News analysis Stalinists and free marketeers agree to differ

19 Sep 02
Over the past year public services have become by default a key issue for the Liberal Democrats. Internal rows and specialist groups have dominated its policy-making.

20 September 2002

And, without changing its official position, the party has appeared to fill the political ground now vacated by Labour as the main defender of public services.

This happy accident for the party has paid political dividends, but left some members concerned that it will be marooned as the voice of a declining public sector constituency.

At the party's conference next week, the future of public services provides one potential flashpoint, and has been the subject of lengthy consultation and negotiations for the past year.

With 53 MPs, the party's parliamentary caucus is very different from the days when it comprised just a few individualists. Now there are enough MPs to reflect the various strands of thought in the party: economic liberals, Left radicals, centrists and social democrats.

In the past year, there have been outbreaks of aggressively free-market speeches from some MPs, notably Mark Oaten and David Laws. Health spokesman Evan Harris was even denounced as a 'Stalinist' for supporting the traditional NHS by an unnamed MP in a very un-LibDem newspaper leak.

LiberalFuture, the free marketeers' main vehicle, campaigned on the slogan 'time to kiss nanny goodnight', referring to the 'nanny state'.

In response, new MPs John Pugh and Alastair Carmichael formed the Beveridge Group, to fight the corner of publicly funded and run services. They claim the allegiance of most of the 2001 intake of MPs.

The group wisely calculated that party leader Charles Kennedy's dislike of internal rows would ensure that he would not back the free-market line so long as doing so would risk a fight with most of his new MPs.

The job of tying together a policy for the entirety of public service provision and for reconciling the competing views in the party went to the MEP Chris Huhne. The lobbying and rows continued during the drafting process so what the conference sees next week is likely to be what the party gets.

Huhne's 116-line motion, introducing a 68-page policy paper, drawn up by 31 party policy specialists, is nothing if not sweeping in scale.

It has avoided pleasing either the free marketeers or the Beveridge Group, but has not simply split the difference. Its main thrust is to get Whitehall off the back of local authorities, the NHS and schools.

It goes into some detail on health and education, but says that these are examples applicable to other public services.

Guaranteed basic standards across the country would survive, but be 'agreed at the appropriate national, regional and local level, rather than dictated by central government'.

A chapter boldly headed 'Stop Whitehall interfering with day-to-day decisions' calls for central government's role to be confined to 'information gathering, dissemination and persuasion'.

The paper rejects any extension of user charges to raise additional funds for key public services and remains committed to funding from general taxation.

Its main idea for injecting choice and competition into public service provision is the 'non-profit distributing organisation' – social enterprises that can reinvest operating profits but pay no dividend.

It describes this sector as an 'increasingly attractive alternative to either state or private provision', but goes on to note that 'Liberal Democrats strongly believe that the "public sector" option must never be dismissed as some relic of the past, as too many on the Right appear to do'.

While it accepts a role for the private sector, it does so without warmth, and it is very sceptical about private finance.

It argues that 'there have been examples of serious and expensive mistakes in the use of PFI/PPPs', and that 'far too frequently, public sector procurers have been forced to opt for PFI/PPPs rather than [for] the best solution'.

It continues: 'For some politicians it seemed that PFI/PPP was a clever way of levering-in extra (private) money into public investment, and that therefore the prime motivation was financial. However, [it] does not result in new extra money: it just changes the time profile and nature of the public sector's payments.'

The LibDem conference takes place in Brighton from September 22–26

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