Steady state

Labour approached the one-year anniversary of its election victory with frustration. Elected on an agenda of national renewal in July last year, by the time of the spring statement, for all its initial achievements, the government was left trying to understand why it had not made more progress on the fundamental reforms required to deliver the UK from the legacy Labour inherited. More recently, the June spending review took place again the backdrop of criticism that the government was cutting spending while details of reforms had still yet to be outlined.

 Meanwhile, the rest of the world has not stood still. President Trump wasted little time in enacting his own reform agenda, focusing on the activities of the US federal government, and announced tariff increases, suspensions, and other changes as he attempted to shift the terms of trade. Watching Trump’s activity, the prime minister could be forgiven if at times he felt some “implementation envy”. Widespread reform of the economy, public sector, and politics in the UK is certainly required. The shortfall is considerable in pretty much every area where the public expects to be served by the state. The NHS, for example, is struggling, and still waiting for long-promised social care reform. Social security does not achieve its purpose, even while costs rise. Our defence ministry wastes money on kit that does not work properly, yet we still lack sufficient missiles to fight a war. And the armed forces have only just caught up with the need for a tactical and strategic reboot following the Russian invasion of Ukraine – the2014 invasion, that is.

Our institutions have become infused with an infectious institutional incapability. The result is malaise and a lack of purpose. We can see the effects in the form of scandals which take years to resolve, or which are painful repeats of past lessons unlearnt. The “meta-scandal” is that the incapability is so widespread that it is often met with a collective resigned shrug rather than outrage. That is dangerous.

Labour is finding it difficult to change things. Accounts of the last Labour government recount similar frustrations. In his biography of Tony Blair, Anthony Seldon writes: “On coming to office, New Labour quickly enacted the specific proposals that had been worked out in opposition. It soon became clear, however, that Blair had failed to work through his own thinking for implementing reform elsewhere, and had placed too much blind faith in others. With his efforts focused so heavily on winning the election, too little time had been given to the challenges of government.” This, presumably, is one part of the New Labour playbook the current government has not been intending to replicate. Two years into his first term, Tony Blair gave an infamous speech about the “scars on my back” from trying to reform the public sector. It took Keir Starmer less than six months before he was complaining about civil service lethargy.

Of course, reform is difficult. Effective reform often represents a fundamental change to the way government does things. Even large private sector companies find change management a challenge, and usually they are not responsible for services that are so critical to people’s future, wellbeing, and even survival. These are all reasons why the Conservatives avoided the necessary and difficult decisions for so many years. Boldness is required – just as we have already seen from Labour on planning rules, for example. The case for reform must be built on values and vision. This is what Patrick Diamond and I argue in Power and Prosperity, a Fabian Society pamphlet published in September last year. In other words, any reform must be part of a practical, compelling, and optimistic story about the nation’s future. That story should be based on ethical socialist values which celebrate the individual flourishing in community.

A narrative with a values foundation does more than help sell reforms; it determines what those reforms should be by giving ministers and advisers a guide to action. It also helps to prevent policy based on expediency, especially when time is short. It might be expedient, for example, to encourage a regulator to shift emphasis or change focus; but any such decision should be in line with an overall vision and a coherent narrative.

Get values and change the wrong way round, and the result will often be ministers handwringing over difficult decisions that cannot be adequately explained to voters. Labour was unable to explain why it chose to cut winter fuel payments to pensioners, nor later why it was partially reversing the cut (nor initially who would benefit and when). Similarly, social security spending cuts were not linked to comprehensive changes to help people live better lives.

Worse, if you pass up the chance to frame the debate, you will often find yourself losing battles in someone else’s framing. Already, ministers and MPs risk slipping into ready-made framings from the right wing of politics, from which they may struggle to escape. Change will require funding. This is a key challenge for Labour, because taxation is already at historic highs, and the economy is in a malaise of its own, as the Office for Budget Responsibility (OBR) regularly highlights. Productivity is far too low, and not expected to significantly increase, leading to low GDP growth and hence limited resources. Funding pressures are exacerbated by the overdue, and still inadequate and indeterminate, commitment to increase defence spending,

The government’s fiscal rules – implicitly motivated by a concern about market reactions to government policy, especially after the Truss administration – are serious constraints. The absence of growth also carries market risks for governments. This is why, in Power and Prosperity, we wrote that action should begin immediately and that innovations previously dismissed, such as a land tax, and hypothecated taxes to build support for key spending, need to be considered alongside investment and promotion of a dynamic market economy. Citizens should be given stakes in the outcomes of successful reforms. There is a very real danger that we lose the next election, watch someone else take bold decisions, and hear ourselves echo the famous Fabian, Sidney Webb, after Britain left the gold standard: “no one told us we could do that”.

The key lesson from history is that major reforms require cabinet-level responsibility and ongoing prime ministerial attention. They require decisions, based on priorities, which are in turn based on values. The first world war “shell crisis” required a new department and a powerful minister – David Lloyd George. Even then, it was necessary for the prime minister to intervene. We could do with a similar such ministry for defence procurement today. Across the government, ministers should have the power to convene, direct, and recruit from anywhere in government or beyond, being clear what they want to achieve and being directly responsible for the results. Reform requires action. Reviews represent delay, can suggest an absence of preparation, and compound dissatisfaction. A case study is the social care review, which was asked to work on the basis that initial reforms would be in place by 2036 at the earliest. When reviews are required, actions should be taken which signal the direction of travel and deliver a taste of the changes to come. This is where a values and vision based starting point is so valuable: individual policies, reviews, and reforms sit in the same values-based context.

Wholesale changes to the way government takes and executes decisions are needed. Recent events have made clear that economic reform is also necessary today to make significant progress, as outlined in Power and Prosperity. Speed is important, and approaching reform in a structured way, starting with values and vision, is essential to enable the UK to continue being a great country achieving great things in which its citizens can flourish – and to enable Labour to win a second term to continue the work.

Image credit: Stephen gray via flickr