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Speech to the Public Service Reform Conference, London 2007

Gordon Brown (Labour)

Location: London

Can I say first of all what a pleasure it is to be here at a conference which started with Tony Blair's speech this morning and is a day when we have been discussing the great challenges ahead, challenges to both reform and to improve our public services.

When a recent survey was done about why people joined the public services there was a straightforward and simple answer that the vast majority gave, they said that they had joined the public services because they wanted to make a difference. So let me thank everybody who is here who is associated with any of the great public services, all the public services, for the work that you do and the service that you give, the dedication that you show, the reforms that you are pioneering and the changes for good that you are making. And let me also thank you for the insight that I think is commonly shared by everybody who is here today, that public services exist not for the public servant, but for the patient, for the pupil, for the parent, the citizen, for all those who are served.

I don't think there is a person in this room or a citizen in this country that does not remember the inspiration of their own teacher or recall the care and support of a nurse, a doctor, a porter or a paramedic who has helped them benefit from healthcare or doesn't know of the compassion and the duty shown by home helps, carers and all the great examples of public service in action, civic duty and social responsibility at its highest. So let me thank everyone associated with the success of our public services.

Now what I want to talk to you about today is what I consider to be the reform challenge and the reform opportunity. I believe that the next few years give us this great reform opportunity that by combining continuing modernisation of our public services with continuing investment, we can better harness the ethos of public services to meet the needs of the people we serve. And in a series of slides, I want to show you exactly where we are in both the financing of public services and where I think we can be over the next few years in the reform agenda ahead.

Now our challenge ten years ago was addressing under-investment in our public services. In 1997 we were facing under-investment through what we considered to be under both previous parties in government, decades of chronic under-investment and neglect of public infrastructure and services. So investment in our public services, has actually doubled over these last ten years. Capital investment, that is investment in new buildings, in new infrastructure, new technology has in fact more than trebled. And if I give you two examples: spending per pupil in our primary and secondary schools was £2,500 per pupil in 1997, it has gone to £5,500 now, it will rise by another 20% to 2010 to £6,600; the number of operations of course a week has increased massively over these years.

Now the major change that has made possible rising investment in public services is actually not a rising tax burden, the major change that has made this possible is a switch in investment from money that was spent on debt servicing and on unemployment security benefits to pay the costs of failure, to being able to spend money by cutting unemployment and cutting debt interest payments on our frontline public services. So instead of meeting the bills of failure which are in a sense the bills that you have got to pick up for what went wrong in the past, social security paying for unemployment or debt interest paying for running up bills in a recession, we have been able to switch resources to our major public services.

And just to give you an example, just over a decade ago when unemployment and debt were still very high, as much as three-quarters of all new public expenditure, all additional public expenditure, three-quarters in any one year, 75% was going to pay debt and social security with only 25% left for health, education, transport, defence and all the other services like policing. Today it is the other way round, these priorities, debt and unemployment, received only a fraction of our public expenditure, 75% of all additional spending is now going to these frontline services - health, education, transport, defence and of course policing and law and order.

So money combined with reform, and the dedication of public servants, has taken us some way along our journey. But in big public services, as you know, and this has been the theme today, we will always find huge and continuing challenges. There has been progress, and let's just reflect, I think these are very similar to the figures that Tony was giving earlier today. There has been a huge input increase, 32,000 more doctors, 85,000 more nurses, nearly 160 major hospital schemes; in terms of output we have no-one waiting more than 6 months, virtually no-one for an operation. And we have further targets to meet in the next year in schools; we have far more teachers and far more support staff, a very big expansion of course in new buildings and improved buildings as well; the output has been now 60% of pupils almost getting 5 A - Cs at GCSE, as well as the improvements in numeracy and literacy by 11. In criminal justice, the input has been record numbers of police, community support officers, the output has been crime down 35%. But this is not enough and the challenge is to do better in the future.

But the further challenge that we face is that the context in which we are making spending decisions and running our economy and trying to improve our society is also changing, and because the context is changing, the focus is changing. If the focus of the last decade was to repair the old, the hospitals, the schools and the housing that was either run-down or in need of rebuilding, the catch-up investment if you like of the past, ten years on now, the new priority, the new focus has got to be that we have world leading public services.

And so the future challenges are more daunting and more difficult than the past, but they are more daunting for another reason, that globalisation is transforming what people both expect of us and what our public services have to do. Globalisation is transforming not just the prospects for the economy, but it is also changing the nature of the world order.

If you take the changes that are happening now, China is now producing half the world's computers - one country - half the world's clothes, half the world's digital electronics. India has 80% now of all global outsourcing. So between them India and China are restructuring at a very fast rate, faster than at any time since the industrial revolution, they are restructuring our industry, our services and our prospects as advanced industrial economies for the future.

Now this change brings many benefits. For the past decade consumer goods inflation has been negative, because it is affected by manufacturing goods prices from Asia, for most families and businesses communication costs have been reduced dramatically, the economy as a whole has been able to keep interest rates low as a result of keeping inflation low. And there may be questions afterwards, but just to emphasise low inflation can only be sustained in this economy, and therefore low interest rates and low mortgage rates, if we do not allow a spiralling cycle of inflation to lead to wage inflation, and that is what is behind some of the decisions we have had to make about public sector pay.

But globalisation also brings insecurity. Environmental challenges require public investment as well as personal and social responsibility.

Then of course we have huge security challenges, the threat from Al-Qaida is evident from the 25 countries it attacked in a very short period of time. Of course the security services are monitoring hundreds of individuals at the moment. Even here in Britain which has been home to home-grown bombers, the suicide bombers. The public want to be sure that in an age when security considerations are paramount that we are doing everything that we can. And just to give you an example, since September 11 the budget that we have got to pay for security services has risen from £1 billion in total in 2001 to two and a quarter billions next year, a more than 100% rise simply for the intelligence side of security for our country.

But the third challenge of course that the public services have got to face as a result of what is happening in the economy and the economic change is absolutely massive. A million manufacturing jobs lost from America and Europe in the last year, a quarter of a million service jobs offshore, a study just published in America saying that 30 million of America's service jobs could be offshored in the next few years and of course people are anxious about the loss of these jobs and feel that free trade is actually costing them more jobs, and it makes the populations of other countries, and increasingly pressure in this country, makes people subject to protectionist rhetoric.

Now I would identify two other major social forces at work as we look forward to the next stage: one is, which I think has been underlying lots of our discussion today, rising individual aspirations, and I will come back to it, and we have got to respond to people's sense that they as citizens with higher expectations and higher aspirations for themselves and their family need us to help them meet them; and then this yearning for stronger communities, whether it is people saying that they are worried about the British way of life, or worried about law and order in their own communities, there is a sense that we are not doing enough to respond to people's desires to have stronger communities and people themselves want to be part of communities, which even in an internet age are stronger than they are at the moment.

Now the answer that we have got to consider is not how we stop the clock, and not how we reverse change, and not how we try to freeze the frame, the answer is how we can equip people best to cope with these changes and to help people achieve what are their aspirations, to help people maximise their opportunities, but at the same time to minimise people's insecurities.

So public services, as I see it, are having a critical role to play in a new era and therefore in a different way. We have got to address people's wider sense of insecurity that starts from the security of wanting to be safe against terrorism, our borders and our communities of course, but people also insecure about their livelihoods. We want to help people, equip them for change, find jobs, acquire skills, get education, ensure that they are in a position to get new skills when they need them, and of course at the same time we have got to meet people's rising aspirations.

And there is a critical role for education, because the changing labour market is just so dramatic that we will have to respond either by providing these people with the skills, or pick up the pieces if we fail to do so. There has been a 400% increase in the number of unskilled labour available to the international economy, simply because of the growth of China and India, and when we did the Leitch Report on skills we found that we needed 3.4 million unskilled jobs at the moment, but we will need only 0.6 million - 600,000 - by 2020. So there are nearly 3 million people who are in work at the moment doing relatively unskilled jobs. Those unskilled jobs will not be needed and will either be offshored or be redundant in the years to come. So we will need higher skilled people and so there will have to be a dramatic change in the numbers of people who are equipped and skilled for the professional jobs of the future, so that goes from 9 million to 14 million and that is the biggest increase that we have seen for decades. And then we have the challenge of course of meeting people's rising aspirations for services, and I will come to that in a minute.

So what is the background then to our Spending Review? We in the Treasury are having to find the finance, not simply to meet the old demands for continuing services, but also to meet these new demands that require us to do quite different things in a new era. And so while the profile of public services will change, public services are as important as ever, and it is as important that we invest to meet the new challenges and it is as important as ever that we can find a way that our frontline priorities get the resources that we need.

And my aim in the coming spending round is to realise a similar growth in frontline delivery improvement that we are seeing in this round. So in addition to overall growth in spending itself, we will need a redirection of resources so that we can have a similar growth in frontline delivery improvement, and that can happen for all the frontline services.

So how have we gone about this? What we have done is made a series of changes that will clear the ground for our priorities. First of all we have cut administration budgets in the different departments by 5% in real terms so we can move £1 billion from there to frontline priorities. The second thing we are doing and so people can see what we have tried to achieve, is to sell surplus assets. Where an asset is no longer needed, or where it is of less value than it used to be and can be disposed of, we will do so to release resources for our frontline priorities, and we are raising on this occasion £36 billions by selling surplus assets for frontline priorities. Then we are releasing resources for other frontline services by making settlements with the mainly administrative departments early on. So in our Spending Review we have already made major settlements for departments at the centre of government at either zero or minus figures in real terms for future rounds and if you take the Department of Work and Pensions administration, HMRC, Cabinet Office, Treasury, the Department of Constitutional Affairs, Attorney General, we are saving an additional £2 billions a year, not easy, I understand this, but that is money that is to go to frontline priorities. And of course to be able to do this again, I just emphasise, requires the discipline in the public sector pay rounds that I have been talking about earlier.

So what is the achievement so far as we plan our spending round? After the efficiencies we are achieving elsewhere, 3% efficiency savings across government, we can ensure resources for improving frontline services will continue to grow at the same rate in this spending review as in the last, while growing overall spending at 2% in real terms, frontline services get additional resources as a result of the changes that we have made. And that is our approach to the next stage of improving public services.

What we want to achieve is personalised services tailored to people's needs, I will just give you an example. I visited the BMW factory that produces the new Mini only a few months ago for the launch of the next model and it was absolutely fascinating to me to find that every single Mini car now produced in Britain, and every one produced at that factory, was tailored to an individual's specification. The days of the one model, one price, one colour car, the old Fordist regime of the 1930s and beyond, with identical fittings for everyone is now over. And each single car is different, either different in colour, or different in its fittings, or different in the quality for particular things that people actually want, each car tailored to what the owners want. And this is the lesson for the future for just about everything that we do. The lesson for the future of public services is that people will want their services personalised too, so that every parent's aspirations are taken into account, every patient's needs are understood, every child's talents have the chance of being realised.

And of course many of you here are involved in education itself, and just to give you an example of how we are moving towards that in decisions that we made in this Budget in the last week, Every Child a Reader is to help children catch up who are in danger of falling behind at the age of 6, to intervene early, but hundreds of thousands of children over a period of years will be able to have that personal tuition to enable them to be readers, where previously they might have left primary school unable to read. We have also expanded the gifted students programme for the best performers. We are announcing also as a result of the Budget that there will be more catch-up tuition for children in secondary schools. And of course, as a result of the Gilbert report, we are trying to give every student a single member of staff, call it a Director of Studies or a learning guide, or call it a teacher, who is just there on hand to mentor you, that is what we are trying to do, personalisation about fulfilling aspirations, of course tailored to people's needs so that people are challenged to move to the next grade of skills and to meet the targets that they have set both for themselves and their parents set for them.

And of course Tony Blair today was talking, as the Home Secretary has been, about offender management, doing that in the same way, focusing on the individual offender, and that goes right throughout the public services now.

So developing a service that is personal to the citizen's needs, and to the citizen's wishes, will take us in the next few years into exciting and innovative new areas of policy, greater choice, greater competition, greater contestability, there will be greater local accountability, there will be new approaches to the responsibilities as well as to the rights of a citizen, there will be a coming together with the third sector and social enterprise so that we can do far more.

And this conference I know from what I have been hearing today of some of the things that you are already pioneering. Let me just single out the areas where I think we can make big advances in the future. Empowering all citizens, extra rights of course for the citizen are part of this such as the expert patient programme in the National Health Service. But let me also say that I believe that information is vital to this so that people can actually use their rights more effectively.

Just let me emphasise how much importance I attach to matching local objectives for public services with the flow of publicly available data, real time data of what is actually happening on the ground, real time information that enables the professionals who run the services to use their experience to best effect, and the transparency that empowers citizens to make informed choices about how they use the services and the standards they expect.

I have seen the power of local crime data in places like New York and Baltimore, and of course you can see it now being used in parts of Britain. We are seeing local authorities across the country use internet and web portals more effectively, so that people can customise information they receive about the services they use. And just as we need information on the ground for citizens and consumers to respond, we need far better triggers for action where things are going wrong, so that local people who find services unacceptable, in need of change, can actually secure that change and they can trigger it by their action. And we now have more empowered tenant management organisations in social housing, and now in crime, the community call to action. I would like myself to see this extended to a call to action by citizens themselves in other areas, able to trigger action to change their services where they are unhappy or simply want them to be better, not just people holding public providers to account, but of course taking some power themselves.

And of course too we know of the proposals for neighbourhood agreements and charters, delegated community budgets, management and ownership of assets by communities themselves, and of course reinvigorated community democracy.

Now the next area where we will cover is the opening up of supply. Tony Blair and I last week launched the government's Policy Review document on this area at the Mossbourne Academy in Hackney. And we are looking not just to expand the role of business, but also the role of the voluntary sector in social enterprise across the public services, and I know Tony said a great deal about this today, and I would just add that one example that I found quite interesting and helpful is the benefit to the local citizen. If for example at a very local level, not just the local health centre, but the local pharmacy is able to offer services that are not offered at the moment in that pharmacy, including blood tests, making it more convenient for the individual who might find, and sometimes does find it difficult to get the GP appointment or to go to the local hospital, so a range of different providers potentially available as we open up supply.

The next area where I think we can make progress is in workforce innovation and development, and that of course is about greater flexibility and less demarcation, as Tony has said already today. And I have seen, like you have seen, health professionals who are changing their roles as a result of new technology and the new power that is opened up to them to do things they weren't previously able to do or empowered to do.

Part of what the Education Secretary announced last week with the schools settlement for the Budget includes extra support and training for teachers to be broader than simply teachers, to be tutors as well as lecturers to young people.

And I think we can also think about the idea of the lead professional here where one person, instead of a multiplicity of agencies, is empowered with a single budget to deal with what are often a multiplicity of problems associated with one individual and one family, and where this has been attempted and tried, the work of the lead professional is yielding results.

Tony also mentioned earlier today this fourth area - helping the hardest to reach. And I, like him, believe that prevention for children and families at risk must take a priority, but we also must act when things go wrong. We have innovated in services for under-5s, recognising just how influential in a child's development the first 48 months of their life is. We will redouble our efforts to expand Sure Start to tackle child poverty, to help mothers at that point in their lives where they are under great pressure with young children, and we will expand the tax credit system, as we have said we have done in response to the need to tackle child poverty.

I was in Dundee only a few days ago visiting the Family Intervention Group which has done some pioneering work amongst families that run into real difficulties, sometimes families where there is antisocial behaviour, sometimes families where there is simply a breakdown as a result of being unable to cope with their children. What has happened there is that families will sign contracts, and they will sign contracts with one agency that they will undertake to do certain things in return for getting 24 hour, 7 days a week help to overcome their problems. One to one help is crucial. Sometimes the voluntary sector or charity organisation is able to do this better, whether it is provided by traditional public services or by that group, and that I think one to one help is key. If you look at the difficult areas we face: children in care, young offenders, young people who are unemployed that cannot find a way to get back into work, people who run into trouble with antisocial behaviour at different points in their lives, the role of this one to one help is something that is important in extending to reach the hardest to help.

And then we come to the balancing of rights and responsibilities, and again in 1997 when we came into power we thought that public services for the unemployed, particularly young unemployed, could only be satisfactorily developed in a way that yielded the results that the public would feel were valuable to them, as well as to the young people if we had both rights for these young people who were unemployed, and responsibilities. And so the new deal had what was called a no fifth option of doing nothing, you had either to take the opportunities available to you or you would either lose your benefits or you would in some way be obliged to take up the training and work opportunities.

And I think this debate about rights and responsibilities in the way we manage our public services is not just a 10 year old debate, it is still a major debate about the future as well as the past. And I think we have got to be more radical in what we expect of citizenship in our country, what in return for the delivery of public services people as individuals are expected to do themselves. And perhaps it is true that we have not been strong enough in applying the rights and responsibility message across our public services from the new deal into other areas.

Only a few weeks ago with the Freud report we decided that we would take further action to ensure that there was the right balance between opportunities and obligations for people who were still inactive in the labour force, and in the Budget we were able to offer 100,000 jobs in the retail sector for people who were prepared to take up opportunities for work, either single parents or people who are inactive on benefits at the moment.

But this rights and responsibility message has got to be adapted to the modern challenges we face as well. Surely it is important that there is a responsibility in receiving educational maintenance allowances to show good school results. The rights of mothers to higher maternity benefits, again the responsibility to ensure that if these benefits are provided the infant child has the health checks that are necessary. Citizens using the National Health Service and receiving quick treatment, but the responsibility a simple one, like turning up for the appointment, not to abuse the system, while also taking care of your own wellbeing.

And this matters when we go on to look at other challenges of the future where public investments are going to be made. If you take the whole issue about climate change and the environment and what we have got to do to make ourselves one of the countries that will be world leaders in tackling climate change, then we have got to match the investments that we are making, for example for the low carbon home or the low carbon travel that we want to see, or even for the low carbon company operating from either a building that is low carbon or with techniques of production that are low carbon, there has got to be at the same time an assumption of personal and social responsibility that it is our business, and our responsibility and our duty to take action to deal with some of these problems where only by individuals taking responsibility, whether it is in the home or about the decisions you make about your own travel and the costs of that, you can actually secure the environmental change that we want to see.

So more broadly as members of the community I believe that we must balance rights and responsibilities as we move to the next stage of public services.

Now we will have the publication of our public service spending reviews in the autumn. Before then, what I wanted to say today was that I believe it is important that we have a wider public debate. Some people will not agree with these themes that Tony Blair and I have set out today, some people will believe that there is more that we can do in particular areas and this debate is something that I think is important to the country.

All government departments are already discussing with people using and running services that they are responsible for the future shape of public service agreements, but I believe that we need a wider consultation and whether it is through the Treasury's website that is mentioned there, but more likely through something that we will announce later, a wider opening up of the nationwide debate on key issues that are still to be resolved, I believe that the only way to make these decisions in the future is to engage as wide a section of the public as possible.

So this in my view is the reform challenge, but also the reform opportunity, citizens at the centre of the decision making process, and why is it an opportunity? It is an opportunity because of the lessons we have learnt from experience, sometimes doing things right and sometimes making mistakes. The new resources we are able to muster that have got to be used to best effect, the experience we have now gained, the modernisations upon which we are building, the international experience that we can draw on, as we have seen from the previous speaker, from the experience of Canada and other countries, the ideas about the future that we are bringing together with these new challenges that I have just identified that we must meet to create this great opportunity that there is a new era of reform opening up to us, that intensifies rather than lets up on modernisation. The benefits to us as a society are not just that we can actually do better with our provision of public services, but we can also lead the world in some of the changes that are being made.

So just to summarise, reforms that create greater citizen empowerment and accountability so that people have more control over the services that serve them, greater choice, competition and condensability so that people have more options from the services that serve them, including from the third sector, greater workforce empowerment so that public servants can actually gain the satisfaction and the confidence that their talents and their expertise is valued by the whole of the general public, and a focus on responsibilities as well as rights, as we personalise services that are fair to all and personalised to each.

I believe that this is an exciting new agenda for the future and I look forward to working with you in developing it in the years to come.

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