Bold and reforming?

What impact has the coalition government had so far? What's been prioritised, promised, cut and changed? Peter Riddell, Senior Fellow of the Institute for Government, reports

Bold and reforming?

Peter Riddell is also a former Times political commentator

Forget talk of reforms in retreat or u-turns – the swings of political and media fashion often obscure more than they illuminate. Despite a number of well-publicised policy shifts during the summer months, the most striking feature of the current government is how much ministers are still seeking to change across the whole range of public services. Indeed, the breadth and range of the ambition is, in many ways, more significant even than the existence of the coalition. The involvement of the Liberal Democrats has affected the character of a number of reforms but not their overall scope or direction: internal Conservative debates have mattered just as much. The key priority is, of course, deficit reduction. There is no disagreement on this between coalition ministers. The need to tackle the budget deficit was the main reason why the coalition came into existence, and this remains its central objective. Revealingly, the final page of the 35-page coalition agreement of May 2010 states that everything in the previous pages is subordinate to the overriding goal of eliminating the budget deficit within the life of this parliament.

Testing the coalition’s prospects

Sticking to this strategy is the main test of the coalition’s economic and political credibility, despite the strong pressures to slow down, or reverse some cuts (for example, in police numbers following the early August riots). Ministers argue that Britain has avoided the type of sovereign debt crisis that still affects much of southern Europe and threatens the stability of the eurozone because it has been willing to take tough tax and spending decisions. So there is no choice but to stick to the targets, with the hope that the structural deficit will have disappeared by year four, and so allow some tax cuts and limited relaxation before the general election. “It has been painful, but it has worked” will be the refrain. George Osborne has been insistent that there is no Plan B although, regardless of what he decides, slower growth will make it harder to hit the fiscal target. All this explains why both of the coalition parties are so keen on a five-year, fixed-term parliament: they need a period of that length to show any results.

In part, it is a matter of political will. Hence the government’s determination to resist trade union pressure to back down on changes to, for example, public sector pensions. Talk of parallels with the ‘winter of discontent’ strikes of 1978 to 79, or the wider strikes of the 1980s, are misleading. The unions are much weaker than they were 30 years ago, and, with the exception of transport, few unions have the power to inflict much more than inconvenience.

The need to tackle the budget deficit was the main reason the coalition came into existence, and this remains its central objective

The coalition – particularly its dominant Conservative side – has taken a different approach from either the Thatcher or the Blair governments. The Thatcher approach was hardly timid in aspiration or rhetoric but she was a gradualist in tactics, picking one battle at a time. For example, schools reform was not tackled until the middle of her second term, and the health service even later. Tony Blair was cautious about domestic reform in his first term, unwilling to risk the enormous political capital he had built up as a result of his 1997 landslide, for fear of jeopardising a second victory. It was only after 2001 that he pushed forward radical plans for schools, higher education, health and, belatedly, welfare reform.

By contrast, the Cameron team has pushed reform plans from the start. Ministers feared that, otherwise, vested interests would build up to block reform and, as the parliament went on, electoral pressures would operate as an increasing check. Moreover, after the Tories failed to win an overall majority, some Cameron advisers feared he might have only a single term in office. This explains the desire to push ahead on all fronts, particularly as the Conservatives are in charge of the key domestic departments.

Cameron initially adopted a detached style, encouraging his departmental heads to develop their own plans without the detailed intervention that marked the Blair and Brown years. Moreover, many of the key ministers were enthusiasts for devolving responsibility to local levels. Such localism, under the Big Society umbrella, has been intended to empower consumers of services to hold local providers to account: through directly elected mayors and police commissioners; through GPs acting as the main commissioners of health services; by individuals being able to decide on their own care packages; and by parents, through increased choice of schools and being encouraged to set up free schools, independent of local authority control.

So there was an early rush of initiatives: with Michael Gove establishing free schools; with Eric Pickles on localism; Andrew Lansley, most controversially, with NHS reform; and Iain Duncan Smith on replacing means-tested benefits, and providing incentives to private and voluntary sector groups to move the unemployed from welfare to work.

Sources of tension

This very rush of proposals and bills has itself created problems. The eagerness of ministers to make their mark has meant that many measures, such as the Public Bodies and NHS bills, have either been mauled in the House of Lords or so sharply criticised as to force the government to introduce far-reaching amendments. There has been neither the time nor the will to follow a more gradual path.

There have been two further sources of tension. First, many of the reforms have been introduced as part of cuts packages. In health, welfare and so on, the aim has been not only to make the services more responsive to the public, but also to save money. However, in the past it has been hard to introduce reforms at a time when budgets are being cut – certainly on the scale envisaged in the October 2010 Spending Review. Second, the Conservative plans reflect a series of ideological differences within the Conservative leadership, which were unresolved during the years of opposition (and have only come to the surface as these plans have been implemented). In one example, George Osborne has not embraced full-scale localism, as advocated by Steve Hilton, Cameron’s policy adviser. The Treasury has been reluctant to allow full devolution of responsibility to a local level as long as finance continues to be raised and allocated centrally.

From this perspective, if something goes wrong in a service, MPs, voters and the media will expect answers from a Secretary of State rather than from local providers. Similarly, the Conservative version of localism has little to do with local government; Pickles has been particularly tough on local councils. There may be less ring-fencing, but the freedom to cut budgets is a limited freedom.

Many of these differences have surfaced in recent months, prompting a change in approach from Cameron. In part, this reflects research showing that many of the reforms are misunderstood and opposed by voters. He has both strengthened his Downing Street operation by building up a Policy Unit to monitor the work of departments, and responded to criticism by modifying some policies. That has prompted headlines about u-turns and policy reversals, but much of this criticism is overblown. As Cameron has argued, in many cases ministers are showing that they have listened to the concerns of voters, and responded. Dropping the plan to sell off forests, or shelving plans to give offenders a 50% reduction in jail terms for early guilty pleas, have generated much heat, but are marginal to the broad thrust of the deficit-cutting strategy and reform agenda. For all the much-discussed changes to the Health and Social Care Bill, and the modifying of the regulator’s role and pace of competition by bringing in new private sector providers, it is just as easy to point to reforms that are being carried through largely unaltered. These include reforms to schools, welfare, pensions and, above all, the reduction in the budget deficit. Yet the vagueness of many of the ideas in July’s Open Public Services white paper shows how much is still to be resolved in practice over the extent of outside involvement.

The key to both fiscal goals and reform plans is the economy. There are worries over a faltering recovery in the USA (with confidence undermined after the debt ceiling cliffhanger in early August), continuing problems in the eurozone, and increasing evidence that UK growth this year will be much lower than forecast. The August riots have been largely brushed aside as criminality but social tensions and protests could make it harder to achieve the coalition’s economic as well as political goals. The coalition seized the initiative in 2010, but is now being severely tested.

Further reading

Peter Riddell

Peter Riddell is director of the Institute for Government and a former Times journalist and political commentator. He has co-authored reports on transitions and ministerial effectiveness, and has been closely involved in work on political and constitutional reform.

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