Francis Maude – 2005 Speech on Social Reform and the Conservative Party

The speech made by Francis Maude on 28 November 2005.

Eight years ago Tony Blair understood something rather important. He understood that people want Britain to have a government committed to a strong and competitive economy, to first class public services, and to a cohesive society where no one is left behind or left on their own. There was indeed such a hunger, and he persuaded them that his would be such a government. Now people feel let down, and there is now widespread disillusion with politics.

The task facing the Conservative Party under its new leader is to show that we are a credible and appealing alternative Government that both wants and is capable of delivering the objectives set out by Tony Blair, and which his Government has failed to deliver, largely because Gordon Brown has blocked the way. The means we propose to deliver these objectives must be authentically Conservative measures, based on well-tried principles, but applied to contemporary Britain.

I want to talk tonight about the second objective. The first is pretty obvious really. There is today a more competitive global economy than ever. The statistics are well known to the point of triteness: China’s insatiable appetite for half the world’s steel, cement and cranes; the opening up of China’s heartland when ocean-going ships can trade a thousand miles up the Yangtze in a few years’ time, with an almost infinite source of cheap labour; the one million engineering graduates being produced every year in India. We all have our favourite lists.

The simple fact is that Britain’s competitive position is deteriorating. The World Economic Forum and other league tables of competitiveness are not some kind of random guesswork. They reflect real factors and real considerations. Gordon Brown seems to have had a disarmingly naive view that if Labour accepted the outlines of the Thatcher/Major economic reforms and gave the Bank of England independence, then Britain’s economic future was assured. An optimal state of economic efficiency would have been attained and additional tax and regulatory burdens could be painlessly absorbed.

But just as there is no successful business today that believes that optimal efficiency is ever achieved, that steady-state management is ever an option, we should not delude ourselves that anything other than continuous economic reform can give Britain a serious economic future. Britain needs constant supply side reform to ensure that we are able to compete. It is no good simply assuming that because Britain is currently more competitive than much of the EU therefore its position is forever secure. The competitive gap against our EU partners is closing, and against the rest of the world is widening.

This is not the time or place nor am I the person to set out detailed policy prescriptions. But the questions to be addressed are clear. What is the right tax framework to attract investment to Britain? What needs to be done to ensure that the Labour market is as flexible as it can be? How do we constrain the apparently ineluctable flow of new regulation so that the regulatory burden on business is no worse than proportionate to the risks being protected against? What needs to be done to ensure that the level of research and development is high and sustainable and that new products, services and processes are exploited commercially in Britain rather than elsewhere? There are many other questions, and Britain needs good answers if we are to flourish.

I turn now to public services. First class public services are essential for so many different reasons. We want excellent health care because we don’t want to be sick or in pain, and we want to live longer. We want good education because it leads to a more fulfilled and rewarding life. But these things are important also because poor health care and inadequate education mean an economy that is held back.

It is not seriously disputed now that the way we provide state-funded healthcare and education in Britain is seriously flawed. Monopolistic, egalitarian, paternalistic in the worst sense, it urgently needs reform. There is no single silver bullet answer. The MacDonald’s approach of uniform franchises stamped out across the country according to some Whitehall-designed template belongs to yesteryear. Its origins were in the egalitarianism that was an inviolable dogma for so long. This egalitarianism dictated that for some to have access to a better education or better healthcare than others was unfair and wrong.

So there must be a uniform National Health Service lest local differences benefit some communities and patients more than others. There must be only comprehensive schools lest excellent grammar schools increase the disadvantage suffered by the less able. It was better to remove the advantages enjoyed by some rather than create better opportunities for the rest.

As we now know, this thesis was deeply flawed. It was never possible to have uniformly good standards of healthcare or educational attainment across the country. There are at least as great disparities today as before egalitarianism caught hold. Thirty years ago two thirds of Oxbridge entrants were from state schools. Today it is just over one-half.

So what is the direction of reform now needed to give this first world country first world healthcare and education? What about this for starters?

“We need to explore the usefulness of choice and contestability [competition] to extend opportunity and equalise life chances…We must develop an acceptance of more market-oriented incentives with a modern, reinvigorated ethos of public service. We should be far more radical about the role of the state as regulator rather than provider, opening up healthcare for example to a mixed economy under the NHS umbrella, and adopting radical approaches to self-health. We should also stimulate new entrants to the schools market, and be willing to experiment with new forms of co-payment in the public sector.”

Or this:

“…it is only by truly transferring power to the public through choice, through personalising services, through enhanced accountability, that we can create the drivers for continuous improvement in all our services.”

Or this:

“In both the NHS and in education, there will in one sense be a market. The patient and the parent will have much greater choice.”

Yes, you guessed it. Not some ideologically driven worshipper at the shrine of Friedrich Hayek, some geeky devotee of market theory. But that most pragmatic of party leaders, and the most electorally successful in recent years: Tony Blair. These excerpts come from speeches made in the last three years. Just look at the ideas he promotes here. The creation of markets within publicly-funded healthcare and education. Co-payment, the polite word for charging for public services. The treatment of patients and parents as red-blooded consumers, with full-on choice made available to them. Allowing private, even for-profit, providers to compete with the conventional public sector providers to create real choice for these consumers.

I do understand why it’s so difficult for many Conservatives to support Mr Blair when he makes this kind of speech. After all when the last Conservative Government was introducing reforms along these lines, Mr Blair’s Labour opposition opposed them root and branch. They deployed every trick of rhetoric and deception to persuade people that these were measures born of extremist dogma, intended to enrich fat cats, and without any regard to the interests of the weakest in society. Then his Government when in office reversed many of the measures, such as GP fund-holding and grant-maintained schools, just when they were beginning to yield real benefits for patients and pupils.

Because Mr Blair’s Labour Party in opposition, from the most cynical and opportunist motives, behaved in this manner, it is indeed tempting for us to play the same game: tit for tat. It is precisely that kind of game-playing approach that has engendered in the public such a dangerous degree of cynicism about and disengagement from politics. We must eschew it.

We have not always done so. When the Blair Government introduced legislation to create foundation hospitals we opposed it. Not because we were against the idea; we had ourselves introduced something similar when Ken Clarke was Health Secretary fifteen years previously. The Blair scheme was compromised and flawed, for sure, but the idea that hospitals should be given a much greater degree of independence and autonomy was one we all strongly supported. Our justification for opposing the legislation was that it didn’t go far enough. It was better that there should be no bread than half a loaf. Another reason for opposing these reforms was that they might not work and therefore we shouldn’t be associated with them.

Both these are bad reasons, and it did us harm. Harm because it looked opportunistic and self-serving. Harm because it lacked authenticity. People rightly felt that these were measures in a direction that a Conservative Government could easily have introduced itself, so how could it be authentic for the Conservatives to be opposing them? The result of course is people saying of us: “We don’t know what you stand for.”

The second example has to be the introduction of top-up fees for higher education. Again the Blair Government’s approach was compromised and flawed. There was an absurdly interventionist regulator created to do what it was already in universities’ interest to do: to find and attract the brightest of students whatever their background and social circumstances. The scheme was so adulterated that the additional financial benefit to British universities to enable them to compete worldwide will be minimal. There was an arbitrary target for the number of school-leavers who should go into higher education.

Nonetheless the core elements of the scheme were ones with which most Conservatives would feel comfortable. It introduced a price mechanism, albeit very truncated in effect. It will encourage students to look carefully at what value they expect to get out of a degree. Stripped of the regulator, it could make universities much more independent of the state, dispersing power to create independent institutions in a way Conservatives over the decades would approve. It fosters personal responsibility in students. It extends co-payment.

In short it felt like the sort of direction that Conservatives could plausibly have wanted to travel, embodying values that Conservatives tend to proclaim as their own. Many Conservatives were deeply unhappy to be whipped to vote against the Bill. And again much of the public simply felt confused about what the Conservatives were up to. We were saying we were for the smaller state and for bigger citizens. Yet here was a measure that although flawed was demonstrably a smaller state measure, which enhanced personal responsibility and thus seemed to create bigger citizens, yet the Conservatives were against it. No wonder people scratched their heads trying to figure out what we stood for.

Now Tony Blair is planning measures to introduce greater consumer choice, more plural provision, and greater institutional autonomy in schools and in the NHS. The proposals have been criticised, rightly, for being pale and timid reforms that conspicuously fall below the level of the rhetoric I quoted earlier. There will be a debate whether the Conservative Party should support the legislation in principle, assuming it does actually take reform in the broad direction we favour. There will be a particular concern that our support might be the deciding factor whether the reforms go through at all, given the high levels of dogmatic opposition in Tony Blair’s own Labour ranks. That Labour opposition will be stirred up covertly by Labour’s own institutional roadblock, the Chancellor, Gordon Brown.

So what should be the Conservative stance? Combine with the Labour left to shore up Gordon Brown, or combine with genuine reformers of whatever party to promote reform? Should we be tactical or strategic? Should we, regardless of our own narrow partisan interests, engage in building a long term alliance across the party divide in favour of serious public service reform?

For we should be in no doubt that people are hungry for realism and hungry for change. Poll after poll shows that people no longer believe that the problems of poor healthcare and education can be solved simply by throwing more money at them. They are willing to be persuaded that even quite radical reforms are needed. But they are deeply suspicious of the motives behind the grand schemes of politicians. They impute the worst of motives to any schemes of reform. They are inclined to see them as flowing from dogma and ideology, or designed to benefit the few rather than the many, or aimed at enriching sinister business interests.

Neither should we underestimate the difficulty of persuading people that radical reform is needed. There is no automatic view that choice is an obvious good. We know what people tend to say: “we don’t want choice; we just want the schools, hospitals etc to be better”. It is not immediately obvious to most people that encouraging more diverse providers into the system, voluntary organisations, not-for-profits, even commercial providers, will improve things for service users. We who agree with Tony Blair’s arguments that I quoted earlier know that choice, diversity and pluralism work. But convincing the public that the uncertainty and disruption that certainly flows from such change is worth while is a very tough call, let alone persuading them of the merits of the sort of co-payment that Tony Blair has argued for. These are the hard yards of political debate.

It is unlikely to be achieved by one party working alone. And it doesn’t need to be. There are Labour MPs, admittedly of the dreaded Blairite persuasion, such as Alan Milburn and Stephen Byers, who share the analysis and are willing to argue publicly for it. There is a growing number of LibDem MPs, including the brightest among them, the “Orange Bookers”, who know that this is where the future lies. And the simple truth is that the most important thing for this country, after delivering strong economic growth, is to create public services that are worthy of its citizens. This is a central contribution to delivering social justice for them all.

We must work together in a broad alliance with whoever shares the broad diagnosis and prescriptions to win a broader consensus with the public. If we can do that we will be ready to serve in Government. More than that, we will be worthy of it.