Good afternoon. Thank you David for having me
here. Thank you also Morgan and Jessica for the organisation.
Last week Ed Miliband set out how we plan to
control social security spending by focusing on the costs of failure. And Ed
Balls explained the tough inheritance Labour will face if we win in 2015. The failure
of the government's economic policy means we will have a substantial deficit
and rising debt. Ed Balls has made it clear to everyone in the Shadow Cabinet,
that Labour has to prepare to govern on the basis of falling department
spending. That is where we start from.
Whoever wins in 2015 will face tough decisions. But
that doesn’t mean there isn’t a choice. There is. Between on the one hand: David
Cameron’s government that talks tough on spending, but has no long term plan
for delivering with less money around. On the other, Ed Miliband’s One Nation
approach which will reduce costs on the public purse by reconfiguring services
and reforming the economy.
So today I want to talk about how Labour will
govern in 2015 when there is much less money around. A One Nation approach –
you could call it a statecraft - based around three organising principles:
1) Power for local people, to shape their
services and communities,
2) Investment for prevention, to avoid the costs
of failure,
3) Collaboration between public bodies, not
wasting money on bureaucratic duplication.
The British State
Let me start with some context. The British state
is undergoing the largest budget cuts since the end of the Second World War. The
Coalition has no statecraft to manage the scale of this change. It is
struggling to implement its Civil Service Reform Plan and as a consequence it
is tinkering at the margins and salami slicing cuts without reform.
There is poor communication and little culture
change. Staff are doing the same work and doing more and more of it. The system
is risk averse and plagued by inertia and lack of innovation . It is a recipe
for inefficiency, falling productivity and demoralisation.
In 2015 Labour will inherit a state that in many
areas has reached the limit of its capacity to cut without transformational
change to the system. The last Labour government rebuilt our public services
and made the country a much better place to live in. We all know it from the
hospitals we use and the schools our kids go to. Labour drove standards up and
waiting lists down.
But too often we thought that a delivery state
powered by choice and competition was the only answer to better and more
productive public services. It isn’t. We did not devolve enough meaningful power
to front line services and their users. We tended to underplay local place and
that what mattered was giving those who used and worked in our hospitals and
schools a greater sense of ownership. We did not protect the relationships and
trust that lie at the heart of public services.
In 2010 David Cameron claimed to be embarking on
a different kind of statecraft. Announcing the Big Society he said, 'Today is
the start of a deep, serious reform agenda to take power away from politicians
and give it to people. But the Coalition is continuing many of the most
centralising features of New Labour’s approach, but with none of its virtues.
More privatisation means more services controlled
by big unaccountable corporations. The Localism Bill gives more power to
Whitehall. The Coalition is salami slicing the NHS, hindering service
integration by putting competition at the heart of service delivery. Instead of
bringing costs down and caring for patients, it has wasted time, energy and
money on what NHS Chief Executive, David Nicholson, has described as a costly
distraction at risk of ending in ‘misery and failure’.
Michael Gove is centralising state power by
running thousands of Academy schools from Whitehall. He is creating an
education market in which schools compete against one another, duplicating
costs and services, with no sense of obligation and too little connection to
their local area. His system entrenches fragmentation and inefficiency, and
locks out parents and teachers. The problem with this government is that it
trusts the market and it trusts Whitehall but it does not trust the people.
They cut public spending and waste huge sums on
paying big corporations to run a Work Programme that creates no work. And they
fail to tackle unemployment, poverty and low pay that create demand for
spending in the first place. The Conservatives have gone from Big Society back
to no such thing as society. Our country has suffered from decades of excessive
centralisation in the market and the state. People feel that their opinions are
ignored and their interests as workers and citizens excluded. They are rightly
angry and losing faith in our political system.
You can see its failure in many of the scandals
of recent years. The risk taking in the City that led to the financial crash. The
phone hacking scandal. The neglect and abuse of older people at Mid
Staffordshire hospital. The horsemeat scandal. When the market is out of
control and the state unresponsive, the result is greed, abuse of power, money
wasted, and unkindness.
A One Nation Statecraft
Ed Miliband and I know we won’t renew our
politics or create a better society by diktat from Whitehall. I didn’t come
into politics to pull levers and make rules for other people to follow. Politics
is about leadership. But it is also about helping to organise people to improve
society themselves.
We will push power downwards and build a new kind
of state which is based on our values of responsibility, reciprocity and
relationships. A state which works for the common good. One that spends less
money by making collaboration a priority and by investing in prevention, not
waiting for the next crisis before intervening.
Already Labour Councils in our great cities are
saving money by radically reconfiguring services to tackle social exclusion. They
are cutting costs by helping people to help themselves; drawing on the assets
of local communities to build resilience and break cycles of deprivation. The
co-operative councils movement is reshaping the relationship between citizens
and the state; giving local people the control to make the changes they want.
Rebuilding the economy for a responsible
capitalism is at the heart of Labour’s one nation statecraft. We have to tackle
the structural failures that have caused wages and living standards to fall and
our country to have the highest regional inequalities in Europe. England’s big
cities are taking a central role in creating jobs and growth by developing
their regional economies with Strategic Partnerships, employment brokerages and
the living wage. Creating jobs and wealth more fairly needs economic reform
as well as economic recovery.
The Organising Principles of One Nation
Statecraft
So I’m in the right place today to set out the
One Nation statecraft that we will employ in government. Our first organising
principle is more power for local people. We can only rebuild our
country on less money if everyone plays their part and feels they have a stake
in society. Labour will devolve power, encouraging and freeing local
authorities to innovate to serve their communities.
Our localism runs all the way down to local
communities; encouraging people to get involved in budgeting and co-designing
services and local development. It means changing politics from making demands
on Whitehall for more spending toward people organising together to improve
their common life and build their power from the bottom up. For example by
setting up credit unions as an alternative to pay day lenders or by combining
together to get a cheaper tariff on energy bills.
In the coming months Hilary Benn will be talking
about his idea of a New English Deal which will offer all English local
government more powers and devolution to cover skills, job finding, housing,
economic development and investment. It will support his plans for the local
pooling of budgets.
Total Place pooled budgets will drive savings
allowing local authorities to collaborate and reconfigure services around
troubled families, the long term unemployed, and older people. According to
Ernst and Young the net annual benefit could be between 4.2bn and £7.9bn.
The second principle I want to talk about is
prevention.
Government wastes huge sums trying to deal with
the symptoms of social problems instead of investing small amounts to deal with
the causes. Prevention is about reducing the future burden on public spending. Some
of the largest returns have been in improving children’s ability to
communicate. The benefits associated with the literacy hour outstrip its costs
by a ratio up to 70:1.
We can prevent an epidemic of childhood obesity
and a future health crisis by low cost measures such as reintroducing the
duties on schools to provide 2 hours of sport a week and lunches that meet
healthy standards.
My colleague Graham Allen has been a fantastic
advocate of early years intervention and he’s always been clear that getting
this wrong has impacts way beyond the individuals and families concerned. Every
taxpayer pays the cost of low educational achievement, poor work aspirations,
drink and drug misuse, criminality and unfulfilled lifetimes on benefits.
There is a growing evidence base behind these
strategic interventions that demonstrate the savings they secure over time. For
example, consider the extraordinary work being carried out by the Social
Research Unit at Dartington. Manchester Council has shown what can be done with
its offer of support for parents and children from birth to 5 years.
A single care pathway from pregnancy onwards
ensures that families do not slip through the net. And there is cross agency
early intervention for highly vulnerable families. Budgets are replenished from
the efficiencies created by implementing early interventions that are proven to
work.
In his speech last week, Ed talked about
partnerships with councils to bring down the housing benefit bill and use some
of the savings to build new homes. Prevention is crucial to controlling costs
in social security. We need to be building homes not wasting money paying
for our failure to do so. In the longer term prevention significantly reduces
future spending because it reduces dependency on services.
The third principle is collaboration.
By 2020 our biggest sectors by value and
employment will be in health, education, and care. If we do not reduce levels
of chronic disease, health services are forecast to grow to 12 per cent of GDP
. Many of the major social problems we face do not need more money. They need
radical new ways to use existing resources, to frame regulations and provide
incentives across local areas.
We need to put relationships centre stage in
service design and reconfigure services around networks, households and
co-creation rather than being delivered by centralised institutions. To achieve
this kind of transformation will require collaboration between organisations. Collaboration
also removes wasteful duplication, and it encourages economies of scale and a
shift to prevention and early intervention.
We need to end the competition where money is
wasted in duplicating activities and creating fiefdoms. Andy Burnham’s plans to
integrate physical and mental health and social care services into a single
budget, single service to provide ‘whole person care’ will help keep people out
of hospital and save money. The CBI estimates that delivering care closer to
home for some patients could save the NHS up to £3.4bn a year.
We will also look at how we structure the
relationship between Whitehall and local government and where the monitoring
and administrative functions of Whitehall add value and where services could be
shared. Savings through local authorities sharing services are close to £280m
suggest the LGA. Replicating this across Whitehall could save between £400m -
£600m according to the Cabinet Office. The radical social innovation we need to
do more with less means working with systems and networks and not silos and
rigid bureaucracy.
Conclusion
Let me end with this. Over the last week we have
set out our economic thinking, setting out strategy to reduce social security
expenditure and statecraft when there is limited finances. Some of you may be
sceptical. You've heard this all before. Labour talks local but has a habit of
big government and top down command politics. There’s no money so there is
nothing we can do.
But let’s remember our traditions. We grew out of
the popular movements of self help and self improvement. Our history lies in
mutualism, cooperatism and organising. We gave political representation to
working people by building political power in our English Cities. We gave
millions pride and meaning when we spoke about the virtue of work and about
conserving the local places people called home.
Our forebears built this country and made it a
decent land to live in. They understood that politics is a struggle for power
and they organised to win it, not from the top down but from the bottom up.
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