Cameron’s reforms will create more bureaucracy

By Jon Wilson / @jonewilson

David Cameron’s article in the Daily Telegraph today responds to a real sense that public services aren’t what they should be. Thirteen years of Labour in power led to massive improvements in schools, hospitals and surgeries. But increases in state spending involved a disproportionate increase in targets and red tape. If often it isn’t a reality, there is a strong public sense that common sense is over-ruled by bureaucrats.

But the coalition’s answer is exactly the wrong one. Proving his Conservative credentials, Cameron wants to open up public services to competition from the private sector: this one will have them rattling their pearls in glee in the shires. The state funds and regulates but will not provide. What Cameron is attempting to do is to create a nation-wide market in public goods.

In fact, expanding the scope of the market in the public sector is going to mean more centralisation and bureaucracy – and make sure public services are even more out of touch with the public. If Labour makes the right arguments, it can open up massive fault-line between us the coalition and gain from growing Tory unpopularity on this score.

The difference between Labour and the Tories must be what it has always been – what the two parties have to say about markets. The Tories are putting big business before people’s ability to have a say over how public institutions are run. Labour needs to stand up for democracy before the market.

Of course, no-one in the Labour Party these days think markets are always a bad thing. But we need to be clear where and why they do work. Markets work well where consumers have clear preferences that can be easily translated into a cash price, which firms then compete to meet. Call me right wing, but I’d rather competition between businesses – rather than bureaucrats – decide how much I have to pay for my laptop or loaf of bread.

But ‘public services’ are goods that don’t just satisfy a selfish need, but benefit the individual as a member of the community as a whole. Even where they benefit the individual alone, the return on a public good is hard to define or quantify. What price do you put on clean streets or good local parks, law and order, a decent school or life-saving cancer treatment? What financial value can be placed on a university education?

The coalition plans to introduce a market in some of these services, Higher Education and Social Care for example. The problem is that people benefit from a university education, from schooling or from social care in literally incalculable ways that makes ‘pricing’ them impossible. The only way these public goods can be marketised is if individuals are transformed into narrow calculating machines, whose decisions are based on their attempt to maximise their personal advantage at every stage and who possessive perfect knowledge about the effects their choice will have on their life chances. Coalition plans in Higher Education will only work is if our generation of highly social, idealistic 18 year olds are made into soulless robots – hardly a laudible aim for the Big Society. What older people value most of all in social care is continuity of contact, being able to develop a relationship with carers who actually care, and aren’t just fulfilling a contract. These are values that can’t be defined in a market contract.

But there are public services that no-one – not even David Cameron – wants to sell on the market. Our society believes it is in the interests of each to ensure decent schools and good hospitals, clean streets and safe neighbourhoods are accessed equally by all. We fund these public goods out of general taxation, and make them free at the point of use. But the fact they are free means suppliers can’t compete on the price they offer, and consumers can’t communicate information about my preferences through the price they’re willing to pay.

In the provision of these public services, what takes the place of consumer preferences communicated through the market? The answer, in theory, is that we do – through the democratic, political process, we decide how much we want to be taxed, and how we want tax revenue to be spent. But often, the real answer is that decisions are made by faceless bureaucrats: by mandarins in Whitehall and local councils who often don’t seem very accountable. With the decline in politicians’ self-confidence and the rise of professional expertise, the grip of the bureaucrat has only increased. David Cameron is right to say things have got too bureaucratic.

But his ‘Open Public Services’ won’t change that. All it will mean is that mandarins write cheques to private sector firms rather than public sector employees. Following arguments made by LSE Professor Julian Le Grand and Cameron’s new (ex-KPMG) head of policy development Paul Kirkby, payment will depend on results. But it is Whitehall bureaucrats who decide what those results are. And how will they measure? The answer, of course, are numerical targets, set by civil servants.

‘Payments by results’ will not mean more real accountability. In reality the provider will have to answer to civil servants who manage links to private firms not the public. It’s going to mean common sense is defeated time after time, as private sector providers tell ‘consumers’ the service they expect was not written into the contract. Contractors will cut corners by delivering according to the letter not the spirit of specifications. We have, of course, been here before, with Compulsory Competitive Tendering and PFI. The reality is that precisely the kind of flexibility and accountability Cameron is calling for is lost

Far from ushering in the dawn of a ‘post-bureaucratic age’, ‘Open Public Services’ are a bureaucrat’s fantasy. Civil servants will retain central control over what is commissioned, but they are no longer accountable for how services are delivered. There’s always someone else to blame when things go wrong. And all thus can be done without ever having to talk to real people. These are reforms which Sir Humphrey’s could have only dreamed of.

The problem for Labour is that Cameron is continuing what we started. Julian Le Grand, was, of course, a major public sector reform advisor for Tony Blair, PFI was championed by Brown.

The answer is simple though. Labour needs to return to its historic scepticism about markets. It should recognise where they have a place, but articulate a clear alternative where they do not.

That alternative is simple: democracy, real, local, deliberative democracy, centred on local public institutions people which are proud of.

Over the next few years, we’ll see the coalition put the market before the power of people to shape their own lives. Rather than creating quasi-markets, we need to call for public institutions to be opened up to democratic decision-making. Instead of fake consultation or forced choice, let’s have a real discussion of whether the local hospital should focus on cancer treatment or infertility? Why shouldn’t schools make decisions about the kind of education they provide as a result of local public debate? The answer, of course, is that even with Cameron’s supposed reforms, the bureaucrats are still in charge.

Labour needs to become the anti-bureaucratic party. But the opposite of bureaucracy isn’t the market, but democracy: peoples’ real, collective power to choose.