by Stella Creasy

In times of economic fear, the political pendulum swings firmly to the purse. A public concerned about losing their job or rising prices wants a government that understands what matters is how their bills are paid. It is a politics not of public services but personal futures. Any party seeming profligate is given short shrift.

The consequences of this government’s debt fixation are now obvious: growth draining from our economy; unemployment pouring in. If this carries on, by 2015 inequality will have worsened and public services could be in tatters. Against such a backdrop, it is tempting to imagine the pendulum swinging back, returning Labour to office to pick up the pieces. Yet in such circumstances, people stick rather than twist. They may know Conservatives are more interested in the bottom line than the front line, but have little faith in any alternative. In this age of austerity, Labour has to rebuild confidence in our economic approach, so that we can redefine the case for progressive politics.

We should acknowledge our past as we plan for our future. Many have chewed over Labour’s fiscal policy – but this is only half the story. As a member of the public accounts committee, it is a privilege and a provocation to analyse how the previous government changed lives. There will be more pupils learning maths and sciences. We built a series of children’s centres of which earlier generations of progressives could only dream. The youth justice board reformed Britain’s capacity to tackle youth offending.

We must also be willing to learn from the difficulties we faced – whether within healthcare, defence contracting or transport infrastructure management. Our opposition is quick to argue that these reflect poor policy. But, as they are discovering, ideas are not the same as implementation. Already our committee has highlighted that their proposals for healthcare, PFI and the future jobs fund do not stand the test of value for money.

To repair the damage being inflicted, Labour should strengthen the framework for managing public monies. The office for budget responsibility should be given powers not only to monitor revenue, but also to ensure that the government can live within its means by having the power to issue notices of direction. Acting as a safeguard to flawed financial decision making, these could be graded to provide warnings about whether spending and revenues are meeting forecasts. Supplementing this, the treasury select committee could propose reports on areas of concern to the OBR, just as the public accounts committee does with the national audit office. Furthermore, if we revive the fiscal rule of borrowing only to invest over the cycle, we should be stricter in assessing whether that rule is met. To avoid confusion, the OBR could be charged with ruling on what is investment and what is current spending- and on when the cycle is likely to end. The government could then be legally required to use these assessments.

Labour’s emphasis on value for money shouldn’t stop at budget planning. The NAO should produce independent reports on departments, not just projects, helping keep policy programmes on track or securing early intervention. We can see that self-regulation isn’t effective, as many departments repeatedly miss their own targets.

Strengthening management of public monies in these ways would underpin our ability to effectively direct resources towards securing a more socially just society. Tough fiscal constraints and scrutiny should encourage, not prevent, radical progressive change. Whether ending persistent inequality or promoting sustainable development, our definition of value for money should be our ability to rewire Britain’s infrastructure to overcome these challenges.

That means renewing Labour’s mission to build public services around users, not providers. There is still a long way to go – many people receive overlapping attention from different agencies whilst others fail to attract assistance until it is too late. Where the right proffer cuts in budgets as the driver for improvement, the left recognises greater gains are to be had through innovation and collaboration. We should not shy away from challenging both those who want to reduce service provision, and resist change. If we don’t, we risk not only wasting public money, but also failing to develop services that secure progressive outcomes in modern Britain.

As the PAC argues, a consumer-based approach places the emphasis on the individual to determine what is money well spent. That produces inequalities – as some people are better than others at disputing service quality- and fails to harness the benefits of collective involvement in service delivery. Labour must offer a distinctive approach to public service reform through incentives based on people not profits.

Real people do not fit neatly into government departments. Whether health and social care, or schools and policing, their needs are not simple “rehabilitation”, “employment” or “better health”, but often a combination of factors that institutions try to deliver in isolation. Against a backdrop of tighter budgets, more time and freedom to achieve efficiencies also allows more creative thinking to take place as to how best to deliver such desired outcomes. As the current Government is finding, pushing cuts at speed leaves little room for successful change or collaboration.

Allocating public spending settlements not for three years but for five would provide greater certainty to plan for national policy priorities, whether reducing health inequalities, promoting sustainable economic growth or improving public transport. To encourage public sector entrepreneurism, Labour could support “save to invest” budgets, so that those who make savings in how they deliver core services can claw back funding for further development. This could not only drive efficiency within service delivery but also encourage collaboration for the benefit of citizens.

Allowing departments to share monies secured through reconfiguration would revolutionise the way frontline public service workers, the voluntary sector and users are involved. The big society preaches responsibility for outcomes to everyone but the government, reducing the state to simply a banker of last resort. As our voluntary sector knows all too well, this overlooks how opportunities are generated when the state supports social and economic development.

Labour should strip away artificial divisions between workers, users and funders of services and reform delivery through promoting equal responsibility in securing results. The previous government began exploring “co-production”, the benefits of involving the public in designing and running public services. The next should go much further, empowering consumers not only through entitlements but also convincing citizens to get involved in collective and mutual service delivery. Here again the principles of clawback and collaboration can be brought into play, letting users and localities combine budgets they manage as well as contribute their own time and energy to shared priorities. Not all services could work like this – A&E is best delivered by professionals – but others – like those for longterm health conditions – could be transformed. The results achieved by partnership also become motivation for redressing differentials in resources and capabilities to contribute.

As we have seen these last months, it is the impoverished and vulnerable that suffer the most when poor economic policy is matched by a cavalier approach to the public sector. Against the right who define their status by an ability to spend less, Labour must set out how social justice is advanced by an ability to spend well. In 2015 Labour should be the party of value for money. Reconstructing Britain will depend on nothing less.

Stella Creasy is Labour and Co-operative MP for Walthamstow.

Tags: co-production, public accounts committee, public services, Stella Creasy

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