This is the full text of a speech delivered this week by Home Secretary Theresa May to the Reform think tank.
We’re delivering more with less – so let’s have the courage of our convictions
Thank you. A year or two ago I appeared on ‘Question Time’, and before the filming Shirley Williams introduced me to somebody. “This is Theresa May,” she said, “our first female Home Secretary.” I pointed out to Shirley that Jacqui Smith was Home Secretary in 2007, three years before me. So Shirley immediately looked at her friend and said, “This is Theresa May, our first tall female Home Secretary.”
Thank you, Chris, for your more conventional introduction. And thank you, too, for the sterling work that Reform has done not just this year, but every year since its creation in 2001.
When he invited me to give this speech, Andrew asked me to give my personal insight into life as a Secretary of State, and we agreed I’d be a bit indiscreet, lift the lid on Coalition tensions and tell a few stories about the Deputy Prime Minister ... But unfortunately I see that Jeremy Browne, my Lib Dem colleague from the Home Office is sitting just over there, so I’ve had to make a few last-minute changes to my script. [tear up one page, then another, then another.]
There’s no other way
Back in 2001, Reform’s message might have seemed a bit peripheral to some. Labour had just taken the brakes off public spending, they fought the general election on Labour investment versus Tory cuts, and they promised no return to boom and bust.
The Conservative election posters asked, “You paid the tax, so where is your operation? You paid the tax, so where are the police?” The posters didn’t make much difference – not much would have done that year – but they were making the same important point that Nick Herbert and Andrew were making when they set up Reform.
In Britain we all want to have the best public services in the world. But throwing more and more public money at those services doesn’t mean they automatically get better. In fact, spending those vast sums – raised either through uncompetitive tax rates or unsustainable borrowing – risks doing serious damage to our economy. Much better, we said, to keep public spending at sensible levels and reform public services to improve them.
Sadly, our argument fell on deaf ears, and we all know what came next. High taxes, a structural deficit, unreformed public services and an unbalanced economy meant that when the crash came, Britain wasn’t ready.
Such is the scale of the economic wreckage we inherited, the task facing the Government today isn’t just the elimination of the deficit, as vital as that is. It’s nothing less than the transformation of our entire economy. To get private sector growth across the whole country, not just London. To support and develop our strategic industries, not just financial services. To make markets work for everyone, not just the executive class. To train and educate our whole workforce. To resolve once and for all those decades-old questions about our productivity so we can compete in the global race. I’ve talked before about my support for a modern industrial strategy, but tonight I want to say a few things about the reform of public services.
Reform has to be the mantra, because – quite bluntly – there’s no other way. Even Ed Balls now admits that if Labour were in power, they’d be cutting public spending. So the choice is between salami slicing budgets and accepting that services will just deteriorate ... or being brave, cutting spending – but transforming the way services are provided.
We’re delivering more with less
So if this Government is a live experiment in reform, conducted for Andrew’s benefit, I hope he’s enjoying the results.
Take police reform. When we said we would cut central government police budgets by twenty per cent in real terms over four years, the critics – not just the Labour Party, but ACPO, the Police Federation and many academics – were united. Frontline policing would be decimated and crime would go up. But in fact, the opposite happened – crime is down by more than ten per cent since the election.
That crime is down is thanks to the efforts of thousands of officers up and down the country and the leadership of chief constables, but it’s also down to police reform. Now I sometimes think that people think police reform amounts to the election of police and crime commissioners, and they are a vital part of the picture. But what I have sought to introduce is a comprehensive package of reform that improves every aspect of this vital public service. I wanted to make the police more accountable, and beat meetings, crime maps and commissioners are delivering that accountability. I wanted to give chief constables more freedom and more responsibility. That’s why I have abolished national targets, slashed Home Office bureaucracy, and, thanks to Tom Winsor’s review, introduced greater flexibility into police employment. The police also face some challenges specific to themselves, so I have introduced a National Crime Agency to confront organised crime, a College of Policing to develop a better evidence base, a more independent Inspectorate of Constabulary and a beefed up Police Complaints Commission. I want to come back to some of the lessons we’ve learned in the last three years, but the conclusion is clear: police reform is working and crime is falling.
It’s not just the police proving that you can deliver more with less. Chris Grayling is reforming the prison system. Philip Hammond is getting to grips with the defence budget. Iain Duncan Smith is bringing his revolution to the welfare system. Eric Pickles is cutting local spending while making sure council tax doesn’t shoot up. Francis Maude is delivering civil service reform and saving a fortune on public procurement. My colleagues across the Cabinet are proving – with reform – you can reduce spending and still improve services.
In fact, it is often the need to make savings that drive innovation and change for the better. As Sir Ken Knight said in his recent review of the fire and rescue services, “I was struck in my conversations that the financial pressures of recent years seem to have been the driving force behind many of the changes and innovation I have seen.”
Even in the departments that have enjoyed protected budgets there is evidence of the need for reform. Last year, the Department for Education commissioned Deloitte to analyse the performance of half a million school pupils at Key Stage Four – the two years covering Years Ten and Eleven. The report found that “there is no correlation at all between the level of per-pupil funding and educational outcomes.”
Last month, Reform published research that was even more comprehensive than Deloitte’s. Using data from more than 16,000 primary schools and 2,600 secondary schools, Reform found that in both primary and secondary sectors, some schools are spending twice as much as others to achieve the same outcomes in English and maths. Neither was there any link between per pupil spending and the quality of teaching as measured by Ofsted. So the message, even from the protected departments is clear: spending more money alone doesn’t improve performance – but reform does.
This is a crucial point, because as the Institute for Fiscal Studies has noted recently, the age of austerity will not end in May 2015; it will be with us for years to come. As George Osborne said in his Autumn Statement last year, net government debt is not forecast to peak until 2015/16, and even then it is forecast to stand at almost eighty per cent of GDP in 2017/18. That is why the Chancellor was right to extend his plans for fiscal consolidation into 2017/18. And it’s why the task facing the Government in the next Parliament will be to maintain fiscal discipline and drive on with reform so that the debt and debt interest payments return to safe and manageable levels.
That will be a tough challenge, but we’re proving to the public that we can deal with the deficit, we can reduce spending, and we can do those things while not just protecting public services but even improving them.
And we must do everything we can to make sure that the debate in this country never returns to the false choice of more spending or worse services. They say that doing the same thing over and over again with the expectation of a different result is the very definition of madness, and a return to more borrowing and debt and tax and spend would indeed be mad. We have to take advantage of the successes of this Government – by making sure that the debate in future is about how we get world-class public services that are funded in a sustainable way and provided in the most effective way possible.
Some observations about reform
The precise nature of reform will, of course, vary from service to service. But while no two sets of reforms are the same, it is possible to draw some common conclusions, and I just want to make a few brief observations.
We need to keep reassuring people about our motives and values
First, we have to reassure people about our motives and our values. We have to show them that we’re committed to universal public services and we must never appear to be doctrinaire about what we’re doing. We have to be clear that we’re reducing spending on public services not because we care little for them, but because we have to for the sake of our economy. We have to be clear that we want to reform our public services not because we have a fixation with the private sector, not because we want change for the sake of it, but because we are restless to keep on improving public services for everybody who relies upon them.
Our public services – the police forces that keep us safe, the schools that educate your children, the local hospital that cared for a loved one, the care home that looks after your elderly parents, the council that lights your streets and maintains your parks – they’re all vital services. They can all get better, in future they might be delivered differently, but what they do is important to all of us – and it’s our duty as political leaders to make sure they’re as good as they can possibly be.
Second – and I know not everybody wants to hear this – size does matter. But don’t worry, in public services, small is beautiful. Old-fashioned, monolithic public services are impersonal, inflexible and they fail to innovate. They suck up more and more public money. Too often they treat their users like statistics instead of customers. They’re dominated by trade unions. They hide poorly performing members of staff. They cover up institutional failures.
Time and again, we see that smaller units, given independence to do their work, made accountable to the people they serve, deliver better services. Schools that use the freedoms of academy status thrive. Hospitals that have been taken over by their own staff improve. Return-to-work providers who tailor their schemes for individuals achieve better results.
In policing, we’d have been unable to deliver cuts in spending while cutting crime if we’d continued to follow the ‘big government’ approach. By abolishing all national targets, ending ringfenced budgets and decentralising responsibility for how the police fight crime, we have seen the 43 forces of England and Wales respond in 43 ways that suit their communities. If we’d reconfigured frontline services from the Home Office, tried to influence decisions by adding conditions onto specific police grants, and continued with those national targets, there’d have been none of the innovation that has seen the frontline service maintained and crime fall.
And, by the way, what is true about the public sector is true about the private sector too. There are many successful big businesses that do great things for Britain. But big, unaccountable businesses that manipulate markets or abuse their monopoly positions should also be in our sights. Whether it’s the banking sector, where customers find it difficult to switch companies, or the big utility firms, with their opaque pricing plans, or the oil industry, which stands accused of price fixing by whistleblowers, we should be as tough with the private sector as we are with the public sector.
Reform is gritty and unglamorous
My third point is that on the whole, reform requires gritty and unglamorous work. It’s for this reason that I believe Francis Maude is the Government’s star reformer. By cutting down on consultancy contracts and marketing spending, reducing the size of the Government’s property estate, improving public procurement and slimming down the civil service, Francis managed to save the taxpayer £3.75 billion in 2010/11, £5.5 billion 2011/12 and £10 billion in 2012/13. This might not sound like exciting stuff – but to put it into perspective, his savings last year almost equal the £12 billion policing budget for the whole of England and Wales.
I believe that the rest of government – and the wider public sector – needs to learn from Francis’s example. The police spend £1 billion every year on ICT. Across all 43 forces, there are 4,000 staff working on around 2,000 systems across 100 data centres. I know of one supplier that has more than 1,500 separate police contracts across the country.
So once the new Police ICT Company is off the ground, I want to convene a summit of police and crime commissioners, police chiefs and their main suppliers with the aim of reducing the number and cost of those contracts. By value, 65 per cent of those police contracts are provided by the same ten companies – so I believe there is a clear incentive for those companies to cooperate.
Too often, Whitehall is set up in the wrong way to get this detailed work right. There’s insufficient financial expertise, including in procurement, outsourcing and contract negotiation. There’s not enough understanding of operational work. Not enough innovation. Not enough confidence to welcome new ideas and thinking from outside the civil service. Too much rigid hierarchy and not enough recognition of real talent. In the Home Office I’m lucky to have a Permanent Secretary in Mark Sedwill who is up for making some big changes and talented enough to deliver them. And we have some brilliant senior officials as well as many hugely talented young people coming up through the ranks. But too often their achievements are despite the system, not because of it. And that’s why it’s absolutely right that this Government is thinking radically about civil service reform.
Reform means taking on vested interests
My fourth point is that reform means taking on vested interests. The first time I spoke at the Police Federation conference was straight after the 2010 election, and we hadn’t yet had to take any difficult decisions. There was laughter, applause, I even got a standing ovation. The second time I spoke I was received in total silence. The third time I was roundly booed and jeered. This year, I don’t think I can say they were enthusiastic – but I got out alive.
My point is this. Reform means taking difficult decisions, and difficult decisions often mean upsetting people – especially when the change involves pay and conditions. But that doesn’t mean you can shirk them. You have to decide what is in the national interest and do it. Keep making your case, always remind people of what you’re trying to achieve, what’s the end objective, but whatever you do, don’t buckle.
In the case of the police, of course changes to pay and conditions and pensions have been painful for some officers, and it’s impossible not to feel sympathy with them. But those changes have been vital in maintaining the frontline service as we reduce spending – and just as importantly they’ve given chief constables real freedom to lead their forces better.
Reform has to fit in with our wider mission
The fifth and final thing I want to say is that individual reforms must fit into the Government’s wider mission. I said earlier that our task is the transformation of our economy. But by that I don’t just mean the elimination of the deficit and a return to growth. I mean getting private sector growth across the whole country. Getting more young people trained up and into work instead of relying on migrant labour. Taking on vested interests and breaking up the concentration of power wherever we find it. In short, we need to make our economy work for everybody.
So our reforms have to allow us to maintain and improve public services as we reduce spending. They have to open up the entrepreneurial potential of the public sector. They have to rebalance the private and the public sectors, and indeed break down the barriers between the two. They have to take power away from the big state and big bureaucracy and give it back to the people.
Let’s have the courage of our convictions
And that is what David Cameron’s Government is delivering. George Osborne has cut the deficit by a third. One and a quarter million new jobs have been created in the private sector. A quarter of a million new small businesses have been set up. A record number of apprenticeships have been started – half a million in the last year alone. We’ve cut tax by £600 for 24 million people. Council tax has been frozen for three years in a row. Benefits have been capped. And energy companies are being forced to put customers on the lowest tariff.
But there is much more still to do. I’ve talked in detail before about the need for a comprehensive industrial strategy. But we also need to go further in opening up public services, including where necessary allowing providers to make a profit. We need to make the state much more accountable when it lets people down, like it did at Stafford Hospital. We need to be much more active in making sure markets – like financial services and big utilities – work in the public interest. And I believe we should be looking again at our corporate governance laws.
In the Home Office, we’ve achieved a lot but the need for reform will not stop. I want to see more aid spending go on things like prisons in countries like Jamaica, so we can get prisoner transfer agreements and deport more foreign criminals. I want us to explore the savings that can be made by integrating the police, fire and ambulance services. And I want the police to use technology to transform the way they do their business. Thirty years ago ambulances were little more than the vehicles that got you to hospital; now they are sophisticated mobile mini-hospitals in their own right, staffed by skilled paramedics. Police cars are still just fast cars. If we could make police officers – both on foot and in cars – better equipped to do their work without always returning to the station, the productivity gains would be enormous.
So this is a great, reforming government. Before 2010, we in the Conservative Party and you at Reform used to argue that we had to start doing more with less. For evidence, we could cite examples from the private sector or from overseas. But now we can prove our point from our experience in government. Across the board, we are re-shaping the state, so it is smaller, stronger and more strategic. And we are delivering more with less.
The result will be a United Kingdom that emerges from the crisis stronger than when it went in. A country that is seen across the world as a role model in tacking the big modern problems of deficits and government performance. A country with stronger growth, less debt and, eventually, lower taxes – because of a more productive public sector and a more stable economy. A country that can afford its responsibilities without losing control of its public finances. A country that can face the challenges of the modern world with confidence.
So let’s have the courage of our convictions – and keep making the case for reform.