Central control cannot improve services

Written by David Laws MP and published in Financial Times on Tue 2nd Sep 2003

Iraq may prove to be the running sore that saps the strength both of the prime minister and of his government. But it is the failure to provide better public services that is Mr Blair's real "Achilles heel".

Education, health, police and transport will be the political battlegrounds on which all three parties will fight the next election. Labour still believes that the man in Whitehall knows best. This is a profoundly centralist administration. For Labour, only central government can be trusted to drive through a "reform" programme based on a central command-and-control model and supported by thousands of targets from world poverty levels to carpet cleanliness in hospitals.

That programme is now underpinned by an expansion of public spending. But instead of targeting resources on priority areas, the chancellor's 2002 spending review marked the beginning of big spending across the board. In the period 2003 to 2006, in almost every government department, the growth of real spending is above the trend growth rate of the economy.

The Tories, meanwhile, are fumbling towards the barest outlines of a public services policy. It appears to rely on the traditional Conservative policy of "opt out" - giving a helping hand to a few people with the money to go private, accompanied by all the "dead weight costs" that arise where people would have chosen this option anyway. Under the Tories, most people would still depend on state provision - but presumably with lower funding.

I believe that both of these approaches are destined to fail. What Britain actually needs is not more management from Whitehall - but a radical decentralisation of power. We need to get away from big government. We need revitalised local authorities, with service providers that are more accountable to the consumers of public services themselves.

The current command-and-control structures are not only not working but cannot be expected to work. Take the National Health Service - a huge and inflexible public sector monopoly that employs the same number of people as Britain's seven largest companies put together. Imagine daily management of the average company. Then imagine running the NHS as currently structured. Then think again.

In all areas of the public services - health, policing, education, transport - Labour clings to central decision-making because it cannot bring itself to trust those closer to the provision of the services themselves. This is not an efficient allocation of resources. How does the government respond to these criticisms? With "earned autonomy" for a small number of schools to do just what the government wants; with "foundation hospitals" that most managers believe will be bound up in as much red tape as existing hospitals; and with "regional government" - a small step in the right direction, but with few powers and freedoms.

But there is a Liberal Democrat alternative. It involves scrapping a set of unnecessary government departments and scaling back central control in areas such as health and education. With a tough inspections regime and local accountability, there is no excuse for micromanagement from Whitehall. It also involves re-prioritising the government's expenditure programme. It is a nonsense that school budget cuts this year mean that teachers are being sacked, while other ministers waste money on pet schemes and state subsidies of dubious value. Decentralising more power and financial freedom to local government - as in the US and almost every other developed economy - might even encourage people to participate again in local elections.

The government should encourage diversity and experimentation. That means allowing new providers to deliver public services (encouraging, for example, mutual and voluntary providers) and giving consumers greater choice, for example by allowing NHS patients to access cost-effective NHS treatment anywhere in the UK.

Those who are rich enough will continue to access high-quality services in the private sector. I have no problem with that. As a liberal, I believe that people should be free to spend their money as they like. What I aspire to is a country where access to a first-class education and to high-quality health care is open to every citizen.

Tory opt-outs and Labour centralism cannot implement that vision. It is the decentralisation of power to local government, to service providers and to consumers that will genuinely give us the public services we badly need.

The writer is the Liberal Democrat MP for Yeovil