Reporting for duty, by Tony Travers

4 Jan 07
With a Brown premiership predicted for any time soon, all bets are off as to what it will mean for one of Blair's most cherished 'legacy' issues public service reform. Tony Travers hacks through a rainforest of reports and reviews to find out

05 January 2007

With a Brown premiership predicted for any time soon, all bets are off as to what it will mean for one of Blair's most cherished 'legacy' issues – public service reform. Tony Travers hacks through a rainforest of reports and reviews to find out

Rarely can a year have ended with as many major official reviews and reports as 2006. One after another, major analyses of policies, institutions and finance disgorged from the centre of government. Many of the more important ones were initiated by the chancellor, and there can be little doubt that this fondness for analysis and discussion is a hallmark of Gordon Brown's approach to government.

Thus, over a relatively short period before Christmas, we saw the publication of the local government white paper, Strong and prosperous communities, the Stern Review of the Economics of Climate Change, the Eddington Transport Study, the Barker Review of Land Use Planning, the Leitch Review of Skills and the 2006 Pre-Budget Report. The latter explained that the Lyons Inquiry's report on local government would have its remit extended to embrace the output of Eddington, Barker and Leitch and that it would report around the time of this spring's Budget.

Public Finance has previously reported the detail of these publications. Eddington suggested the country needed to upgrade its transport infrastructure and charge more for it. Barker wanted to speed up the planning system and make it more permissive. Leitch painted a bleak picture of how Britain might get left behind if it didn't improve its skills levels. It is hard to argue with the need for any of these reports. What is less clear is whether they are a pathway to action or a way of avoiding decision-making. Some have also questioned the independence of the reviews.

Ruth Lea of the Centre for Policy Studies has said she believes the various reviews are 'a way of putting off decisions'. Dermot Finch from the Centre for Cities was quoted in the Guardian saying: 'The Eddington and Barker reports both had the support and advice of government civil servants, so to what extent were these views independent?' The same will be true of many of the other official reviews.

Lea and Finch have raised serious points about the purpose and freedom to act of government-commissioned inquiries. Indeed, their points are stronger because of the sheer volume of advice and documentation building up on Whitehall desks and hard drives. A quick trawl through the 'research' parts of departmental websites will often reveal a cornucopia of commissioned reports.

The Home Office, for all its annus horribilis in 2006, has long produced high-quality research – often undertaken by its own officials. The Treasury publishes dozens of documents to accompany each Budget and Pre-Budget Report. The Department of Health has long been a huge consumer and publisher of research. Communities and Local Government recently published no fewer than six further research reports as part of the State of the English Cities programme – running to more than 1,000 pages of analysis and tables.

As we look forward into 2007, the government's fondness for evidence-based policy will finally be tested. The arrival of a new prime minister, widely expected to be Brown, will provide a short, sharp opportunity to see what the government has learned from the recent battery of research and reviews. Will action finally follow the millions of words of evidence?

Other issues will also surround the passing of the political baton from one PM to another. Tony Blair has struggled with public service reform. But, as he made clear in his tenth and last New Year message, he is determined that there will be no let-up under his successor. For all the talk of 'legacy', Blair will leave the NHS and schools in the middle of complex, controversial and messy reforms. Britain continues to move from a previously evolved version of Welfare State provision to a new one. But it is not possible to be sure what the new model will be once completed. There seems to be a move towards a 'mixed market' of providers, embracing the public, private and not-for-profit sectors. There is also an expectation that the public will be offered a 'choice' of publicly funded provision while enjoying 'personalised' services.

The end of the Blair decade has resulted in a muted running battle between a traditional view of public services (as held by providers, trades unions and commentators) and an ill-described desire for radical modernisation within Number 10, as filtered out through departments and their ministers. The current prime minister has rarely hidden his frustration with the 'traditionalist' view of the State, which he sees as producerist and anti-public. Whether his successor will maintain this implicit stance is one of the big questions for 2007.

There will be other, more practical ones. For a start, 2007 is the year of the long-awaited Comprehensive Spending Review. We already know that the NHS and schools will continue to enjoy above-inflation increases, although these will be smaller than in recent years. For almost all other services, there will be no real-terms growth for the period 2008/09 to 2010/11. Indeed, given the fragility of the public finances and the growth of public borrowing and debt, the 2007 CSR will be a good predictor of the slightly longer period up to 2012/13. The golden years for the public sector are well and truly over. Brown now needs at least five years of strong private sector growth to begin the process of lowering public sector borrowing and thus slowing down the growth in government debt.

A long public expenditure squeeze will mean lower public sector pay – and further pressure to reduce the generosity of the pensions offered by many public services. The chancellor's desire for a 2% public pay limit is already producing threats of industrial action during the early part of 2007, notably from the civil service unions. With inflation at its highest level for years, negotiators are unlikely to settle easily for a real-terms reduction in earnings. Expect the return of fudged 'productivity deals', where employers attempt to trade pay increases above 2% for improvements in productivity.

Pressure for Gershon-style efficiency savings will continue to be applied by the Treasury. Indeed, pressures created by lower year-on-year public spending increases might translate into a need for real efficiencies – as opposed to the smoke-and-mirrors variety seen so far. Employment in the public sector stopped growing during 2006, though it shows little sign, so far, of shrinkage. During 2007, there are likely to be reductions in the numbers employed in many parts of the public sector, including the NHS. Expect a wave of 'cuts' stories throughout this year.

There will be efficiency-led pressure on shire county and district councils to merge their administrative functions. The recent local government white paper encouraged two-tier areas either to propose moving to unitary status or, alternatively, to merge their democratic and officer structures. Many counties are enthusiastic about this kind of reform. An unexpected coalition of interests involving the Treasury, the DCLG and county councils might lead to radical reform of local government structures.

But this is not the only part of the public sector likely to face structural reform in 2007. The arrival of a new prime minister, particularly Brown, will almost certainly lead to a major reorganisation of Whitehall. The Treasury itself might face reform, along with many other departments. Departmental Capability Reviews and National Audit Office reports are revealing a number of fundamental weaknesses in the core of government.

The chancellor and his supporters have long given the impression that, if and when he moves next door, he would wish to be radical with the institutional machinery of the State. The constitution and Whitehall departments could well be in line for a major shake-up. Will 'Communities' stay with 'Local Government'? Probably not. Might there be a new 'Department for Innovation, Enterprise and Skills' or a 'Department for Regional Development'? Perhaps. All will be revealed, though there are no handy official reviews to guide any reform in this sphere.

There will also be further reports from official reviews and inquiries. John Hills of the London School of Economics has conducted a review of social housing that the DCLG is expected to publish in the spring. Sir Michael Lyons will finally go public around Easter, though it remains unclear as to whether he will have much room to suggest major changes to local taxation. Council tax remains the scariest of all public revenues. Do not expect radicalism. A series of 'developmental' proposals, designed to tilt the balance slightly towards greater local discretion, appears likely.

Even more reviews and reports are also likely to be commissioned. Perhaps a part of government – say, a prime minister's department – might be created by the new PM to commission and co-ordinate this kind of corporate policy thinking. The soon-to-be-ex chancellor is a serious man who will want to consider every avenue open to Britain in the years ahead.

By the end of this year, we will have a much clearer view about the future for the UK's public sector. Elections in Scotland and Wales will add to the general sense of a 'new start' in each country in Britain. It is possible that a radically different government, with different policies, will emerge in Edinburgh from the one that has operated since 1999. Northern Ireland faces steps in its major programme of local government reform.

Brown's view about the UK's need to compete in an open global economy is now well known. His approach to public services will almost certainly be revealed relatively soon after he becomes PM (assuming he does). Just to his Right (or is it now his Left?) David Cameron will be putting flesh on the bones of Conservative policy. The longer leading indicators of the 2009 or 2010 general election manifestos will start to become apparent. Will Brown turn out to be a public service moderniser like Blair, or will it be back to the 1970s, or something else besides?

There must be a significant chance that there will be a number of major new policies for both the constitution and public service reform this year. Such changes might be welcome if they didn't follow year upon year of change and unresolved argument. A state of continuous revolution might have become natural for many British public services, but this does not make it a desirable condition.

Moreover, while 'stop-go' might have been banished – for the time being – from the wider UK economy, a 'feast-famine' contrast is now discernable within public expenditure. It is ironic indeed that a benign and growing economy has been used to produce a short, sharp jump in public expenditure, which will now be followed by a slowdown. Above-average growth would have been wiser, surely?

The new prime minister will have to manage an over-centralised set of public services with a dwindling real-terms amount of money to spend on them. There will be expectations of the new prime minister that could never be met. Yet the baton will pass from one leader to another in the middle of a complex struggle over the future direction of public policy. The country is in the middle of a programme of significant public service reform that cannot be stopped dead. Moreover, the Opposition is stronger than for many years. 2007 looks set to be quite a year.

Tony Travers is the director of the Greater London Group at the London School of Economics


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