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The Real Third Way: Britain's lesson

Paul Hirst
26 September 2001

The reverberations of 11 September around the world will not indefinitely postpone the routines of political life and argument that are essential to a healthy polity. Even in the midst of international crisis, politics does not cease to matter, or make a difference. If it is natural that Britain’s House of Commons should be recalled to discuss the crisis, it is equally so that the Labour Party conference – the first of its historic second term - should address the character and fate of the political project that has informed its government’s approach for the last four years.

The idea of a radical centre, which this government has promoted, is still a good one. It suits the new mass middle class societies growing up across the advanced world, based around the service sector. The old “one size fits all” welfare state is obsolete in these wealthy well-educated consumer societies. So too are the old centralised national industrial policies, suited to standardised manufacturing but not to a service and knowledge-based diversified economy. The politics of this new centre must be open, democratic and inclusive.

There is a particular British dimension to arguments over the Third Way. It was the election of a New Labour government here in 1997 that helped to galvanise the intellectual debate about the possibility of an alternative political project. And if the sense of excitement that accompanied Tony Blair’s arrival to power has long since passed – something vividly displayed after New Labour’s huge re-election victory in June – the British experience remains a fertile source of debate, both domestically and internationally.

New Labour came to power in 1997 in a country with a secretive government, exclusive institutions, and crippling inequality. It knew the problems. It is committed to modernising Britain. The question is: is it committed to democratising Britain? Because without major changes to our institutions and our attitudes, modernisation will fail. British people need to know this and our political allies elsewhere need to be cautious in taking lessons from these shores. They should ask themselves: is New Labour really carrying out its declared project, or slipping back into a version of the old politics?

We will reform you

There is little evidence of democratic renewal in the UK. The political class and their media in Britain have become worried about the decline of political participation. The low turnout at the last election (only 59 per cent) robbed the government of some of its legitimacy. Labour’s vast majority represents just 25 per cent of those eligible to vote.

But declining participation can be read in one of two ways. First, the Old Labour critique. New Labour suffered from massive abstention. Its policies in the first term alienated its heartlands, and the Party must now return to its traditional agendas. Second, the complacent. The country is prosperous, with near full employment. The election was no contest. Why vote when the issue was never in doubt? The fact is, these two responses are not incompatible. Labour is the only possible party of government, and yet it lost three million votes in comparison with 1997. Both judgments imply that the election did not really matter. It was a boring formality.

But it did matter. For the first time in two decades the politics of public services won a decisive victory over the appeal of tax cuts. In 1997 New Labour campaigned on an agenda of modernisation, and building a more open political system and inclusive society. This was a historic shift in the terms of political debate. And yet, so scared were they of the tax issue, that they adopted the Tories’ excessively restrictive spending plans. Labour insiders now accept that this limit on the ability to deliver improvements in public services quickly was a big mistake.

The tension between ambition and achievement is now at breaking-point. Improvements in public services have been put at the core of the government’s historic second term. Tony Blair has made the involvement of the private sector in funding and delivery of services the index of his determination to achieve better public sector performance. So his government intends to pursue improvements by riding roughshod over the public sector itself and its employees.

It is not the involvement of the private sector as such that should be controversial. Improvement in standards is indeed essential, and other countries mix private and public provision of services quite well – for example, in France’s health system. New Labour’s fatal flaw is that it can only conceive of reform as a top down process. It has combined the aims of modernity and openness with the politics of central control – the best of New Labour and the worst of Old – in a way that is completely unworkable in practice.

Why it hasn’t worked

There are two problems with this approach. The first is that the government’s objectives cannot be realised by authoritarian methods. New Labour promised a radical break with the past, but its centralising reformism is a continuation of the endless initiatives of the last two decades. In education, the result has been that a significant minority – at least 15 per cent – are still functionally illiterate. Only the dedicated or desperate teach as a career choice. London relies on poaching short-term teachers from New Zealand, South Africa, and even Bulgaria. In the National Health Service, Labour seems about to produce an equivalent demoralisation. Family doctors are already in open revolt. Britain is going to start exporting patients to Germany. The NHS is no model for an advanced country to copy. The government seems not to have learnt the elementary lessons: that public services are labour intensive; that there is a limited amount that can be achieved by “management”; and that real improvements can only be achieved by working with frontline personnel on a shared agenda for change.

If Labour fails in its objectives to improve public services it will be faced with a backlash of public hostility. This may be reinforced by a major recession. The Government may then be saved only by the absence of a real Opposition. A third term with an even lower turnout, no real mandate and no clear goals would be a disaster for Labour.

The second problem with enhanced private sector involvement is the sort of corporate culture that is specific to the UK. Britain’s major firms are typically short-termist, excessively hierarchical, and financially orientated. They do not have a good record for innovation, product quality, or customer care. They are constrained by a footloose stockmarket that will sell on quarterly forecasts, together with a deal-making culture that promotes takeovers, whatever their ultimate business logic (the current crisis at Marconi is a textbook example of this). British managers are good at corporate politics and financial engineering. The evidence that the private sector can manage complex public services is not good. For example, the failure of Railtrack – the company set up to own and manage Britain’s rail network after privatisation – was only partly structural. It was also caused by the attitudes and priorities of its management.

Voters first need voices

In fact British government and British management are very much alike. Both are command and control junkies. Successive governments have promoted the relentless centralisation of power in Britain. Local government has been emasculated by a series of frankly confiscatory acts. The public sector is controlled from Whitehall and services are micro-managed by civil servants without frontline experience. The Blair agenda for reform is based on the assumption that citizens are mainly consumers, that they want greatest service at the lowest cost and do not mind how services are provided. Every four years or so the consumers turn into shareholders and get a chance to approve the actions of the Board of UK plc.

Opportunities for citizens to participate in politics in the UK are few. And British elections even minimise that participation. First-past-the-post elections, national and local, undermine the value of principled choice. The real electorate in the UK is tiny, smaller than that before the Great Reform Act of 1832. This is because switch voters in marginal constituencies decide the election. Politicians concentrate on these voters and constituencies at the expense of the others. Loyal voters in safe seats are taken completely for granted.

Political participation has never been a mere matter of voting. Voting is the culmination of a wider experience of involvement. Taking part in politics depends on peoples’ experience of their voices and actions mattering across the whole of their lives. Governments in Britain for the last twenty years have relentlessly worked to narrow that experience. Unions were an important school of political involvement. They have been deliberately marginalised. The obsession with the “power to manage” has led to the destruction of opportunities for voice and sources of countervailing power in both the public and private sectors. The destruction of professional autonomy means that the most basic forms of participation, meetings, cease to be forums for decision and become simply means to implement goals imposed from the outside.

Again, two of the public services which New Labour most wants to change – education and health – provide vivid evidence of this professional impoverishment. Teachers with no autonomy over the curriculum, of how and when to teach what, have no powers and thus no micro politics. Now doctors will be similarly sidelined. The logic of the current spinning of scandals like those at Alder Hey Childrens’ Hospital and Bristol Royal Infirmary is to use genuine public disquiet about some arrogant doctors to shift the managerial frontier of control over all doctors. The aim is to reduce doctors to technicians who are managed by objectives. A society of voiceless employees who are managed from above cannot sustain a culture of political participation.

Consuming weakness

If that is true of employees, then what of consumers? Britain’s anti-competitive corporate culture means that even conventional consumers have little chance to exercise that “sovereignty” which is the essential discipline of market capitalism. When it comes to the public sector, consumers are virtually powerless. They have to take what they are given. The NHS ensures that access to treatment is always at the discretion of a doctor and it is very difficult to shop around. If you are prosperous and find the National Curriculum too prescriptive, you can go private – but Ofsted, the Government’s centralised school inspectorate, has become intrusive there too. It tried to close Summerhill, England’s leading progressive private school.

Poor public services and low political participation are connected. Why does the UK spend a much lower percentage of GDP on public services than equivalent European countries like France and Germany? Some on the right claim it is because we are an open, entrepeneurial society like the USA, and thus out of tune with continental corporatist inefficiency. But British productivity compares unfavourably with France or Germany.

The main reason for the spending deficit seems to be that Britain has a first-past-the–post electoral system and a de facto one-party state. Switch, or “swing”, voters are vital. They tend to be tax averse and governments are eager to appease them. That means continuous polling and focus groups, the modern forms of selective “participation”. Since 1983 we have had a 1.5 party system with a weak Opposition. Huge majorities mean that the legislature is little more than a channel for executive initiatives. This means the government can drive through daft or unpopular policies unchecked, like the Poll Tax or the privatisation of the London Tube. Such policies only matter when they come to antagonise the real electorate in the marginals.

Decentralise, or else

New Labour’s modernisation efforts have been extensive in one area, namely the constitution. Labour between 1997-2001 carried out the most extensive programme of constitutional reform of any recent government. The autonomy of the Bank of England, reform of the House of Lords, the incorporation of the European Convention on Human Rights, the creation of a Scottish parliament and Welsh and Northern Ireland assemblies, form a significant canvas of change.

But even here, the initiatives are often half-hearted and contradictory in effect. Wales and Scotland are following policies at variance with those of Westminster, and Northern Ireland is in limbo. The House of Lords reform, marked by the farce of the “People’s Peers”, has stalled. The problem is that none of these reforms have touched the real centres of power: budgetary control through the Treasury and policy control in Downing Street.

Blair and Brown, if they do want a great reforming second term – if they really want to improve public services – and if they mean to halt the decline in political participation, will have to face the political and institutional sources of current failure. There are both short- and medium-term remedies that simply cannot be avoided much longer.

In the shorter term, both the consumers and the producers of public services need to be empowered. This means decentralisation of control. But it also means allowing consumers choice and giving them control over additional spending. Clearly, the NHS will collapse if it suffers further ill-considered and hasty reform. In the medium term, significant funds can only be diverted into it if the UK switches to an insurance system that allows patients to top up on basic state benefits. The feeble and partial embrace of the private sector will not bring real change.

Proportional representation for Westminster elections will also help in the medium term. So will local government reform, about which (as in Geoff Mulgan’s response to Sue Goss’s recent book) there are some signs of creative thinking at the centre as well as on the ground. And so too will English regional government, increasingly discussed as a practical response to European developments as well as devolution. But all these processes can only succeed if they are understood as part of a “democratic” rather than “managerial” understanding of what New Labour is about – and it is perilously late in the day for that.

We must see that political and social reform are connected. The original New Labour idea was to build an open, decentralised state and an inclusive society, in which the many share power, not the few. It is far from being realised. Here in Britain, the Third Way needs reinventing – and fast.

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