacity


Photo: nrares

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Sonia Sodha

is a former adviser to Ed Miliband and writes for Progress in a personal capacity


  • Where to start ? I don’t know why Sonia hasn’t submitted this to the editor of the Spectator, it would sit well there with other articles of similar derivation or character. One can’t help but conclude that some on the Blairite centre-right of the Party are secretly glad that the settlement is so brutal to local government – hoping, perhaps, that this will act as an engine of change to finally remove Councils and a huge swathe of NHS organisations as the direct providers of services, and, instead, as she rather subtly puts it “to commission services tailored to local needs” – note, not services provided by the Council itself. Similar, Sonia bigs up greater private sector involvement in education (could I actually see ANY empirical evidence this has yielded ANY results, please) as advocated by – surprise, surprise, fellow Progress member, Stephen Twigg.

    I think I can see where this is ultimately headed when Sonia talks about “state-funded private healthcare providers…delivering excellent public services centred around the needs of those who use them – the cat is well and truly out of the bag.

    2 suggestions. If (and I don’t) we accept that the stricture of the budget the Tories bequeath us, the way we make massive savings is to remove the useless and immense market orientated provider/client split bureaucracy. We can also remove whole swathes of useless management – Progress and their ilk are in thrall to the managerial tendency.

    The other suggestion is to ditch Trident – and, at a touch, we remove billions of spend. We don’t need it, and only a minute band of Atlanticist Labour members want it in the party.

  • My suggestion for public sector reform is no public sector reform. Why don’t we just let public sector workers do their jobs without constant meddling?

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