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Clarke: The Conservative Party and Public Services

Speech to the Centre for Social Justice

Introduction

"I am delighted to be making this speech at the Centre for Social Justice. Iain Duncan Smith has done politics in general a great service in setting it up, and Conservative politics in particular a favour by pursuing, in remarkable and personal manner, a conviction to be associated with the most vulnerable in society.

By giving Tim Montgomerie and his colleagues an opportunity to explore how voluntary and faith based groups could make a significant contribution to the regeneration of the spirit in British society, Iain is helping to lay the ghost that there was ever a section of British society in which the Conservative Party was uninterested.

Those to whom the work of this centre is devoted are also closely engaged with the work of this country's public services, one of the most visible signs of Labour's failure in Government.

There is no reason why we should not be able to deliver to the public the same level of satisfaction with the delivery of these services that they normally expect from the delivery of other less important goods and services in today's world. There is no reason why the people working in public services should not derive the same level of job satisfaction as people in other jobs.

It will plainly be one of the most important tasks of the next Conservative government to resolve this seemingly intractable problem of satisfying those reasonable public expectations.

We have now spent 20 years in this country trying to modernise and reform our great public services, particularly health and education. We are in the extraordinary position where the Labour Party in its rhetoric is espousing an agenda that is almost indistinguishable from that of the Major and Thatcher Governments.

Labour came to office with an ill-thought out and incomplete agenda for the public services. There seemed to be an inbuilt belief that somehow everything would get better simply because there was now a Labour Government.

Labour, after two years of indecision and drift, turned back to third-term Thatcherism for its approach to public service reform.

Margaret's third term was a period of great social reform and it set out an agenda that Labour today is trying to follow slavishly in their rhetoric at least. Sadly, they are making an appalling mess of it and they are giving reform a bad name. Because they are not competent in delivering reform, they are failing to produce results that are value for the fantastic sums of taxpayers' money being spent.

What should the reform agenda be? It is:

• that money should follow the patient or the parent as they seek the best quality care or education to fit their own personal requirements;

• that there should be more diversity of institutions supplying treatment, care or education in order to increase capacity and to become more responsive to individual wishes;

• there should be greater co-operation between the public sector and the private and voluntary sectors;

• public services should continue to be free at the point of delivery and financed by general taxation. High standards should be strived for and delivered to every citizen regardless of means;

• universal provision does not mean that the state has to own all the buildings or employ all the staff; diversity and innovation are to be encouraged;

• there should be a decentralised service delivered by more responsible local leadership. Responsibility should pass downwards to NHS Trusts, Primary Care professionals, Grant-Maintained Schools (now re-named Foundation Schools) and City Technology Colleges (now renamed City Academies). National standards should be set down and inspected so that local management can be accountable both upwards to the Secretary of State and locally to the communities they serve.

The failure to put this agenda into practice properly is a cruel irony for Prime Minister Blair who once perceptively but unwisely said that it "all about delivery". On those rare occasions when Mr Blair gives himself good advice, he fails to take it.

What Has Gone Wrong?

Labour in office soon came to agree with the Conservatives that the public services needed a combination of more money and reform. Unfortunately they were panicked by the lack of quick results and started pouring money into the services before they had any reforms under way.

If we needed a textbook on how not to manage the National Health Service we could ask Mr Blair to write it. Mr Frank Dobson, Blair's first appointment as Health Secretary, promised us that scrapping the NHS internal market would save lots of money. All that he actually did as to scrap GP fund holding, which was working well, and replace it with primary care trusts. "We shall divert the millions saved on bureaucracy to the treatment of patients", he told the House of Commons in May 1997. What has actually happened is that the administration budget for the NHS has risen by two-thirds. The largest group of staff in the NHS is now managers and support workers. The number of managers rose by an astonishing 58 per cent between 1997 and 2003. Not quite what you promised us Mr Dobson.

Mr Blair panicked after the winter crisis in 2000 and made a promise on Breakfast with Frost to increase spending on the NHS to the European average. One of Mr Blair's fans, Polly Toynbee, has called this commitment "astonishing" and described it as a "panic" response to a winter crisis that lacked credibility. "Was ever so much money spent to so little effect on public opinion?" asked Polly Toynbee.

A wise Prime Minister does not make policy in a television interview after a media flap. But Mr Blair did and when he changed course and started hurling money at the problem, the NHS was in no condition to respond.

Nothing speaks more eloquently of the collapse of Labour's public service reforms than the startling revelation that, after a fifty per cent increase in NHS funding, 61 of the 231 NHS trusts are in deficit to a total of £306 million. The truth is that the growth of resources has been in excess of the capacity to absorb it. Most of the extra money has gone into larger payrolls and excessive bureaucracy.

Everywhere you turn in the public sector you find targets. It is like living in the Soviet Union in the 1970s. Targets for the number of children playing truant. Targets for the number of children reaching the expected levels of achievement at 11 and 14. Targets for the number of exclusions from schools. Appointment targets for GPs; waiting list targets for hospitals. The NHS has no less than 206 targets for professionals on the frontline to comply with.

This target culture is part of a desperate desire for publicity and quick political payback that has spawned thousands of detailed targets across the whole public sector and created a bureaucracy to produce figures to match those targets. Some targets are perverse - those for the numbers on waiting lists and for 48-hour appointments with GPs for example - and not only do the Government set too many targets, they miss too many of them as well.

Despite the huge increase on spending on the NHS between April 1999 and March 2005, productivity has actually fallen by up to one per cent a year since 1997. Faced with this damning evidence of its own failure, the Government's response was simple: claim that the productivity figures do not accurately reflect the facts. Yet a leaked Cabinet paper showed that productivity in the NHS had dropped by between 15 and 20 per cent since 1997. International studies confirm that this is what has happened.

Money without reform, an unnecessary expansion of bureaucracy and too many targets; you would have thought those three mistakes enough for any Government. Not a bit of it; Labour was determined to go just that little bit further. They embarked on a ruthless centralising agenda. Partly this was to satisfy their lust for better headlines. But it was also driven by a naïve belief that they could run services like health and education from the centre.

An endless stream of initiatives was launched, managed and sometimes micro-managed by Ministers and their Departments, whether in the No. 10 Policy Unit, the Treasury, the No 10 Delivery Unit or the Education and Health departments themselves. In 2003, for example, the Government sent schools a total of 2280 pages of guidance - 12 pages for every school day.

This culture of centralism has done critical damage. It has stifled local initiative. It has all but eliminated managerial creativity. Teachers, doctors and other public sector professionals have been overwhelmed with initiatives, directives, circulars and targets destroying morale.

All this upheaval has created a sense of permanent revolution. There is a feeling in the public services that careers depend on the obeying of central directives and there is a risk-averse fear of bad publicity. There is constant pressure from the centre to deliver what the professions know is impossible to deliver quickly faced with the reality of local pressures.

What Should We Do?

It is often easier to identify a problem than to decide on the solution. Let me say first of all that there is no simple solution to the problems of public services. We must not fall into the trap of assuming that there is a magic formula for success.

It is occasionally suggested that there are three measures that will automatically raise standards in public services: they are,

• greater choice;

• private sector involvement in delivery;

• use of the concept of markets.

All these things have their place - I used them extensively when reforming public services myself - but they are not a kind of boil-in-the-bag, instant solution. As if all you need is to add a few businessmen, break up a monopoly, throw in a bit more money and hey presto! reformed public services bubble up before your eyes. Public services are complex, difficult to run and they hold a unique place in public affections.

In any case, we in the Conservative Party have to be honest with ourselves. We do not have the credibility with the public that enables us to propose radical reform in the public services. We have no licence from the voters to shake up public services because many people still suspect that we just want to privatise them in order to save money and then cut taxes for our rich friends.

That is not our agenda - and it never was when we were in government - but our opponents have been very successful in giving us that reputation. A core task for the new leader of the Conservative Party will be to restore the trust that is needed before the public will accept that we really do want to make public services work better for all and not to get rid of them. With my personal commitment to public services and my experience in leading them, I believe that I am particularly well equipped for that task.

I am as committed as I always was to the role of the state in modern Britain to the provision of high quality health and education free at the point of delivery to every citizen. It is quite wrong to suggest that the welfare state has failed. It needs to be improved and modernised to meet the high expectations of today's consumer society.

After setting out a framework for public service reform, I want to focus today on two public services that affect almost everyone - schools and the NHS.

But let me make two crucial points first. I recognise the commitment that those who work in public services show every day in delivering the services we all need in circumstances that are often challenging. I recognise that many of them are motivated by a personal commitment to the values of public service. It is important that Conservatives show that we not only understand those values but that we respect and cherish them too.

I also think it is important that Conservatives discuss the public services in the context of what is happening within them now. We should not walk into office on 8 May 2009 in the belief that we can start afresh. There will be no blank sheet on the desks of the Education and Health Secretaries. Instead there will be an agenda already in progress and we will have to decide which parts of Labour's agenda we will continue with and which we will scrap.

A Framework for Reform

To me there are five key building blocks that Conservatives need to put in place in order to convince the electorate that we are serious in our commitment to public services. These building blocks have another purpose too; they will act as a framework for reform.

First of all, public services are provided for the many and not the few. They are universal services that everyone can use and they will continue to be free at the point of use and largely funded by taxation.

For most people in this country, the quality and availability of public services matters to them in their everyday lives. Over ninety per cent of the twelve million children in this country will be educated in state schools; most people cannot afford school fees. Over 52 million people in England are registered with a GP. The elderly and the sick cannot afford health insurance. Public services, in other words, are not the concern of a few but of the majority.

Conservative Party must never talk about the public services as if they are exclusively used by the poor. Public services are not a last resort for a minority; they are the first place the majority of us turn to for health, education and many other essential needs. To be blunt: the public services are as much a middle class issue as a working class one and it is about time we recognised that.

The argument about public services is also characterised too often as being one about inner cities. It is often said or implied that public services in the cities are uniformly dire and those elsewhere are better. But the true picture is more complex; of the bottom 25 primary schools in England in 2004, four were in cities but 12 were in shire counties. Of the top 25 primary schools, two were in cities and 18 in were in the shire counties. The worst problems in our society today are often to be found on the edges of our provincial cities and not in the centre.

I do not believe that there should be public subsidy of private provision in health care or anywhere else. Citizens should be free to make private provision but it should be allowed to find its own level.

The second building block is simple: just because they are public services does not mean they have to be provided by the public sector. The voluntary sector, the private sector and religious bodies all have a distinctive and invaluable contribution to make. The state should be wary of being the monopoly provider and where it is, it must be rigorously regulated.

But at the same time as recognising the value of the non-state sector, Conservatives need to stop portraying the state as a pantomime villain. It is important that we do not confuse freedom with a free for all.

The notion that we are all suffering because an oppressive state is leaning on us is an argument for anarchism, not Conservatism. The state is not a wicked stepmother stopping us going to the ball. The state can be a force for good in peoples' lives. After all, it is thanks to the state's intervention that education and healthcare have become universal in this country. Conservatives were at the heart of the development of that state provision from Shaftesbury to Major and we ought to be proud of our contribution.

The issue is not whether the state should be involved but how. Where we Conservatives differ from many in Labour and the Liberal Democrats is that we do not believe that the state should be the sole provider of public services. What we do believe is that the state's role as commissioner and regulator is essential to ensure both social justice and the maintenance of standards.

Conservatives want to see a plethora of providers in public services. The voluntary sector is a major provider of services in communities up and down this country. Many of you in the audience tonight give your time and your expertise to make those voluntary sector provided services the success they are. Your contribution is essential to building the better society we all want to see. Government should be supporting groups such as the ones you are involved with, using your skills and learning from your successes.

The private sector also has a role to play in the delivery of public services - it always has done. There is no conflict in my view between making a profit and delivering a public service. What matters is that the quality of the service provided is high and that it is available to all under the same basis as publicly run services.

My third building block with which to construct better public services can be put very clearly: it is no good putting more money into public services without reform. New money should be used for new approaches. I recognise that many voters think that a shortage of money is invariably the reason for a poor service. We must get through that just spending more does not work unless the money is spent wisely.

I believe that the electorate is now more sceptical than they were in 1997 about the supposed link between increased spending and better services. The public are increasingly savvy consumers when shopping for goods. They know that just because one computer costs more than another does not mean it will be a better machine. Cost and quality are not invariably linked.

What we have to show people is that extra spending on public services can achieve a positive outcome but only if the money is spent carefully. We must show them that Labour's approach to public service reform is to have an open chequebook; our approach is to have an open mind.

Fourth, let reform work in a genuinely localised way. Power must be devolved downwards but there must be accountability upwards. The centre needs to be small but effective. The vast range of units, advisers, and quangos created by Labour will have to be removed. We should reduce the size of central Government Departments dramatically. The Treasury and No 10 must be taken out of detailed involvement with delivery entirely.

The number of targets and central directions must be cut to a handful of sensible priorities. But budgets should be in local hands in a way that will allow money to meet local demands and capital investment to finance the new capacity to meet local patient and parent-led demand. What you must do at the centre is to provide some measure of control to prevent sudden shocks and to smooth out swings in demand and resources.

There should be support and advice from the centre when it is sought and asked for by local managers, clinicians, school governors and teachers.

Regulation, whether of public sector or other providers, must be proportionate to the potential problem. In October last year the Healthcare Commission admitted that NHS hospitals now face 102 separate inspections a year. This is madness; over-inspection is as bad as under-inspection. Inspection must result in reports that the public find helpful.

My final building block is that public services are not all the same. We must not put various taxpayer-funded services in a box labelled "public services" and assume that common solutions apply to their problems. What is right for education may not be right for health; the reverse is also true.

If you stop a New Labour MP today and complain about the weather they are quite likely to respond, "don't worry, we are looking for a market-based solution". Sadly, they are being serious. Labour has adopted market language with the zealotry of a convert but without the understanding of the long-time believer. The solution to a problem must be appropriate for the service it is provided for.

The National Health Service

I want now to turn in more detail to the future of the National Health Service.

An incoming Conservative Government may well have to deal with an NHS crisis of sizeable proportions. The current high growth in health spending is due to end in 2008. What will happen when the Chancellor's foot moves from the accelerator to the brake? Will the car slow down or will it swerve and crash?

What would be my priorities in the NHS as Prime Minister?

The first thing I would do is to leave the leadership of the NHS to the Secretary of State for Health and his department. I would stop the constant intervention on day-to-day issues by people from No. 10 and the Treasury. There is too much bureaucracy at the centre. Over 20 health-related agencies have been created since 1997. Such is the shambles under Labour that one of these, the National Care Standards Commission, only lasted for 18 days before being told it was to merge with another body. This sort of nonsense has got to stop. The structure has to be decided upon and then left alone.

Secondly, I believe that local managers should have the freedom to innovate. Too many managers now devote their imaginative skills to finding ways round Government targets. I do not want hospital managers to be coming up with clever wheezes like keeping patients in ambulances at the hospital gate in order to meet their admission time targets in A and E. I want those same managers to be devising new approaches that will actually reduce the waiting times for patients.

Thirdly, as I have said, the target culture has to go. Ministers must ensure that any targets that are set are the minimum needed to ensure the delivery of a high standard of service. Those targets should be realistic and not be based on arbitrary numbers chosen more for public presentation than anything else.

Governments of any party should only talk about choice when it is a realistic and practical possibility for most people. You can give patients more choice without creating chaos but it has to be carefully planned.

What Labour did when they came into office was to abolish the GP fund-holding practices and create primary care trusts to commission hospital treatment on behalf of patients. They are now going back to what they call practice-based budgeting and commissioning. They are sweeping the primary care trusts into fewer, bigger PCTs which will supervise the GPs' practice commissioning.

Labour have decided that by December 2006 under this new system, that GPs will be ready to offer patients a choice of hospitals for their treatment which will be financed out of the GP's budget. Talk to anyone in the National Health Service and they will admit that Labour will create more chaos than choice if they continue hurtling along in this erratic way. The present Government has pursued reorganisation at bewildering speed and that has left GPs and other local healthcare professionals exhausted and frustrated.

What is needed is steadily and in a measured way to ensure that the money follows the patient to services that GPs judge to be of quality. This has to be done alongside building the new capacity - expanding to fix the gaps where patient demand cannot now be met.

But we Conservatives also have to admit that choice is not the whole answer. Choice between several poor hospitals is no choice at all. Standards have to rise before choice will be meaningful in many areas.

I would want to place greater emphasis on primary care. Too often the NHS is talked about as if it were a hospital service; it is much more than that.

For the Conservative Party, the goal with the National Health Service is clear: we must deliver an improvement in the patient's everyday experience of the NHS. If we cannot show that we can make a real difference to the daily reality of the NHS we will not win the public to our side.

Education

The second public service I want to say something about is education and in particular, schools.

It was Jim Callaghan's Ruskin College speech in the 1970s that first put the subject of education at the top of the political agenda. But it was not until Margaret Thatcher became Prime Minister that the pace of change picked up. Britain had fallen behind its competitors and our children's life chances were less good than they should have been.

As I said at the beginning of my speech, it was in Margaret Thatcher's third term that we set up the current structure of school education. A national curriculum with assessment at 7, 11 and 14. The devolution of power from LEAs to school governors and head teachers. And we later added - it was my key contribution as Education Secretary - a more rigorous system of inspection.

Those reforms have made a difference. Standards have risen; this year over 60 per cent of our pupils gained five or more good grade GCSEs. The percentage of pupils taking no exams has fallen from 23 per cent in 1979 to about three per cent today.

But you can never stand still in education. There is no room for complacency. The statistics from the OECD demonstrate that. In the 2003 survey of 15 year-olds across the industrialised world, the UK has fallen from 4th to 11th place in science, 7th to 11th place in reading and from 8th to 18th place in maths. Of course that reflects an improving performance in other countries rather than a collapse in standards here but it shows the level of competition that we face.

There are new challenges too. School performance is patchy; there are some outstanding schools and some very poor ones. Too many in the middle are coasting. There is concern about whether examination standards have been maintained over time. OFSTED found that nine per cent of secondary schools had unsatisfactory behaviour standards last year. We have still not managed to provide all the pupils who would benefit from it with high quality vocational education.

Parents are concerned about all these things. Often they feel that politicians are more interested in talking about structures than standards. As Estelle Morris has rightly pointed out, the Government in which she served promised to focus on standards and not structures but has now gone into reverse and prioritised structural reform in secondary education instead.

At this stage, I want only to point a way forward and in doing so, I want to build on the best of what we have now. That first of all, means rejecting any talk of a wholesale school reorganisation. The last twenty years have seen a reduction in the role of LEAs and a strengthening of school management. That trend is broadly right but it is now in conflict with the Government's children's services strategy. The Government is in favour of giving greater independence to schools but at the same time wants all providers of services to children to co-operate more closely together. Long before the 2009 or 2010 general election the Government is going to have to decide which way to jump.

The role of LEAs should evolve further. I expect them to become more like health authorities in that they will commission services and monitor standards. Over time, they will run fewer schools and other services themselves. It should happen gradually as schools and LEAs develop the capacity to make this change. We will always need the LEA in some form - someone has to guarantee that every child has a school place and to organise school transport for example - but we should not be afraid of this evolution in the role of local authorities.

What I said about health is in this sense similar in education: more choice does not automatically lead to higher standards. London has probably the greatest choice in school provision but it does not have higher standards than everywhere else. For many parents, especially those in rural and suburban areas, school choice is likely to be limited. We Conservatives must not allow our belief in choice to become an excuse for not trying to raise standards across the board.

I do believe that there should be opportunities for a greater range of providers to come into education. We already have extensive involvement in education by the churches. I endorse the ambition of the Church of England to expand the number of secondary schools that it operates in partnership with government. It is right and proper that faith communities should be involved in the delivery of this critical public service and we know how successful many faith schools already are. But faith schools should deliver the same national curriculum and be subject to the same rigorous standards of inspections as other schools.

At present, new schools are often blocked because of the number of surplus places in an area. Yet the demand for a new school is often the result of existing provision that is below standard. I think it is time for those who decide whether a new school is to be approved to have to have regard to the quality as well as the quantity of places in their area. There ought to be a recognised basic level of performance that a school has to achieve, based on its intake and the community it supports. When a school persistently falls below that level, we should not simply label it as "failing" but be more proactive in looking for ways to turn it round. That may well mean bringing in a new provider to that area.

We should allow parents to set up new schools and we should not see this as an exclusively urban phenomenon. Why can we not let parents establish an early years' class in the village hall of a community that no longer has its own school? Such a class might be free standing or a satellite of an existing school but if we have a system where the money follows the pupil, as we do, then it should allow parents to make this kind of provision. I believe that we should not confine choice to the cities by the imposition of outdated rules.

Whatever school provision is made and no matter who provides it, those schools must be subject to rigorous inspection by OFSTED. I am not happy with the changes the Government has made to the inspection system. I fear that they will have the effect of reducing the quality of inspections. No one likes being inspected but without such external scrutiny, confidence in teachers and schools will fall.

The Conservative & Public Services

We have got to put improving the public services at the very heart of the Conservative approach to government. We must win public trust by making people understand that we are dedicated to higher standards for all.

Conservatives should approach the subject of public services on a human scale at local level and not just on the basis of number-crunching and bureaucratic efficiency. Our concern is for pupils, parents and patients and not paperwork, press releases and policy units.

A good Conservative government in this country could make no better contribution to the quality of life and the values of all our citizens than to transform the quality of public services."

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