A Journey (38 page)

So there I was at the away day, gazing at my colleagues round this famous memory-soaked table, a repository of so many words and meetings, and thinking not of war – not then – but of how the unease I felt was related to wondering if I was asking the right fundamental question. I knew the party had to continue to be led strongly and planted firmly in the centre. When I spoke, I focused not on polling or the Tories but almost entirely on the overriding need to modernise, and in particular how we couldn’t just be advocating more money in public services.

The unease was this: maybe the real problem wasn’t the party’s failure to embrace modernisation; or, at least, not only that. Maybe it was that the country didn’t really buy it. What if instead of taking on the party, I had to take on the public, my allies, the strong trunk holding up my branch? It was not a thought designed for repose.

We were riding high, the country, though impatient, was still essentially supportive; the Tories were nowhere, we were politically supreme. Why risk that? So, yes, we should drive through reform, but not to a depth or at a pace that overwhelmed people, that disorientated or destabilised them. Truth be told, we were also still learning. In March 1998, we had published a Welfare Reform Green Paper, had started tax credits, begun the Sure Start programme for children, introduced the minimum wage, the literacy and numeracy strategy, and the education action zones for the inner city. There was NHS Direct coming in and the first antisocial behaviour legislation. There was activity and there was impact.

But in each case, again I felt it was unsatisfactory. We now had some decent policy reform nuggets going beyond the very limited commitments we had made in the 1997 manifesto, but that is what they were – nuggets, no more. Literacy and numeracy hours were a step forward for primary schools, but what about failing comprehensives, particularly in the cities, which were the real Achilles heel of the state school system? And failing local education authorities? And the teaching profession? Tax credits, and the various measures in the Welfare Reform Green Paper – including new ‘stakeholder’ pensions above the existing state pension that would be offered at a low cost to employees by their employers, and new welfare-to-work incentives, new ‘employment zones’ to target extra help on the unemployed and a unified Employment Service and Benefits Agency – these were all very well; but what about the 1.7 million and rising on incapacity benefit, signed off work for life with precious little incentive even to start looking for employment? We talked of the dramatic reduction in the numbers unemployed, but this masked the huge rise in numbers on incapacity benefit that had taken place under the Tories and was continuing under us, and the Green Paper proposed only tinkering changes in this crucial area.

Similarly, NHS Direct was a concept for the future, and specific strategies for tackling cancer and other chronic conditions, alongside extra doctors and nurses, were making a difference in the health service, but they were partial responses to the chronic endemic problems of rising waiting lists, long waiting times, outdated working practices and nugatory patient choice within the NHS. So serious was the NHS situation that the annual nightmare of ‘winter pressures’ had us holding our breath and hoping that the NHS would not collapse entirely in the first winters after 1997. And the criminal justice system seemed impervious to any reform beyond the further entrenching of rights for offenders and ever more bureaucratic processes encumbering the police and the courts.

To bridge the gap between reform and aspiration, we set alongside these piecemeal reforms a swathe of performance targets to eliminate the longest hospital waiting times, raise school literacy and numeracy and GCSE scores, etc. There were also new national agencies and structures to drive improvement, such as the National Commissioning Frameworks, the National Institute for Clinical Excellence in the NHS, the National Literacy and Numeracy Strategies, and a new National College for School Leadership with mandatory leadership qualifications for new head teachers, to raise standards in education. These were sensible steps to improve accountability for extra funding and spur departments and their agencies to greater efforts. We were to go further and – as I describe later – publish a full ‘NHS Plan’ in July 2000 which highlighted greater staff flexibility, greater decentralisation and the reduction of waiting times as key priorities. These were to be achieved alongside the step change in NHS spending and the transformation of the NHS estate starting to take place thanks to the recent Comprehensive Spending Review.

But as we flogged the horse harder for only partial improvements, it became clearer to me that only so much could be done by driving improvement from the centre through targets and piecemeal top-down reform, even with the significant extra funding coming through. I increasingly came to see the centralised systems themselves, and the disempowerment of front-line managers and the denial of user choice which they entailed, as a fundamental part of the problem. I wondered – as did some of the newer and more radical faces in my Policy Unit, although this was still heresy in the party, not least among most of my ministers – whether we had been right to dismantle wholesale GP commissioning in the NHS and grant-maintained schools in education, instead of adapting these concepts of local self-governance to spread decentralised management across the state health and education systems, but without the inequity inherent in the underfunded Tory reforms we inherited.

From talks with capable voluntary and private sector providers only too willing to engage in public service delivery but prevented from doing so, I also chafed increasingly at the restrictions placed in the way of good independent providers establishing themselves within health, education and the other public services. This seemed to me a classic case of the confusion between means and ends which had dogged the left for a generation – and which it was New Labour’s mission to overcome. For public services to be equitable, and free at the point of use, they did not all need to be provided on a monopoly basis within the public sector, controlled in a rigid way by national and local bureaucracies often deeply resistant to innovation and genuine local autonomy.

In short, our mantra was ‘investment and reform together’ – emphasising rhetorically the big difference in the public services between New Labour and Old Labour (investment without reform) and New Labour and the Thatcherite Tories (reform without investment). But where was the scale of reform to match the scale of the investment coming on stream?

In welfare and law and order, I similarly worried that we had a good mantra – ‘rights and responsibilities together’ – but no comprehensive policy thrust to underpin it. It wasn’t just the benefits system. Another acute concern of mine was antisocial behaviour. What were we actually changing on the council estates to eradicate the constant barrage of low-level crime which made a misery of so many lives, and to break the grip of worklessness passing from generation to generation? More police officers, and police modernisation – which we took forward with, for example, the introduction of auxiliary community support officers able to do much of the community policing job in a more focused way – were only partial responses; the police also needed better, more immediate tools for the job in terms of sanctions, which meant a shake-up of the criminal justice system. We had to move from concept to policy, and were doing so only fitfully and painfully.

I was starting to think more systematically about New Labour and its relationship with the welfare state we had inherited and pledged to preserve and improve. The welfare state and public services, as we recognise them, were created after the tumultuous events of the Second World War, but their origins lay in the early budgets of Lloyd George, in the groundbreaking economics of Keynes, in the combination of vision and mastery of detail that was Beveridge. The state would provide.

Capitalism had driven the Industrial Revolution. Unregulated, unrestrained, untamed, its giant wheels rolled over the great mass of the people, squeezing work and profit out of them. But it was also bringing them together, letting them see how they toiled and sweated not as individuals but as a collective machine, and not for their own benefit but for the benefit of the owners of capital.

Out of such common struggle came the trade unions, the cooperative societies, the great engines of collective spirit and will to confront the grinding wheels of capital. For some, such confrontation was for the purpose of eliminating capitalism; for others, to make it fairer.

Out of this struggle came the idea that to change society, there had to be political organisation and there had to be democracy. The mass was the majority. They should take command of the laws of the land. Those who had too much should yield to those who had too little. The ones who took the profit by their capital should yield to those who made it by their labour.

Out of this idea came the notion of the state, not in the sense of the ultimate authority, but in the sense of the political and social expression of this collective will; the state not as in the phrase ‘the grand affairs of state’, but as in the state as benefactor, as provider for those who couldn’t provide for themselves.

So the state grew, first in the field of pensions and National Insurance, then in education, then finally after the war in the National Health Service. The state also regulated: health and safety laws; mining; the Protection of Children; redundancy and unfair dismissal legislation in the 1960s and 1970s. The state would protect. Its power would regulate, restrain and tame the power of capital.

But, in time, two things happened with profound political consequences for progressive politics, not just in the UK but everywhere where the same process of change had occurred. First, as the state ameliorated the conditions of the people, so the divide became more apparent between those who wanted to humanise capitalism and those who wanted to eliminate it. For fifty years or more, this put the Labour Party on the rack, meaning that its divisions were not just about means but about ends, giving it a fatal incohesion right in its guts. Second – and for the purposes of reform, of more consequence – the state grew, and as it grew, its very success became its problem. Suddenly, alongside the vested interests of capital could be seen very clearly the vested interests of the state. Bureaucracies are run by people. People have interests. And whereas the market compels change, there is no similar compulsion in the public sector. Left to its own devices it grows. Governments can change it, but governments use the public sector, depend on it and are part of it.

Moreover, and partly as a result of what the state has achieved, as prosperity spreads, the beneficiaries of the state find they are also its funders through their taxes.

In the 1930s, before the state’s full power had been developed and when the mass of the people were still ‘the mass of the people’, the middle way in politics could be easily defined. It was a public sector, owning assets and regulating in the interests of fairness, alongside a private sector suitably constrained. Harold Macmillan’s book
The Middle Way
, written in 1936, was extraordinary for its time. It accurately reflected where social democratic politics should have been. But such politics only got there in the 1960s.

And that was the point. By the 1960s we had caught up with the 1930s. Anthony Crosland’s book
The Future of Socialism
was a magnificent essay in bringing Labour to the reality of life in the 1950s, but we only really imbibed it and digested it by the late 1980s.

Whatever the enormous impact of the Thatcher reforms had been on the private sector of the 1980s, we had inherited a public sector largely unreformed; and we weren’t instinctively inclined to reform it. The state was still as it had been since 1945. In fact, had Clement Attlee come back to earth in 1998 and examined modern Britain, much would have astounded him. But the welfare state, rather like Whitehall, he would instantly have greeted as an old friend.

There was a further political complexity of which I was all too acutely aware, and which bore directly on the issue of reform and the unease I felt. As I say above, the people today are largely beneficiaries and funders of the welfare state and public services. Unfortunately, what this means is that simultaneously they want more of them and to pay less for them. And, again unfortunately, they are perfectly within their rights to hold these apparently contradictory sentiments.

It also makes them sorely prey to those within the service who tell them change will harm them. It always makes me hoot when the polls are trotted out showing how respected and trusted are doctors’ opinions on the NHS, and how despised the opinions of politicians (and in 1998 the British Medical Association attacked us for the first time), when it is so obvious that those who are running a service have a self-interest as well as a public interest to serve, and when for most of the politicians, there is no reason other than public interest for taking them on.

So all this I knew. And if I am honest, I hesitated to probe fully my own doubts about the true radicalisation of what we were attempting. What we were doing up to then was working well politically, and well enough on the ground.

In the NHS, we were beginning to reorganise the system itself. Power to commission was being devolved to primary care trusts, themselves run by GPs. Increasingly, they would hold the budgets and negotiate with the hospital trusts. But the reality was that a large part of the commission was already accounted for, in ensuring emergency admissions, operations, consulting appointments and so on. And there was no alternative provider to which they could turn. Likewise, GPs had a complete monopoly. Competition, even in the event of a hopeless service, was literally banned. So the different bits could negotiate with each other, but if they were unhappy, there was not a lot they could do.