The Renewal of Government The Renewal In The Renewal of Government, Neil O’Brien and Ross Clark set out an optimistic manifesto for economic reform and show how, with less money, The Renewal we can still deliver better public services. This book shows how we can staunch the flow of regulation, reduce the cost of energy and climate policies, and make it easier and cheaper to build. of Government It argues for radical reform of our schools and universities to break the anti-work, anti-achievement culture which squashes people’s aspirations and opportunities. It sets out bold changes that will help people currently A manifesto for whoever trapped on benefits escape into work, and proposes ways to liberate the wins the election public sector from the bureaucratic burdens and mismanagement it is currently labouring under. Neil O’Brien and Ross Clark Neil O’Brien and Ross Clark Neil O’Brien and Ross £15.00 ISBN: 978-1-906097-69-1 Policy Exchange Clutha House 10 Storey’s Gate London SW1P 3AY www.policyexchange.org.uk 0650PEX_Renewal for Govt_cover_v2.indd 1 03/03/2010 15:59 The Renewal of Government A manifesto for whoever wins the election By Neil O’Brien and Ross Clark Policy Exchange is an independent think tank whose mission is to develop and promote new policy ideas which will foster a free society based on strong communities, personal freedom, limited government, national self-confidence and an enterprise culture. Policy Exchange is committed to an evidence-based approach to policy development. We work in partnership with academics and other experts and commission major studies involving thorough empirical research of alternative policy outcomes. We believe that the policy experience of other countries offers important lessons for government in the UK. We also believe that government has much to learn from business and the voluntary sector. Trustees: Charles Moore (Chairman of the Board), Richard Ehrman (Deputy Chairman), Theodore Agnew, Richard Briance, Camilla Cavendish, Robin Edwards, Virginia Fraser, George Robinson, Robert Rosenkranz, Andrew Sells, Tim Steel, Alice Thomson, Rachel Whetstone, Simon Wolfson. Registered charity no: 1096300. © Policy Exchange 2010 Published by Policy Exchange, Clutha House, 10 Storey’s Gate, London SW1P 3AY www.policyexchange.org.uk ISBN: 978-1-906097-69-1 Printed by Heron, Dawson and Sawyer Designed by SoapBox, www.soapboxcommunications.co.uk Contents 3 Acknowledgements 4 About the Authors 5 Foreword 6 Introduction and Outline 9 1 The Revolution that Wasn’t 13 2 The Philosophy of Government 24 3 A Culture of Rights 34 4 Changing the Culture of Government 44 5 Reforming the Public Sector 60 6 A Better Way to Fight Crime 87 7 Education 107 8 Universities 122 9 Health 131 10 Welfare 145 11 Economic Growth – How Well Have We Been Doing? 166 12 Better Transport 176 13 Regulation 184 14 A More Open Planning System 200 15 A More Rational Energy and Environmental Policy 213 Conclusion 228 4 Acknowledgements The authors would like to thank the staff of Policy Exchange for their consider- able efforts in helping to make this book possible. In particular, we are grateful to Natalie Evans and James Norman for their work in managing the project as it developed. We would also like to thank Miriam Gross and Philippa Ingram for bringing their considerable experience to bear on the editing process. 5 About the Authors Neil O’Brien is the Director of Policy Exchange. He was previously director of Open Europe, a cross-party think tank working for free market reform in Europe. Neil grew up in Huddersfield, West Yorkshire, and took a first in Politics, Philosophy and Economics, at Christ Church, Oxford. His interests include economic reform and social policy. Ross Clark is a columnist for The Times, The Daily Express and the Mail on Sunday, and a leader writer for The Spectator. He is also the author of How to Label a Goat: the silly rules and regulations that are strangling Britain (Harriman House, 2006) and The Road to Southend Pier: one man’s struggle against the surveillance society (Harriman House, 2007). 6 Foreword – by Simon Wolfson Neil O’Brien and Ross Clark have written an important book. It endeavours to think about government policy outside the confines of today’s narrow political debate. It displays intellectual rigour, innovative thought and political courage and creates a set of ideas that politicians of all parties should consider for inclu- sion in their manifestos. In recent years we seem to have lost sight of the proper role of the state in Britain. This has led to a loss of focus: the traditional, core functions of government are neglected while the Government pursues a panoply of intru- sive, meddling and largely ineffective initiatives. From the absurd excesses of health and safety legislation to advertising campaigns which treat people like children, they seem to think there is no part of our lives that cannot benefit from the heavy hand of state intervention. Indeed, laughing off silly rules and regulations has become a national pastime. There is a huge economic cost in having a hyperactive, intervention- ist, and regulatory government – in fact new regulations have cost us £150 billion since the government started counting. Just one regulation has cost the NHS the equivalent of an extra 5,400 doctors. But the real cost is the debilitating affect on society. When charities are shut down by the burden of bureaucracy, or teachers ask children to wear goggles to play conkers, we see the dangers of creating a submissive, risk-averse culture. We end up with a society that expects the authorities to protect them from every danger, and in doing so we slowly, subconsciously, surrender individual responsibility to an all-knowing state. In recent times politicians of all persuasions have increasingly presented themselves as a mixture of social architect and social doctor. They feel the need to be the solution to all society’s failings. But government cannot solve all of our problems. And when it pretends that it can regulate its way to a perfect Foreword 7 society, it stops focusing on its real role – to provide a basic framework in which society can function. This book argues that the state should be smaller, and certainly less intru- sive – but in some ways actually stronger. A strong government doesn’t indulge in knee-jerk reaction to today’s headlines. A strong government doesn’t get bogged down in special pleading from interest groups. And a strong govern- ment doesn’t tiptoe around obvious problems. For years people on the centre-right have pessimistically assumed that the problems of the public sector cannot be solved. So the strategy has been to “go around” these problems: to privatise, contract out, or introduce competi- tion through quasi-market structures. Many of these policies are sensible and should be taken further. But we have avoided tackling the underlying issues – the reasons why the public sector is underperforming. As a result there is still a large chunk of our economy that more closely resembles the Britain of the 1970s than Britain in 2010: a lost world of strikes, absenteeism, falling productivity, and low morale. So it’s time to directly confront the underlying causes of poor public sector performance: the lack of a link between performance, pay and promotion; national pay bargaining; excessively powerful trade unions; a profusion of costly and distracting secondary objectives and absurd processes for recruit- ment and dismissal that make it almost impossible to root out weak performers and raise productivity. Most importantly of all, Whitehall has undermined the independence of action, discretion and initiative of its employees through an ever increasing set of rules, targets and guidelines. Over the last decade politicians have tried to improve the performance of public services by imposing targets followed up by inspections, and by setting up new quangos to “drive up standards”. This has the seeming advantage for politicians of allowing them to hold others to account but avoid being held accountable themselves. If there is a problem, it is the fault of the quango, or the inspector should have spotted it. Meanwhile workers in public services have been treated to a blizzard of time-consuming new initiatives from the centre, as ministers rapidly shuffle around between different departments. All of this serves to debilitate public sector managers – it puts a premium on complying with the letter of the rules, passing the inspection, and “not screwing up”. It discourages risk-taking and innovation. Inspection might identify the very weakest performers (sometimes). But it will not help average performers to get better. It is a system designed to minimise and punish mistakes rather than maximise and reward success. 8 The Renewal of Government In Britain at the moment it seems like freedom has dropped out of our political discourse. We have been through a long period of policies which encourage dependency and treat people like children. But these policies have failed. I predict that at some point soon freedom and responsibility are going to come back into fashion. This book shows what that would mean. But this book does not just deal with how the state can reduce its role, it also argues that the state can use its economic power to boost growth and help unleash the creative energy of an economy that is often held back by Luddite policies. Ross and Neil argue that if we are to be successful in tackling our country’s deep rooted economic problems then the next government must be unashamedly pro-growth. We must staunch the flow of regulation, make it easier and cheaper to build, and reduce the cost of energy and climate policies.