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Editor’s blog Thursday 18 March 2010: Less public debt, and a slightly opaque interim report from the 2020 Public Services Trust

Good morning. I may be a little off-form today, owing to the sad news of the death of Alex Chilton.

Chilton was a great, if commercially unappreciated, US singer and songwriter. If you’ve never heard his music, particularly Big Star, do so now: you’re going to get something great in your life if you do. (Just avoid anything he recorded since about 1990).

However, there is some better – in the sense of less bad - news for us on public sector borrowing.

There is a new interim report, Beyond Beveridge: principles for 2020 public services from the 2020 Public Services Trust, on the principles that should inform public sector reform. It chooses three main ones:

• A shift in culture: from social security, to social productivity.
• A shift in power: from the centre to citizens.
• A shift in finance: reconnecting financing with the purposes of
public services.

The report cites research that its authors commissioned from LSE Professor Howard Glennister, which “estimated that the equivalent of an additional 6% of GDP would be needed to meet the social costs of our ageing population while meeting existing cross-party commitments (such as reducing child poverty, for example).

“Alongside HM Treasury forecasts, this would increase the share of national income spent by government to over 45% by 2020 and nearer 47-48% by 2030”. Glennister notes that public tax receipts have rarely been above 40%, meaning that ”our current welfare funding arrangements are not sustainable”.

The 20-20 PST’s other research, commissioned from IPSOS MORI, finds (again) that public perceptions consider the NHS locally to perform well (69% of the sample), but not so nationally (49%). Moreover, “only a minority (23%) think the Government is pursuing the right policies for the NHS”.

The MORI data also suggests that only 50% of respondents “believe that spending on public services needs to be cut. A large majority (75%) think that effi ciency savings can
avoid the need for cuts”.

Which I suppose you might regard as proof that the sample may have over-represented the stupid.

An unpalatable Beveridge
The report suggests that “we have stretched the Beveridge settlement to the limit”, conveniently ignoring the fact that Beveridge principles were broken within a few short years of the introduction of the NHS in 1948.

It is correct to suggest that a welfare dependency model is a poor use of human and social capital. And it rightly notes that without significant change in the delivery of services and the involvement of citizens and users, we are stuffed.

Its analysis that “our system is too passive, often demanding little in the way of responsibility and reciprocity … Too often our welfare state views problems and solutions statically. It focuses on the symptoms, not the underlying causes, and raises unnecessary barriers to innovative solutions. Too much of the focus is on ensuring uniform access to services. Too little focus is on the diversity of our needs and the challenges of turning access to services into tangible outcomes. The primary lines of accountability run upwards to departments and ministers, not downwards to citizens” is elegant and truthful.

Equally candid is its self-impalement on the horns of the public sector innovator’s dilemma: “how to move from pilots, disconnected initiatives and small-scale success stories, to a system where these kinds of innovations are the norm, forming part of a coherent process of development”.

The 20-20 vision is relentlessly ambitious and broad: “2020 public services help us to achieve – for ourselves and each other – things that we value and cannot achieve on our own. They help us become the people we want to be, living within a society we want to be part of. 2020 public services put us in control of our own lives. They make us more secure today and more confi dent about tomorrow, encouraging us to take responsibility for ourselves and for others.

“Realising this vision – capable, resilient citizens, making choices for
ourselves and able to make a social contribution – means system-change, not incremental reform. It will require a revolution in our thinking about what public services are, how they interact with citizens, how they are governed, financed and held to account. It will require a readiness to embrace change – to give up as well as to gain – and make use of the creative energies of all”.

It all sounds good and worthy. The issue is the lack of any core principles about funding; universality-vs.-targeting; an appropriate level of expectation relative to tax take.

Their examples offer little clarity, and some of it reads alarmingly: its idea that “citizens could assume ownership of community assets such as green spaces and leisure facilities” looks to have some highly commercially-lucrative wriggle room in it. Not a peep about asset locks – but then, then public sector is not averse to selling off public assets either: think playing fields and PFI schemes.

It also rightly confronts the issue of its localism-based proposals representing a “huge challenge to popular conceptions of fairness in public services, which are mostly framed in terms of uniformity”. But it is elusive on the how – in fairness, it is only an interim report.

However, its axiom that “to avoid disadvantaging those on lower incomes, co-payments, user charges and insurance models will need to be applied with care, and with appropriate safeguards.” give us a bit of a clue as to their general direction of travel. As do the assumptions implicit in its range of ‘big questions’:
What is the most effective way to ensure fairness and a reduction in damaging inequalities?
What should be the role of local people and national frameworks in doing this?
How can a system that is dynamic, variable and open meet needs as they arise, whilst at the same time investing in prevention and long-term problem-solving?
How does a model of democratised commissioning ensure a vibrant supply side market?
How can we encourage flexibility and innovation alongside efficiency?
When money is tight, how can we ensure we invest in the local and national infrastructure we will need to be competitive?

The report concludes with a huge assertion: “Over the long term, our model will be more cost effective. But a key challenge is how to take the first steps within a constrained fiscal environment”.

It will be interesting to see their answers.

The 2020 Public Services Trust is supported by
Research partners
Barrow Cadbury Trust
Institute for Government
Joseph Rowntree Foundation
Policy Network
The Design Council

Core funders
The Aldridge Foundation
DCLG Empowerment Fund
Lord Gavron Charitable Trust
National Endowment for Science,
Technology and the Arts (NESTA)

Corporate partners
Dr Foster Intelligence
Ernst and Young
Neil Stewart Associates
Partnerships UK