Making it work: why localism is the key to public services
Pamphlet for the Liberal Democrat Meeting the Challenge process, Sept 2005
“Nowhere has democracy worked well without a great measure of local self-government.” Friedrich Hayek
A century of Norwegian independence from Denmark was celebrated in 1998 by the appointment of five eminent men and women to inquire into the state of their democracy. Their 50-volume report was a frightening wake-up call to the country that their democratic infrastructure was approaching collapse.
They found that participation in government and elections was plummeting, that the municipalities – the source of Norway’s democratic energy – were being captured by the central state, and power was falling into the hands of unelected technocrats. The result was stagnation.
Norway was relatively late coming to this conclusion. A similar realisation in France in 1982 led to power being transferred dramatically from the préfets – some of whom are supposed to have broken down in tears at the news – to the mayors of the cities and communes. Other European countries have taken similar dramatic decisions over the past 20 years.
This is not to say that the French system, or any of the other decentralised systems of Western Europe – some of them dating back to the post-war constitutions drawn up by the victorious allies in 1945 – would be precisely right for the UK. The point is that the UK’s neighbouring countries and allies realised the damage that the drift of centralisation was doing, to democracy and public services, and reversed the trend.
Britain did not follow suit. There is lip-service paid to similar problems in the UK by ministers. David Miliband famously promised schools “a 25 per cent reduction in inspection … a 40 per cent cut in data submission” – but all their decisions are in the other direction.
In particular, there is little understanding of what the Norwegians, and the other European countries, came to believe about the consequences of centralisation: the sclerosis of decision-making, the dwindling of imagination and the slow collapse of public services. This is partly because the UK political battleground remains stubbornly aloof, sticking to the familiar groove of the tax and spending debate.
In the 1997 and 2001 elections, Liberal Democrats focused overwhelmingly on the problem of under-funding in health, education and other public services. They realised, quite correctly, the central role that these services – and others like them – play in UK life. That argument is not over. There are urgent priorities for more spending. But the NHS alone has also experienced its fastest and biggest cash injection since it was founded. Even the 2005 election battleground was fought over tiny proposed changes in public spending.
The problem is that, despite all the extra money, public services remain largely unresponsive. Public service reform is stalled. The most prominent targets on which central government based their efforts are being abandoned, and the league tables are widely derided. In education, we still shamefully fling primary school pupils into classes of up to 30, and one in five of them leave at the age of 11 without being able to read properly. In health, people can still wait years for diagnostic tests or appointments with consultants.
Of course government and opposition have vested interests in limiting the argument about public services to spending, or the extent of state control – issues where most other European countries have reached some consensus – because they own those debates. The central question of why public services still fail people – why they are so intractable – will not be addressed unless the real reasons are forced onto the debate by the one political force with a coherent understanding of such things.
Liberal Democrats are the traditional exponents of localism. They understand that decisions are best taken as near as possible to the people they affect, that imagination and responsibility is maximised in that way. They grasp, because it is key to the Liberal political tradition, that local control makes things happen – in fact, it is the only thing that ever does.
But even inside the party, the debate about decentralisation tends to be relegated to a worthy sideline about the importance of democracy. It certainly is more democratic for local authorities and public services to be run by local people, who are elected by local people and accountable to them. That is important, but it is not the heart of the debate. The point is that locally controlled public services work, and centrally controlled ones don’t.
According to the Democratic Audit project at Essex University, the UK is “one of the most centralised political systems in the western world.” This pamphlet is about the implications of that for our lives.
Public sector and public services
“You are to be in all things regulated and governed’ said the gentleman, ‘by fact. We hope to have, before long, a board of fact, composed of commissioners of fact, who will force the people to be a people of fact, and of nothing but fact. You must discard the word Fancy altogether.’ ” Charles Dickens, Hard Times
“Be more expensive,” the Liberal local government pioneer Joseph Chamberlain urged his fellow councillors in the 1870s. It was a demand, not that they spend more, but that they be more ambitious. That predominantly Liberal vision of urban pride and innovation is the basis for the libraries, art galleries, sewage and transport systems that remains of Britain’s great Victorian cities.
Our local independence was widely trumpeted – right up until the middle of the 20th century – as the basis for British freedom, compared to the slavish centralisation of the Napoleonic continent. It still seems to inform the UKIP myth of sturdy Anglo-Saxon self-determination. Yet, since the Second World War, and more particularly thanks to the Thatcher, Major and Blair governments, it is no more.
In his recent pamphlet Big Bang Localism, Simon Jenkins uses the example of London, which in 1900 elected 12,000 people to run their local services. By the time Tony Blair was elected in 1997, that figure had shrunk to just 2,000. The rest had been replaced by 10,000 appointees, the creatures of Whitehall, to boards and quangos, running everything from roads and transport to health.
Despite Blair’s promises in opposition, this process has accelerated under his government. The extreme disconnection between the decision-makers and the front line – the main factor in the failure of public service reform – is starkly obvious if you compare the structure of what remains of local government in the UK with other European countries.
The average population of the lowest executive tier is 118,000 in the UK. That compares to 1,500 in France, 5,000 in Germany and 7,000 in the USA. We have 2,605 electors on average per elected official, compared to 116 in France and 250 in Germany. Our local councillors are outnumbered three times over by 60,000 unelected people, appointed by the centre, running 5,200 local quangos that dominate our experience of public services. They are the direct result of the contempt with which Whitehall regards its local equivalents. There is worse to come:
- Over 100,000 people sit on parish councils in the UK, which unlike most of their equivalents in other countries have absolutely no power.
- Elected councillors divide their time 17 hours with the public and eight hours with officials. The quangocracy manages it the other way round: four hours with the public but 11 hours with officials.
- The first Blair term imposed no less than 6,000 targets on their poor benighted local councils and quangos, many of them conflicting, and backed by a battery of cappings, ring-fencing, inspectors and all the panoply of empire.
- There have been various attempts to replicate the NHS in education, creating a directly managed National Schools Service, with the same disastrous intractability at its heart.
The exception to this was the brave and successful moves devolving power to assemblies in Wales and London and a parliament in Edinburgh, which were carried out largely through the auspices of the joint cabinet committee – chaired by Robin Cook and Robert Maclennan – which history I believe will judge to have been enormously important.
Blair and Brown’s chosen instruments of control were central government management targets. These were borrowed from the Thatcher and Reagan governments, but fall into the tradition of Benthamite empire-building, and have created an “explosion” in the auditing business, breaking down every aspect of local government and services and measuring it.
But here lies the heart of the problem. Because as well as adding a good ten per cent to the costs of local services, on top of central auditing costs running at £600 million, this kind of target-setting only provides the illusion of control. Because, under a phenomenon known as Goodhart’s Law, any measure used to control is bound to be inaccurate. Like the school league tables which made teachers concentrate on getting borderline pupils through at the expense of their weaker classmates. Or the hospital waiting list targets that meant NHS managers concentrated on quick simple problems, at the expense of everyone else.
In both cases the people being measured did what made the figures look better, not what they should have done. Inspired by management consultants McKinseys – who have won a favoured position inside Whitehall – bureaucrats believe they can manage the complexity of front line services by concentrating on a handful of measures. Actually, as we now know, these measures are difficult to interpret and have perverse effects on the ground. Like the target designed to measure the time patients take to between being seen and getting treatment in casualty. The result was, for one 88-year-old, a 24-hour wait just to be seen, officially recorded as 30 minutes.
Other hospitals have avoided the target that limits patients’ time on hospital trolleys to four hours, by putting them in chairs instead. Others have bought more expensive kinds of trolleys and re-designated them as 'mobile beds'.
None of the early targets were agreed with either local government or their people the represent. Most were – as it turned out – simply plucked from the air. They are part of a prevailing culture in government that manages complexity badly, rewards and promotes auditing skills but derides and downgrades delivery skills – precisely the opposite of what government needs.
Ironically, the whole idea, which derives from the time and motion pioneer Frederick Winslow Taylor, is increasing rejected by the private sector on the grounds of its enormous inefficiency. As the management pioneer Peter Drucker argues, it de-skills those who are being counted.
There has been a widespread belief at the heart of Labour and Conservative governments alike that central control of large units is somehow more efficient. There are clearly instances where this is so, but it is very rarely the case in administration.
Simon Jenkins quotes a Plymouth NHS trust manager forced to spend £1,500 on a shelf which would cost £100 at a local store, thanks to central regulations and controls. These extra costs are not, of course, recorded as a by-product of the centralisation that is supposed to be bringing ‘efficiency’, any more than the army of auditors is. Even without them, according to the economic historian Robert Dahl, there “is no evidence of any significant economies in city government attributable to larger size”.
In fact, the kind of efficiency imposed on these local outposts is the kind understood by the Treasury – which is the major source of this kind of insidious inefficiency dressed as its opposite: not about the effectiveness of the service, but entirely about the size of the budget. Instead of efficiency meaning the most effective service for the lowest basic budget, we have a system dedicated to the lowest budget and the most basic service.
But one of the by-products of aggressive centralisation is that the people who deal best with the complexity of front line service are sidelined and disempowered. Innovation and imagination is subjugated to central measures and tick boxes. The rise of medication errors in the NHS, a symptom of centralisation and giant units, is a direct result of this, now costing £500 million a year – or twice that including adverse reactions to drugs. Hospital infections, another symptom, cost another £1 billion.
When one person in ten admitted to a UK hospital suffers “measurable harm” as a result – causing extra hospital stays costing £2 billion a year – you know something is wrong in the basic administration.
Health decisions are taken around, for example, whether it is possible to merge already over-large institutions to free up sites for sale on the market. The debacle of the failed merger between three giant hospitals onto the site at St Mary’s Hospital, Paddington, is evidence of how centralised administration subsumes clinical decisions and basic healing relationships to the property market. The externalities caused by giant schools of 2,000 pupils or more are all too apparent.
The direct connection between high costs and centralisation were only too evident in Alan Milburn’s speech as Health Secretary, where he claimed that NHS was succeeding because of the rise in prescriptions. A health service rewarded for how much it prescribes is more expensive to run and less effective. Any GP will confirm that people's problems are often not best treated by drugs.
There are similar issues in the voluntary sector, as charitable institutions like housing associations – and increasingly other charities too – are brought into the same target culture by large government contracts to deliver services. As a result, many of the housing associations – previously the hope of tenants searching for responsive local landlords – have become as labyrinthine and distant as any of the big city departments they have replaced, dedicating most if not all their attention to their central government paymasters.
There is a problem of democratic legitimacy here. The government’s ludicrous attempt to solve this by recruiting 5,000 local representatives to sit on health consultative boards has failed in its two most basic senses. Not all the places were filled, and actually they have no effect at all on the decisions-taken. But a more fundamental problem is whether our services can survive being run in this blind, indirect and authoritarian way – where the very people who make the difference between success and failure are increasingly undermined and constrained.
Private sector and where we live
"One ordinary morning last winter, Bernie Jaffe and his wife Ann [small shopkeepers in New York] supervised the small children crossing at the corner; lent an umbrella to one customer and a dollar to another; took custody of two keys; took in some packages for people in the next building who were away; lectured two youngsters who asked for cigarettes; gave street directions; took custody of a watch to give the repairman across the street when he opened later; gave out information on the range of rents in the neighbourhood to an apartment seeker; listened to a tale of domestic difficulty and offered reassurance..." Jane Jacobs, The Death and Life of the Great American Cities
One side-effect of rigid centralisation is that local institutions of all kinds become subject to the drift of appearance over substance that is characteristic of national institutions. I know one Probation Officer, for example, who has 600 clients as her personal responsibility. She, and so many other public servants delivering services locally, become the mere unthinking deliverers of national targets. The vital face-to-face inter-action between professional and client, as much as between doctor and patient or teacher and pupil, becomes subsumed under micro-management that leaches the institutions we rely on of meaning.
What is less well understood is that the same thing is happening to our towns and cities, and for the same reason – the massive centralisation of decision-making by companies and retailers. That is the force driving the ‘ghost town’ phenomenon, emptying communities of local post offices, banks and pubs, or transforming the places we live into bland identikit centres where the economic and buying decisions are taken by distant purchasing executives, and where shopkeeper jobs have been replaced by low-paid check-out staff.
The USA is not an administratively centralised country – quite the reverse – but it is miserably centralised in its business decisions. So we know where this trend is heading, because we can see the dead town centres in America, where there is now 38 square feet of retail space per person, much of it abandoned. Town centres suffering from this economic centralisation have three problems:
- Multiple retailers bleed local economies dry of money: earnings do not re-circulate unless there is a basic bedrock of locally-owned business to trade with. Local authorities that accept large new retail developments on the grounds that they are worth a certain amount of money forget to ask whether than money is likely to stay put.
- Consumers get less choice than they would with locally owned shops that are, theoretically at least, able to stock fresh local produce if they want to.
- The social glue provided by real local shops that holds communities together – which prevents crime, spreads responsibility, builds social capital and even tackles loneliness – is dissipated.
But because Labour and Conservatives alike became in office contemptuous of local initiative of any kind, they slavishly adopted policies that allowed a few retailers to build up semi-monopolies in regional and local markets. The Office of Fair Trading believes any market share above eight per cent to be damaging to the retail supply chain, yet successive governments have allowed Tesco to build up a share of over 30 per cent.
Whitehall centralisers speak lazily about people getting what they want, but actually they have decreasing choices. A recent survey for Spar found that 80 per cent feel that a shop ten minutes' walk away is more important than a police station, church or pub, but that choice is not offered.
Those communities not favoured by the retail multiples suffer instead a slow strangulation followed by a ‘tipping point’ of economic collapse. Each closure is bad enough on its own: a quarter of all bank branches and fishmongers' shops disappeared in the 1990s. But when the number of local retailers falls below a critical mass, the quantity of money circulating within the local economy suddenly plummets, as people find there is no point trying to do a full shop in town.
Nor is it just post offices closing which is sucking the life out of towns and villages, it is the loss of open space, community buildings and meeting places. London alone has lost the equivalent of 1,428 football pitches, or seven Hyde Parks, since 1989. Also:
- Wholesalers, the lifeblood of small local shops, have closed at a rate of six per week, while new registrations of small scale food manufacturers have fallen by 12 per cent.
- As many as 800 communities in Britain have no bank left, and over a thousand have only one. In the decade to 2002, Britain lost one third of its bank network.
- Up to 20 traditional pubs are closing every month.
Taken together this public sector sclerosis and private sector retrenchment are a devastating blow to local life in the UK, helped by punitive health and safety regulations – products of a cabal of corporations, central bureaucrats and risk-averse insurers. It represents a slow emptying of our institutions, a destruction of our way of life as tangible as any terrorist attack, a rotting away of the nation of shopkeepers – of imagination, innovation and pride at local level – to a miserable, slavish acceptance of whatever narrow aspects of life our centralised systems choose to deliver. Taken together, this is impoverishing our culture and the services and institutions we rely upon. It is also the direct result of Labour and Conservative centralisation over half a century.
What this means and what we can do
“I am beginning to see the defects in all this devolution stuff.” Tony Blair, quoted in Paddy Ashdown’s diaries, complaining that Scotland was proposing to go its own way on student fees
There are reasons for centralising some decisions. This is not an extreme condemnation of any decision-taking at national level. Quite the reverse: Britain has suffered from half a century of obsessive centralisation, a fear of local innovation, and an illusion of control.
It may not amount to a conspiracy, but there are aspects of one. Conservative-controlled Bury St Edmunds is currently banning locally-owned business from their new shopping development on the grounds that they are ‘untidy’. Margaret Thatcher’s Environment Secretary Kenneth Baker admitted that, while he rate-capped effective councils, he refused to intervene in Militant-run Liverpool in order to prove the incompetence of local government.
But if this is no conspiracy, it is certainly a disease of complacency which has all but seized up imaginative government. It is a debilitating sickness which happens when decisions about nearly everything to do with local services are made by mandarins, their consultants and their appointees, and when decisions about what we should be offered to buy, and how we live locally, are made by high-paid corporate executives, often in other countries.
At the heart of all this is a decadent metropolitan snobbery. The contempt that the City of London feels for industry and small business, and the contempt that Whitehall civil servants feel for their local counterparts, has been swallowed whole by Labour and Conservative governments alike.
The result is public services that are grinding to a halt thanks to disempowered officials and conflicting targets, local and national institutions sucked dry of meaning. It means the transformation of local energy, and public service commitment, into the hopeless delivery of national targets in the approved, narrow manner. It means a serious and increasing threat to the very engine of public service – the healing and educative relationship between doctor and patient, teacher and pupil.
Most of all it means a dwindling of local responsibility, because the technocrats do not deem us worthy to share it. A Liberal Democrat commitment to localism is more than just an timely attack on the assumptions of technocrats, it is about devolving responsibility as well as power. Behind it lies a radical new offer from politicians to the public. Not any more ‘ask and you shall receive’ – nobody believes that any more, least of all the voters. It says: we can achieve these things, but not without your help.
Despite the government’s rhetoric about active citizenship, central targets make it almost impossible to experiment with working as equal partners with patients, parents and their neighbours – even though the latest research suggests that this is the key to reducing crime and ill-health. That is the real story of the massive crime reduction in New York City. The Treasury’s Wanless Report also estimates that public engagement in good health might save the NHS £30 billion a year by 2022, which is half its current budget. Progress in these areas is possible only with genuine local control, partly because irrelevant narrow targets now prevent it, partly because only local initiative can deal with frontline complexity, and partly because nobody distrusts the public more than centralised technocrats.
Instead we face the next logical extension of central power: an increasing clampdown on the failure of ordinary people to conform to Whitehall tidiness. Geoff Hoon wants voting to be made compulsory. There is even a government-inspired debate about whether parents should be prosecuted for failing to provide approved sex education. And despite the clear preference by parents for informal childcare, Ofsted has announced they will be inspecting step-grandparents who regularly look after their grandchildren.
This is tyrannical, but it is not just tyrannical. It is deeply ineffective.
This is not a plea for decentralisation as we have known and loved it so far – an abstruse debate about the precise administrative arrangements and boundaries for timid devolution from Whitehall. Nor is it just the dramatic shift of power to parishes, districts and cities. Nor just the abolition of quangos or the devolution of the NHS to elected local authorities. It is an outline of a policy that articulates a whole critique of centralisation that goes deeper than we have done before, recognising that:
- Big administrative systems and institutions are deeply inefficient and ineffective.
- Local people and frontline staff have invaluable experience and skills and are more able to solve problems than diktat from Whitehall.
- Far from efficiency savings from centralisation, we are stuck with horrendous externalities – damaging mistakes and hospital bugs in big hospitals, disaffection and failure in factory schools.
- People want relationships with their local doctors, police, teachers. They know face-to-face institutions deliver, while centralised institutions and private monopolies don’t.
- Nothing that professionals do to make us well, educate us or tackle crime will work without the active involvement of those they are trying to help.
- People want their towns to be distinctive and to defend their high streets against identikit monopolistic megastores.
This policy – let’s call it ‘Decentralisation Plus’ – is about why government is so ineffective, why prisons are so useless at reducing crime, why the NHS is so useless at preventing illness, why the welfare state is so useless at reducing poverty. And why Westminster is so plodding in its delivery of real change.
We will have to argue that decentralisation is not an attack on equality. One look at the vast health inequalities delivered by the centralised NHS should suggest otherwise. The recent pamphlet by Nick Clegg and Richard Grayson also found that the most decentralised education systems in Europe are also the most equal. Actually, centralisation enables elites to capture the source of all power and to entrench their control of resources.
We will also have to persuade sceptics that decentralisation does not undermine efficiency. A recent study of police forces shows that the big national ones perform less well than the locally managed ones. As Simon Jenkins puts it: “The plenipotentiary state of New Hampshire has only half the population of the capped and cribbed county of Hampshire in England.” We will have to persuade the political culture that the task of the centre, apart from foreign affairs and defence, is to set the framework, set basic standards, and help local effort succeed.
Commitment to Decentralisation Plus means no shift to the right, any more than it means a shift to the left. And it shows up the narrow thinking of UKIP, who only care about Brussels centralisation, but collaborate happily with the deeply un-British Whitehall variety.
It requires policies that shift the balance of taxation from central to local, that launches an independent appeals tribunal about local decisions, ends league tables, gives a power of general competence to councils, beefs up the Competition Commission, and supports small business and monopoly-busting local retailers.
Most of all it requires a shift in the culture of government. It is the historic destiny of the Liberal Democrats to provide this.
Liberals believe in the primacy of the individual. They do not believe they can be sacrificed in some circumstances to the requirements of the state (Labour) or the market (Conservatives). But that carries within it an important implication for public service. The magic ingredient in health, education and all the other vital functions of what ought to be local government is provided by individual frontline staff, using their experience and skill, in relationship with those they are assisting. Success is about human beings interacting with each other, dealing at first hand with complexity, not computerised tick boxes.
If those individuals use their training and imagination skilfully, they will succeed. If they don’t, then no amount of centralised targets, Whitehall initiatives or McKinsey style systems will make their work effective.
This is the original insight of privatisation, which neither Labour nor Conservatives seem able to learn: innovation requires freedom to operate. Progress is made, things happen, when the right people are appointed, trained and given responsibility. That can only happen locally. The alternative is stagnation of the kind Britain now suffers from in so many areas of life.
David Boyle is a member of the Federal Policy Committee and the Meeting the Challenge Working Group. He is the author of The Tyranny of Numbers and Authenticity. His latest book, Blondel’s Song, was published in the summer. www.david-boyle.co.uk
The best description of Goodhart’s Law (“Any observed statistical regularity will tend to collapse once pressure is placed upon it for control purposes”) is in K. Hoskin (1996): ‘The awful idea of accountability’ in R. Munro and J. Mourtisen (eds) Accountability: Power, ethos and the technologies of managing¸ Thomson, London.