2nd Annual "Liberal Democrat News" Lecture
Paddy Ashdown (Liberal Democrat)
In 1909, Lloyd George produced his famous "People's Budget" to pay for the Liberal Government's great new scheme of social security against sickness, unemployment and poverty.
In Parliament he described it as a "War Budget ... to raise implacable warfare against poverty and squalidness" The budget, with its new progressive income tax, was rejected by the hereditary peers in the House of Lords, prompting a constitutional crisis. Lloyd George took his campaign to the country.
At Limehouse in July 1909, in his first big defence of the "People's Budget" outside Parliament, he told a cheering crowd of 4,000 people:
"The budget is introduced not merely for the purpose of raising barren taxes, but taxes that are fertile taxes, taxes that will bring forth fruit. The security of the country which is paramount in the midst of all. The provision for the aged and deserving poor ... We are raising money to provide against the evils and the sufferings that follow from unemployment. We are raising money for the purpose of assisting our great friendly societies to provide for the sick and the widows and orphans. We are providing money to enable us to develop the resources of our own land. I do not believe any fair-minded man would challenge the justice and the fairness of the objects which we have in view in raising this money".
The King sent a message of complaint from the Royal Yacht, but Lloyd George set off round the country, undeterred.
Inspired by a generation of "New Liberal" thinkers, the Liberal Government of 1906 to 1914 recognised that individual liberty depended, not just on the hard-won political freedoms of the nineteenth century, but on positive protections against ill-health, unemployment and the deprivations of old age. And the Liberal reformers recognised, too, that if you wanted these things, they had to be paid for.
With these Liberal reforms, the British welfare state was born. With them, too, was born a new understanding of the role of taxation and State expenditure to fund schemes for the benefit of the whole nation - a recognition that taxes are the subsrciption charge we pay to live in a civilised society.
As the century has progressed, so this role has grown. At the start of the century, the British State spent 14.5% of national wealth. Today, our Government spends over 41% of our national wealth.
The twentieth century has seen the unprecedented expansion of the State in all industrialised nations - and in Britain, under governments of all parties. State spending has increased, not just to fund social security, but for healthcare, housing and education; for transport schemes, big infrastructure projects, for defence, for prisons, for the police.
Today, all parties in Britain talk about reducing that proportion of national wealth spent by the State. Personally, I believe it is possible to reduce the share of GDP spent by Government to below 40% - and this could be done with sustainable economic growth and a sensible welfare-to-work strategy for the long-term unemployed.
But as the last eighteen years have shown - the rhetoric is easy; actually achieving it is much, much harder.
What is definitely true is that people feel that the State is very big, spends a lot of money, yet still provides services they are not happy with. They are not sure where all their taxes go. They suspect that there is a lot of waste in government. And they dislike the idea of giving more and more money in tax to be swallowed up by the bottomless pit of government. In short, there is a feeling that Government doesn't do very well all the things it tries to do.
You only have to consider how the word "bureaucracy" has changed over the course of this century to appreciate how people's attitudes have changed. 100 years ago, "bureaucracy" actually meant something positive - a rational, efficient method of organisation. In today's world of rapid change, mass communications, a global market, greater individual choice and an information revolution, "bureaucracy" summons up an image of jobs-worths, restrictions and red tape; plodding, inflexible organisations, uncreative, unenterprising and uninspiring.
"Government" might not be as out of fashion in Britain as it is in America - after all, in Britain people still tend to say "the Government should do something about this", as opposed to, "we have to get Government off our backs". But even in Britain, there is a strong feeling that "government" isn't working.
What is interesting - and depressing - is how British politicians have responded to this mood - a response that can be summed up in one word - TAX.
For Conservatives, the answer to all the nation's ills was supposed to be lower taxes.
In fact, of course, over the last eighteen years, the national tax burden has actually increased. Yet despite breaking their promises to cut taxes, despite increasing indirect taxes as fast as they have cut direct taxes, despite putting taxes up by record amounts since the last election, still they repeat the old mantra - "all that matters is lower taxes and the Conservatives will give you lower taxes".
Now the Labour Party - haunted by their past record on tax and terrified of their tax-and-spend reputation - have decided that the only way to win elections in Britain is to say as little about tax as possible. So instead of challenging Conservative assumptions about what people want and what Britain needs, they meekly go along with them - trying to outflank the Conservatives with equally unbelievable promises to cut taxes, and limiting their capacity to win a mandate for real change.
British politics is being reduced to a one-dimensional "cost of everything, value of nothing" obsession with direct tax levels. And the next election is being turned into an auction of fantasy promises in which the Labour and Conservative parties try to outbid each other with bigger and better promises of tax cuts which no-one believes.
Consider the results of this poll in the "Observer", ten days ago.
Only 15% of the public believe the Prime Minister when he says the Conservatives will reduce income tax if they win the election. Three times as many - 43% - think the Conservatives will raise taxes if they win again.
13% of the public believe Labour will reduce income tax if they win. Four times as many - 50% - think taxes will rise under Labour.
Not surprisingly, after the last election, voters take promises on tax with a healthy pinch of salt these days.
But perhaps most interesting of all, a massive 66% of those questioned say they think our public services are in a worse state than five years ago - compared to just 7% who say they have improved.
So it is not just that ordinary people don't believe the Conservatives and Labour parties when they say they will cut taxes - it seems that both other parties have actually misjudged the public mood, and missed the real challenge for our public services.
What people want is better services - and the knowledge that the taxes they pay are being wisely spent.
They want better personal service. They want to see the people who run their services more in touch with what they need. They want to see more resources put into key services like education and health where it is necessary - and would be prepared to pay more for these services if they knew that the money would actually be spent in the classroom or on the hospital ward, and spent on making things better, rather than just wasted.
All this reflects, in my view, three facts about our public services which should underpin our approach to education, health and other services as we move towards the next century.
First, people understand the value of decent public services. They want high quality public services, and they don't want the next five years to be years of harsh cuts to services their families rely on.
Second, we need a new approach to our public services that is less about big government or small government, and more about better government - an approach that concentrates on government's role in enabling, empowering and building partnerships; on reducing bureaucracy and decentralising responsibility; that is about getting maximum value-for-money, enforcing high standards and quality, focusing on goals and results, and above all about being in touch with the wishes of the people government is supposed to serve.
And third, we have to respond to the need and demand for extra resources with clear, targeted investments, geared to specific objectives, so that every pound invested brings improvements and can be seen to have delivered higher standards and better results.
Essential here is a new approach to tax, which focuses rather less on arbitrary tax levels, and rather more on the value-for-money that people receive in return for their money.
In the rest of this lecture, I want to focus on these three issues, starting with the value of decent public services, and the importance people attach to them - something, incidentally, which I believe is growing, not diminishing.
Take the National Health Service as an example.
The great achievement of the NHS was to make good quality health care available to all, regardless of their ability to pay. That is not to say the NHS has always been perfect - it hasn't. It has suffered in the past from being over-centralised, over-secretive, underfunded and too often run in the interests of health providers rather than patients. It has focused too little on health promotion, and has operated more as a National Sickness Service than as a National Health Service as a result.
But for all its problems, the fact remains that as a public service, funded out of general taxation, the NHS has provided British people with a comprehensive service more efficiently and cost effectively than comparable services in other countries.
Look at the United States, in contrast, and you will see what you get with a healthcare system based on private insurance. It is unable to provide a comprehensive service - 20 million people are underinsured, and 42 million have no insurance at all. It is not free at the point of need. And it actually costs individuals more. American health-care swallows up more than twice the share of national wealth that British healthcare does - 13.7% and rising.
If we are able to lift our horizons from a superficial debate about tax levels, we will see that, not only for their impact on our quality of life, but also for their impact on our cost of living, decent public services are a good collective investment.
What is also clear is that if you cut investment in public services, you pick up the bill in some other form - whether it is delays travelling to work on old trains running on old tracks with old signal systems, charges when you go to the dentist, or private insurance for social security previously provided collectively through the tax and benefits system.
The London Underground system illustrates the point perfectly.
Last week the fares on London Underground rose by 9%, leaving the capital with the most expensive urban transport network in the world. Prices have doubled over the past decade. Yet despite all this extra revenue, we still find ourselves paying more and more for a worsening service.
A chronic lack of investment in the Underground system has meant extra costs in our pockets, coupled with declining services, ageing trains, overcrowding, cancellations and delays.
More long-term investment in the first place, and the tax-payer and tube traveller would both be getting better value-for-money today.
In every area of our lives, we are experiencing the same thing. That is why two thirds of people in Britain think their public services are getting worse. And when politicians dangle promises of tax cuts before them, that is why they don't believe them.
People know that you don't get anything for nothing. And they long ago learnt that one Government tax-cut always means either a lost service, a new problem and often more expenditure for another Government department, a rise in their local council tax, or a new burden on their wallet or purse because of new charges and new private costs - usually more expensively than in the first place.
So lesson number one is that people want decent public services, and they recognise their value.
They know that their children need a good education.
They want the NHS to be there when someone in the family falls ill.
They want to be able to get to work quickly and reliably.
They want to see that extra community policeman on the beat.
They don't want to live in a society where people are having to sleep on the streets because there are no homes for them.
And they know that without decent public services, they will still be paying for the things they need - whether education, healthcare, transport or protection and insurance against crime - more expensively out of their own pocket.
And let no-one be in any doubt, that is what a fifth Tory term will be about. Five more years of the Conservatives will be five more years down this road. Five more years of cuts to public services. Five more years of new costs in our pockets. Five more years of dogmatic battering of our public services, when what people really want is common-sense support for the services they rely on.
But while people value their public services, most do not believe they get the best possible service, best value-for-money or highest quality in their public services.
They want to see services improved, and more emphasis put on quality. They want more influence over the services that are delivered, and better redress when they get poor service. They want more information about performance, and they want more choice. They want value for the money which they, as taxpayers, spend.
And here I think we need a new approach.
There have been two approaches to delivering public services over the last fifty years.
The first was the "command-management" approach - symbolised by Nye Bevan when he described the NHS managers as "the agents of my department", and famously remarked that "when a bedpan is dropped on a hospital floor its noise should resound in the Palace of Westminster".
Public services were planned centrally, provided almost entirely by the State, and delivered top-down through large, often inefficient and wasteful, bureaucracies. Efficiency and quality were not top priorities, and service-providers were not accountable enough to the users of the services.
Over the last ten years, there has been a second approach, driven by a laudable desire to correct the inefficiencies of the old "command-management" structure.
Where this has been about providing more information, really increasing choice, making services more responsive to customers and putting greater emphasis on performance and quality, this approach has been supported by the Liberal Democrats.
Indeed, in many ways, Liberal Democrats were pioneers of these ideas - for example, it was Liberal councillors in Cambridgeshire who pioneered the idea of Local Management of Schools.
But the "market" approach has created its own problems - usually the inevitable consequence of trying to force market mechanisms into every area of public life, however inappropriate.
First, there is the issue of choice. Better information and complaints procedures are an important spur to improvement. But because our health and education services are not natural markets, information has created as much frustration as new "choice".
For example, if you are a patient in the Highlands of Scotland, there is precious little choice in where you can go to hospital. And in education, where is the choice if the school you want your son or daughter to go to is completely full? A recent Audit Commission report showed that one in five parents did not get their "genuine first preference" for their children, and that appeals against decisions on places have increased by 44% over the last three years.
Of course there are some elements of the market approach which can, with benefit, be applied to the public sector because they increase efficiency or senstivity to what the customer wants.
But because health and education are not natural markets, the rigid application of pure market mechanisms often results, not in extra choice for all, but in two-tier services and inequalities.
Second, the rigid application of pure market mechanisms into the public services has frequently created new and unnecessary bureaucracy.
This is most obvious in the NHS. Anyone who has had experience of the NHS over the last fifty years will understand that we need a well-managed Health Service. But what has been created by the Government's health reforms is a whole bureaucracy needed just to manage the new system.
And if you think things might be getting better, consider the latest product of the Government's market obsession - the nursery voucher scheme. This is how it works.
First, the Child Benefit Agency sends an application form to the parent. The parent completes it and returns it to Capita, the company running the scheme. Capita send back a voucher. The parent gives this to the school. The school gives it back to the LEA, which sends it back to Capita. Capita confirms receipt from the DfEE, which sends the money - earlier removed from the LEA's budget - back to the LEA, which hands it to the nursery provider!
All this from a Government which tells us it wants to cut red tape! Just imagine what Tory MPs would have said if that had come from Europe!
A third consequence of the market approach has been a decline in strategic planning.
This is obvious in education. Giving schools more control over their own budgets is a good idea - I want to see schools have as much control over their budgets as practically possible. But by allowing schools to "opt-out" of any sort of local strategic framework, the Government has destroyed the possibility of any sensible local strategic planning - over admissions, sixth form provision or cost-effective joint services.
Similarly, in health, the internal market has made strategic planning in the NHS almost impossible.
Nothing illustrates this better than the efforts Simon Hughes had to go to try to discover the extent of local health authority overspending last summer.
First he asked the Minister, who said he didn't know. Then he wrote to the Government's new regional outposts. They either didn't respond, or referred him to the NHS Executive. So Simon called the NHS Executive, and was told - we don't have that information, but the regions are legally obliged to give it to you if they have it. So Simon followed up the regions, and got two responses.
The first said: "Please be advised that you should address this query to the Minister". The second said: "There is actually no-one collecting that sort of information at the moment. At the end of the day it will hopefully all get sorted out ... God knows how".
Linked to the problem of co-ordination is the fourth problem of the Government's market approach - accountability.
That Nye Bevan assumed responsibility for every bedpan in the NHS typified the problem of the old approach. But the problem now is that Ministers don't want to be responsible for anything.
In the new market system, accountability upwards to ministers - the concept of ministerial responsibility - has been lost in a tangle of quangos and arms-length agencies. Even MPs are given the brush-off - as the MP who asked the Home Secretary for the ratio of staff to prisoners in the Wolds Prison discovered, when he was told the information was commercially confidential!
Accountability downwards - to the consumers - is even worse. Again, it is most obvious in the NHS. Like the whole plethora of new quangos and trusts and boards, NHS trusts are made up of Government appointees - including, it has to be said, a disproportionate number of defeated Tory candidates and the spouses of Tory MPs. All these bodies meet in secret, are accountable to no-one and their members don't even have to declare their interests in the way that local councillors do.
Above all, there are no democratic mechanisms for public input into decision-making about local needs and priorities - or for removing the people responsible for the services if local people feel they are failing.
The final weakness of the rigid application of a pure market approach to our public services has been on the service ethic itself and on morale within these services.
It has always been one of the great strengths of our public service that those working within it have been so dedicated. This has been due in no small measure to the service ethic within our public services which has given so many a sense of satisfaction in what they do.
Now, both that service ethic and morale have been comprehensively undermined - among teachers, health professionals and civil servants in every area of public administration.
In the NHS, management interference, the growth of short-term contracts and local pay bargaining have all undermined morale among nurses, physiotherapists and occupational therapists.
And the national survey of GPs that the Liberal Democrats published last week, covering a fifth of all GP practices, revealed the shocking figure that half the GPs surveyed are considering leaving medicine altogether. 90% of the GPs were less satisfied with their jobs since the Government's NHS reforms.
For all these reasons it is clear that the Conservatives' application of a pure "market" approach to our public services has created new problems to replace the problems of the old "command-management" approach.
What we need is a new approach - I shall call it a "people first" approach.
An approach which goes with the grain of recent reforms where they have improved access to information, made services more sensitive and sensibly devolved decision-making.
But an approach which puts rights the damage done by "market" reforms - the two-tier inequalities, the increase of bureaucracy, the absence of effective choice, the public's inability to influence decision-making, the lack of accountability, the loss of the public service ethos.
An approach which removes bureaucracy, which decentralises political responsibility as well as administrative responsibility, and which concentrates on high standards and improving quality, and above all, on responding to what people want.
And that means a different role for Government. It's not about big government or small government, but better government.
It is not Government's role to provide all the services that people want. It is Government's role to ensure that taxpayers get the best possible value for money; to monitor performance, enforce standards and improve quality; to foster partnership, enable communities to do things for themselves and to encourage innovation, not least in independent community projects and enterprises that are neither public nor private.
Local government, in particular, ought to be a seed-bed of innovation, new ideas and new practices - a magnet for bright and imaginative young people who want to work in an interesting environment, with councillors and colleagues willing to experiment and try out new ideas. Unfortunately, in too many places, I fear that public administration is attractive, not for those reasons, but because it is safe, secure and as unchallenging as it is unrewarding.
Let me make it absolutely clear that this new approach does NOT necessarily mean government, local or national, always having to be the "doer".
Indeed, in many areas it ought to mean that government moves away from "doing" in favour of "commissioning" - setting the terms for the private and voluntary sectors to carry out public functions to contracts tightly drawn up and rigorously enforced by government.
But however much government may decide to "contract out" public services, it is government, not the service providers, who must ultimately take responsibility for the efficiency and effectivenss of the service delivery. If increased accountability to the tax payer and client is a key principle, then "arms length agencies" must not become, as they so often have done today, an excuse for "arms length responsibility" for the politician.
Let me give you some examples of what this "people first" approach would mean.
In the NHS, we would see the end of unnecessary bureaucracy created solely to serve the internal market. NHS trusts would be made accountable to their local communities, and more responsive to local needs and priorities. In planning, much greater effort would be put into finding out what local people want, and responding to their concerns, in the same ways that more innovative local councils now do.
This would also help to involve the public more in the difficult issue of prioritising services - previously done by doctors in the privacy of their surgeries, now by health service administrators in the secrecy of their offices - and completely ignored as a serious issue by Labour and Tory politicians alike.
It would also lead to a completely new approach to front-line health-care services. We would see "one stop shops" for primary health-care, and a more proactive role for nurses. And a "people first" approach would build on the successful aspects of GP fundholding so that GPs have the freedom to provide the care they think is best for their patients, but within a unified funding framework that removes the inequalities of the current two-tier system.
To go with this, we should establish a new National Inspectorate for Health and Social Care in the NHS. In a service now split between commissioners of services and providers, such a body is essential. It would enforce standards, publish and disseminate advice on good practice and successful innovations, advise ministers on when standards could or should be improved and recommend closure of facilities that consistently fail to meet expected standards.
In education, there is already a national inspectorate, but there is no professional body for teachers, in the way that there is, for example, for doctors. A new General Teaching Council would become a guardian of professional standards in teaching, rewarding success and weeding out poor standards.
Instead of wasting 20 million pounds to set up a new bureaucracy to administer nursery vouchers, the Government should direct the resources into creating more nursery places, and concentrate on rigorously monitoring standards and improving the quality of early learning.
To encourage innovation, this "people first" approach would mean giving schools maximum freedom within a local strategic framework, and rewarding schools which use their facilities beyond normal school hours for the whole community.
The under-use of Britain's schools is a national scandal. Schools are still seen by too many as eight-thirty to three-thirty events for a particular age group. In the education revolution this country needs, our schools must become, instead, a resource for the whole community - centres of "community learning networks" which, in partnership with others, offer a whole range of educational opportunities for all ages, throughout the day, all through the year.
Don Foster has recently given our Party's support to the new "Creating Learning Communities" initiative, involving the Kids' Club Network and others. I want to see initiatives like these taken much further as part of a national crusade for education in Britain.
Using school facilities for after-school homework bases is part of this - but a very limited part. There should be courses for parents to learn and retrain, including on-site childcare as part of the arrangement. Other partners should include private firms, local leisure centres and sports clubs, and voluntary organisations from playgroups and after-school clubs to organisations like U3A, which gives elderly people a chance to return to learning.
A good example is in Liverpool, where the LEA, the local Association of Secondary Heads, John Moores University and the UK's largest private vocational training company plan to put 3.5 million pounds worth of multimedia computer hardware into schools to provide National Curriculum teaching in the day, and commercial training for small and medium sized businesses out of school hours. Schools and universities are providing free premises for the training firm. The firm is buying the hardware and putting IT-skilled staff into the schools to support the teachers during the day.
Similar things could be done by turning schools into the centres of "Community Sports Bases", trading cheap access to school sports facilities for access to quality coaching from sports clubs.
The possibilities are endless - but this approach needs a culture in which innovation can flourish - and that requires the decentralisation of political, as well as administrative, power.
This new "people first" approach to our public services, then, is the context in which I want to discuss the final issue tonight - additional investment in our public services.
Liberal Democrats do not believe in throwing money at problems.
But the Conservative and Labour idea that you can somehow have better services and lower taxes is a laughable deceit. To take just one example, how are we to provide every three and four year old in Britain with high quality early years learning without extra money, given the cost?
That is why, alone in British politics, the Liberal Democrats have clear, costed commitments for specific, targeted investments in our public services, targeted to specific outcomes, and geared to raising standards and improving the quality of services.
In education, we will guarantee two years high quality early learning to every three and four year old.
We will work to reduce primary class sizes which have grown massively as a result of Government cuts over the last two years.
We will increase resources for books and equipment, and for developing teachers' skills.
And we will improve post-16 training and adult education.
We will do all this by making education the first call on the nation's finances and by investing an extra two billion pounds a year in British education - paid for, if necessary, with an extra penny on income tax.
Clear, costed commitments.
In the NHS, we will restore free eye and dental checks to every person in the country, as the cornerstone of a new focus on preventing ill-health. This will be paid for with an extra five pence on a packet of cigarettes.
We will halt bed and ward closures in our crisis-hit hospitals until a full independent audit of facilities has been carried out.
We will, over three years, cut waiting lists between diagnosis and treatment to a maximum of six months.
And as we cut unnecessary bureaucracy, we will recruit new staff with enough money for 10,000 new nurses or 5,000 new doctors.
All this will be paid for by closing the large National Insurance tax loophole on benefits in kind.
Clear, costed commitments.
But in our "people first" approach to public services, it is not the money that is most important, but the improvements in standards and services. Our aim is not more money for its own sake, but higher standards, and better quality services.
We will insist on value-for-money for every penny that Government spends.
We refuse to see money wasted on unnecessary bureaucracy.
That is why, according to the Government's own figures, you will find that Liberal Democrat local education authorities hold back less money for administration than either Labour or Conservative councils.
We do insist that money raised from the taxpayer actually delivers improvements in the services they use.
Already, Liberal Democrats fully support independent instpection of LEA spending. And tonight I announce that we will instruct the National Audit Office to work with the Audit Commission to rigorously monitor the additional investment that we plan to put into our education and health services, to see that that money delivers improvements, raises standards and improves quality, and gives the taxpayer value-for-money.
This new role for the National Audit Office will go hand in hand with a new "Tax Contract" we will strike with the British taxpayer.
First, there will be no taxation without explanation. No tax increases without a clear explanation of what the money is for.
Second, we will wage war on waste. No-one will be asked to pay more in tax, until the Government has shown that it can do more to tackle waste.
And third, there will be no promises without the bill attached. We will produce a costed manifesto at the next election, making it crystal clear how we will pay for our promises.
This, I believe, is what people in this country want - clear commitments to provide decent public services and value-for-money, not uncosted promises to cut taxes that they can't believe.
The Liberal Democrats won't enter into the Tory-Labour auction of promises. We will make clear that the only way to get decent services and value-for-money in this country is with the Liberal Democrats.
We are now the only Party that will make a trenchant defence of the value of decent public services.
We are now the only Party that will dare to suggest using taxation to improve our public services.
We are now the only Party prepared to address the issue of tax in a rational manner.
I have no doubt that the election campaign ahead of us will be judged by history above all for its lack of substance.
The way we are going, Britain will drift into the next century on a tide of slogans and soundbites, without rational debate about our future and without seriously addressing the issues facing our country.
Liberal Democrats are determined that this does not happen. And starting with the issue of tax, and with our vital health and education services, we are determined to put forward something positive and constructive.
People want decent public services, and they want value-for-money. The "command-management" approach didn't work. The "market" approach isn't working. The Liberal Democrats' "people first" approach maps out a strong and successful future for our public services in the twenty-first century.
Decent services. Value-for-money. Putting people first.
That is the Liberal Democrat commitment.
That is the Liberal Democrat guarantee.