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How not to make policy

Daft ideas on the backs of envelopes threaten to unseat Labour, says John Denham MP.

At the time of writing it was unknown how many Labour MPs would rebel against the Education Bill, But whatever the outcome, the long running crisis has left many wondering why the Labour Government has got itself into similar hot water so many times. Tuition fees, Foundation Hospitals, Primary Care Trust reorganisation have all followed similar patterns.

The simplistic answer is, of course, that the Government is pursuing policies that many in the PLP and the wider Labour Party do not like. There is some truth in that. But unless you subscribe to the view that Labour Ministers are all closet Tories and that new Labour was a Tory project it’s not very helpful in understanding why these things happen.

Several bad habits have come together in each of the recent public service reform rows. With a leadership change imminent, we must make sure they are not carried forward into the new regime.

It’s striking how much all our recent policy rows stem from an explicitly ideological approach to policy-making. This marked a sharp change from New Labour’s origins. Then the mantra was ‘what matters is what works’. Early on this was much more than a way of challenging the traditional socialist ideology of ‘old Labour’ with its uncritical support for producer interests and its in principle rejection of all market mechanisms. It also was the basis for rejecting Thatcherite approaches to taxation, public spending and family poverty.

In the early years, a pragmatic approach was taken to public sector reform. We had clear values – we wanted public services that worked both for the poor and disadvantaged and for middle Britain, and we wanted to close the gap between the two. But the tools we used were largely based on evidence of what worked in practice. But New Labour’s impatience for change and its desire to produce headline-grabbing initiatives often distorted the best efforts at change. Too much was expected before the money really began to arrive. Targets were over-used and badly designed. Centralised management encouraged gaming and suppressed local initiative. The pressure for rapid change meant that good developments like Primary Care Trusts were pushed too far too fast and then abandoned as failures before they had a chance to succeed.

Instead of taking a measured approach to success and failure, and building on the former, impatience took hold. The search began for new approaches. And this is where the insidious simplicities of the new internal markets began to make a comeback. There is no doubt that choice and contestability have legitimate roles to play in the management of public services, but only as part of a package of measures that must include planning, strategic management, outcome measures, independent inspection, intervention and accountability. Real public services are complex and the desire to find simple formulae for their reform is doomed to failure.

But the Government has adopted a simplistic and ideological formula. All public services have to be based on a diversity of independent providers who compete for business in a market governed by consumer choice. All across Whitehall, any policy option has now to be dressed up as ‘choice’ ‘diversity’ and ‘contestability’. These are the hallmarks of the ‘new model public service’.

We can see this formula behind al the recent major policy rows, and its ideological nature goes some way to explain Labour’s internal opposition. But it’s not the whole reason. Plenty of MPs are willing to look at policy change on its merits, whether or not they have suspicions about its origins. And this is the second point where things go wrong.

However strongly the Government believes in ‘choice, diversity and contestability’ there is little unambiguous evidence in its favour, and plenty of evidence that points to caution. The evidence does not suggest, for example, that choice all leads to inequities but it certainly suggests that it usually does. There are services where a choice of independent autonomous providers may make sense, but the evidence suggests that health, or education, works best when this is cooperation between different parts of the system. The link between your nurse, GP, consultant and therapists is more important than competition between different providers.

It is common to hear the Government claim that evidence supports its reforms. But it is much rarer to have the evidence published. The recent Education White Paper claimed international evidence for choice based school systems, but none of this evidence was included or referenced in the White Paper. The tuition fees idea did not appear to be based on any modelling of how it would effect the finances of different higher education institutions. The instruction to stop Primary Care Trusts providing services was not based on any analysis of the strengths and weaknesses of primary care delivery. A recent pamphlet by the Prime Minister’s health advisor on markets and primary care was remarkable for omitting any discussion of the clinical needs of patients.

When new policies are produced most Labour MPs assess them on their practical effects. (Most of us are still working in the era of ‘what matters is what works’ I’m afraid). As it becomes clear that there is no evidence to support the changes, the concerns grow. When it then transpires that even the most basic details have not been thought through (like what will happen to the staff that used to work from the PCTs) the anger grows.

Until now at least, the process has had a messy but predictable end. The original policies are transformed so that the damage is minimised. Tuition fees were capped preventing a serious internal market in HE; the PCT policy was sent into reverse for a few months at least. But all this has a very damaging effect on Labour. Voters do not like divided parties, and the process is inevitably establishing an image that will be hard to throw off.

This could be avoided. Not so long ago, Governments published radical policy ideas in discussion documents (green papers). The debate that followed allowed controversial proposals to be thrashed out; for the practical to be sorted from the impractical. Government policy itself was not defined until later (in a white paper).

These days, daft ideas can go from the back of the envelope straight into white papers. Change is then doubly difficult, because it cannot be made with the Prime Minister or other Ministers being seen to climb down.

There is one final element that undermines sound policy formation. Superficially it makes sense for any to seek policies that will be electorally popular. But here again the process seems to be going awry. There is no doubt that Labour’s continued survival in office depends on convincing middle income, middle class voters that they are getting value for money from public services; there is good evidence to say that choice and personalised service matter greatly to these voters. It is the equation of these aspirations with choice based, competitive systems that is not justified. There are plenty of ways of giving people more choice and control without relying on internal market mechanisms, but these don’t seem to get equal consideration.

If policy making continues like this, Labour will suffer a further series of damaging rows and be damaged with the voters. There is also real danger in choosing policies because they appeal solely to the centre ground of Labour's coalition. Sound policies must work for all Labour's voters, not just for middle England. Such policies do exist, but are too often put to one side. This brief overview of recent mistakes suggests four ways we need to change our approach in future.

Firstly, go back to pragmatic policy making which has a clear set of outcomes and an undogmatic approach to selecting the best policy tools. (I suspect this won’t be too popular with Chartist readers, but allowing ideology to overrule the facts is always likely to lead to the wrong policies. The powerful role for ideology is in setting the outcomes – for the many not the few, with a bias towards the poor – not the mechanics. Secondly, back this up by publishing the evidence and analysis that lies behind the policy. Thirdly, be prepared to have our ideas discussed and scrutinised before settling on Government policy.

Finally, of course keep your eye on electoral support. But take a balanced view of the different ways of meeting the voters’ aspirations.

John Denham is MP for Southampton Itchen. He resigned as a Home Office Minister over the Iraq war.