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Hague: Common Sense on Public Services

A door is opened and behind it lie dead bodies, roughly wrapped in sheets and placed on the floor of a hospital room little bigger than a cupboard.

A man is killed after an intruder breaks into his house. The police admit later that they didn't have the manpower to respond when, earlier that evening, a burglar alarm had gone off in a neighbouring house.

A child comes home after another school day spent being taught by supply teachers and brings his parents a letter from the headteacher. The letter says that, if things don't improve, the school may be forced to move to a four day week.

A worker retires after a lifetime of paying taxes and national insurance to find a barely adequate pension. The saving for which they sacrificed so much, seems to have earned them little.

How can all these things be happening in our country? And how can it be happening now?

After all, we have never in our history taxed families and businesses so heavily. And we have never in our history had such high public spending.

Yet still there is failure. Our hospitals, our schools, our police service, our welfare system seem to be in an almost permanent state of crisis. The extraordinary and dedicated people who work in them are demoralised. The people who use them, dissatisfied. The people who run them, perplexed and confused as they desperately pull more and more levers and get no response.

Today I intend to speak about this failure.

I want to tell you what a Conservative Government intends to do about it.

I want to talk to you about our plans for the most ambitious programme of public service reform since the creation of the modern welfare state.

I want to explain how change can be brought about with the support of those who work in public services, for the benefit of those who use them.

There has rarely been a better moment to propose such a programme.

Economically, the hard work of the 1980s has produced growth and stability. We are able to provide greatly increased resources to our services as we reform them. The moment may not last, the opportunity may be lost unless we grasp it.

Both Parties have agreed to large increases in spending on core public services. This provides not simply an opportunity but also a duty to ensure the money is spent wisely. It would be scandalous to end the next Parliament as we are ending this one - with much greater spending and little to show for it.

Politically, too, there is an opportunity. An understanding which Conservatives have worked so hard for, has finally begun to dawn. The view has, at last, taken hold that greater public service investment is necessary, but not sufficient to improve the quality of provision. The Prime Minister and his Cabinet look increasingly isolated as they attempt to equate inputs with outcomes. Week by week, public anger grows more acute. There has rarely been a better political moment for reform. That opportunity may also be lost, unless we grasp it.

It would, therefore, be profoundly depressing if the coming election campaign concerned itself entirely with claims about the quantity of public spending, leaving the Parties' plans to improve the quality of that spending largely unexamined.

We mustn't look back at the election of 2001 and say that this was when the moment for great reform of state provision came and the moment when it passed us by.

One of the central issues at the next election will be this - why has Labour failed to deliver? And is that failure doomed to repeat itself if they are re-elected?

Or put it another way. Why do Conservatives believe that they can succeed where Labour has failed, given that public service provision has always been considered a Labour issue ?

Our answer will be simple. We believe that in their management of public services Labour has, again and again, acted in defiance of what can literally be called common sense. That is, they have acted in defiance of every understanding we have, and all the knowledge we share, about what makes organisations succeed.

A Conservative government will, by contrast, learn the abundant lessons of experience everywhere. We will apply that experience to the reform of public services. In other words we will bring common sense to public services.

Let me give some examples of what I mean when I say that Labour's approach has defied common sense.

It defies common sense to try to control every last detail of the performance of public services from Whitehall on the basis of a central plan. Yet this is what the Government hopes to do.

They have piled on regulations and started countless initiatives and set aside a bewildering variety of special pots of money for favoured schemes. Like incomes policy, the more the approach fails the more they try to make it work and the more it fails.

Since 1997, schools have received over a thousand publications and regulations from the Department for Education and Employment. In the first six months of 2000, the DfEE sent out 140 circulars of guidance to teachers. (HC Debs, col. 555w, 25 July 2000).

Local Education Authorities now have to produce seventeen different plans for the DFEE. This includes a plan of plans bringing together all the other plans.

The Government's own Better Regulation Task Force has concluded that "increased red tape is acting as a distraction from the drive to raise standards".

The police face the same problem. As Chief Inspector Ray Shepherd of West Yorkshire police says:

'Is Charles Clarke, the Home Office Minister, being fed so much nonsense that he isn't aware that police officers nowadays have far more paperwork to complete than before? … We could all make a list of the additional paperwork that creates a bureaucratic nightmare for officers who want to spend more time actually delivering the goods… The situation is far more frustrating nowadays than at any time in my 28 years' service. The public is getting a raw deal.' (Letter to Police Review, May 2000)

And in the National Health Service, a study by the Virgin Group concluded that "within the service there is the impression of management by cascading paper, of ideas and instructions being passed down from above. The dead hand of bureaucracy seems to stifle imagination and flair and obscure responsibility".

The results of such interference far outweigh any possible good done by the individual initiatives themselves.

Staff effort is diverted into form filling and paperwork. Specialists in hacking the complex Government system of finance and control become more valuable than staff able to provide a service to the public. Employees are demoralised and leave to work in jobs where they have greater freedom and face less interference. The provision of high quality, flexible public services comes a distant second to the following of rules and the ticking of boxes.

It defies common sense to set vast numbers of targets which have more to do with news management than the provision of services.

From the start this Government has added targets until the number stood at nearly 600. Even its own supporters began to argue that such a number made the results almost meaningless and that if everything was a priority, nothing was a priority.

The more recent decision to pursue a smaller number of targets as part of public service agreements is far more sensible.

Yet the Government remains attached to many of the political targets it set before, with disastrous consequences.

For example, the Class Sizes Initiative for primary schools has led to an increase in class sizes in secondary schools. Head teachers who previously thought it best to have classes of 32 pupils with a classroom assistant, have had to replace them with classes of 28 pupils and no classroom assistant.

Then there is the NHS Waiting List Initiative, which has resulted in simple and quick operations being preferred to those which are more complicated, but more necessary. Such an outcome was entirely predictable. As Dr Ian Bogle, the Chairman of the BMA has put it, "The Government is obsessed with waiting list targets that distort clinical priorities to the detriment of patient care."

It defies common sense to reduce variety, eliminate competition between providers and restrict the choice of those who use public services.

Again and again the government has acted to try and eliminate diversity of provision.

They have ended GP fundholding, abolished grant maintained schools, increased tax on private health insurance, announced their intention to punish NHS consultants who work privately and introduced legislation that encouraged attacks on grammar schools.

Their much vaunted co-operation with the private sector has in practice usually ended up being little more than accounting changes. The real advantages of such co-operation - greater innovation, bringing in different kinds of managers, making use of the incentives and freedoms of the private sector - these advantages have generally been forgone.

The result has been to reduce the incentive for providers to succeed, to make it more difficult to compare the performance of different providers and to rob users of public services of one of the most valuable means of calling providers to account - the right to take their custom elsewhere.

It defies common sense to undermine the institutions and behaviour that reduce dependence on the state and support strong communities.

Yet this has been the consequence of a series of different Government policies.

There has been, for example, the £5 billion a year raid on pension funds which mean, according to accountants Chantrey Vellacott, that a typical 30 year old might have to save as much as an extra £200 a year just to get the same pension on retirement as they would have had before the tax was imposed.

There has been the extension of means testing that will leave half of pensioners on means tested benefits by 2003.

There has been the abolition of family credit and the introduction of the working families tax credit that extends means testing so far up the income scale that some upper rate tax payers are eligible to claim.

And there has been the ending of the recognition of marriage in the tax and benefits system despite all the evidence that marriage does more than endless Government scheme to improve health and education and to reduce poverty and crime.

The consequences of these policies will take longer to become clear than some of the others I have mentioned. Yet when they become clear they may well be seen to be even more serious. Increased poverty in old age. Increased dependency on the state. And the erosion of independence and personal responsibility.

So it is not a mystery that Labour has failed to deliver.

No organisation will succeed if it is highly centralised, rigidly uniform, over regulated and subject to constant interference.

No organisation will succeed if its staff are allowed almost no room for initiative, are weighed down with rules and are rarely rewarded for success. No organisation will succeed if it faces little competition and is difficult to call to account.

Labour has made each of these problems worse.

No wonder so many schools are failing, so many hospital wards are dirty, do many pensioners live in poverty and there is so much crime. No wonder we have a health service in which people are forced to go private or may even die waiting for an NHS operation. No wonder there's too little discipline in our schools and it's difficult to employ teachers. No wonder we have two tier services where the standard of services depends more on what you can afford and where you live than at any time since the last war. No wonder we live in a civilized, prosperous country and our public services are a scandal.

No, it's not a mystery why they have failed. And it is certain that they would continue to fail if they were re-elected.

I am not, however, arguing that all the problems of public services began on 1st May 1997. Labour may have made the problems worse. Yet clearly there are serious structural problems that preceded Labour and will remain when they have gone.

Tackling these structural problems will be one of the most important tasks of the next Conservative Government.

I would like the successful delivery of improved public services to be one of the defining achievements of our next period in office. By the time we next leave office I want us to be as associated with public service reform as we were with trade union and economic reform in the 1980s.

Before I outline our plans for the first stage of reform, let me begin by saying something about the nature of our approach.

For years we on the Right have talked about change. Now the time has come to make real change. That means we have to win the political battle to persuade people that change is essential and right. We have to listen to peoples concerns and fears and make sure our plans reflect an understanding of those concerns.

We will act boldly, but we will also act wisely.

First, we will remain totally committed to the public services we are reforming. We will demonstrate that commitment not just with words, but with deeds. We do not want anyone, for instance, to be able credibly to suggest that just because we want to reform the National Health Service we do not really believe in it. We do not want support for much needed change to be lost because, for example, people wonder whether we are really committed to providing healthcare to all regardless of ability to pay or to publicly financed education.

Second, we will ensure that our reforms are properly financed. We have committed ourselves to large amounts of extra investment in public services over the next three years. In the core services our pledges match those made by the Government. Nobody will be able to argue that reform is being enacted as an alternative to investment. A key political battle will have been won in advance. We will be on the front foot, arguing that to invest vast new sums of money without reform would be unforgivable.

Third, we will ensure that our reforms are practical and reflect the experience of those who use the services and those who work in them. We will introduce our proposals piece by piece, testing each one to see that it works before spreading it to other services. We want our reforms to be good, not just to sound good. Our ambition and openness to new ideas is limitless, but so is our moderation and common sense.

Finally, we will work hard to win and retain support for our programme of reform from those who work in public services as well as those who use them. Too often public service workers are vilified by government. Too often it is suggested that they are the cause of all the problems. I think they are more often the victim than the villain. I think they have the potential to be the greatest champions of change. I think that no-one is more aware of the deficiencies of our services or keener to see improvement than public service employees. We will form a partnership with them and they will truly be, as the Prime Minister has already memorably described them, the Forces of Conservatism.

This then is our approach. Moderate, sensible, pragmatic.

But let no-one doubt our determination or our ambition.

We want babies born in clean hospitals, children taught in the best schools in the world, students attending world class universities, families able to live without fear of crime, the sick able to rely on swift and effective treatment, the old able to live in dignity after a lifetime of hard work and savings.

We know that we cannot have these things if we simply continue as we are. There has to be serious change.

Let me tell you what we intend to do.

Monopoly provision by huge bureaucratic providers cannot work. So we are going to champion diversity and allow choice.

Why are we constantly surprised that our public services are inefficient, inflexible and unresponsive? Why do we look on with amazement when users find their encounter with the public sector unsatisfying and even, occasionally, life threatening? Why do we regard the queuing and the shortages as puzzling?

After all, aren't such failings exactly what you would expect when there is only one supplier and no choice? When have central planning and monopoly produced anything different?

The question isn't why are our schools and hospitals failing, but how on earth could they possibly succeed?

Wherever we can, we need to give users choice and ensure providers face competition. That's the only possible way to drive up standards and keep them up.

That's the motivation behind our Free Schools proposal, widely acknowledged as one of the most imaginative initiatives to improve schooling in this country.

Money will follow the pupil. Financial power will back up parent power. By making free choices, parents will be able to call schools to account. The best schools will thrive and the worst will face pressure to change.

Schools will change as the demands and expectations of parents and pupils change. The best traditions will be preserved but there will also be new ideas. Ways of teaching we haven't even thought of will tomorrow become standard ways to teach. The constant improvement and growth which we have come to expect in every sector of economic life will come to this most vital part of our national life.

Our plans will see good schools expanding and specialist schools created. There will be grammar schools and those that don't select.

But there will be something else too.

One of the most important and least reported parts of our Free Schools proposal is that the choice offered to parents will not just be between schools owned and run by the state. We believe schooling should remain state financed and free to all. Yet this doesn't mean that every school must be owned by the state. It doesn't mean that every school must be run by the state.

We are going to create partner schools, bringing in charities, independent trusts, community groups, religious foundations and private enterprise into schooling. That means that as well as state owned and state run schools there will be taxpayer financed schools that are state owned and privately run and those that are both privately owned and privately run.

Our commitment to end monopoly provision and extend choice will be most audacious in our first term in the area of education. But the principle will extend to other parts of the public services.

It will, for instance, be a feature of our health policy.

I repeat again what I have said before. Under the next Conservative Government there will be no privatisation of the NHS, no retreat to a core service, no compulsory health insurance.

Yet if some people wish to insure themselves privately in addition to the care they can receive in the NHS, they should not be penalised to satisfy the left's ideological hatred of private healthcare.

The removal of tax relief on private health insurance from pensioners was mean spirited and retrograde. So was the £100m stealth tax imposed by the Government on employers providing health insurance for their workers.

A Conservative Government will wish to encourage greater personal provision on top of an expanded and comprehensive NHS.

And within the NHS, just as within education, we will wish to see greater accountability to users brought about by choice.

GPs should have much greater freedom to refer their patients wherever they think it is right to do so. We currently have the bizarre situation that statistics are collected and published to expose differences in performance and yet doctors are cannot act on the information they are given, because extra contractual referrals have been abolished. In office we will give them that right.

So we will put choice and diversity in place of monopoly and uniformity.

And we will put independent institutions and greater freedom and flexibility in place of regulation, bureaucracy and centralisation.

Public services run by tight central regulation, and close political control from the centre cannot work. We are going to allow greater independence and flexibility and see our services benefit from the creativity and renewed sense of purpose that will result.

There is a crisis of morale in our public services. We can't find the police officers to police our capital city because too many of them are leaving. We can't find the teachers for our schools. When I meet people who work in one of our universities or in our health service or in our schools I encounter a strange mixture of dedication and desperation, of pride and of shame. They love their work but they feel increasingly helpless and they feel that, no matter how hard they work, they are letting down the people who turn to them for help and guidance.

We also have what appears at first sight to be an unconnected crisis - a crisis of community. We expect something more from our public services than from, say, our supermarkets. Partly because we purchase them collectively, and partly because they are concerned with goods whose social value is often as great as their value to the immediate user, we look to our public services to help knit together the community. Yet, in most cases they do not do so. Each year we get richer and richer yet more and more uneasy at the way society seems to be less cohesive and, even, less ordered.

In fact, these two crises - of public service morale and of the failure of public services to support strong communities- are not unconnected at all. They are two problems with the same cause.

Our public service institutions are soulless administrative units of the central state. The staff who work in them, who work so hard in them, too often feel like factors of production churning out services to a Whitehall blueprint. They have no control and their pride in what they do is steadily eroded by the conditions in which they do it. Tradition, distinctive values, individual conviction, personal creativity, institutional loyalty seem to have little place.

Of course staff are demoralised, of course they leave, of course the relationship between the state and the community has been so disappointing.

That's why we're going to introduce a second supply side revolution. In the first supply side revolution Margaret Thatcher and John Major's governments reinvigorated the private sector by removing one regulation after another and restoring pride and independence to British businesses. The next Conservative Government is going to have a supply side revolution in the public sector.

Emboldened by the new ways in which parents will be able to hold Free Schools to account we're going to deregulate teaching. Headteachers and governors will be free to manage their own budgets, free to employ their own staff, free to set their teachers' pay, free to determine their own admissions policy, free to run their own school transport, free to manage their own opening hours and term times and free to set and enforce their own standards of discipline.

Of course, freedom must come with greater accountability. We will give all parents the Parents' Guarantee that provides a means of changing the management of a bad school. We will retain the National Curriculum, albeit in a more flexible form. We will retain the literacy and numeracy hours, which owe their origins to the previous Conservative Government. We will give Ofsted greater powers of inspection, and publish expanded, value added league tables.

We're going to cut the regulation and paperwork that keep our police stuck in offices filling in forms rather than out on the street fighting crime.

We're going to stop the distortion of medical priorities that results from political targets such as the Government's ill starred waiting list policy. Instead of micro managing the NHS from the Secretary of State's office by setting input and throughput targets we will move to proper outcome targets.

Our Patients' Guarantee will mean that NHS patients, starting with those with the most serious conditions, will be given a maximum waiting time based exclusively on their medical need. The health authority will be required to treat the patient within that waiting time, and if it cannot, to arrange either for the patient to be treated in another health authority or pay for treatment in the private sector.

And alongside this determined deregulatory drive will come some even more exciting policy innovations.

The next Conservative government plans to endow our universities and museums. In other words we plan to set those institutions free from the annual Treasury round, by providing them with lump sums from which they can generate their own stream of future income.

We will do this gradually, as the money to fund it becomes available. Yet gradual though it may be, it will still be a revolution.

Some of the greatest British institutions, the pride and symbol of our nation, the protectors of our past and our future, will be given once more the chance to excel and compete in the world. Unnecessary rules that hold them back will be gone.

This endowment policy has been made possible by the fresh thinking we have done in Opposition. It has allowed us to develop ideas that have never before featured in the programme of a British political party.

The same can be said for our policy to transform Britain's welfare bureaucracy.

Our Britain Works policy will bring private enterprise and the voluntary sector into the business of finding work for the unemployed. And in order to ensure that they use the methods that work best, they will only be paid if they succeed. Payment will be by result - a fee for finding employment and a fee if that employment lasts.

Bring together these policies - the partner schools run by charities and community organisations, the Free schools and hospitals locally accountable, the police set free to do their job, our cultural and educational institutions given back their freedom, private enterprise and the voluntary sector finding work for the unemployed - bring together these policies and you can see how our reforms of public services will contribute to a revival of community.

They will contribute because the local institutions and traditions and values without which there can be no community will be the great gainers of the next Conservative Government. The soulless state will be on its way out. That is our ambition.

So we will support the revival of community.

And we will support a society based on personal responsibility.

A welfare state that discourages personal responsibility and undermines the habits and institutions that support responsible behaviour cannot work. So Conservatives will begin, step by step, to restore personal responsibility to its central place in social provision.

No government scheme can ever fully undo the damage of a broken home. No welfare system can ever replace the security of personal saving. No free society can ever survive the eroding of the values that sustain it.

Conservatives have not opposed the abolition of the recognition of marriage in the tax and benefit system out of intolerance of differences. Nevertheless, we have strongly opposed it. We know that bringing up children in a home with both married parents helps build a stronger society from which we all benefit. Marriage is a social good and as such it should be recognised.

Return a Conservative Government to power and we will restore such recognition.

Return a Conservative government to power and we will ensure that the state does what it can to help those who under difficult circumstances are doing what they can to help families stick together.

Return a Conservative Government to power and we will also reverse this Labour Government's attack on saving.

We are going to allow young people to build up a fund of savings as an alternative to the basic state pension. No one will be forced to change. However those who take the opportunity may end their working life with a much larger pension than would otherwise be the case. The saving habit will have been instilled and the basic choices and paperwork done at a much younger age than might otherwise be the case.

The result will, I hope, be greater prosperity for pensioners in the future and a smaller burden on the state.

We will have taken some big steps along the road to a stronger and more secure society.

At the next election Labour will be proposing large increases in public spending. We have argued repeatedly that these increases are unsustainable. We have instead proposed that public spending should not grow faster than the economy and shown how that can be done.

Today I hope I have made clear another part of our argument.

It is not just that Labour's spending plans are unsustainable. It is that they will not work. They are going to take billions of pounds of public money and throw it away.

Without change, there can be no delivery.

We will increase public spending at a sustainable rate. By a series of tough policy decisions we will be able to save money while matching Labour's planned spending on core services. And we will make tax cuts.

Yet as important as all this is that we will not just spend, we will reform.

At the end of the next Conservative Government expect to see a smaller, more effective state delivering better public services.

Not smaller because we are starving services of cash and making cuts. Smaller because we interfere less, regulate less and centralise less. Smaller because we work in partnership with communities and the private sector and don't expect to own everything we provide or run everything we own. Smaller because we give users power over services rather than keeping it all in Whitehall.

Conservatives believe that real change depends on the freedom and creativity of people, not the power of Governments. When you trust people they flourish and they grow. When you put power in the hands of people rather than Government, they use it to better their own lives and the lives of others. The contrast between our belief in people and Labour's belief in Government remains the big dividing line in politics.

Our plans are practical and careful. Yet I believe they represent the most radical programme of improvement in public services ever put forward by a British political party.

The last century saw the creation of the welfare state and public services. The new century must see their reform. For the Conservative Party this is a historic opportunity and a historic duty.

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