John McTernan: Ed Miliband’s big, bold plan

Ed Milibands speech on public service reform was revolutionary. Picture: Getty

Sometimes a major moment in politics is passed over rapidly, noted, but not understood. Only in retrospect is its importance fully appreciated. We had one such moment this week. Ed Miliband had his Clause 4 moment. His speech on public service reform was genuinely revolutionary. If Labour gets elected nothing will be the same again. This speech set out the third leg of Milibandism. Before examining what Ed promises for the public sector, it’s worth remembering what the other elements are.

The first is an economic critique – a response to the changed economic terrain which was, in Miliband’s view, not created by the recession but exposed and exacerbated by it. The UK has seen an explosion in self-employment, and lower wages in that sector. In addition, the shape and nature of poverty has changed with half of all poor households in work. This, in Miliband’s sharp phrase, is the betrayal of the British promise. The answer lies not in more tax and spend – the traditional route of redistributing tax revenues. It lies in interventions in the labour market to prevent – where possible – the poverty even occurring in the first place. This approach, termed “pre-distribution”, is symbolised by the Living Wage – a deal where employers receive tax breaks to give workers higher wages. It’s a win-win. Taxpayers save on in-work welfare benefits and extra cash for the low-paid boosts economic demand.

Second, he has highlighted a cost of living crisis. Talking about this has given him an emotional connection with voters and a neat retail proposition – an energy price freeze and an agenda that has spooked the coalition. But that’s not the point. Miliband was mocked for his attack on predatory capitalism early in his leadership. It’s as if the behaviour of companies and the market is like the weather – beyond our control. Well, it is ours to control, says Miliband, and we must reform capitalism. Indeed, it has always been the historic task of social democracy to save capitalism from itself. Energy markets will be re-regulated. Banks broken up and new entrants encouraged.

Now, in his boldest step yet, Miliband has turned to public services. He pointedly says that you cannot attack vested interests in the private sector but ignore those in public services. This will be uncomfortable for many in the Labour Party for whom the interests of producers of services still come first. It is yet another signal that Ed Miliband has no interest in being an anti-Blair politician, defining himself against the Blair/Brown government. Nor is he merely the continuation of New Labour under another label. Ed understands that Tony Blair was for his time, and that he has to win as himself on his own terms with his own agenda.

The reform agenda has three strands. First, a massive transfer of public finance from Whitehall to counties and city regions. It has been known for the last decade or so that multiple government agencies operate in the same areas and spend billions overlapping and potentially duplicating services. No-one has worked out how to make the silo services work together. Miliband has cut the Gordian knot by creating one pot and promising it to local government with funding agreements for 3-5 years. But there’s a kicker. The money will be top-sliced on the way through. Labour will consolidate the public finances, so it will cut spending – but local areas will have control over shaping the services they can afford.

The second move is a huge expansion of access to information. What is known about you and your family by government will be accessible to you. This is a bet on the power of, to coin a phrase, LittleData. Teachers keep assessments of pupils, parents should be able to access them too. The same is true of health data – particularly for the growing number of people with chronic conditions. Patients will be able to be become agents – actively managing their own conditions. Miliband sees people power, patient power, parent power as a digital dividend. Information is the true basis for choice. The better the quality of information citizens have, the smarter the choices they can make for themselves and their families.

But information and choice are not sufficient on their own, argues Miliband. Voice should be added to choice, but an empowered voice – rich with information, but strong in options for action. The information age strengthens the hand of individuals, but it also creates new opportunities for networking around interests and localities. The smartphones we carry aren’t simply phones with cameras and video-screens attached. They are the building blocks of new forms of accountability and community organisation. The best judge of whether a school is thriving or failing are parents. Too often help or inspection only comes after catastrophe. Ed’s pledge here is that when parents see a school failing they will have the right to call an intervention. In other areas, networking will lead to new forms of service provision as information and personal budgets are pooled.

The glory of what Miliband proposes is its sheer creative anarchy. New Labour tried to down-change and it worked – up to a point. Thatcher tried market-driven reforms and they worked – up to a point. Miliband rejects neither as a tool, but sees the space for people-driven reforms to make a transformative change. Will it work? In some places it will be a huge success, in others a failure. Too much public service reform in the past has been about uniformity of approach – doing the same thing the same way, or uniformity of outcome – the same result everywhere. Miliband is aiming for uniformity of freedom. It’s brave but it’s right. We have tested to destruction the model of imposing change, in Thatcherite and Blairite forms. For Miliband the race to the top will be fuelled by difference, by local pride. It’s big and it’s bold – and it might just work.