Getting better government and a growing economy are linked. Nobody is really interested in either

If we want better government then start with asking what better government looks like and what changes are needed. Not merely in headline terms but right down to the details.

Ambrogio Lorenzetti’s Good and Bad Government

There are two pivotal ‘wicked’ issues facing Britain. They are not isolated issues but intertwine to help create the frightened rabbit impression of government in the UK. The issues are:

1. An economic stasis characterised by very little real economic growth, a sense of increasing personal financial struggle for many, and a resentment of those who are economically successful. Britain’s economy does not work for ‘the many’ or allow enterprise to bring growth.

2. The slow collapse of visible public services, the inability of the state to administer its services with any sort of effectiveness, and an obsession with petty, unimportant issues and the introduction of pointless bans and restrictions. We are badly governed and the state is too big.

There are, of course, other concerns - immigration, social cohesion, crime, low birth rates and the collapse of intergenerational respect - but these issues are eased if we get better government, a growing economy and control over who lives in our nation. The problem is that, while lots of people - left, right and centre - proclaim concern over bad government and a struggling economy, there is very little beyond rhetoric - policy proposals get determined more by how they land on the Sunday morning politics shows than whether they might work.

Britain’s sclerotic economy traces back to decisions taken by Gordon Brown’s government in 2008/9 (and indeed further back into the wider post-WW2 settlement with the planning system, NHS and a cultural distaste for allowing markets to set prices). But the failing strategy was reinforced by a cross-party agreement on economic development and regeneration best encapsulated by “No Stone Unturned: in pursuit of growth”, the independent report written by Tory grandee, Michael Heseltine. In this report Heseltine returned to his dirigiste themes from the post-Thatcher Tory government - the state is essential to economic growth and should direct the heights or the economy through a partnership with the private sector.

Heseltine was adamant that economic growth required ‘stability’, by which he means that investors will only invest if there is a high degree of political certainty. This is essentially what is meant when people speak of a ‘uniparty’ and, more cynically, the idea that it “doesn’t matter who you vote for the government still gets in”. Such an assurance is fine when the economy is going gangbusters but, as we’ve seen over the past two decades, useless when people feel they’re getting poorer. Most of the disgruntlement in Britain isn’t just a consequence of social change or dysfunction but is as much a consequence of how people perceive their economic circumstances. When Zack Polanski or Gary Stevenson say tax the billionaires they play to this sense of economic struggle even though they both know their proposals cannot resolve that struggle. It is the same ‘find someone to blame’ line as we see from Nigel Farage and Rupert Lowe who point to immigrants implying that the fault for your economic conditions lie there.

Antonio Garcia Martinez, the author of ‘Chaos Monkeys’, posted a pertinent analysis of how the left-populist position arises saying:

“The only measure of poverty that matters is this: at what point of wealth inequality in a democracy do you get majority support for third-worldist grievance politics like Mamdani’s, or resentful confiscation like Khanna’s?”

The left-populists are correct to say that reducing inequality is a good idea but this is largely because if people aren’t resentful of others’ economic conditions they don’t elect people like Zack Polanski or Jeremy Corbyn. But you achieve this by economic liberalisation not by the further development of the state’s role in the economy. The Heseltine model - bizarrely popular with the people running Reform UK and other ‘National Conservatives’ - has been the dominant approach to economic development in the UK since the 1990s and, in the 21st century became the preferred approach for all the main political parties. It is fair to say that while it has failed, politicians and their advisors are unable, even those on the supposedly radical right, to find a way out from the tangle of price controls, regulations, state oversight, nationalisation and employment laws that represents UK economic policy.

At present the choice offered to the British public is either a sort of home-grown dirigisme or a version of socialism owing more to student politics than any considered economic strategy. Yet we know socialism doesn’t work and are coming round to the realisation that the managerialist regulatory state doesn’t work either. But getting a better economy requires politicians to face down important selfish and vested interests - NIMBY homeowners, the NHS, the ‘green economy’, trade unions, NGO leadership and public service management. It would be nice to say that an incoming government , elected on a radical platform, could simply act to make the change but the reality is that the Jim Prior approach of chipping away at the edifice of sclerosis is the only effective route. Revolutions create chaos, not better government.

The process of pulling the tentacles of public sector management from out of private business, opens up the prospect for reforming the public sector itself. Back in the 1980s Margaret Thatcher believed that the way to get better government was by introducing ‘business management’ and separating the process of decision-making from the job of administering services. Over 20 years or so from the mid-1980s British central government was completely transformed through the creation of arms-length public agencies and a host of regulatory bodies with the idea that this liberated those around ministers to focus on policy and associated decision-making.

The problem with this approach, however, has been that public services became less accountable, many agencies focused on expanding their role as regulators or service managers, and central government departments had less and less idea of what really happens at the interface between public service and the public. It isn’t just the high profile scandals such as the Post Office, NHS maternity care, or defence procurement but the whole system of service delivery. And as these functions grew larger and more complex, the chance of any ministerial oversight disappeared. The courts and Home Office give the impression of conspiring to undermine immigration and asylum control (they haven’t, merely taken these rules to their logical and ridiculous conclusion) and, as we saw with Covid, public health authorities simply ignore any ministerial direction that didn’t suit them. Worse, ministers and their advisors become captured by ‘experts’ within these systems and are effectively unable to break out faced with an inevitable media onslaught.

Just as refocusing economic policy requires a ‘softly, softly’ strategy, reforming how government functions - prising out those tentacles - is not something that can be achieved with a big bang. It is easy for a politician to proclaim that they plan on reforming the civil service but, so far, nobody has set out what this means in the real world. The ‘Next Steps’ reforms that started in the mid 1980s took over twenty years to implement, the idea that you could simply restructure the machinery of government over a wet weekend in February is plainly nonsense. Similarly, announcing plans to reduce civil service headcount represent a huge hostage to fortune. If you know anything about how bureaucracies implement cuts, then you’ll know that any mandated headcount reduction will be done in a way designed to maximise the front line pain. And when you say to managers that front line services are bad their response is simply to say “you wanted the cuts”.

Back in 2003 I had the joy of leading on Bradford Council’s budget process. There were many lessons learned but the most important one was the Finance Director telling me that, if you want actual budget reductions, the only way to achieve them is to stop doing things. Yes you can play smoke and mirrors with the numbers, you can not fully fund inflation or pay rises, you can promise efficiency savings, better procurement and reductions in waste, but all of this is just flim-flam, a process of handing responsibility for making cuts to middle management rather than owning the reduction of services yourself. If we want better government, we need to start with asking what better government looks like and what changes are needed to get the better outcomes we desire. Not merely in headline terms but right down to the detail - if you want fewer potholes then ask first why we have so many of them, if you want less immigration start by asking why we have so much of it in the first place, and if you want community cohesion perhaps begin by wondering why those parallel lives occur.

All of this is really dull, a bit like my former colleague John Hinchcliffe’s view of marketing - 1% strategy and 99% boring routine. The systems that are failing Britain right now were created over three or four decades (longer in the case of health and planning) and are seen - with the Kafka-esque inevitability of bureaucracy - as ‘this is how we do things’ meaning that those inside the system (which includes most politicians regardless of how much they love their radical image) simply don’t see what needs to be changed. As the surveyor in The Castle was told, there is no conception of error even if things go wrong.

Right now the only people thinking about how to improve what government does are those inside the system, comfortable warm frogs unaware of just how hot the water has become. As a result their proposals for change do not involve the state doing fewer things, do not argue for fewer managerial silos, and assume the current centralised, command and control approach is the only means to deliver. This percolates through to policy as civil servants advise ministers that we get more housing by employing more planners, we get less immigration by increasing resources for border control, and we improve community relations by investing in preventing hate speech. The idea that rising crime, illegal immigration or declining high streets might be down to perverse incentives rather than the resources available to the state simply doesn’t register as a possibility. The only way to solve any public policy problem is to spend more money.

Politicians, or at least those listening, will hear people’s real concerns: how do I afford the rent, why are there so many immigrants, why do my taxes go up while services are cut. But once those politicians get inside the state’s hive they wander frustrated from person to person trying to get something done before either giving up or accepting their role as performing seals designed to distract the public from the big issues. Meanwhile the task of getting better government remains untouched because nobody knows - is allowed to know - where to start with making the changes we need.