Alan Milburn – 2003 Speech on Localism

Below is the text of the speech made by Alan Milburn, the then Secretary of State for Health, on 5 February 2003.

I would like to thank the New Local Government Network and the New Health Network for hosting today’s event. They are at the forefront of new thinking around public service reform and debates about what should rightly be done centrally and what locally. It is an important indication of where that debate is going that they have jointly hosted today’s discussion.

This speech is the first of two speeches I will be making over the next week on the theme of public service reform. My speech next week will focus on choice in public services. Today I want to cover the importance of local accountability and local control in public services.

The context is this. Any government succeeds or fails according to two simple tests. One whether it has a coherent vision for the country. Two, whether it can make progress towards realising that vision: whether the country is moving forwards or backwards.

We are now at a critical juncture for this Labour government. We have been in power for almost six years. Labour dominates the political landscape in a way quite unimaginable even a decade ago. The Conservatives are weak, divided, uncertain. And yet the decisions we take on reform now will determine the course of politics not just for the remainder of this Parliament but I believe for the remainder of this decade.

Of course the decisions we make in relation to Iraq and the Euro are hugely important. They will leave their mark for years to come. But it will be the bread and butter issues on the economy and public services that will shape public views.

Here we need to chart a clear course, both in setting our vision and in making progress towards it. On both counts we face a choice. In essence it comes down to this: to consolidate around what we have done to date, to pursue the cautious incrementalism that sometimes characterised our first term in office. Or to discover new momentum towards a more fundamental and radical transformation of our country. It is the latter course I believe we must choose.

Today I want to set out how we can transform public services in our country. And in so doing I want to make the case for what I will call ‘Real Localism’.

The Government has made public services the key political battleground in our country. We have staked our reputation on being able to deliver the improvements in public services that have escaped governments for decades. And we have embarked on a high risk but necessary strategy of putting up taxes in order to raise resources for the health service and other key public services.

We have been right to do so. But we need to recognise that we have massively raised the stakes. Collective provision of public services – whether in health, education or local government – is under threat as never before.

The Right – in the media and in politics – believe the game’s up for services that are collectively funded and provided. In today’s consumer world they argue that the only way to get services that are responsive to individual needs is through the market mechanism of patients paying for their treatment.

It is easy to dismiss the Right’s policies as the last twitch of the Thatcherite corpse. But if we fail to match high and sustained investment with real and radical reform it will be the Centre-Left’s argument that public services can both be modern and fair, consumer-orientated and collectively provided that will face extinction.

I believe that we can win the argument for public service investment and reform but to do so we have to accept that the era of one-size-fits-all public services is over and that the Centre-Left’s approach today should be based on decentralisation, diversity and choice.

We can win this argument for three reasons.

Firstly, in this era of globalisation public services are necessary to provide security, foster inclusion and promote prosperity. People today feel more insecure than ever. This can be a reflection of their own economic circumstances or a recognition that there are new and powerful forces at play – economic, social, cultural – which affect every developed country and impact on all our lives.

Greater economic uncertainty is inherent in globalisation. Crime, terrorism and international tensions have heightened this sense of personal and national insecurity.

Global insecurity makes the case for social and economic institutions which strengthen aspects of personal security. In this climate, strong values-based institutions which reinforce people’s sense of community become more rather than less important. The NHS is just such an institution.

And in any case, medical advance and technological change is making the NHS more, not less, relevant. When health care can do more but costs more, where no-one knows when or whether they may become ill, a National Health Service providing services for free, based on need not ability to pay, can provide a rock of stability in an otherwise uncertain world.

Secondly, we can win the argument because the NHS is now making progress. It has 40,000 more nurses and 10,000 more doctors. For the first time in four decades over two consecutive years the number of general and acute beds has risen. The number of patients waiting over 12 months for NHS treatment is down 59%. A year ago the maximum wait for a heart operation was 18 months. Today it is 12 months. By April it will be 9 months. Over 95% of patients with suspected cancer are now seen within two weeks by a specialist when many used to have to wait months.

In the last few years death rates for cancer have fallen by 6% and for heart disease by 14%. The latest reports show the survival rate for the most common forms of childhood cancer now rank amongst the best in the world.

There is still a long way to go. But the momentum is forwards not backwards. Of course, the Right’s strategy – having starved the NHS of resources for decades – is to deny that the NHS can ever translate extra resources into results for patients.

But the fact is the money is working. Since 1997, one million more patients are being admitted to hospital for an operation. A further one and three quarter million patients are being seen as outpatients or in A and E. The number of prescriptions by GPs rose by 11% last year and is up 13% this year. Prescribing of cholesterol-lowering drugs – which prevent heart attack- has doubled in the last few years. And for the record, whilst hospital bed numbers are rising management costs are falling.

The third reason for my optimism is that the investment is committed for the long term. The NHS is assured of high and sustained levels of resources up to 2008. And, after decades of stop-go and short-termism, we have a ten year NHS Plan of reform to match the high levels of resources.

The NHS will not make progress unless the two go together. Reform is too often characterised by its enemies as an attempt to undermine NHS values. But this confuses ends with means. Labour’s reform programme is all about preserving NHS values by changing NHS structures. The ends – care for free based on need not ability to pay – remain. The means – a one-size-fits-all nationalised industry monopoly approach – must change.

There are four principal reasons for that.

First, the uncertainty engendered by globalisation is driving people to take refuge in what they know – in their families, their communities, their regions. People find shelter in the very local because the local can be influenced even if the global can not.

The way politics is structured needs to reflect that yearning for local control. In this country the advent of locally elected mayors, renewal of local government and, I hope and believe, the birth of regional government will give life to localism. Public services too, in the way they are structured need to reflect the growing public desire to control what they know.

Second, for all its great strengths – its staff, its public service ethos, the great advances it has brought in public health – the NHS has a profound weakness too. It took power away from local communities and vested it in the central State. Of course, this brought huge benefits but at a real cost. A gulf grew up between local communities and the running of local services. Today we must find a way to bridge that gulf.

Ours is a small country with big differences. It is not uniform. It is multi-faceted and multi-cultural. Different communities have different needs. With the best will in the world, those needs cannot be met from a distant Whitehall. They can only be properly met locally not nationally.

Third, health services are delivered locally not nationally by over one million expert staff whose principled motivation and ethos of service private sector organisations can only gaze at with envy. The NHS is a high trust organisation. It needs to be organised in such a way that trust can be enshrined at every level; trusting people to innovate and take initiative for themselves. In the end I don’t treat patients. Whitehall doesn’t provide care. That is what hospitals, health centres and surgeries do. And that is where power needs to be located. On the frontline. The simple truth is the NHS works best when it harnesses the commitment and know-how of staff to improve care for patients.

Fourth, ours is the informed and inquiring world. Universal education and now the internet are redistributing knowledge. In a consumer society more people are demanding public services that are responsive to their own needs and offer greater personal choice. This is a long way from the one-size-fits-all, take-it-or-leave-it public services that were the product of the 1940s. Then expectations were lower, deference was greater. Now it is the other way round. Sustaining public confidence in public services means they need to dance to the tune of the consumer.

Together, the push to the local and the pull of the consumer call for a new model of public services. One where patients and parents have greater choices over the services they use and where communities have greater control over how they are provided.

The new political battleground then, is around the politics of localism. The Right desperately want to claim this ground. In the process they will want to paint Labour as the Party of the centralised, out-of-touch State; the Party of Government-knows-best rather than consumer choice; the Party of old style, monolithic, unresponsive public services.

We pick up this mantle at our peril. And yet for reasons of history – both ancient and modern – Labour could easily have it laid upon us. At the end of the Second World War it was Labour that created big national institutions to tackle the country’s big national problems. Whilst across Europe other Socialist and Social Democratic Parties were championing community involvement and ownership – and indeed Left thinkers such as GDH Cole, RH Tawney and others from the mutualist tradition were advocating a similar approach here – in Britain we ended up with too a close an affinity between State ownership and public ownership.

Whilst the British post-War welfare settlement assured all our citizens of universal provision – particularly in health – it defined equality as uniformity in provision. It was easy to be convinced that by securing one we had inevitably secured the other. But just as communities are different, health needs are different too.

Uniformity of provision has not guaranteed equality of outcomes. Indeed health inequalities in the five decades since the NHS was founded have widened not narrowed. Too often even today the poorest services are still in the poorest communities.

The case for localism over uniformity is about shaping services more effectively to tackle health inequalities in our society every bit as much as it is about shaping them to be responsive to the concerns of the individual.

In our first term Labour’s approach was to try to do that from the top down through a plethora of service targets, inspection regimes and national standards. There is little doubt that many of these were needed to counter the effects of two decades where the Tories had fragmented services and, in the NHS, delivered a lottery in care.

And for all the concern about targets no-one should kid themselves that we would be making the progress we now are without the targets that we set then. Waiting times for treatment – which had been rising for decades – are now falling on virtually every indicator because targets focussed the health service on what is the principal cause of public concern about the NHS. Standards of reading and maths in primary schools are rising because teachers and parents now support the literacy and numeracy hours timetabled every day in every school.

Arguably it should not have needed Whitehall to focus our health and education services on these key objectives. But a monopoly public service can all too easily become ossified and immune, if not resistant, to public concerns. External pressure from above therefore, can be an important means of focussing efforts to address public concerns. So can the pressure brought by individual patients exercising choice and by enhanced forms of local accountability. In the next period the emphasis needs to move from top down pressure to these more direct forms of engagement between those providing public services and those using them.

Targets work best when they are properly focussed. Which is the reason, incidentally, why the Priorities and Planning Framework we issued late last year to local health and social services contained not 400 targets as some claim but just 60 or so for the next three years.

National standards are necessary to ensure equity. No-one who is serious about securing fairness wants to go back to the days when cancer treatments, for example, were available in one part of the country but not in another. So targets can work but targets can go too far as well.

Targets fail when there are too many of them and when they inhibit the ability of local staff to shape local services to meet local needs. Disempowering frontline staff – whether it is doctors or nurses, social workers or police officers, teachers or managers- is not the best way to run a public service. It is right to set standards nationally but it is wrong to try to run the NHS nationally.

Those of us who have had responsibility for frontline public services over the last six years realise that whatever we thought possible on the 1st May 1997 – however much we believed that taking control of the commanding heights of the central state was enough – we now know that finger-wagging from Whitehall can not deliver public service improvement any more than could the old laissez-faire mentality of the Tories’ NHS internal market.

A better balance is needed. Whereas, some suggest there is a choice to be made between national standards and local autonomy I believe that is a false dichotomy. The experience from elsewhere in Europe in the health sector and from across the developed world in other economic sectors is that securing improvements in performance requires both.

As the Prime Minister’s four principles of public service reform rightly acknowledge, in any large organisation – public or private – there are some functions only the centre can perform: fair allocation of resources; setting of standards; monitoring of performance.

And it is precisely because we have a framework of national standards and inspection in place that the pendulum can now swing decisively towards local control and greater individual patient choice. I believe these must become the principal drivers of public service improvement in the next period.

We are now in transition from the old order to the new. As we set out in the NHS Plan the more performance improves the more control local health services will assume. Rather than trying to drive improvements simply through top-down performance management, the transition will be towards improvements being driven through greater local autonomy in which PCT commissioning, new financial incentives and the choices patients make become the driving force for change, backed by scrutiny through independent inspection. That transition will take time. It will require careful management and a new, more mature understanding about the relationship between government and the health service, where the government does less and the NHS does more.

That transition has now begun across the public services. In local government the White Paper produced by Stephen Byers represented a turning point in the relationship between central government and local councils with the prospect of more freedoms, flexibilities and powers. The Deputy Prime Minister John Prescott is now taking this further. Similarly, in the health service from this April, three-quarters of the total NHS budget will be controlled by locally run PCTs with three year budgets. In turn PCTs will be able to devolve resources to their constituent practices. None of the 30% growth PCTS are on average receiving has been earmarked. They will be free to commission services from the public, private or voluntary sectors.

So we have been moving from a centralised command and control model to what has been called new localism. The issue is now whether we can make this localism real and permanent. Whether we can go beyond a relationship where localities receive a few crumbs of decentralisation from the top table of central government and are expected to be grateful. Or whether we can make localism irreversible through a shift in accountabilities, ownership and control out of the hands of the central state and into the hands of local communities. This is what I mean by real localism.

I believe we have the opportunity to transform governance in our country. To do so requires grasping some thorny nettles of reform.

It means placing limits on the role of Whitehall. We could do that through exhortations to good behaviour on the part of Ministers and civil servants. We could be much clearer about what the role of the centre of government is about; what the role of the individual government department is about; and what, together, is the best role for Whitehall to play. All of these, in my view, are needed. Some have already begun. But I do not believe they will be enough.

Central bureaucracies make work. They make demands. Politicians – for good reasons, not bad – want to get their hands dirty. We want to pull levers to make changes happen. And that places further pressure on local services. It is naive to believe that a self-denying ordinance in Whitehall will be sufficient.

If we want to place limits on the role of Whitehall we will need limits on the size of Whitehall. The time is right in my view for a fundamental re-assessment of what functions Whitehall needs to perform in an era where the premium is now not just on making policy but on securing delivery. Where there is an acceptance that securing improvements in public services requires a re-balancing between the power held by central government and the power held by local communities.

The nature of Britain’s unwritten constitution means all governments have experienced tensions between competing centres of power. It is not a new phenomenon. Throughout time, there has been a struggle for power within the British constitution: between barons and Monarchs; between the Church and the State; between the rights of Parliament and the Divine Right of Kings.

It can be seen in the continuing struggles over powers between the House of Commons and the House of Lords – where history seems determined to repeat itself, as Marx once said, “first as tragedy and then as farce”. And in the context of last night that is Karl Marx not Groucho.

And on the issue of Lords reform let me just say: surely the priority should be to address the imbalance between the centre, the region and the local rather than just concentrating on the balance between the Commons and Lords. Getting that balance right – through greater devolution – could then, in my view, be reflected in a reformed second chamber constituted from the different nations and regions of our country.

Today competing tensions exist in a more modern context but they exist nonetheless. Those tensions exist between Europe and the Nation State; between government from Westminster and Whitehall and devolved administrations in Scotland, Wales and Northern Ireland; between the decisions of Parliament and the interpretations of judges; between power best exercised from the centre and that best exercised by local communities themselves.

For all the reasons I have set out the days of Whitehall – or any one part of Whitehall – knowing best are over.

My argument is not that Government itself is bad – that is not true. Government has an important role determining policies and priorities, setting and monitoring standards, raising finance, ensuring value for money, assuring equality of access and opportunity. The alternative to government – or its proxy – doing these things is to leave them to the invisible hand of the free market, which as Gordon Brown was rightly saying only on Monday, is often an insufficiently effective mechanism for so doing.

My argument is that government at the centre has to be big enough to perform its function but limited enough to curtail its ambitions. All bureaucracies have a natural tendency to grow, to replicate themselves. With the Crown prerogative and an unwritten constitution, we have no basic law setting out the roles and responsibilities of governments at local, regional and national levels, no constitutional court, no real fetters on the power of central government to accrue powers to itself save those exercised through Parliament and Judicial Review.

In these circumstances, it is for those who believe in progressive reform of public services to ensure real power shifts from Whitehall to local communities. And power moves when ownership transfers.

This involves a fundamental change in governance. The centre will always be strengthened and the locality weakened so long as the one has the mandate of democratic accountability and the other does not. That is why I believe NHS Foundation Trusts are so important. They are not about relinquishing a little central control. They are about relocating ownership out of the hands of a State bureaucracy and into the hands of the local community.

In the process they relocate accountability – so that hospitals can look outwards to the communities they serve not upwards to Whitehall. That will help get local health services better focussed on meeting local needs and addressing local inequalities.

NHS Foundation Trusts will usher in a new era of public ownership. They will be owned and controlled locally not nationally. Modelled on co-operative societies and mutual organisations, these NHS Foundation Trusts will have as their members local people, local members of staff and those representing key organisations such as the PCTs. These members will be its legal owners and they will elect the hospital governors. In place of central state ownership there will be for the first time in the NHS genuine local public ownership.

It is not and it has never been my intention to retain these benefits solely for an elite few. The freedoms they offer provide a new incentive for all to improve. We do not advocate that any NHS hospital should be left to sink or swim. That is why we have put in place help and support for struggling services to get better. In time, all NHS hospitals could gain Foundation status.

I believe NHS Foundation hospitals will help bridge the gap between public services and the public who use them. With a clear public benefit purpose NHS Foundation Trusts can provide a model of local control and ownership that others could follow. They are localism made real. I believe they provide a model that could apply to other aspects of public services.

Community-owned NHS Foundation hospitals will allow us to tap the great reservoir of enterprise and knowledge which exists in local communities. Some say that allowing local people to be elected to hospital governing boards will always favour the sharp-elbowed middle classes. Yet in my constituency – just like any other – the people who make the biggest difference on local council estates are people from those council estates. What we need to do is open up public services in such a way that they can be properly representative of the communities they serve.

For example, where New Deal for Community boards have been set up to oversee regeneration in some of the poorest parts of our country turnout in the board elections has been much higher – in some cases double – the turnout for the local council elections.

Democracy is by no means perfect in practice but it is not a bad principle. Transferring ownership from the central state to local communities – giving local people a stake and a vote in the public services they use – is the best way of moving localism beyond a gift conferred by Whitehall – which can be taken away by Whitehall – into a permanent feature of our democratic landscape.

The implications of this approach are potentially far-reaching. In other countries with a stronger democratic input into local services, for example, local communities are able, through referenda or through local elections to agree to raise local funds to invest in the public service infrastructure. In the USA local bond issues are common. Some are issued by a local government authority which then lends the proceeds to the local hospital. Others are sanctioned by voters and issued by the hospital district direct. In this way, these health care systems can overcome the constraints either of central government capital rationing or the straitjacket of particular forms of procurement.

And in the context of our new approach to localism in this country there is already discussion of these issues here.

Alongside self-government in Scotland and Wales and the plans for regional government that John Prescott is leading in England, I believe that such devolution and democratisation of public services can point the way to a more pluralist and decentralised Britain.

The ramifications are profound. Where there is greater local control – as the Prime Minister, Chancellor and myself have all argued – there will inevitably be greater diversity. The one flows from the other. I think that is right. The NHS cannot survive as a monolithic top down centralised system. Without greater diversity the NHS cannot be more responsive. Without responsiveness there cannot be public confidence. Without public confidence the NHS will not be sustainable.

Despite fifty years of hard evidence that uniformity has not produced equality, the traditional fear on the Left has been that diversity must bring inequality. But it is worth recalling what R.H.Tawney wrote in his 1931 book Equality:

“equality of provision is not identity of provision. It is to be achieved not by treating different needs in the same way, but by devoting equal care to ensuring that they are met in the different ways most appropriate to them, as is done by a doctor who prescribes different regimens to different constitutions, or a teacher who develops different types of intelligence by different curricula. The more anxiously, indeed, a society endeavours to secure equality of consideration for all its members, the greater will be the differentiation of treatment which, once their common needs have been met, it accords to the special needs of different groups and individuals amongst them.”

Diversity, in other words, can bolster the pursuit of equality rather than undermine it.

The evidence from the specialist school programme shows that diversity and choice of provision delivers a real return not least in poorer communities. Specialist schools recruit on a broadly comparable basis to non-specialist schools in terms of deprivation and test results at age 11. Yet GCSE performance in specialist schools was six percentage points higher than in non-specialist schools – 55 per cent to 49 per cent, in terms of those gaining five or more good passes. Research also shows that the longer schools remain in the programme, the higher the rate of improvement. And on recent measures of value added performance – which allow comparisons to be made between schools with different intakes – specialist schools outperform non-specialist schools.

Diversity is not a stranger to other left-leaning countries. Whereas in the UK’s health care system there is uniformity of ownership, in many other European countries there are many not-for profit, voluntary, church or charity-run hospitals all providing care within the public health care system. There are private sector organisations doing the same. As other European nations testify there is no automatic correlation that tax-funded health care has to mean health care supply run purely by central government. That is why I believe tax funded health care in our own country can sit side by side with decentralisation, diversity and choice.

Labour’s objectives – social justice and opportunity for all – remain our mission. Our means of delivery however, must now change. We can preserve values and yet still change structures. We recognised this when we got rid of the old Clause 4 from our Party’s constitution. We did not change the values in which we believed but we renewed our Party’s appeal as a result. We now need to end the old Clause 4 approach to public service delivery. We must not abandon the values and ethos of public service but – through local control and ownership, diversity and choice – we must now reconnect public services directly to the public that they serve.

The relationship between citizens and public services in this 21st Century should be based on principles of decentralisation and empowerment. In health, in education, in housing, in local government and elsewhere we need to decentralise and empower staff and citizens alike. We must decentralise from the nation to the region. From Whitehall to the town hall. We must decentralise from local councils to local schools and to local housing estates. And in the NHS we must give communities more voice as well as giving patients more choice.

These are the building blocks of real localism. The challenge to government is not whether Ministers can use the rhetoric of locality but whether we are now all prepared to live – and govern – with the reality of localism. I believe we should.