The first
hundred days
Welfare
Education
Public services
and the deficit
Health
The first hundred days / Reform
Contents
Reform is an independent, non-party think tank whose
mission is to set out a better way to deliver public services
and economic prosperity.
We believe that by reforming the public sector, increasing
investment and extending choice, high quality services can
be made available for everyone.
Our vision is of a Britain with 21st Century healthcare,
high standards in schools, a modern and efficient
transport system, safe streets, and a free, dynamic and
competitive economy.
Introduction and overview The first hundred days Summary of transcripts 4
5
8
Reforming welfare A new welfare agenda Local solutions and the Big Society A new welfare settlement The unemployment challenge Transcript 16
19
21
23
25
27
Schools for the future The state of education Supporting quality teaching Raising the bar Education for less Transcript 56
59
61
63
65
66
Reducing the deficit and improving public services Improving public sector productivity Public sector management A new era: the rights and responsibilities of individuals
and the government Government as commissioner not provider? Transcript 106
109
111
113
115
117
Delivering a new health agenda NHS: new health services Managing the budget Healthy competition Transcript 154
157
160
163
166
Reform
45 Great Peter Street
London
SW1P 3LT
T 020 7799 6699
[email protected]
www.reform.co.uk
www.reform.co.uk
3
Introduction and Overview / Reform
Introduction and Overview / Reform
Introduction
and Overview
The first
hundred days
The change in government and the challenges posed by
the economic and fiscal environment have unleashed a
ferment of ideas and discussion. Reform, an independent
and non-party think tank, wanted to bring together many
of the people who matter in the first 100 days of the new
Government to get a sense of where the Government is
and, more importantly, to engage and discuss what to do
on a number of fundamental questions.
Over three weeks in June and July Reform hosted
conferences on welfare, education, the deficit and public
services and health. Around 600 senior delegates, from
across the UK and abroad, from politics, public service,
business and the third sector, and representing all major
political parties, listened to and debated the presentations
of around 60 senior speakers and panellists. Key political
speakers are listed opposite (in speaking order).
The events provided the chance to hear the views of a
range of leading figures and organisations and, in turn,
provided these people with the opportunity to receive
questions directly from a range of delegates. Booklets
containing short think pieces from speakers and other
commentators were published with each of the four
conferences. Presentations and question and answer
sessions at each of the conferences were recorded.
This report contains copies of the agendas of each of the
four conferences, the booklets that accompanied them
and the transcripts of the discussions. To set the scene
for this material this report first contains an assessment
of the new Government’s first 100 days and a summary
of the transcripts. This report will form part of Reform’s
submission to the Government’s spending review.
Dr Patrick Nolan,
Chief Economist, Reform
4
www.reform.co.uk
Key political speakers included:
(in speaking order)
Rt Hon Iain Duncan Smith MP,
Secretary of State for Work and Pensions
Douglas Carswell MP, author of
The Plan: Twelve Months to Renew Britain
Steve Webb MP, Minister for Pensions
Rt Hon Yvette Cooper MP, Shadow
Secretary of State for Work and Pensions
Rt Hon Lord Knight of Weymouth, former
Minister of State for Schools and Learners
Nick Gibb MP, Minister of State
for Schools
Rt Hon Francis Maude MP, Minister for
the Cabinet Office and Paymaster General
Bernard Jenkin MP, Chair, Public
Administration Select Committee
Rt Hon Margaret Hodge MBE MP, Chair,
Public Accounts Select Committee
Hon Sir Roger Douglas MP, New Zealand
Finance Minister 1984 to 1988
Cllr Colin Barrow CBE, Leader,
Westminster Council
Dr Phillip Lee MP, Member of Parliament
for Bracknell
Simon Burns MP, Minister of State
for Health
Rt Hon Stephen Dorrell MP, Chair,
Health Select Committee
Rt Hon Lord Warner of Brockley,
former Health Minister
While the milestone of 100 days is not new – US
presidents are still measured against the progress made
in 100 days by Franklin Delano Roosevelt in 1933
– it is important. A poor start can create the impression
of a government of novices. A good one can provide a
new government with critical momentum. In some ways
the first 100 days should be amongst the easiest of a new
government. It has the chance to start from scratch and
to make changes with there being a full Parliamentary
term before the next election (assuming that it lasts
the distance). In other ways the challenges are greater
with the government needing to establish new working
relationships and develop a detailed understanding of
the task ahead. The first 100 days not only involves the
public getting to know the new government but the
new government getting to know its job.
Given the long-term consequences of
many policy decisions 100 days is early to
take score. Rather than easily measurable
short-term achievements what is important
about this period is whether the
government has begun to establish its
long-term vision (how it will redraw the
borders of the state).1 This is not a short
process and, as President John F Kennedy
noted in his 1961 inaugural address, “will
not be finished in the first 100 days. Nor
will it be finished in the first 1,000 days, nor
in the life of this administration, nor even
perhaps in our lifetime on this planet.”
But it needs to begin.
The coalition has stated that reducing the
deficit is its most important task. The
emergency Budget introduced by the
Chancellor of the Exchequer, Rt Hon
George Osborne MP, made a start by
signalling the intention to eliminate the
structural deficit, of 7.4 per cent of GDP in
2010-11, within the term of a Parliament.
Achieving this goal will require tough
spending choices yet delay would make
fiscal consolidation harder as interest
payments on debt and the costs of
unreformed programmes and entitlements
would continue to rise. Countries like New
Zealand, which went from a large deficit to
running surpluses in three years, and
Canada in the 1990s, where the process
took four years, have shown moving
quickly means that the government stops
accumulating debt and is able to begin the
task of repaying debt sooner. As Rt Hon
Paul Martin, former Canadian Finance
Minister and Prime Minister, noted in his
foreword to Reform’s alternative Budget,
“because [their] cuts were sharp and deep
they worked – the vicious circle turned
virtuous and the positive payback was not
long in coming.”2
Yet the measures announced in the
emergency Budget left the real drivers of
government spending unaddressed. They
set out to simply trim existing budgets.
Rather than withdrawing benefits from
people on middle and higher incomes the
Child Benefit was frozen. Rather than
introducing a link between pay and
performance public sector pay was frozen
too. As Hon Ruth Richardson, a former
New Zealand Finance Minister, who also
contributed a foreword to the Reform
Budget, noted, “imposing a lid on
increases in public spending, eliminating
waste, and salami-slicing existing budgets
tend to be the politicians’ stock answer,
but none of these approaches go to the
heart of the problem.”3 Without reform the
growing costs of entitlements in areas like
pensions and health could bankrupt the
country over the coming decades, with
the cost of benefits to pensioners alone
being set to increase by £12 billion by the
end of the term of this Parliament.4
www.reform.co.uk
5
Introduction and Overview / Reform
On this the coalition has made some
major mistakes: the increase in the
long-term cost of pensions by linking
increases in the state pension with
earnings, failing to adequately address the
cost of middle class welfare, and the
pledge to increase the NHS budget
regardless of its efficiency or productivity.
Restoring the link between the core state
pension and wages would increase the
cost of pensions by £21 billion (in today’s
money) by 2050. Yet over 40 per cent of
the welfare budget is already spent
providing support for pensioners at a cost
of around £80 billion a year. Even before
the recent change in policy these costs
were forecast to increase by £162 billion
by 2050.5 It has been argued that bringing
forward the already planned increase
(from 2026 to 2016) in the retirement age
will address these costs but this is not
correct. Costs will be higher in the period
up to 2016 and after 2024, when the
pension age will be back on its current
trajectory, any cost savings will be
minimal.6 The Government remains in
denial over the need to amend the
pensions system. This denial will cost
younger generations dearly.7
On welfare for working-aged people the
Government has set out an agenda of
reform to reduce poverty through
emphasising “Big Society” not big
government, while Frank Field has begun a
review of poverty and opportunity. Making
progress on this agenda requires focussing
on reducing the mobility blocks contained
in the benefit system and improving
educational outcomes for the poorest. This
also requires seizing local initiative and
innovation and moving the welfare system
from the economics of redistribution to the
economics of growth and mobility.
Rt Hon Iain Duncan Smith MP set out
proposals for a comprehensive reform of
the welfare system. The goal is to replace
51 benefits with a single and flexible
allowance.8 It has been claimed that this
reform would allow people with jobs to
retain more of their benefits and ensure
that people who work will always be better
off than people on benefits. While
introducing proposals for simplification of
welfare is common among new
governments around the world little tends
to come of these proposals. This is
because of their inherent problems:
6
www.reform.co.uk
• Fiscal cost is one with, for example, the
Secretary of State for Work and
Pensions having had reportedly clashed
with the Chancellor of the Exchequer
over the price of these proposals.
Lowering taper rates to make work more
rewarding could mean that more people
receive more generous assistance –
meaning costs go up. While fiscal cost
could be reduced if the government is
willing to reduce the generosity of
assistance to some families there are
questions over whether the coalition will
have the political will to create losers in
this way.
• Fairness is another problem as a
consequence of a simpler system is that
some differences in people’s
circumstances will no longer be taken
into account when assessing
assistance. Further, the complexity of
many families’ living arrangements, and
how these arrangements change over
time, mean that no government ever has
managed to achieve the goal of ensuring
that work pays more than benefits for
everyone and at every time.
The areas of welfare spending which
provide lowest value for money, such as
middle class welfare in the form of the
universal Child Benefit and pension
gimmicks such as the Winter Fuel
Allowance, free TV licences and bus
passes, have remained unreformed.
Improving the targeting of spending would
make the welfare system stronger and
more just. Experience shows that poorly
targeted spending leads to less generous
support for poor families. Even a small
increase in the generosity of a universal
programme comes at a very large financial
cost, meaning resources have to be
spread thinly and less is available for poor
families.9 Although spending on middle
class welfare is expensive and represents
poor value for money the coalition has
been, aside from a few relatively small
programmes such as the Child Trust Fund,
reluctant to require well off families to take
greater responsibility for themselves.
Introduction and Overview / Reform
After welfare, health is the second largest
area of government spending and
accounted for 40 per cent of the increase
in inputs across the whole public sector
between 1997 and 2007. The NHS budget
has, however, been ring fenced. Protecting
the NHS budget in this way will lead to
greater cuts in other departmental budgets
and will insulate the health service from the
pressure to make savings. This will mean
that opportunities to save money and
improve health outcomes will not be taken
and that the service will fail to confront the
need for fundamental reform to address
the growing cost of healthcare due to the
increasing costs of drugs and technologies
and changes in health needs (such as an
increasing incidence of diabetes).
The Government has set out a plan to
radically reorganise the NHS. The ambition
is to tear down current administrative
structures and put GPs in charge of
around £80 billion of the budget. But the
details of the White Paper mean that the
NHS will remain centralised rather than
decentralised. The Secretary of State for
Health would remain accountable for the
performance of the NHS, as in previous
years. It will remain a system in which
Ministers instruct the bureaucracy to make
the system deliver patient choice, instead
of a system based on choice itself.
Further, by choosing to reorganise the
service, rather than grasp the nettle on
how health services are financed the
Coalition has missed a real opportunity to
reform the NHS. An honest debate is
needed on how health services are
funded. Other European countries have
faced the need to consider the greater use
of co-payments and user charges, to
define a core set of services that the public
system provides and to encourage the
greater role of insurance. It is time to catch
up with these international debates.10
On education policy the new Government
has made encouraging steps in its early
days, freeing more schools from local
authority control, allowing parents to set
up new schools and giving heads more
freedom over curriculum and teachers’
pay. These changes alone will not create
great schools for the future. But teachers
and parents have a rare opportunity to
take advantage of the reforms that are
currently being introduced. If they can
seize this chance to reshape the
education system English schools could
do more to help those most in need and to
build the future the country needs and its
children deserve.
Yet to secure the future of the English
education system a number of key
questions still need to be answered.
Should there be a “core” in the education
system followed by all pupils – and if so,
what should it be?11 How can quality
teaching best be supported and how can
schools improve the quality of teaching?
How can the massive bureaucratic
overhead, in both central and local
government, be made transparent and
then reduced in order to release the
resources needed to fund greater choice?
Without good public sector management it
will be difficult, if not impossible, to develop
and implement sustainable long-term
reforms. Reform has spoken to good
managers in the public sector. They are
acutely conscious of costs to the taxpayer
and want to be held personally
accountable for performance. But they do
this despite the system not because of it.
Accountability to the users of services to
local electorates or to Ministers will
improve management and performance.
Yet Rt Hon Francis Maude MP, the Minister
for the Cabinet Office and Paymaster
General, has argued for more decisions,
especially on procurement, to be more
rigorously controlled from the centre. This
fails to address the real problem at the
heart of the Civil Service – lack of
accountability – and will shield officials
from taking personal responsibility for their
actions and draw Ministers into delivery.12
The approach that should be taken, as
argued by Sir Roger Douglas, another
former New Zealand Finance Minister, at
Reform’s conference on Reducing the
deficit and improving public services,
should be to end the notion of a civil
service career as being a “job for life,”
introduce contracts that hold civil
servants to account for the outcomes of
their work and provide them the freedom
to get on and do their jobs free from
excessive political interference.
As Rt Hon Margaret Hodge MBE MP, Chair
of the Public Accounts Select Committee,
also noted at the Reform conference on
Reducing the deficit and improving public
services, one of the features of a good
reform process is the government acting
consistently to maintain credibility.
However, while the coalition has
committed to a public spending review
which will be completed by 20 October
2010 and which will supposedly generate
a once in a lifetime debate on the role of
government, the credibility of this review
has already been undermined by the ruling
out of difficult changes, such as scrapping
free school milk, and the floating of poorly
thought out ideas, such as replacing
university tuition fees with a graduate tax.
Of the “100,000 ideas” submitted to the
spending review by members of the public
and public sector workers, the coalition
has chosen to highlight ideas such as
encouraging volunteers to form teams of
“civic gardeners” to reduce the demand
for council staff. This will not address the
drivers of public spending, such as the
increasing costs of pensions and health.
Further, the approach of the coalition to
encourage civic activity, particularly in the
third sector (Big Society), is far from
fully-formed with there being many
questions around financing and the
framework for contracting providers.
Without more clarity the question will be
asked whether Big Society reflects, as
Stephen Bubb of ACEVO noted in the
Reform conference on Reforming welfare,
truly involving voluntary organisations “in a
way that simply hasn’t been seen since
the War” or a “charade.”
It will be important to encourage voluntary
and profit making organisations in the
provision of welfare to work services given
the outlook for the labour market. The
early effect of the recession was largely
confined to the private sector, with many
private sector workers losing their jobs or
facing reduced terms and conditions of
employment. The private sector labour
market is now strengthening and the
recession is moving to the public sector.
In this public sector recession it will not be
possible to significantly reduce spending
while failing to reform front line services.
This is an opportunity as if public services
are to improve radically then the front line
needs to change.13 Yet this will require
making some honest and difficult choices,
such as reconfiguring health services to
reduce over-reliance on hospital beds.14
This will also require substantial growth in
private sector employment, which needs
the business environment to be more
supportive of growth. To support growth
the tax system needs to be more stable
and consistent and based on the
principles of broad based and low rate
taxation. This requires broadening the VAT
base, as recommended by Reform and
the OECD, rather than increasing taxes on
the most mobile segments of the tax base,
such as high income workers and the
financial sector.15
Rather than just being an opportunity to
develop a list of cuts the spending review
should be seen as an opportunity to have
an honest debate on how to curb the
over-reach of the state and what the future
state should look like. While the coalition
may have looked busy so far, that is not a
measure of effectiveness. As Sir Roger
Douglas noted at the conference on
Reducing the deficit and improving public
services when faced with a large structural
deficit it is vital that politicians start with
the right questions. The principal question
has to be what policies would be in the
interests of the nation. Only once this
question has been answered should the
question of how these policies could be
sold to the electorate be considered.
Otherwise the reform process will begin
from a position of compromise and the
chance to undertake sustainable reform
will be lost.
Footnotes
1 B
assett et al (2010), Budget 2010: Taking the
tough choices, Reform, Section 9: Redrawing
the borders of the state.
2 B
assett et al (2010), Budget 2010: Taking the
tough choices, Reform, Foreword.
3 B
assett et al (2010), Budget 2010: Taking the
tough choices, Reform, Foreword.
4 B
assett et al (2010), Budget 2010: Taking the
tough choices, Reform, Section A: Welfare.
5 B
assett et al (2010), Budget 2010: Taking the
tough choices, Reform, Section A: Welfare.
6 P
PI (2010), PPI Submission to the DWP’s State
Pension Age Review, Pensions Policy Institute,
London.
7 R
eform and IPSOS Mori (2008), A New Reality:
Government and the IPOD generation.
8 R
t Hon Iain Duncan Smith (2010), 21st Century
Welfare, Department for Work and Pensions.
9 C
awston et al (2009), The End of Entitlement,
Reform. Reform estimated that the cost of
middle class welfare amounts to around
£31 billion per year. This is a conservative
estimate and was based on a threshold of
“middle class” that accounted for differences
in household sizes and costs.
10 Bosanquet et al (2008), Making the NHS the best
insurance policy in the world, Reform.
11 Bassett et al (2009), A new level, Reform.
12 Haldenby et al (2009), Fit for purpose, Reform.
13 Haldenby et al (2009), The front line, Reform.
14 Haldenby et al (2010), Fewer hospitals, more
competition, Reform.
15 Bassett et al (2010), Reality check: Fixing the UK
tax system, Reform.
www.reform.co.uk
7
Introduction and Overview / Reform
Summary
of transcripts
This report contains copies of the agendas of each of
the four conferences, the booklets that accompanied
them and the transcripts of the discussions. Summaries
of the transcripts follow. These summaries draw out
key themes raised by speakers and do not include all
points raised. Readers are encouraged to read these
summaries with the full transcripts of the conferences.
Reforming welfare
This conference included
a keynote address from
Rt Hon Iain Duncan Smith,
Secretary of State for Work
and Pensions, and sessions
on local solutions and the
Big Society, a new welfare
settlement and the
unemployment challenge.
In his welcoming remarks Michael Smyth
CBE of Clifford Chance noted that while
there is an emerging consensus over the
need to reform welfare, important
questions remain unanswered. Questions
he raised included how do we achieve
reform while protecting the weakest and
most vulnerable? How does the rhetoric
around the establishment of a Big Society
lead to the reality of jobs and dignity and
hope? How do we transform a system
designed to defeat Beveridge’s five giant
evils into one fit to serve a modern
economy in the 21st Century? As he
argued, “So the challenges are therefore
great: income inequality at its highest
since records began, more working-aged
adults living in poverty than ever before
and over a million on benefits for nine or
more of the last ten years. But so too are
the prizes in all this: a society with social
justice and mobility [and] a welfare
framework that has justice at its core.”
8
www.reform.co.uk
In his keynote speech Rt Hon Iain
Duncan Smith MP stated that “we are
now past the time when we can think the
unthinkable. [This] is absolutely the time to
do the things that we think are necessary.”
He identified that the Government’s
welfare reforms have two phases.
• Phase one includes housing benefit
reform and the new Work Programme,
which includes plans to get people who
can work off incapacity benefits.
• The second phase involves reforming
the benefit system to make work pay,
simplifying the system to make it more
efficient and understandable, enhancing
mobility, and reforming the pension
system.
The Secretary of State noted that reform
should set out to reset the balance of
incentives as at present the poorest in
society see little reason to take the risk of
finding a job and losing their benefits. As
he argued “there is nothing big about a
society which seems content to let a
growing number of people become
dependent on the state and live without
work, aspiration or hope.”
Concerns that the current welfare state is
not working were also shared by Douglas
Carswell MP. He argued that this reflects
the fact that the welfare system is based
on an approach of universal provision
achieved by a highly centralised model
presided over by a remote technocracy.
Introduction and Overview / Reform
He emphasised that rather than
centralised, universal welfare there is a
need to look to localised provision, as this
would encourage pluralism, innovation
and accountability. As shown by the USA’s
1996 Personal Responsibility and Work
Opportunity Reconciliation Act, a greater
focus on localism would make welfare
work better and make better citizens.
Localism would, as he argued, transform
attitudes and encourage the spread of
best practice.
Stephen Bubb of ACEVO predicted that
the Work Programme would fail if it is
simply an “efficient supply chain sausage
machine and if it does not significantly
involve charities and social enterprises
and other third sector organisations in a
way that simply hasn’t been seen since
the War.” We need to encourage a whole
raft of community organisations and
national charities who are not currently
involved in providing work programmes.
As he noted, “The Big Society is not about
the state withdrawing, it is about what
David Cameron describes as a smart,
strategic state, but if Big Society turns out
to be the state retrenching, cutting back,
withdrawing and leaving us to pick up the
pieces, it will be a charade.”
David Ellis of Catalyst discussed how
“community organisations can actually
build a bigger society” and some of the
challenges that they face in the work that
they do. He noted the costs of not acting
– that the cost of educating a child from 11
to 14 costs the average London borough
£4,300 per year, that if a child is excluded
from mainstream school this increases to
£9,000 a year, in a young offenders’
institute this rises to £52,000 for a year and
to £100,000 a year in prison. He argued
that we need to learn how to build
programmes around mentoring and tailor
them to specific and local needs of young
people in the communities. The challenge
is, he argued, “to make this Big Society
happen in a big way.”
Sally Burton of Shaw Trust identified
that while the third sector can play an
important role it cannot play the role of the
organisations that bring the large amounts
of working capital needed for the Work
Programme to the table. As she noted,
why would trustees of charities want their
organisations to put significant amounts of
resources up front on a payment by
results regime when they may not be able
to guarantee getting that money back
because of factors beyond their control?
The third sector “can play a huge bridging
role but we cannot play the role of the
organisations that bring the huge levels of
working capital that are needed for the
Work Programme to the table.”
Professor Julian Le Grand, when
introducing the third session, noted the
potential growing unaffordability of the
welfare state. Life expectancy has
increased by three months in every year
since the Beveridge Report was written
and one in four children born today will live
to be 100 years old. While this is,
ultimately, a good thing it does create
challenges for the healthcare system,
social care system and pensions. “In all of
these things we are going to have to
consider how meeting these needs is
going to be financed and provided for, in
that, we are probably going to have to
consider various ways of mobilising the
private sector resources as well as public
sector ones.”
Steve Webb MP argued that addressing
these costs of population ageing requires
both a single, fair, decent and
understandable foundation for people on
which to build and for individuals to be
encouraged to take responsibility for
themselves. He argued for a policy
direction heading towards flat rate
provision and emphasised the
Government’s commitment to the principle
of automatic enrolment and to reviewing
the state pension ages. He also highlighted
the need to encourage greater levels of
savings with “probably more than half the
workforce now [not] saving significantly for
their retirement.” He concluded that “the
role of the state is not to remove the need
for individual responsibility [….] What we
need is a complementary system, the state
playing its part with a firm foundation and
then something on which people can build
so when they save they know they are
going to be better off and they can save
with confidence.”
Tim Breedon of Legal and General
noted that the insurance sector has the
capacity to play a greater role in risk
sharing. Much of the work that insurers
do overlaps with that of government –
and the insurance sector can help reduce
the welfare bill in two ways:
• Private cover, either funded directly or
through employers, which can provide
necessary funding for families in the
event of bereavement, critical illness or
unemployment, reducing the risk of those
individuals falling back onto the state.
• The second way is by transferring cover
from the state to the private sector. He
noted that the addressable risk market
has been estimated at £340 billion in the
UK and of this the private sector covers
just 35 per cent. Shifting the balance by
5 percentage points to the private
sector would take some £17 billion off
DWP spending.
Andrew Harrop of Age UK noted that
there are a lot of people on inactive
benefits in their 50s and early 60s, and it is
necessary to see welfare reform through
the prism of people in their mid-50s
onwards who have been out of work for a
long time. He argued that success at
getting the over 50s back into work should
be a major factor when increasing the
retirement age is considered. “If we
cannot work with people detached from
the labour market in their early 60s up to
65 then we need to think very carefully
before increasing the pension age to 66.”
Rt Hon Yvette Cooper MP, Shadow
Secretary of State for Work and
Pensions, struck a note of caution over
the risks of long-term unemployment
following the recession and fiscal
consolidation. She highlighted the risk that
the private sector job growth expected in
Office for Budget Responsibility forecasts
will not happen. “In the 1980s, youth
unemployment rose for four years after the
recession finished and that was when the
real damage was done in terms of the kind
of long-term unemployment that actually
scarred the whole nation for many
generations.” She also noted that while the
rise in unemployment during the recent
recession was lower than expected this
reflected changes in the wider economy,
the work that firms did to keep hold of
labour and also the work of Jobcentre
Plus. She argued that while the New
Labour welfare reforms were relatively
successful in supporting lone parents into
work, the reform of sickness benefits
should have started earlier.
David Banks of G4S Care and Justice
Services noted that the challenge for
funding the DEL-AME switch (when
contractors are paid back out of the benefit
savings they achieve) largely reflects the
challenge around getting the risk-balance
right. There is little understanding over how
much it costs to help a long-term
Employment Support Allowance claimant
into work (how long this may take and what
levels of sustainability may be achieved
over a three year period). With this
uncertainty around cost and confidence of
outcomes for client groups it is difficult to
justify up front funding. The DEL-AME
switch needs to look like an investment not
a gamble. For this reason he supported a
discovery phase to the Work Programme.
“A discovery phase period that properly
shares risk and reward between prime
contractors and the state would generate
the data needed to erode the uncertainty
which currently makes up much of the risk
in this market.”
Chris Melvin of Reed in Partnership also
noted that innovation needs to be based on
learning from best practice. He argued that
the creation of a single programme (the
Work Programme) should not only simplify
support to job seekers but could allow
providers to bring a much broader range of
services to bear in a much more cost
effective way. There are, however, still many
questions to be answered around the
contracting framework. There is a need to
be simple about the funding mechanism
and to be simple about the way we
measure success. “I would urge one word
of advice on Ministers and civil servants
engaged in the development of the Work
Programme. [….] Let’s be simple […].”
Janet Daley of The Sunday Telegraph
highlighted the need to alter the political
culture in which welfare problems are
discussed. She noted that logic that being
self-supporting and responsible for your
own life and your loved ones, which was a
normal expectation of adult existence, has
been lost. Not only is work the best route
out of poverty but it is the normal condition
for grown-ups. She argued we have
confused protecting the poor with
protecting poverty – so that the poor
become a fixed entity, an immovable
tranche of the population who must be
protected, must be looked after, must be
supported, must be treated as permanently
vulnerable when in fact poverty should
always be, especially in a reasonably
dynamic economy, a temporary condition.
“Somehow we have to break through this
notion that we are actually protecting
people who we are supporting by refusing
to allow them to become, or creating
disincentives for them to become,
independent and self supporting.”
www.reform.co.uk
9
Introduction and Overview / Reform
Schools for the future
This conference included
a keynote address by
Nick Gibb MP, the Minister
of State for Schools, and
sessions on the state of
education, supporting
quality teaching, raising the
bar and education for less.
Paul Woodgates of PA Consulting
Group argued that history is littered with
great ideas for educational reform that
have been poorly executed. He argued for
a greater focus on implementation and
how we can turn great ideas into real
practice that make a difference in
classrooms. He noted that implementation
is challenging because, in the recent past,
there have essentially been two
approaches to delivering government
policy on educational reform:
• The first was, broadly speaking, to throw
money at it, which will no longer be
feasible given the context of the public
finances.
• The second was for central government
to define a set of rules and targets and
guidance and frameworks that cascade
down through the system. But if we are
now talking about decentralisation –
about localism and empowering schools
– then centrally-driven change does not
make any sense.
Camilla Cavendish of The Times noted
how educational outcomes are polarised
between the frontiers of knowledge (e.g.,
universities creating patents and amazing
technological ideas) and between those
kids falling through the cracks, and
between the independent sector and the
state sector. She also noted that the many
issues we face in the education system
come back to teaching. If “we can be
more open about who we take into
teaching, if we can see it as a flexible
profession – and maybe, controversially, if
we can have teachers have more control
over the curriculum – we might get a
better product.”
10
www.reform.co.uk
Professor Francis O’Gorman of the
University of Leeds argued that there is
“quite a serious problem with expectations
about independence of thought and I think
that comes from a regime of high – if not
over – assessment. The setting of hoops
to jump through tends to produce among
good students people who are very good
at jumping through hoops, rather than
somehow thinking a little bit more broader
than that.” As Professor O’Gorman noted
“the real transformative effect of education
– comes through attempting that which is
challenging and succeeding – or partially
succeeding – or, at any rate, doing better
than we had thought. And, in order for that
to happen, I do think that we need space
for students to be able to make mistakes
[…] rather than being relentlessly pursued
by the dark shadow of ‘assessment’ all
the time.”
Professor Dylan Wiliam of the Institute
of Education emphasised that it is
“teacher quality not class size that
matters” and that “[class size] reduction
programmes generally lower teacher
quality. When you reduce class size you
need more teachers and, when you need
more teachers, you tend to train them
quickly and let in people who should not
have been let in.” The key is to get the
cleverest people in the country to want to
be teachers. The framework for reform
also needs to be tight but loose – reforms
have to be loose enough to be able to
adapt into settings that are different from
the ones that were envisaged. But reforms
should not be so loosely articulated that
they lose their effectiveness when
implemented.
Rod Bristow from Pearson UK noted
that in an environment where everybody is
demanding more from the educational
system a teacher has to have a “good
understanding of the needs of the
students in front of them, to know where
they are in their learning, for the whole
class but for the individual learner as well.”
Indeed, if you were to bring a teacher from
100 years ago into the future the job
would be largely unchanged – “they’d be
standing at the front of the class and doing
whole class teaching.” Data and
technology can transform teaching. It
could allow greater learning-by-doing, so
students are not just told whether they are
right or wrong, but why. It could also allow
many more worked examples than could
ever be possible in a textbook.
Introduction and Overview / Reform
We should not lose sight of the fact that,
as Professor Sir John Holman of the
National Science Learning Centre
noted, the really important thing about
what goes on in schools is teaching
subjects well. As he argued, in general,
good teaching of a particular subject
requires the teacher to know their subject.
With all else equal, subject specialists are
more effective, particularly if they are up to
date with their subject and the ways of
teaching it. Developing subject specialists
requires a focus on recruitment, which has
been helped by the economic conditions,
and training those teachers who are
already in place through providing
continuing professional development and
great experiences.
The issue of pupils’ evaluations of
teaching was discussed by Professor
Judy Sebba of the University of Sussex.
She noted that pupils are ongoing
consumers of teaching and that schools
that seek pupils’ evaluation of teaching on
a regular basis and train pupils to evaluate
sensitively improve the quality of their
teaching considerably. She also
highlighted the need to provide
accessible, synthesised and robust
evidence for teachers. Accessible
evidence and a licence to experiment,
with ongoing feedback from pupils and
properly implemented coaching, will
improve the quality of teaching.
As Rt Hon Lord Knight argued the
success of the child is to a large degree
subject to the quality of parenting, so the
discussion should not just be limited to
teaching. On teaching, however, he also
noted the need to consider more flexible
practices such as having more than one
teacher in larger, more flexible spaces.
With the right design this would have the
opportunity to create much more
engaging, more personalised learning.
Technology allows education to be
undertaken in a more engaging and
exciting way and if the education system
does not grasp these opportunities then
it will miss a massive trick for the country
as a whole as well as the children who
live here.
Nick Gibb MP highlighted the coalition’s
goal to make it easier for parents, for
teachers and for education providers to
set up new schools so that there is real
choice in every area. He highlighted the
responsibility that the Government has to
ensure high standards, that schools have
the responsibility to promote an ethos of
excellence and aspiration with
opportunities for extra curricular activities
and sport, and pupils and their parents to
ensure that their behaviour at school is of
a standard that delivers a safe and happy
environment where children can
concentrate and learn. He argued that the
state’s failure to provide enough good
schools is socially unfair and economically
damaging. He argued that there needs to
be a greater focus on teaching children to
learn, particularly acquiring knowledge
and concepts. With this in mind he
emphasised restoring the National
Curriculum to its intended purpose – a
core national entitlement organised
around subject disciplines.
Amanda Spielman of ARK Schools
noted that many children are being
prematurely steered towards vocational
and quasi vocational qualifications.
Intellectual development is not the same in
every qualification and most, not all,
vocational qualifications add very little to
pupils’ intellectual development, so they
are limiting those individuals’ horizons
unless they happen to be directly relevant
to a career path that the individual wants
to follow. While there are some policies in
schools that try and establish academic
paths as the default and that students
should be advised carefully before moving
off them, for change to truly flow through
users of qualifications, employers and
universities need to be much more open
and honest about what they value.
Ros McMullen of the David Young
Community Academy argued that
interacting intelligently with knowledge is
what education is about. The choice is not
between academic and vocation at all
– what is needed is to work with local
employers and university admissions
departments and to get the curriculum
right. As she argued, “I believe that
interacting intelligently with that knowledge
is what education is about [….]. It seems
to me that people who are entrepreneurial
and intelligent and wealth-makers are what
our society, what our world, needs. God
knows we need our next generation to be
real problem solvers.”
Professor Deborah Eyre of the
University of Oxford highlighted some
of the factors that characterise systems
that produce high performing students.
She noted that these systems tend to
have high expectations for all and to
mean it, they avoid polarisation (“the idea
that this is right and this is wrong”), they
learn from others and they are pragmatic
and realise that some things will work in
some circumstances and not in others.
As she argued, in the UK “we spend an
inordinate amount of time trying to work
out which people are going to go in which
direction because ultimately we genuinely
believe that only a few of them can be
really successful, unlike many other
countries where they start with the much
more optimistic assumption which is to
say that with this new generation of young
children coming through, better fed,
better educated, better supported than in
many other generations, we should be
able to do better.”
Simon Lebus of Cambridge
Assessment discussed how
qualifications can be part of the solution in
raising the bar rather than part of the
problem. He noted a number of
challenges in developing qualifications,
including the need to think seriously about
the regulatory regime, and to trust
professionals, reduce bureaucracy and
extend choice. He highlighted that a key
challenge in developing qualifications is
that we have a very diverse population.
“Humanity comes in all sorts of shapes
and sizes, pupils come in all sorts of
shapes and sizes and trying to put them
through a single door, trying to put them
down a single track is not an appropriate
thing to do. What we ought to be doing is
offering a diverse range of different routes,
a diverse range of different qualifications,
and I think that we need to create a
system that encourages that.”
Shaun Fenton of Pate’s Grammar
School argued that “we’ve seen all the
benefits we can get from just putting more
and more money in education and now we
can take advantage of the opportunities to
look at it in a different way.” He noted that
there were many opportunities for doing
more for less, including reducing the
compliance burdens on schools created by
Ofsted, moving away from national pay
scales and making greater use of evidence
based teaching and learning, as opposed to
government initiative teaching and learning.
He also noted the need for a culture change,
as there “is a danger in education that […]
where things need to be improved, the
intervention is measured more by the
quantity of the support that a school gets
rather than the impact of that support.”
Dale Bassett of Reform noted that while
the per pupil spending is now double in
real terms the level that it was in 1997/98
the school system is not twice as good.
Reasons for this failure to secure
proportionate improvements in
performance that he identified included
policy makers’ obsession with visible
spending and mission creep in the role of
schools. On the first issue he noted that it
“is all about inputs, it has nothing whatever
to do with outputs and the two big areas in
which this is manifested is staff and
buildings.” On the second issue he noted
that the “amount of stuff that schools have
responsibility for now I think is beyond
most people’s comprehension.”
Steve Beswick of Microsoft argued
that a reduction in spending does not
necessarily mean a reduction in quality,
depending on how you spend the money.
On this he highlighted three areas: the
contribution that schools can make, the
contribution that industry can make and
the contribution that government can
make. However, he noted that “there is
very little work being done in schools
around how IT can save costs the same
way a business would and I think that’s
something that has to be looked at.”
Simply viewing information on IT systems
rather than photocopying it would, for
example, make significant savings as in
many schools the photocopying bill is
higher than the IT budget.
Chris Davies of Tribal argued that the
subject of schools’ resources has not
been particularly high on the priority list in
terms of discussions around education
and that what we have seen is “a culture
amongst many schools that this is
something that they don’t particularly
have to focus on.” He noted that there
has not been a lot of “grit around financial
accountability for schools” and that the
“period that we are about to go into is
going to be hugely challenging for an
awful lot of school leaders.” He noted that
there are many ways that schools can
save money, but as 80 per cent of school
budgets go on staffing reducing
workforce costs is clearly going to have to
be an area to address. The challenge in
making savings is, as he noted,
“alongside all the inspirational heads […]
there are a lot who will struggle with this
sort of thing and as the Department
withdraws into the centre and as local
authorities start to wither on the vine,
who’s going to help those schools deal
with these things in a meaningful way so
they don’t damage outcomes?”
www.reform.co.uk
11
Introduction and Overview / Reform
Reducing the deficit and
improving public services
This conference included
a keynote address from
Rt Hon Francis Maude MP,
Minister for the Cabinet Office
and Paymaster General, and
sessions on improving public
sector productivity, public
sector management, a
new era – the rights and
responsibilities of individuals
and the government, and
government as commissioner
not provider.
In his keynote speech Rt Hon Francis
Maude MP highlighted how the
government is spending £4 for every £3 in
revenue just to keep the lights on, the
pensions paid and teachers in schools. He
argued that there is a need to be more
realistic about what it is possible to do in
the centre of government – particularly
given recent experience which has not
only shown that the idea that there is a
state solution for every problem is not true,
but that in many cases the insistence that
there is a state solution has made
problems worse. He noted that in his role
as the Minister for the Cabinet Office he
has a concern with clarity about what the
centre of government does and that
reforms need to strike a “lose-tight”
balance: where some things are rigorously
controlled from the centre (such as
procurement of those things which are
common across government to force
down costs) and everything else should
be pushed away from the centre. His view
was that responsibility for the delivery of
services should be put as near as to the
people who use the services you can get
and that government agencies could be
flatter and disencumbered from some of
the burdens of compliance.
Bernard Jenkin MP, the incoming
Chair of the Public Administration
Select Committee, highlighted the need
to not only root out existing inefficiencies
but to also rethink the way that the public
sector is expected to operate. Increasing
public sector productivity has moved from
being a luxury talked about at conferences
to an absolute necessity. In improving
productivity encouraging innovation will be
even more important than reducing
inefficiency. He also noted that government
agencies should be flatter. There are just
six layers of management between Sir
Terry Leahy and the Tesco cashier but, he
asked, how many layers of management
are there in the National Health Service?
12
www.reform.co.uk
As Aidan Connolly of Sodexo UK &
Ireland argued, if you are going to make
cuts you should make them quickly and
deeper than you think because, in the
long run, having to go back and do it
again it is incredibly damaging. To deliver
transformational changes the government
needs to work out how it commissions
and how it provides, and then how to
coordinate across the two. Barriers to
doing this in a cost effective way include
the government’s cultural inertia and the
presence of a tick-box system which aims
to ensure that everybody is covered
should a decision go wrong. The final
result is a risk avoidance contract rather
than a contract for outcomes. Barriers to
effective commissioning also include
inconsistency in procurement skills across
government and an inability to spread
best practice across departments, and a
risk that governments see value for
money simply as procuring the least for
the lowest.
The pace with which a budget surplus can
turn into a deficit was highlighted by Colm
McCarthy, Chair of Irish Special Group
on Public Service Numbers and
Expenditure. He noted that if the interest
rate moves against you this does not only
affect the cost of fresh borrowing but the
cost of whatever borrowing you have to
roll over every year. Further, increases in
the number of people out of work puts
upward pressure on government spending
and downward pressure on revenue.
Downward pressure on revenue is
amplified when a country relies on tax
bases that are heavily cyclical – such as
VAT on new house sales and capital gains
tax on non-residential properties. In
dealing with a deficit, Colm McCarthy
highlighted the importance of picking the
right battles. As he noted “[politicians in
Ireland] haven’t shown a shortage of
bottle, but they have rationed out their
bottle very carefully.” It is unrealistic to
expect politicians to spend capital on
saving a million here and two million there,
when they are trying to save billions more
on big issues. He also noted problems
caused by ring fencing the health budget
and major parts of the welfare budget. The
advantage of not ring fencing is that you
are proofed against accusations that you
are picking on people.
Introduction and Overview / Reform
Drawing parallels with 1981, Alan
Downey of KPMG argued that “we run a
risk if we simply find ourselves replaying
the rhetoric of the 1980s […] we will fail to
take the steps that we desperately need
to take in order to tackle the problems
that we face.” Without tackling the
ingrained inefficiency of current
arrangements the problems we face
today will simply recur. He also noted that
we risk losing sight of why we deliver
public services in the first place – they are
not simply there for the interests of the
people who provide the services. Further,
in contrast to the way we interact with
many businesses – including travel
companies, high street banks, retailers
and the music industry – the way that we
interact with public services such as the
justice system and community health
services has changed relatively little over
the last ten years.
John McTernan, a former Political
Secretary to Tony Blair, highlighted the
potential for both reducing costs and
improving services as, by and large, it
costs less to provide quality services than
it does to provide bad services. He noted
the reluctance to reorganise services like
the police and fire service, as these are
areas where there is the need for a huge
political commitment to reform. He also
put the planned reductions in spending in
context, and noted that even if we remove
the amount of money we are looking at
we will only be returning spending to the
level of 2004-05.
The barriers to change created by a poor
culture of performance management were
discussed by Michael Izza of the
Institute of Chartered Accountants in
England and Wales (ICAEW). He cited
their survey responses which showed that
senior financial managers believe that
cuts can be made in spending while
protecting front line services. Further,
financial managers do not only believe
that savings could be made, but that the
scale of possible savings is significant.
However, managers feel that the most
important thing needed to support
efficiency improvements in the public
sector is political support, especially from
Ministers. A working culture which fails to
encourage financial awareness within
departments also needs to be addressed.
Finance cannot be relegated to a
subsidiary function.
That more inputs do not necessarily
translate into better outcomes was
highlighted by Tony McGuirk QFSM,
Chief Fire Officer, Merseyside Fire and
Rescue Service, who noted that while
nobody spent more or had more fire
fighters per head than in Merseyside you
couldn’t find anywhere in the western
world that was less safe. The service had
high costs per head, poor working
practices, a poor reputation and industrial
relations issues. This service was turned
around over ten years through reducing
the number of fire fighters – down from
1,550 in 1991 to 850 now – while
maintaining the number of fire stations and
engines. Headcount was reduced through
reducing sickness absences, dismissing
people who were not performing and
improving criteria for hiring new staff. A
greater focus was also placed on
preventing fires, rather than just
responding to them. The service changed
– it visited every single home, fitted smoke
alarms and provided fire stations as
resources for the community.
Rt Hon Margaret Hodge MBE MP,
Chair of the Public Accounts Select
Committee, noted that it is one thing to
talk about a smaller state and changing
public expectations but it is another thing
to realise this, especially when there are
changes in society which may demand
increases in expenditure. The obvious
example is an ageing society, which will
have implications for pensions and health
and social care expenditure. She also
noted the dangers of rash decisions made
for quick and populist headlines, the
question mark over ring fencing health
expenditure, and the need to guard
against unintended consequences of
decisions (where cuts taken in one area
may lead to increased expenditure in
another). She argued that a good reform
process would involve government
measuring the impact of their spending
decisions, acting consistently to maintain
credibility and not just cutting but seeking
efficiency measures, sharing best
practice, ensuring that revenues are
collected and reforming public services.
The need to address staffing costs as a
part of a reform process was also
highlighted by Julie Spence OBE QPM,
Chief Constable of the Cambridge
Constabulary, who noted that 83 per
cent of her budget is staff. She noted the
need to take care when pursuing
amalgamation as a route to saving money
– as some of the biggest forces in the
country spend more per head of the
population on the service that they deliver
than some of the smaller forces. She also
raised a note of caution around handing
over budgets to the private sector until the
public sector has squeezed everything out
that is possible. There must also be
emphasis on making the reform agenda fit
the evidence base. Her services did not
measure performance against the targets
that politicians actually set to avoid the risk
of “hitting targets but missing the point.”
Good managers know you should not just
have one single top down measure. You
have to have a whole range of them.
Hon Sir Roger Douglas MP, a New
Zealand Parliamentarian and former
Minister of Finance, argued that it is
vital that politicians ask the right
questions. Too often politicians start with
the question what can I sell to the public?
What policy can I put into place that the
public may accept? But, he noted, this is
the wrong question – it will inevitably bring
about the wrong result and will not satisfy
the public in the end. The right question to
ask is what should we do in the interests
of the nation and only then should you ask
the question how the policy should be
marketed to the public. You may have to
modify the policy in the light of the second
question but failing to ask the first
question first means the reform process
will start from a compromised base. He
argued that the New Zealand experience
with reform in the 1980s and 1990s
showed that wherever a quality decision
was made then those decisions survived
but whenever decisions were half
measures the government got into trouble
and there is still major political debate. He
also noted the consensus for quality
decisions does not arise until they are
made and implemented so a government
has to do it and trust themselves. Sir
Roger Douglas highlighted the
importance of the three Cs: consistency
leads to confidence, and confidence
leads to credibility.
Allister Heath of City A.M. identified
that to a major degree the poor state of
the public finances reflects the large
increase in government spending so far
this century, with the UK moving from
being one of the low spending to one of
the very highest spending countries in the
OECD. He also noted that the increase in
taxation and government revenue as a
share of GDP over this period has been
much lower. The link between spending
and taxation has been broken. He argued
that as the economy is near the limit in the
tax burdens that it can bear, restoring the
public finances will require cutting public
expenditure as a share of GDP. This
cutting can be done in two ways – the first
is across the board cuts and the second
is restructuring spending, so that, for
example, people face more of the costs of
the services they consume or that
services are provided privately not
publicly. Failing to reform the public sector
or to redraw the boundary between what
is paid by the government and what is
paid by individuals would be a missed
opportunity, as the government would
simply be trying to squeeze an
unmanageable and unworkable system.
Cllr Colin Barrow CBE, Leader,
Westminster Council, discussed the
recent decision to merge his education
authority with that of Hammersmith and
Fulham, which was expected to bring
savings of 20 per cent, and two key
issues regarding commissioning. The first
was that there are decisions that you
cannot outsource, such as political
decisions. You have to delegate schools’
performance, for example, but holding
schools to account has to be done by
politicians. Separating the world into
those things that belong to politicians and
those things that do not is an important
and central component of the exercise in
commissioning. The second was the
importance of a local perspective. He
noted that in Westminster the Council
spends £200 million and the public sector
spends £2 billion. While issues like a road,
a school, a child with disabilities and
social problems like policing, drugs or
alcohol are very local issues, they are
commissioned in or provided into
Westminster by Whitehall. Yet what is
done closer to the client is normally not
only more attuned to the client’s needs
but also more efficient.
www.reform.co.uk
13
Introduction and Overview / Reform
Paul Pindar of the Capita Group noted
that effective commissioning requires
measuring improvements in service
quality, providing contractual certainty
regarding cost reduction and looking at
how services can be run to create a wider
economic benefit beyond simply saving.
He also noted that outsourcing over the
last 25 years in the UK has generally been
a success and gave the example of the
Teacher’s Pensions Agency, which
provided cost savings, a better service for
customers, and genuinely enriched the
careers of people that transferred over to
the private sector. However, further gains
could be made by changing the culture of
the public sector and also improving the
ways in which procurement is undertaken.
On the relationship between providers
and commissioners, Amyas Morse,
Comptroller and Auditor General,
National Audit Office, noted that there is
an imbalance because there is not enough
commercial leverage or strong enough
incentives for commissioners to control
providers. They do not pay by results for
the most part. He also noted weaknesses
between direct commissioning and planning,
failure to effectively manage processes
between relationships, commissioning
leading to a loss of economies of scale,
lack of knowledge and evidence, decisions
to commission not being based on hard
evidence, lack of data and analysis, failure to
make best use of data that already exists or
obtaining data that is needed, lack of quality
management, and recommissioning services
from providers who have a record of under
delivering. Finally, he noted that if we are
going to have a lot more contracting we
have got to make sure that the terms are
right and that there is tough commercial
thinking when it comes to contracts.
John Fingleton, Chief Executive, Office
of Fair Trading, argued that the issue of
reducing the deficit and improving public
services is essentially an exercise in trying to
de-monopolise the public sector. We know
from private sector experience that when
monopolies are removed quality and
efficiency often improve. Yet the big
question is how to remove public sector
monopolies in practice. It is necessary to
avoid simply substituting a public sector
monopoly for a private sector one. To make
competition work in practice we need to
allow new entrants to drive innovation and
allow incumbents to exit (failure regimes).
Consumer choice is also essential as this
can play an important role in ensuring that
the market delivers what the customer
wants in driving competition. Finally there
needs to be a level playing field between
private and public organisations providing
public services.
14
www.reform.co.uk
Delivering a new health
agenda
This conference included
a keynote speech from
Simon Burns MP, Minister
of State for Health, and
sessions on new health
services, managing the
health budget and healthy
competition.
In his introduction to the conference
Andrew Manning of Bevan Brittan
noted that healthcare is facing many of the
same changes and challenges as other
industries, and could thus learn from these
other examples. He also argued that to
deliver reform leaders in the NHS and the
health industry need to carefully manage
the process of change. As he noted,
“people’s desire and ability to change [is]
going to depend on the attractiveness and
the ability of the status quo compared to
the attractiveness of the new model. The
people will think, well what is the cost of
getting there? [….] Have we got a map to
get there and have we got the leaders we
want to follow together?”
Dr Phillip Lee MP, the newly elected
Member of Parliament for Bracknell and
practicing GP, highlighted the need to
de-politicise the provision of healthcare.
“I know that’s not actually possible, but it
would be nice if we could take the politics
out of healthcare because I suspect the
healthcare that would be provided would
be different if politicians were not
involved.” He noted the challenging future
for all healthcare systems due to changes
in health need (such as rising rates of
diabetes) and costs, and made the case
for a reconfiguration of services. As he
argued, “people view where their hospital
is as being their blanket, their safety
blanket, it’s where they think they’re going
to be looked after the best, and the reality
is that isn’t the case always.” He argued
that fewer big centres of excellence along
with a network of community hospitals
would allow the better management of
patients with chronic conditions and
delivery of more care closer to home. He
also noted that patients must be
encouraged to not only exercise greater
choice but take more responsibility for
their own care and their treatment.
Introduction and Overview / Reform
Sophia Christie of Birmingham East
and North Primary Care Trust argued
that while our default position is often to
see hospitals as the NHS the reality is that
the majority of healthcare activity takes
place outside the hospital. Hospitals,
which are a 19th century medical
technology, are no longer capable of
delivering much of the care modern
populations need. As she noted, “Why do
I have to travel up to a hospital, either
taking two or three buses or struggling to
find car parking in order to have a 15
minute interaction to tell me that I’m ok,
when I could get some bloods taken in the
community?” She also noted that
reconfiguring service provision away from
hospitals requires confronting vested
interests in the NHS, “the way the system
is currently set up incentivises 1948, not
2008,” and understandable public anxiety
about changing the infrastructure of the
NHS.
Cynthia Bower of the Care Quality
Commission also discussed the
challenges of service redesign and argued
that more must be done to strengthen the
position of the patient and their carers in
the system. It is important to genuinely
engage patients in decision making and to
empower patients through the system to
make more effective changes. This
requires thinking a lot more about
advocacy and support for people in doing
that. It is also important to take a more
holistic approach to people’s problems,
and to never make too many assumptions
about who the biggest users of care are
and who we need to focus on. She
stressed that better patient pathways, and
the integration of health and social care,
could significantly improve the
performance of the health services.
Sam Lister from The Times put the
recent White Paper into its financial
context and noted that a much more
integrated system is vital. He highlighted
the challenges of effectively engaging GPs
in the challenge of improving productivity
and in managing multi-million pound
budgets. He argued that with a change
programme as radical as that proposed in
the White Paper “people are going to need
their hands held, people are going to need
to be guided. It is going to take years of
close monitoring and channelling to be
able to get that through.” He also
highlighted the challenges around the
reconfiguration of services as we “do not
need as many DHGs [district general
hospitals], and DHG in the sort of Tory
lexicon has been a pretty protected
species up to now.”
In his keynote address Simon Burns MP
argued that the reforms proposed in the
White Paper would create a NHS focused on
quality, value and outcomes. He also argued
that these reforms would deliver a radical
shift in power to patients and professionals, a
focus on outcomes (not inputs) and outputs,
and replace targets with quality standards.
He noted that when “GPs are commissioning
services they will be able to do so, where
appropriate, from any willing provider. This
will introduce a new level of competition […]
within what will become the largest social
market in the world.” The Minister also
highlighted the goal of reducing layers of
management on the NHS, which the
Government has argued could deliver a 45
per cent reduction in management costs,
and noted that the Government “will not go
down the path of paying for healthcare or an
insurance system.”
The newly elected Chair of the Health
Select Committee, Rt Hon Stephen
Dorrell MP, discussed the three challenges
facing the NHS: the need to deliver value for
money, to deliver better quality and to
ensure clinical consistent outcomes and
make healthcare more responsive to patient
needs. He noted that the “challenge is how
to deliver the value for that money that has
already been committed and to which the
Government is committed to continue that
level of funding.” He argued that properly
empowered commissioning is the best way
to deliver these goals and claimed that a
central failure of healthcare policy over the
last 20 years has been to realise the
potential of commissioning. Improving
commissioning will ensure that the
necessary reconfiguration of services,
integration of health and social care and
development of patient pathways can be
delivered efficiently, particularly for patients
with long-term conditions.
Roger Taylor of Dr Foster Intelligence
began by making the point that while the
debate is still often framed as if it is a quality
versus money saving agenda this tension
can be resolved through a focus on
measuring quality of care and outcomes.
He noted that “it is simply not about the
data any more. We know what the issues
are; it’s how we turn it into action.” He
argued that, in terms of addressing this, the
current move towards GP consortia could
help through ensuring that there is a clear
locus of responsibility for information, the
care of the patient across the pathway and
the use of the budget. He also argued that
moving forward requires better information
about GP consortia, rather than just
hospitals, and patients to be at the centre of
the information revolution in the NHS.
Dr Nicolaus Henke, from McKinsey
& Co, noted that governments across
the OECD have postponed tackling the
growing costs of healthcare over the last
60 years but the need to deliver value for
money is now more urgent than ever
before. He noted three big questions on
the healthcare budget: how urgent is it to
tackle it? Where is the money? What kind
of mindset (or approach) do you want to
pursue? He then discussed five key
approaches for tackling the costs of
healthcare: budget discipline to control
costs, deferring responsibility and cost to
the patient, focus on cutting “back-room”
costs, encouraging innovation in the
delivery of care by “disruptive entrants”
and ensuring there are incentives to drive
productivity in the service.
Professor Alan Maynard of the
University of York highlighted that many
of the same problems of excessive clinical
variations and weak commissioning face
both public and private health systems,
and that proposed reforms such as
reconfiguring hospital services bring
trade-offs in either economies of scale or
competition. The question is, he asked,
“Which do you want? Economies of scale
or competition?” He also noted that the
“White Paper is almost a blank paper in
the sense that we really don’t know what
the entry and exit strategies are and we
are unclear what the incentives are.”
This raises the importance of evidence
and data, and what incentives there are
for data to be used. As he noted, “it’s the
incentives stupid, that’s what is going to
make or break the current White Paper.”
Leading the session on competition in
healthcare, Rt Hon Lord Warner began
by stating that competition on its own is
not the solution to all problems facing the
NHS. However improving competition
between providers can encourage the
NHS to change. As he argued,
“Competition is about challenge. It is
about people who are doing things well
being able to take on wider responsibilities
in the NHS.” Yet the recent experience
with extending competition in the NHS
has been “stuttering” due to weaknesses
in the commissioning process and the
political challenges around the effect of
competition on local health services. He
questioned whether increasing the
number of commissioners through the
introduction of GP consortia would
improve competition.
In his remarks, Steve Bundred, the
Chair of Monitor, began by noting that
the “NHS is enormously grateful for the
degree of protection it’s been given for
spending cuts and other sectors are very
envious of it.” He also noted that the
outcomes from the health sector are not
as good as other OECD countries and that
despite the health budget being ringfenced there is a need for efficiency gains
to be made. He argued for a more serious
approach to having a market based
system in the NHS, but for this to happen
two things need to happen. First, the
system design needs to be right, and this
requires the unresolved issues of the
White Paper, such as the role of the
economic regulator, to be settled. Second,
and this is vital, there needs to be a shift in
culture in the NHS.
Mark Pearson of the OECD highlighted
that the international evidence on the
impact of competition in health systems
healthcare is varied, with different countries
having quite different experiences. The
experience of the choice of purchasers in
the Netherlands, however, suggests that
this encouraged prices to go down and the
quantity of services to increase. He also
noted, however, that this could indicate
supplier-led demand. Finally, he expressed
a certain amount of disappointment in the
approach of the new government. As he
argued, it’s not that he thinks “that moving
to GP contracting is a bad idea […] it’s just
that I am not sure that this is the area that
matters most in health services. [….] The
UK has been very good at being very, very
innovative, in developing new ways of
running the health service but it has still not
actually picked up in trying to be innovative
in how we actually pay for care services.
We are still trapped in this model of we pay
primary physicians in one way, hospital
services in another way, and social care in
another way.”
As the last speaker of the day Adrian
Fawcett, Chief Executive of General
Healthcare Group, welcomed the White
Paper for setting out a new approach to
competition, choice and decentralisation
but noted that the White Paper only looked
at the NHS in isolation. He argued that
there is a need for an intelligent partnership
between the public and private sectors
and that the challenge in the short run is to
“use what we have currently got a lot better
than we do in order to make sure that the
efficiencies come through for the benefit
of the health sector in total.” He also noted
that, in the face of rising costs and
increasing demand, a feature of this could
be for people to take more responsibility
for themselves to generate new sources
of income aside from the taxpayer.
www.reform.co.uk
15
Welfare / Reform
Reforming welfare / Reform
Programme
Reforming
welfare
Local solutions and the Big Society
A new welfare settlement
The unemployment challenge
With speakers including Rt Hon Iain Duncan Smith MP, Steve Webb MP,
Rt Hon Yvette Cooper MP, Douglas Carswell MP, David Banks, Tim Breedon,
Stephen Bubb, Sally Burton, Janet Daley, David Ellis, Andrew Harrop,
Chris Melvin, Michael Smyth CBE and Professor Julian Le Grand
16
www.reform.co.uk
08.30 – 09.00
Registration and
breakfast
09.00 – 09.30
Welcome and
introduction
Andrew Haldenby, Director, Reform
Michael Smyth CBE, Partner, Head of Public Policy, Clifford Chance
09.30 – 10.00
Keynote speech by
Rt Hon Iain Duncan
Smith MP
A keynote speech by Rt Hon Iain Duncan Smith MP, Secretary of State for Work and
Pensions, on the new welfare agenda
10.00 – 10.50
Local solutions and the Policies to encourage social mobility and end welfare dependency have moved to the centre of
Big Society
the political debate. The Government has set out an ambitious agenda to restore civil society and
reduce poverty. This requires a new approach to delivering welfare that draws on local initiative
and local expertise to deliver innovative solutions
Douglas Carswell MP, author of The Plan: Twelve Months to Renew Britain
Stephen Bubb, Chief Executive, ACEVO
David Ellis, Group Director of Business Development and Marketing, Catalyst Housing Group
Sally Burton, Chief Executive, Shaw Trust
Chair – Nick Seddon, Deputy Director, Reform
10.50 – 11.40
A new welfare
settlement
There is a growing demand for public-private partnerships in delivering welfare. In welfare systems
throughout the world new insurance products are being introduced to cover risks that have
previously been covered by the state. Is there now an opportunity to transform the entitlement state
and encourage more people to make their own provision for the risks they face?
Steve Webb MP, Minister for Pensions
Tim Breedon, Chief Executive, Legal & General
Andrew Harrop, Director of Policy and Public Affairs, Age UK
Chair – Professor Julian Le Grand, Richard Titmuss Professor of Social Policy, London
School of Economics
11.40 – 12.00
Coffee
12.00 – 12.50
The unemployment
challenge
How can the UK reduce the rate of long-term unemployment? All political parties recognise the
value of innovative private providers and the need for greater conditionality of out-of-work benefits.
But a more comprehensive reassessment of the structure of welfare provision is needed. Reducing
long-term unemployment and the social and fiscal costs of welfare requires a new approach
Rt Hon Yvette Cooper MP, Shadow Secretary of State for Work and Pensions
David Banks, Group Managing Director, G4S Care and Justice Services
Chris Melvin, Chief Executive, Reed in Partnership
Janet Daley, Columnist, The Sunday Telegraph
Chair – Dr Patrick Nolan, Chief Economist, Reform
12.50 – 13.00
Closing remarks
13.00 – 13.30
Lunch
Reform will sum up and close the conference
www.reform.co.uk
17
Reforming welfare / Reform
Reforming welfare / Reform
A new welfare
agenda
The Reform team –
setting the agenda
Andrew Haldenby,
Director, Reform
Nick Seddon,
Deputy Director,
Reform
Eliminating the deficit will
be the defining issue of this
Parliament. The Emergency
Budget put the cost of
welfare at the heart of these
efforts. The government
spends more on welfare
than anything else. The bill
for “social protection” is
now approaching £200
billion. Left unreformed
these costs will become
crippling with the cost of
benefits to pensioners
alone set to increase by
£12 billion by the end of the
term of this Parliament.
Failing to get to grips with
this while total government
spending is falling will mean
much deeper cuts to other
departmental budgets.
Dr Patrick Nolan,
Chief Economist,
Reform
Lucy Parsons,
Senior Economics
Researcher, Reform
There is scope for reducing the costs of
welfare without compromising other
policy objectives. Much welfare spending
does not provide value for money. The
UK is spending at European levels for
poor American results. Although it has
one of the most expensive welfare
systems in the world, the UK faces rising
income inequality, low levels of social
mobility and poor outcomes for children.
Poor quality spending, not a lack of
spending, is the problem.
Welfare reform should set out to not only
save money but to support employment
and social mobility. The Government has
set out an ambitious agenda to reduce
poverty through emphasising Big Society
not big government, while Frank Field
has begun a review of poverty and
opportunity. Progressing this agenda
requires focussing on reducing the
mobility blocks contained in the benefit
system and improving educational
outcomes for the poorest. This also
requires seizing local initiative and
innovation and moving the welfare system
from the economics of redistribution to
the economics of growth and mobility.
But reforming assistance to the poorest
families should only be a part of a reform
agenda. Improving the targeting of
spending would make the welfare system
stronger and more just. Experience shows
that poorly targeted spending leads to
less generous support for poor families.
Even a small increase in the generosity of
a universal programme comes at a very
large financial cost, meaning resources
have to be spread thinly and less is
available for poor families.
18
www.reform.co.uk
Thomas Cawston,
Researcher, Reform
Kimberley Trewhitt,
Researcher, Reform
The desire to use welfare to attract votes
means that benefits for middle class
voters become more generous while
poor families are left with scraps.
Transfers to working families now
account for nearly twice as much of the
welfare budget as transfers to families
out of work. Improving welfare and
sorting out the debt will require wealthy
families to take greater responsibility for
themselves.
As the Bank of International Settlements
has demonstrated, it is the cost of
welfare, as well as healthcare, which will
largely determine the future state of
public finances. The UK is no exception.
The Emergency Budget announced
policies that would move people off
benefits and restrict entitlements, while
the Department for Work and Pensions
now intends a faster rise in the retirement
age. But will these savings be enough to
cut the deficit and make the growing
costs of welfare sustainable?
Rt Hon Iain Duncan
Smith MP and
Steve Webb MP
The case for
fundamental reform
In the run-up to the recent
Budget, the Prime Minister laid
bare just how urgently we need
to get the country’s finances in
order so that we can stimulate
economic growth and get
Britain back to work.
However, there was a
strong case to be made for
radical welfare reform long
before Britain was plunged
into recession and facing
unprecedented levels of
national debt.
The fact is that for too long
we have had a welfare system
that actively disincentivises
people from seeking work – the
most sustainable and effective
route out of poverty.
At the same time, we have
inherited a pensions system that
has allowed the value of the state
pension to dwindle while adding
more complexity for those
claiming it. Not only that, but
private pension provision is in
desperate need of reinvigoration
and millions are failing to save
enough to fund the retirement
they want.
The legacy of the last
Government’s failed regime lies
all around us.
Across the country, entire
communities are blighted by
inter-generational cycles of
welfare dependency and
endemic poverty and today
there are more than five million
people on working age benefits
and 1.8 million pensioners
living in poverty.
That is why fundamental
reform of the welfare state is
crucial. Not just for the taxpayer
who has had to shoulder the
financial burden of these failing
policies, but also for the worst
off in society who find
themselves without a clear path
out of poverty.
Now is not the time for
tinkering around the edges of
reform, but for fundamental
change. That is why we are
re-thinking our entire approach
to welfare.
A new Work Programme
will provide the unemployed
with the tailored support they
need to get into long-term,
sustainable work.
Just as importantly, we will
simplify our complex benefit
system so that we re-establish a
clear link between work and
reward for the poorest, as well as
reducing the opportunities for
fraud and error.
We will apply the same
principles to pensions, by
developing a fairer, simpler
system that people can build on
with confidence. The “triple
guarantee”, which ensures that
the basic state pension will
increase by the highest of
earnings, inflation or 2.5 per
cent, provides the first solid step
in this direction.
We will also reinvigorate
occupational pensions and
encourage personal saving
through automatic enrolment
into pension schemes and we
will simplify the myriad of other
rules and regulations that tie up
pensions.
Equally, we will reappraise
the assumptions we make about
older people in society – not
writing them off, but making the
most of their skills and
experience. That is why it is
important to phase out the
default retirement age,
empowering those people who
want to continue working with
the freedom to do so.
This is how we will help the
poorest and create a fairer
Britain where we balance rights
and responsibilities and
stimulate economic growth, as
well as building a welfare system
that is fit for the 21st century.
Rt Hon Iain Duncan Smith MP,
Secretary of State for Work and
Pensions and Steve Webb MP,
Minister for Pensions
Dr Patrick Nolan
Welfare reform
that works
Reforming welfare is one of the
hardest – but most important
– challenges facing the
Government. Any reforms will
face difficult tradeoffs. They will
need to chart a course between
providing support to people in
need while ensuring they do not
become too dependent on state
support. Unemployment and
demographic changes will push
up costs while large savings will
be needed to address the deficit.
Delivery will have to be simpler
and easier for the public to
interact with, while efforts to
encourage more innovative and
diverse providers will mean
more, not less, variation in how
people are treated.
The ways in which these
tradeoffs are reconciled will
largely determine the success or
otherwise of the Government’s
welfare reform agenda.Yet these
tradeoffs are not new. Nor are
they unique to the UK. There
are many previous and overseas
examples of welfare reform that
provide important lessons.
www.reform.co.uk
19
Reforming welfare / Reform
These include:
Save money through
cutting entitlements that
are poor value for money:
Although having one of the
most expensive welfare systems
in the OECD the UK’s system
is one of the worst performing.
This mismatch between inputs
and outcomes reflects the
poorly targeted nature of much
welfare spending – with around
£31 billion going to wealthier
households. Savings that could
be made in this area dwarf
savings that could be made in
other parts of the welfare
budget. These savings could be
made without compromising
the living standards of poorer
families.
Decide where the poor
incentives should go:
The only welfare system that is
free of poor incentives, such as
poverty traps and marriage
penalties, is one that provides no
transfers at all. Even universal
transfers discourage labour
supply and lead to higher tax
rates.Yet as all real world
systems require transfers to be
provided the crucial questions
are how poor incentives can be
kept to a minimum and how
their economic and social harm
can be reduced. This requires
judgement on whether
emphasis should be on ensuring
every family has at least one
worker attached to the labour
market or whether second
earners in couples should be
encouraged to work. How
assistance and entitlement vary
with the age and number of
children also requires
judgement.
Simplify old
programmes, do not add
new ones: Many problems
facing the welfare system reflect
the complex interaction of the
maze of welfare programmes.
Many programmes have been
developed and reformed in
isolation and contain complex,
conflicting and confusing rules.
In the UK previous efforts to
address these problems,
especially the disincentives to
work they create, have
emphasised the provision of
new forms of assistance, such as
employment tax credits.Yet
layering new programmes onto
an already complex maze
20
www.reform.co.uk
increases the welfare mess and
makes the problem worse.
Reducing disincentives and
complexity requires simplifying
old programmes, not adding
new ones. The limits to what can
be achieved through welfare
transfers also need to be
recognised. Often the more
effective approach is to reform
other areas, such as education or
regulation of the labour market.
Deliver welfare in
different ways: The UK has a
heavily centralised welfare
system.Yet understanding the
long-term interest of welfare
recipients often requires local
information, such as the
conditions of local labour
markets or efforts that people
make to find work. In recent
years some moves have been
made to better employ local
knowledge, through greater
public-private partnerships, but
transforming the delivery of
welfare also requires handing
over the power to set some
benefit rules. Increasing the
requirement for individuals to
prepare for their own future,
through the use of insurance or
personal protection accounts,
can also transform the delivery
of welfare and encourage people
to make decisions in their
long-term interest.
Dr Patrick Nolan, Chief
Economist, Reform
Reforming welfare / Reform
Michael Smyth CBE
Welfare reform and
the new politics
migrate from welfare to work.
Our view is that that transition
must be managed in a way
that optimises social mobility
and ensures that no one gets
left behind.
We are delighted to be
hosting today’s conference
which aims to address these
issues and pay tribute to Reform
and its Director Andrew
Haldenby for conceiving it.
There could surely be no more
trite observation regarding the
state of the UK public realm
than to say that the next few
years will be difficult. Of that,
few citizens appear to be in any
doubt. The same is true of
those they elect. It was indeed a
noteworthy feature of the 2010
General Election that all the
principal political parties
accepted the need for fiscal
constraint and retrenchment.
Few if any mainstream
politicians deny that the
nation’s deficit and debt burden
need to be substantially
reduced. On this score at least,
the Government and
Opposition appear divided not
by ideology but managerial
approach: not so much a
question of “whether” but
rather “how”.
But if it is agreed that “we
cannot go on like this”, how
do we genuinely ensure that
“we are all in it together”?
The five giant evils identified
by Beveridge of squalor,
ignorance, want, idleness and
disease have not disappeared
but their extirpation needs to
be paid for. Can the post-War
welfare state settlement any
longer be regarded as fit for
purpose when there are so
many more of us living longer
and protective of benefits
universal in nature?
Clifford Chance has an
interest in these matters, much
like its clients. The firm’s
headquarters are in east
London, within the borough
of Tower Hamlets, which has
one of the youngest and
fastest-growing populations
in the UK, a high proportion
of unemployed graduates and
enduring levels of poverty.
Private institutions like mine
have their own role to play in
assisting our neighbours to
Michael Smyth CBE, Partner,
Head of Public Policy,
Clifford Chance
Local
solutions
and
the Big
Society
Douglas Carswell MP
Local welfare
The welfare state is not working.
Billions of pounds are spent each
year on supporting millions of
people, yet rather than alleviating
poverty that money is helping to
sustain it. More than 50 years
after the introduction of
universal welfare provision,
today more households depend
on some form of welfare than at
any time in our history.
The problem is that the
British welfare system, built on
the model of universal provision,
is highly centralised, and
presided over by remote
technocrats.There is little scope
for pluralism, or innovation, and
almost no pressure to seek better
ways of alleviating poverty.
Both Labour and
Conservative Governments
have tried their hand at welfare
reform, but none of the steps
they have introduced has
significantly cut levels of welfare
dependency. This is because the
one policy change they have not
tried has been to devolve control
over welfare from central to
local government – a change
which when implemented
overseas has reduced both
poverty and welfare spending.
It is time to break with the
principle of universal provision,
and to localise control over
welfare. This would involve:
• Replacing the principle of
universal provision, on which
the welfare state was founded,
with the principle of localised
welfare provision.
• Providing welfare and social
security budgets not through
national agencies (as at present)
but through local county and
metropolitan authorities.
• Transferring control and
accountability for how welfare is
provided within the
communities they serve to
locally elected councillors.
• Enabling local, not central,
authorities to commission
charities and other bodies for
welfare work.
• Enabling and encouraging
different town halls to offer
different levels of welfare
support, using variable criteria
for assessing need.
Douglas Carswell MP, Member
of Parliament for Clacton and
author of The Plan:Twelve
Months to Renew Britain
Spending on welfare has grown far and
fast and is unaffordable in the face of
demographic pressures like population
ageing. Previous efforts to manage the
costs of welfare have focussed on
creating an “enabling state” but rather
than delivering a smaller and smarter
government this has encouraged less
focussed and ever-increasing spending.
A new approach to delivering welfare is
needed that empowers individuals and
harnesses the potential of local solutions
and social enterprises. This requires
curbing the ambitions of government
and redefining the boundary between
the state and individual responsibility.
The state cannot do it all – individuals
and communities must play a central role
in creating a Big Society.
Stephen Bubb
Civil society – a
solution to longterm unemployment
It has been all too easy to see
the big story relating to
unemployment as being the
number of people out of work as
a result of the recession. But
there is another story just as
pressing: the millions of people
who have been unemployed for
years, sometimes generation
after generation, who suffer the
results of long-term
unemployment at great cost to
the public purse and who are
not able to contribute to society
to their full potential. Over the
past decade and more, the state
has tried to help them into work.
Despite some marginal
successes, it has largely failed.
The problem remains.
Where the state has failed,
civil society (third sector
organisations like charities and
social enterprises) can succeed
in partnership with the state.
Rooted in communities, civil
society organisations can do
what the state finds so hard:
inter-generational support,
support built around families
and individuals, support that
cuts across the silos of state
delivery and addresses people’s
problems in the round.
Unlocking the third sector’s
potential to solve the problem of
long-term unemployment must
be central, then, to David
Cameron’s cross-governmental
drive to build a Big Society, to
revitalise civic life and to deliver
more public services through
the third sector.
In welfare reform, that will
mean having a clear underlying
ambition to leave no one behind
and a resultant focus on the
harder to help. Creating an
environment in which third
sector organisations (no matter
what their size) are able to
contribute must also be a
priority. So, for instance, we
must have a powerful and
well-capitalised Big Society
Bank and a strong Social
Investment Business to enable
third sector organisations to
deliver by raising capital. If
moving to payment by results;
we must have payment
mechanisms that reward
providers for getting the most
difficult clients into work. We
must also have a state prepared
www.reform.co.uk
21
Reforming welfare / Reform
to intervene to ensure that
partnerships or subcontracting
arrangements between
providers are based on the
interests of jobseekers and
taxpayers, not on those of larger
providers.
Long-term unemployment is
a scourge on our society. Where
the state has failed to solve it, the
third sector can. As part of
building a Big Society we must
now work together, state and
third sector, to design a system
that enables that to happen.
Stephen Bubb, Chief Executive,
ACEVO
David Ellis
Where Big Society
is already working
Big society is already happening
– for many housing associations
across the UK, it is what we do.
The best housing
associations work at a grassroots
level, building communities with
and for the people who live in
them, supported by central
government. We know our local
communities and customers
and are already delivering the
“big stuff” to them in a way that
they can use. But it is imperative
that we get the balance right. If
we go too local, we risk turning
into a bunch of parish councils,
fussing around the edges of
things, not seeing the big
picture. If we go Big Brother
command and control, we lose
the energy, the innovation and
the sensitivity that delivers a
local solution for the local
problem. Central strategy needs
to set the local free – not crush
it. There are many housing
associations embedded in our
communities holistically
delivering and adapting the
national agenda to local needs.
Housing associations are the
forerunner of Big Society. For
22
www.reform.co.uk
two centuries we have been at
the forefront of entrepreneurial
philanthropy, tackling poverty
using a powerful synergy of
charity and enterprise.
Big names like Rowntree
and Bourneville, the Peabody
Trust and Guinness, backed by
cash and a moral purpose,
spontaneously took on poverty
in the UK. They weren’t told
what to do and how to do it
– they just did it. Here at
Catalyst we go beyond housing,
challenging gang culture,
creating innovative ways to get
people off housing waiting lists,
delivering the NHS and other
support to people who are the
most marginalised in our
communities. We have started
to cut the housing waiting list
in the London borough of
Westminster by focussing our
time and resources of
understanding the problems at
a very local and tailoring the
solution to the local and
individual need. It is a new
project, but we expect see a
10 per cent drop in waiting list
applicants. Innovative
partnerships have been formed,
bringing the NHS to
marginalised communities who
can not easily access health
services, improving their
healthcare and saving cash
through prevention rather than
cure. And we have cut crime on
some of our estates by up to 38
per cent – saving millions for
the tax payer in prisons and
court costs alone.
This is Big Society – local
solutions harnessing local
knowledge to national need and
resources. It works. Moving the
poorest and most vulnerable,
who conversely can be the most
expensive in our society, to
being active participants in a
productive economy, rather
than part of the contribution to
the deficit, is a goal that is being
realized and delivered already.
Our challenge is to keep
listening and keep adapting to
what we see at a local level and
to co-ordinate better on a
national stage to bring about
tremendous change.
David Ellis, Group Director
of Business Development
and Marketing, Catalyst
Housing Group
Reforming welfare / Reform
Sally Burton
Trust in the Big
Society
Thousands of charities and social
enterprises, big and small, stand
ready to deliver a more responsive
range of public services, involving
volunteers to help forge new
styles of public involvement.
However, we are also deeply
concerned about doing things
well, and being measured by the
impact we make.
As Chief Executive of Shaw
Trust, a charity with 28 years
experience in helping disabled
and disadvantaged people to
gain employment, skills and
independence, I am committed
to ensuring that the Big Society
is big enough to leave nobody
behind and to place the most
disadvantaged and excluded
at the centre of the system.
I want the Big Society to be
about everyone, not those who
shout loudest.
A strong society and a strong
state are not mutually exclusive.
A strong state should not be a
monolithic provider of services
but it does need to be clear
about purpose, equity,
outcomes, safety and the wise
use of resources.
There are several tensions in
the government’s emerging
strategies.
The Work Programme is
welcomed for its approach to
investing more in those furthest
from work. However, the
financial model could mean
that organisations that work
within communities,
supporting the hardest to help,
may be unable to compete,
reduced to “sub contractor
status” and excluded from
implementing the model of
service which they know to be
effective. How do we ensure
that Big Society doesn’t just
mean Big Business, but means
harnessing local knowledge and
energy and integration of
services at the front line?
What about the idea of
charities running local services?
Of course many already do have
huge council contracts.
However, I am keen to see a
combination of service delivery
and social enterprise. One
example is the horticultural
enterprises run by charities
which could extend and manage
parks and other public spaces,
employing disabled people and
engaging volunteers. However,
in the drive for efficiencies,
councils have awarded ever
bigger contracts to large
national organisations and may
not be able to break them down
to stimulate local
commissioning and delivery.
How should we counter the shift
to ever bigger contracts with the
need to involve local people in
designing and delivering
services?
We all recognise the
profound change that is upon us
in this economic climate.
Politicians and managers realise
that they have a long way to go
to restore public trust. On the
whole, charities have that trust.
Many can use this as a positive
force to lead a renaissance in
local involvement, and an
engagement and a new means
of connecting with the
community.
Sally Burton, Chief Executive,
Shaw Trust
A new welfare
settlement
The UK’s welfare state is beyond the limits
of affordability. The government is already
spending £77 billion on pension benefits
and, according to the Department for Work
and Pensions, this will increase to £240
billion by 2050. An increase in tax burdens
on this scale will not be sustainable.
Reform is needed to transform the
entitlement state and seize the insurance
opportunity. Quietly, and rightly, the UK has
begun to increase the level of welfare risk
borne by individuals, such as through the
introduction of university tuition fees.
With individuals taking a new approach to
work, family and retirement, there is also
growing demand for more flexible forms
of support. Yet the existing welfare state
remains highly rigid and the private sector
is yet to fully embrace the opportunities
provided by the new welfare agenda.
A new approach is needed. This approach
requires greater use of public-private
partnerships in delivering welfare and
individuals to take greater responsibility
for preparing for periods of life when they
are in need.
Tim Breedon
Public-private risk
sharing
This year, the UK faces a
welfare bill of around £87 billion
(including tax credits). If you
add pensions this figure rises to
£185 billion. With deficit
reduction heading the political
agenda, addressing the welfare
bill should be a major priority.
Ideally this should be done
without penalising vulnerable
individuals, while delivering
long term reform – for example
by introducing slower benefit
withdrawal rates and helping to
lift people out of benefit and
poverty traps.
Inevitably, achieving this will
entail more selective
government expenditure and an
increased role for private sector
providers. This does not
necessarily equate to wholesale
privatisation: third sector, social
finance or commercial
alternatives could help refocus
benefit provision, leaving the
state to concentrate on areas of
most need and reducing the
strain on taxpayers.
Much of the Department for
Work and Pensions’ mandate
consists of providing insurance,
and here it overlaps with the
private sector. In 2007, insurers
paid some £121 billion in
pensions, accident, health and
income protection benefits.
The same year, government
spending on similar risk
management and welfare
provision (including pensions,
unemployment benefit,
statutory sick pay and
healthcare) was estimated at
£219 billion. The split is
roughly 65 per cent to 35 per
cent with the public sector
taking the lion’s share. A 5 per
cent public to private sector
shift would reduce public
spending by £17 billion. So
policymakers need to ask
themselves: which current state
insurance activities could be
partly or wholly transferred to
the private sector, and how?
There are many examples,
but to look at just one: 41 per
cent of the inactive working age
population is parked on
Incapacity Benefit. Nine out of
ten people falling into incapacity
benefit expect to work again, but
if you stay on incapacity benefit
over two years, you are more
likely to retire or die than ever get
another job.
Sometimes, sadly, illness or
accident will lead to long
term-unemployment.
Alternatively, employers can use
commercial group risk policies
to fund employees’ sickness
absences. Results have been
very positive, especially for
www.reform.co.uk
23
Reforming welfare / Reform
stress, mild depression, and
similar conditions which if not
checked quickly can cause
long-term exclusion. It works
because it serves all parties’
interests to arrange quick, good
treatment facilitating an early
return to work. These policies,
though, are disincentivised both
for employers and employees
through the tax system. This
cannot be right.
We need a holistic approach
based on what works best for
the claimant, at the least cost for
the taxpayer with the lowest
drain on economic potential. By
delivering this we can reduce
future claims, helping the
Department for Work and
Pensions focus on vital
structural reforms to welfare.
Our industry has expertise, and
is willing to help.
Tim Breedon, Chief Executive,
Legal & General
Andrew Harrop
A better pensions
system
There is probably a degree of
public acquiescence for
short-term welfare belttightening. But this should not
be confused with long term
consensus for a significant shift
of the risks of old age from
collective to individual
responsibility. In any event, the
costs of public spending on later
life, although set to rise over the
next 50 years, are quite
containable if all we aspire for is
a rolling forward of existing
levels of support. However Age
UK is more ambitious than that.
We want better pensions, care
and support for future
generations than those
experienced by today’s older
people. To make that happen we
do not want to see personal
responsibility replace state
activity, but build on it.
The aim of increasing private
24
www.reform.co.uk
pension provision is not new.
Indeed the Labour
Government’s 1998 pensions
Green Paper talked of shifting
pension provision from 60:40
public-private to 40:60.Twelve
years later only limited progress
had been made, but in 2012 the
introduction of auto-enrolment
into employer pensions will
provide suitable saving
opportunities for many for the
first time. This will gradually
replace much of what the old
state-controlled SERPS scheme
was designed to do, but will take
decades to build up. However
many commentators from the
pensions industry and
elsewhere are adamant that to
work, this new system of private
pension saving will still need the
platform of a higher, simpler
and more universal state
pension entitlement.
Many of the same principles
apply to the funding of care and
support. We will need to
maintain a state-funded safety
net for those without their own
means, but for everyone else we
must promote responsibility by
offering attractive private
payment options including
insurance, saving and the
unlocking of capital.
Universal pensioner benefits
such as Winter Fuel Payments,
so called middle class benefits,
are currently under attack, but it
is worth remembering they
form just one part of a state
pension system which was
described by Adair Turner’s
Pensions Commission as
“among the lest generous in the
developed world”. We can
debate the balance between
universal and means-tested
entitlements, with all the
complexities and cliff-edges the
latter entail, but the key test is
whether the pension system as a
whole reduces poverty and, for
more affluent groups, replaces
an improved share of previous
earnings.
Turning to pre-pension age
benefits, everyone can sign-up
to the principle of a much
simpler benefit system, which
does not discourage work; and
alongside this, greatly improved
welfare-to-work support. But if
these aims were easy to achieve
the previous government might
have made more progress.
Reforming welfare / Reform
Getting the detail right is
everything. For Age UK, the test
will be what impact reforms
have on people from low
income backgrounds in their
late 50s and 60s who often face
a combination of low skills, poor
health and age discrimination.
If welfare-to-work works for this
group it will work for everyone;
but if it does not, welfare reform
must not penalise them. We
should not be pushing up the
state pension age and reducing
payments from working age
benefits in the name of work
incentives, if the result is
hundreds of thousands of
over-55s cast into poverty
with little realistic chance of
finding work.
Andrew Harrop, Director of
Policy and Public Affairs, Age UK
Kerrie Kelly
A new welfare
settlement – the
insurance industry
view
How the state, the insurance
industry and consumers
respond to the welfare
challenges of the next decade
and beyond is one of the most
important issues the new
coalition government must
address. If current standards of
welfare protection and
pensioner prosperity are to be
maintained or improved then
Government, industry and the
public alike need to wrestle with
difficult challenges.
The insurance industry
welcomes the new
Government’s stated aim to
re-examine the balance
between state provision of
welfare and private insurancebased solutions, echoing the
report on a vision for 2020
co-authored by the previous
government and the industry in
2009. That report identified
that 65 per cent of the
addressable risk market was
provided for by the state with
the remainder taken by the
private sector through products
such as private pensions, health
insurance and protection
insurance. A five per cent shift
towards the private sector, the
report estimated, could save the
Government and taxpayers
£17 billion annually – more
than the budgets of the Home
Office, Foreign Office and
Defra combined.
So both main parties have
agreed something should be
done but how do we make
progress from here?
From the market side,
insurers will need time to get
this right. Taking on the extra
five per cent of risk identified
above would require an
estimated £9.7 billion of extra
capital – at a time when the EU
Solvency II directive will
already be adding very
significantly to capital
requirements. Time will also be
needed to develop the right
products, with the risk priced
accurately and designed in a
way that will be attractive to
customers and meet the
approval of regulators.
From Government and
regulators, the industry will
need a commitment to a
long-term framework covering
regulation, tax incentives and
certainty about what the state
expects to provide. Cross-party
support would be even better.
Certainty would allow the
market to design products that
would be attractive to groups of
customers for whom state
protection was no longer
necessary or desirable. In some
cases, this would almost
certainly involve partnership
– most obviously in designing
products for long-term care.
So insurers potentially have
a vital role to play in designing
a new welfare settlement. There
are benefits as well as risks for
all concerned, but only with
bold leadership and a will to
genuinely take long-term
decisions will we find a
meaningful solution for the
future.
Kerrie Kelly, Director General,
Association of British Insurers
The unemployment
challenge
The failure to reform the welfare system
while times were good means that it is
now necessary to reform welfare in the
face of greater demands on the system.
Yet ignoring the need for reform is not an
option. Without reform it is more likely
that a legacy of the recent recession will
be higher rates of persistent and
long-term unemployment.
All political parties recognise the value of
innovative private providers and the need
for receipt of out-of-work benefits to be
made more conditional on work effort.
However, welfare providers continue to
operate with one hand tied behind their
back. Social enterprises and companies
are improving services for unemployed
people, but their impact is limited because
they do not have full control of the full
range of benefits and programmes for the
unemployed. A new approach is needed.
David Banks
The unemployment
challenge
There are almost five million
people of working age who are
not in employment.This
represents an enormous cost to
the taxpayer, to society and,
most significantly, to the
unemployed individuals. If you
are unemployed then you are
more likely to suffer from
ill-health, you are more likely to
be unhappy and you are more
likely to die early. And this
disadvantage is passed on to the
next generation – the children of
workless individuals are more
likely to leave school with no
qualifications, are more likely to
be victims or perpetrators of
crime and are more likely
themselves to be unable to hold
down a job. Intergenerational
unemployment kills social
mobility and perpetuates social
exclusion.We have a moral
imperative to do more to help
unemployed people to find
decent, meaningful employment.
We also have a financial
imperative. The UK spends over
£40 billion a year on primary
benefits for unemployed people
of working age.
The Unemployment
Challenge is not intractable.
Indeed the solutions are
reasonably widely understood
and accepted. There are three
primary areas where research
suggests that we can make an
enormous difference.
First, work should pay.
People need to know that they
will be financially better off by
being in work. A re-imagining
of the benefits and tax system
for low-income groups would
help many people escape
worklessness. In the past the
necessity of this task has been
outweighed by the complexity
of achieving it. In meeting the
complexity challenge we will
make a critical step in reducing
unemployment.
Secondly, we need a unified,
effective, Active Labour Market
Programme that best deploys the
resources available to help the
maximum people find sustained
employment. Underpinning this
is the creation and maintenance
of a vibrant and diverse supplier
market in which contractors
are paid only when they
achieve results.
Thirdly, the potential benefit
savings that will be made by
www.reform.co.uk
25
Reforming welfare / Reform
helping people into work need to
be leveraged in order to generate
those savings. Many unemployed
people have complex constraints
to employment that require
significant investment to
overcome. Only by releasing the
spending power of future benefit
savings will we be able to make
the transformative investment
required to significantly reduce
unemployment numbers. There
are very real complexities in
solving the AME/DEL riddle.
It will require the collective
imagination and resource of
government, prime contractors,
providers and other key
stakeholders to overcome them.
David Banks, Group Managing
Director, Care and Justice
Services, G4S
Janet Daley
Self-perpetuating
poverty
The absurdity of a benefits
system which penalises those
who take paid employment by
making them worse off than if
they had remained out of work
has been clear for many years.
Even Labour ministers admitted
its failings in private (and
occasionally in public). Welfare
dependency perpetuates
defeatism, despair and civic
exclusion. It condemns people
who are not necessarily the
wilful “scroungers” of tabloid
notoriety to a futile dead-end
existence in which the possibility
of self-reliance (let alone
self-improvement) becomes
further and further out of reach.
As well as the damage to
individuals and the waste of
personal potential, it creates
long-term economic and social
problems by making poverty selfperpetuating. As Arther Laffer
has said, “If you pay people to be
poor you will never run out of
poor people.” And if you penalise
people for going to work, you will
26
www.reform.co.uk
Reforming welfare / Reform
make the decision not to work an
eminently rational – sometimes
unavoidable – option. Paid
unemployment as a lifetime
condition is unsustainable
economically because it is hugely
expensive and wasteful of human
resources, and socially because it
creates a permanent underclass
locked into hopelessness with all
the attendant problems of
criminality, drug addiction and
irresponsibility that follow.
At a time of recession, reform
is almost certainly going to
involve a “workfare” programme
in which those who have received
unemployment benefit for more
than a minimum amount of time
are required to do community
service of some kind.This
activity need not be seen as
punitive or shaming but as an
attempt to introduce the concept
of reciprocity and social
participation. It would, if
anything, tend to reduce the
stigma of prolonged benefitdependency by addressing the
sense of unfairness – of nonworking people being supported
by the rest of the population
indefinitely. More importantly, it
would give recipients some
experience of structure and
purpose in their daily lives. In
practical terms, it would virtually
eliminate the possibility of
claimants working in the black
economy.
The criticism on the Left of
American welfare reforms has
centred on the argument that
they “force people into low paid
jobs”. It is true that far more
people have taken on low wage
employment in the US since the
welfare reforms of the 1990s.
But all the evidence shows that
most people do not remain in
low or minimum wage positions
for long: once they start
working, they move up the
employment ladder quite
quickly. While there may be, at
any given moment, a proportion
of the working population in low
wage employment, they are not
the same people from one year
to the next. Work, as many
statistical studies have shown, is
the best and most lasting cure
for poverty.
Matthew Taylor
IB or not IB: is that
the question?
Janet Daley, Columnist,
The Sunday Telegraph
Matthew Taylor,
Chief Executive, RSA
A major welfare challenge for
the Coalition will be getting
long-term Incapacity Benefit
claimants back into work or
starting to actively think about
doing so. It is one thing stopping
new claimants coming on to the
books, as the last Government
was already doing, another
entirely telling a 56 year old man
with no qualifications and no
recent employment record that
he is losing a sizable chunk of
the livelihood he has relied on
for a decade. Providing high
quality services so that this is a
transition into employment has
to be the minimum expectation.
The simplest route is sheer
compulsion but there can be
little doubt that this will cause a
major backlash, and not just in
Labour seats. But how do you
sugar the pill when the
Chancellor has screwed the lid
of the sugar jar tight shut? With
proper funding and realistic
targets, there are plenty of
providers who would be willing
to have a go at getting the rolls
down, and the moves to ensure
providers are paid by results in
terms of savings to the
Exchequer is one way to ensure
this happens.
The alternative is to wheel
out lots of tough rhetoric but to
accept a slowly downward curve
as fewer new claimants are
allowed on IB and long term
claimants leave the labour force.
But this will not generate the
savings upon which the
Coalition seems to be relying.
So it will be fascinating to see
how the Department for Work
and Pensions intend to pull off
the conjuring trick.
Transcript
Michael Smyth:
Secretary of State, ladies and gentlemen, my name is
Michael Smyth and on behalf of all the partners at
Clifford Chance, I’d like to make you very welcome on a
sticky summer’s day to a sticky but important subject,
namely that of reforming welfare. That welfare requires
to be reformed is now the subject of an emerging
consensus with broad acknowledgement that we must
incentivise the worker, reward aspiration and give
opportunity to all whilst protecting the genuinely needy.
But if there is broad agreement from the direction of
travel, there remains uncertainty about the detail with
important questions still unanswered – how do we
achieve reform whilst
We must incentivise the
protecting the weakest
worker, reward aspiration and most vulnerable so
that nobody is left
and give opportunity
behind? How does the
to all whilst protecting the rhetoric around the
genuinely needy
establishment of a Big
Society lead to the
reality of jobs and dignity and hope? How do we
transform a system designed to defeat Beveridge’s five
giant evils into one fit to serve a modern economy in the
21st century?
These surely are amongst the questions to be
asked at today’s conference and it is fitting perhaps that
we convene to do so at Canary Wharf, still by most
measures the richest piece of real estate in Europe, but
sitting also at the heart of one of Britain’s poorest
boroughs where wealth and opportunity live in close
proximity to high unemployment and in-ground
poverty. We have in this area a growing young and
ambitious population and yet fewer than 10 per cent of
the people working in Canary Wharf were born or live
in Tower Hamlets and over 50 per cent of the borough’s
children were born into households where neither
parent works. That cannot be acceptable morally or
sensible commercially.
Private businesses like this one have an important
role to play in assisting any process of transformation,
the marketplace cannot just be a means for contract and
exchange but must also maximise opportunities to
deploy wealth and success to improve the public realm.
Law firms have no reason to be complacent in this
regard. Last year’s report of Alan Milburn’s commission
on access to the legal profession suggested that by a
number of measures it was now more difficult for those
in working class backgrounds to become lawyers than
ever before. Compared to the 60s and 70s the direction
of travel is now remorselessly in the wrong direction and
who are we, in elite law firms, to condemn those who fail
to seek work opportunities in other locations when it is
increasingly difficult in this office to persuade staff to
move around the world because they are
understandably reluctant to risk prejudicing the career
prospects of other family members. So let us for our
part be quick to acknowledge that these issues are
complex and affect many of us.
So the challenges are therefore great: income
inequality at its highest since records began, more
working age adults living in relative poverty than ever
before and over a million on benefits for nine or more of
the last ten years. But so too are the prizes in all this: a
society with social justice and social mobility, a return to
their rightful place at the heart of the public realm, and,
you will perhaps forgive me if I say as a lawyer, the need
for a welfare framework that has justice at its core is
important to me. So this is set fair I think to be a terrific
event.
Before we move to the substantive proceedings it
falls to me what quaintly used to be known in the media
as a public service announcement – we are not
expecting a fire drill today so if you hear the fire alarm
respond appropriately against that context. I will help
you with a visual demonstration in the manner of a non
striking BA steward and say that the exits are here and
here and here and here and, if you get outside, the river
if you need to douse yourself is in that direction. Please
extinguish anything electronic that you have about you
because it will affect the mikes here. Lawyers are very
reluctant to adhere to that injunction but I know there
are few lawyers in the room today so I expect
compliance in that regard. We will give you food and
drink throughout the day. We do hope in particular that
you will stay for lunch but there is a condition precedent
to you being able to indulge in that regard and that is
that you will be proactive. The conference programme
permits questions and answers at every turn, we have
roving mikes and we do value your participation
enormously.
There are a variety of sponsors today who will be
thanked properly in a moment but I want to pay tribute
in particular to the fact that this day has been conceived
and to a very large degree executed by one organisation,
namely Reform. Reform was amongst the first to identify
the importance of this subject, it has been in the van of
the very necessary
Reform was amongst the forensic and intellectual
work that has to
first to identify the
any sensible
importance of this subject, underpin
discussion as regards
it has been in the vanguard how our welfare is to be
improved. They have a
of the very necessary
terrific number of work
forensic and intellectual
behind them
work that has to underpin streams
with more to come and
any sensible discussion
it is an association that
as regards how our welfare we at Clifford Chance
are delighted to have
is to be improved
and it is very
appropriate that this is their event and very appropriate
too that the chairman of today’s proceedings is the
brilliant young director of Reform, Andrew Haldenby.
I’m not sure why that induced giggles but I think he’s
brilliant and he will conduct you through the rest of the
day’s programme.
Andrew Haldenby:
Now I’m blushing! Don’t believe a word of that,
certainly the young bit. Well good morning everyone I
will just say a few brief words because Michael has set
up the day perfectly. This is the first of four major
conferences that we are holding in these 100 days, this is
www.reform.co.uk
27
Reforming welfare / Reform
day 49 if anybody hasn’t realised it. Today welfare with
Iain Duncan Smith, tomorrow education with Nick
Gibb, next week public service productivity with
Francis Maude and later in the month, health with
Simon Burns.
Because this is the most amazingly exciting time it
seems to us, there is a ferment of ideas, the new
government and the economic environment and the
need to tackle the deficit
The new government and have unleashed an
the economic environment absolute ferment of
and discussion
and the need to tackle the ideas
and we wanted to bring
deficit have unleashed an together the people that
absolute ferment of ideas matter in these hundred
days to get a sense of
where the government is but more importantly to
engage and to have a discussion together about what to
do on these fundamental questions.You clearly have
given up your time to come and I am thrilled that we
have such an exceptionally strong event today which
gives it its critical mass.
What we are going to do is record the
discussions today. We will write them up and we will
submit them to the Treasury as part of Reform’s
submissions to the spending review, so today is an
important part of our work in influencing the spending
review and the Treasury will get that in good time
before that October announcement.
Let me just whip through the programme that is
in your brochures. We are going to talk about four
things: the first is the big question of the welfare budget
and of reform. We have got to get the welfare budget
down given the deficit but the question then is what is
the approach to reform, how much is going to change
so that we can improve the delivery of benefits at the
same time as reducing costs, and clearly we are
absolutely delighted that Iain Duncan Smith wants to
take this platform. He has been a firework of activity
even in the last few days so for Iain to take this moment
to put into context his developing thinking is wonderful
for us and he will take questions.
Secondly, we will talk about the Big Society, the
idea there being that big government has not been
perfect in delivering welfare. It has been not only
impersonal and bureaucratic and uncaring but also
inefficient, so the question is can the Big Society be a
better alternative. The third session is what happens to
welfare when people take more responsibility
themselves and when there is a new settlement between
the state and its activity in financing on one side and the
individual and the rest of society and families on the
other. Again I am thrilled that Steve Webb, the Pensions
Minister, will be able to give his thinking there. The final
session is unemployment, which is a core issue given the
economic situation and the move out of recession.
There has been a consensus on opening up the market
in providing services to unemployed people but the
question is, are new ideas needed given the scale of the
challenge? As you know Reform is an independent
charity and a cross party organisation, and I’m thrilled
that Yvette Cooper, the Shadow Secretary of State, will
join us for that session. We will close at 1 pm for lunch
and no later.
Because this event has exceptionally generous
sponsors we have been able to do it in a proper way and
on a large scale, so that is the first reason for thanking
28
www.reform.co.uk
Reforming welfare / Reform
them, but more importantly we are going to benefit
from their intellectual capital as they contribute to the
discussions today. So Stephen Bubb for ACEVO and
David Ellis for Catalyst will tell us about the Big Society
and what they are doing; Tim Breedon of Legal and
General, who I did see come in but can’t see right now,
Tim Breedon who is also the new Chair of the ABI, will
speak on the new Welfare Settlement and then David
Banks of G4S and Chris Melvin of Reed in Partnership
will speak on the unemployment challenge. I am
extremely grateful for not only your financial support in
helping us towards the cost of this event but also your
intellectual contribution and my profound thanks, of
course, to the very brilliant, and young, Michael Smith
whose pro bono work is really remarkable. Clifford
Chance does not just sit in this remarkable building and
sort out the problems of many companies and
governments, it absolutely reaches out into the
community and seeks to improve people’s lives directly
so Michael, not only for your help today but also for
that, we pay tribute.
Keynote Speech by Rt Hon Iain
Duncan Smith MP
Andrew Haldenby:
Let me introduce Iain Duncan Smith. I am not going
to say very much more than the fact that Iain has been
Secretary of State for Work and Pensions now for
these seven weeks. He is going to take questions which
I will chair and I am only going to say that it is not
often in politics that someone with a passion for a job
gets to do that job and this is one of those rare
moments. So Iain can I ask you to come to the podium
and tell us your thinking.
Iain Duncan Smith:
Can I say thank you very much indeed for the
opportunity to lay out today some thoughts on where
we would like to go and in a sense where we are. But can
I just say that I feel quite ordinary and quite dull beside
the brilliant Michael and the brilliant Andrew, I’m sorry
you are just going to be treated to a boring speech by me
but nonetheless they will liven it up later on I’m sure!
Can I also say that before I really get going, that
many of you know that I set up and have been involved
with the Centre for Social Justice which continues
without me now as an independent organisation. I’m
sorry for the plug for a rival think tank but …
Andrew Haldenby:
Not at all, we believe in competition.
Iain Duncan Smith:
It is in fact independent and I dare say it will be in due
course cajoling and critical as must be its right, but I am
no longer the chairman of it but it still continues. It was
really in that guise that we first started to look at what
was going wrong with a society that in a sense had never
had it so good in a way, there was so much money
around but it was becoming in certain areas
phenomenally dependent and I was reminded by the
great statement by Tony Blair when he was Prime
Minister, when they came in in 1997. I must say how I
wish this was 1997 with a growing economy and an
awful lot of money around. So much of what I say of
course will be set in that context, but he did talk at the
time – and I think genuinely meaning it too – that it was
time for proper welfare reform and that they would have
to think the unthinkable and he brought Frank Field in.
I have never thought that thinking the
unthinkable was the problem, the problem has been
doing the, up until then, the undoable, which is the real
issue here for as soon as you start to make change, of
course, everybody finds a reason why that change
cannot take place. So in the context of what I say
today, I hope you’ll remember that we have sort of
been here before but I think we are now past the time
when we can think the unthinkable. I think this is
absolutely the time to do the things that we think are
necessary and so in that context I hope to use today to
set out a direction of travel and to give you some
examples of why I think reform is necessary.
Of course everything is set in the context of our
economic situation. I don’t need to remind you, but
being a politician I will, that the emergency budget has
come about because we as a nation are pretty bust and
there isn’t any spare cash sloshing around the place.
Unless we get the borrowing and the deficit under
control, in many senses things could be a lot, lot worse. I
know there is a bandying around between politicians
about whether or not Greece is a future for the UK or
not, the reality though is very simple and
straightforward, that unless we do get the deficit under
control, as every serious economic commentator has
already said, then the cost of our borrowing alone, even
before they raise the interest rates on us, would be
staggering and cause every single tax payer to be hit by
huge payments.
So the Budget, the emergency Budget, was set to
drive down our record deficit, cut the second highest
level of debt in Europe, which as I remind everybody is
projected to be £149 billion this year, over the course of
this parliament, with what I suspect – agreed or not
agreed – is at least a clear five year plan. Securing a
forecast for steadily falling unemployment is critical and
producing a plan for sustainable economic growth
within the centre of that. George Osborne, having set
that out in major consultation with myself and others,
has at least now set the course for what I believe will be a
fair budget and a fair future into which we may set
proper reform. But the budget of course was not just
about getting the deficit down, if that was all then I
wouldn’t be here today, I actually wouldn’t even be in
this job. I have come here because I believe what Tony
Blair said back in 1997 was absolutely correct, my
concern is that it has taken all these years for us to
recognise that some quite important decisions need to
be made.
So I see the Budget really as phase one of an
agenda for change that has two phases. It has laid the
groundwork for reform and is not just I believe about
top slicing budgets simply to save money, it has to be
about more than that even as we start through the deficit
reduction. Let me give you an example of how I see this.
Phase one within the Budget sits across two areas that
are absolutely necessary for reform and are right in the
heart of the Budget. The first is for housing benefit
reform and the second is bringing the new work
programme which includes our plan to get people who
can work off long term incapacity benefits, two big
issues in the early phases which are necessary. I remind
everybody here that the cost of Housing Benefit and
Incapacity Benefit have absolutely spiralled pretty much
out of control over the last number of years and put a
great burden on the taxpayer but the true cost has been
paid by some of the poorest receiving those benefits
because it is not just about the money, it is the fact that
they have become trapped in a form of dependency by
the very nature and the structure and in many senses
the scale of those benefits.
Let me just deal with Housing Benefit first. No
one can really doubt that these reforms are long
overdue, it is the sort of stuff that politicians in the tea
room at Westminster privately all say is absurd,
whatever party by the way, except for those who have
long since given up rational thought, but the rest of the
politicians – and there
The true cost has been paid are a few – all discuss
quite openly that there
by some of the poorest
something
receiving those benefits… isfundamentally
wrong
it is the fact that they have with this system. It has
become trapped in a form been going on for years,
of dependency by the very we were all in
agreement about that.
nature and the structure
In real terms the cost of
and in many senses the
the working age
scale of those benefits
housing benefit has
absolutely spiralled, it
jumped by some £5 billion in five years and it is
projected to reach £21 billion if we do nothing about it
by 2014/15. Massively demand led and obviously
clearly unsustainable. It would be unsustainable frankly
if we were sitting here with the money that we had in
1997, and we aren’t.
But the cost – and let’s get away from that for a
second – the cost is not the only problem. The scale
of these payments has meant that housing benefit has
become a disincentive for people moving to work for
those who receive it. I know that we will have our
differences, and we do in a sense because the purpose
of opposition is not necessarily to give government
support if they are doing things that maybe you
didn’t get round to, but even Yvette Cooper has had
to admit in the House that the government would
have had to have reformed this had they got back into
power. My only question is why it took so many years
to face up to that.
In fact politicians of all parties, as I said, have been
on about this for a while so the time is now to do
something about it.You know some of the figures:
75,000 people get more than £10,000 a year in housing
benefit and all right, a smaller but certainly a significant
number, especially in places like London, some get over
£100,000 a year. These are payments that no one on
low income trying to struggle by trying to rent homes
etc would ever be able to afford and in a sense they have
also distorted the market in the social rented sector quite
intriguingly, so dealing with housing benefit is not just
about the recipients of housing benefit, it is also about
others who have to rent homes in similar areas. So we
have had to cap local housing allowance levels to the
rate of four bedroom properties, following a cap from
Labour of five. We have had to introduce size
restrictions to the social rented sector to make better use
of existing housing stock and we have had to change the
percentile of market rents for local housing allowance
rates to 30 per cent to help keep the rising rates under
control.
This is all about resetting the balance of incentives
www.reform.co.uk
29
Reforming welfare / Reform
to move into work, I think these changes are vital.
Nobody says this is going to be easy and we have
increased transitional money, dramatically actually,
we’ve tripled it and we will keep it under review. The
transitional period I recognise will be difficult in certain
areas but we will do our level best to make sure that that
is smoothed through, but nonetheless these changes
have to be made.
The other key element in this phase one is the
Work Programme and the transition to get people off
incapacity benefit. The Work Programme as you
probably noticed was launched yesterday by Chris
Grayling, who opened the competition for the new
framework. For the first time the programme offers
providers real freedom to truly tailor support for job
seekers. No more centralised, one size fits all schemes,
but real support to help people back onto the path of
sustainable work. To be sure that we’re being fair to the
taxpayer, the Work Programme will be run on a
payment by results basis – this is critical – when it rolls
out in the first half of
next year and not just
The key is to get people
into the work habit, to make on the basis of course
that you get somebody
sure they stay in work,
into work. That point is
that they overcome their critical when you deal
with getting people into
problems and I want to
come back to that later on work, as many of the
voluntary organisations
will tell us, and I see Stephen Bubb sitting here from
ACEVO, they will tell us that actually you didn’t finish
your job, you only started. The key is to get people into
the work habit, to make sure they stay in work, that they
overcome their problems and I want to come back to
that later on.
We will also demand that job seekers take
personal responsibility for accepting work when it is
there, so we will work with them intensively, we will help
them, we will support them in a way that hasn’t been
done or achieved at any other time, but we also believe
that that comes therefore with some responsibilities. So
there is conditionality and sanctions on the benefit side
as well and, for those who hadn’t noticed, it’s been there
all the time. In fact it started under my last Conservative
predecessor, Peter Lilly, but it seems to have been
parked for a while. It is important for people to
recognise that that help comes with some responsibility.
So this is a complete reappraisal of how we help
people back into work and involves a major change in
the way providers deliver support. Underlying all of this,
the delivery of this, is also a change in the sense that we
want to bring in the private and voluntary sector
because they have so much expertise. I learned a huge
amount from particularly the voluntary sector in the
way that getting people to work is done and is carried
out and I hope that those plans will come through in
those reforms that we are bringing through.
Part of that also, and you can argue more
controversially, is the whole area of the ESA, the
Employment Support Allowance migration. Now all of
this area of course was originally proposed and started
by the [previous] government. We have made changes to
it, we have focused it more and we have put more
support behind it to ensure that those that need work
will get better tailored support, but we are also
committed within that to tackling this huge problem of
those who languish on incapacity benefits, unwatched
30
www.reform.co.uk
Reforming welfare / Reform
and unhelped. We currently, as you probably already
know, have two and a half million people claiming this
inactivity benefit, a figure which has remained
stubbornly high and which has cost the tax payer about
£7.2 billion just to sustain people in that state of limbo.
Despite many of these people wanting to work and
telling us that they want to work, and they do, people
can spend years, and have spent years, on Incapacity
Benefit without ever being required to do an assessment
or without ever being seen by anybody to even ask them
a simple question, how were they? In fact 30 per cent of
those on the old style benefit have never even had any
form of medical examination at all and some 41 per cent
haven’t been seen by anybody for six years.
When John Hutton was Secretary of State for
Work and Pensions, some of you may recall that he
pointed out that if you had been on Incapacity Benefit
for more than two years you were more likely to retire or
die than ever move back into work. I don’t think in a
modern society that is any state of being we should
either wish or accept for anybody in society unless they
absolutely are incapable of any form of work. We have a
society which should be capable of finding and tailoring
employment and work for people as far as we possibly
can, here we absolutely fail to do so and that is why we
are now starting the process of migrating some 1 ½
million of those on Incapacity Benefit onto
Employment Support Allowance and simultaneously
providing intensive personalised support to help them
make sure they transit back into work.
For those that aren’t sure about the ESA, let me
explain, the benefit has two parts to it. One part is for
those who are deemed capable of some work but with
serious difficulties and will need intensive support
which they will receive and we’ve added support to that,
that’s called the Work Related Group, and the other
part, which is the Support Group, is for those deemed
simply incapable of work in any form and they will
simply receive support. If they think they can do work,
of course that is for them to decide. Those who are
deemed fit for work will be moved on to Job Seekers
Allowance where there are courses, as I said before the
Work Programme will bring intensive support for them.
Moving beyond that, that sets the base, the idea
that we have begun to reform two major areas of
difficulty, the second phase of reform has to take this
forward at a pace. I have spoken a bit about this and I
want to use this opportunity to try and set the context
for this. Reforming the benefit system to make work
pay, simplifying the system to make it more efficient and
more understandable, enhancing mobility and also
reforming at the other end the pension system.
Let me start with the make work pay part. Benefit
reform is absolutely critical and will play a major part
here. As some of you know from the work that we
published at the Centre for Social Justice, we have been
looking at this in some detail and at some expense for
some time but since I’ve come into the Department I
have simply asked everybody to get on with it. I’ve been
working therefore with experts, David Freud
specifically on this one, and the officials across
government and not just in the Department, to look at
how we can deliver a benefits model that ensures it pays
consistently to take work at every opportunity.
I have also within that context with Downing
Street asked Frank Field, as some of you spotted, to look
at the issues of poverty. One of the areas that we’ve
discussed is that the nature of poverty is so narrowly
defined in the UK and it is time for us to understand
also what contributes to poverty. Things like asset
poverty are critical and how that affects the ability of
people to take opportunity and life chances. Also
mobility, and I’m going to come down to that, so Frank
has gone away to look at that and will be presenting
reports as I think everyone has been told.
At present the poorest in our society see little
reason to take the risk of finding a job and losing their
benefits and actually seen in the light of the calculation
that all of us make in our daily lives and we take for
granted, seen in the light of the calculation made on the
basis of a risk and reward system, the decision frankly
looks pretty rational. All the figures show that for people
starting out in work for the first time and for those
seeking jobs, having been out of employment for a
while, all of these figures show that work provides the
most sustainable route out of poverty, there’s no
question about that, we know that. However, the
complexity and perverse nature of the system acts as
real disincentives to people making those decisions of
balance of risk and reward.
Multiple withdrawal rates over massive numbers of
benefits have resulted in a combined regressive tax and
benefit system for the poorest in society.We ask them,
those who start work, to put up with rates of benefit and
tax withdrawal that none of us sitting in this room would
absolutely accept without going completely mad at the
ballot box at the next election, possibly not even making it
to that. For someone to seek work for the first time in an
area of high economic dependency there is a cultural
issue to overcome as well as a financial issue and we often
just focus on the financial. If for you going to work is a big
choice, it is an even bigger choice where nobody you
know really regularly
At present the poorest
goes out to work.You are
having to make a
in our society see little
decision about
reason to take the risk of positive
your life and there is no
finding a job and losing
example of that around
their benefits
you, again something
that many of us take for
granted.We see and we know people going to work, we
recognise if we are young enough our parents set that
standard and maybe our friends and relations and people
in neighbouring houses, all pretty much fill a very similar
style of life to us. But if you come from an area where
nobody does this, where people simply don’t fill regular
work, then taking that decision is a very big decision
indeed.That cultural decision has to be supported and
helped and that’s why it’s important that when they
balance that risk, they realise that the reward is very clear.
However, right now, the risk of taking work
simply for them therefore doesn’t outweigh the reward.
As they see it, if they take a few hours of work, for every
£10 they earn they might actually lose £7, £8 or in
some cases even £9 of their benefits and moreover the
complexity of the system means too often that they have
no idea how much they will lose or when it might be
clawed back from them, they simply have no idea about
this at all. It is very difficult if you don’t know exactly
how that is going to work whether you will make that
decision. My view is that the benefits system has to be
far simpler and establish a very clear link between work
and reward, very clear, very understandable, very
obvious. A simpler system will also help to reduce
administration costs as well as reducing the
opportunities for fraud and error in this complex
system that we have at the moment which today costs
the taxpayer many billions of pounds and which are
unnecessarily wasted.
This process of reform to enhance the dynamic
benefit of making work pay and simplifying the system
is at the heart of our reform agenda and whilst I can’t go
into much more detail
If for you going to work is than that today, I do
a big choice, it is an even plan to bring forward
much more detail on
bigger choice where
this fairly soon, but rest
nobody you know really
assured, changing that
regularly goes out to work. system to make work
pay is critical and lies at
the heart of everything that we do.
That brings us also to another issue here and one
that I had spoken about before but that I need to explain
perhaps a little more. Beyond just making work pay it is
important to understand, as I said before, some of the
reasons why taking work becomes more difficult for
people in difficult areas than we would assume at first
glance. Even as we make work pay and simplify the
system, this problem is persistent. Britain has one of the
highest rates of workless households in the whole of
Europe, it is an astonishing record when the last
Government talked consistently about the creation of
new jobs, alongside that has been the fact that we have
had this persistently high level of workless households.
Perhaps what is even worse, we also have the highest
numbers of children living in households that have no
work and, if you’re quick, you will recognise the
connection between poverty and worklessness is very
clearly established, so we already therefore set those
children on a path of poverty and low achievement from
the word go.
This is simply unacceptable and for those who
glibly talk about a North/South divide, I think it’s time
we stopped all of that. In my view that is just simple lazy
rhetoric by politicians seeking simple sound bites. The
problem frankly is much, much more complex.You can
find workless blackspots all over the country quite near
areas of very high prosperity. In fact, for example, the gap
between wealth and worklessness doesn’t have to be far
for you to travel at all. Jobs growth and employment, the
recovery in cities like Manchester and Leeds, has simply
not benefited the deprived communities that actually
already lie within those cities and at the Centre for Social
Justice we did some reports on some of these cities,
certainly Manchester and others, and we showed that
much of the money flowing in on regeneration had had no
effect on some of the poorest in those communities at all.
This is in part because our system already works
against labour market flexibility within that area. Not
just transport costs, and these are factors taken into
consideration, but because anyone in council housing
who wants to move into an area with work runs the risk
and the fear of losing their right to their accommodation.
I said when I was on an interview the other day that I was
struck by some people from up in the North East who
told me when I spoke to them once in London that they
had travelled all over from one city to the next looking
for work and hadn’t seen their families for up to a year
at a time because of the fear that had they moved with
their families they would find it impossible to find
accommodation.
www.reform.co.uk
31
Reforming welfare / Reform
Again it is that balance between risk and reward
where we seem to penalise the poorest in society right
now yet expect them to take the greatest life changing
decisions that any of us will ever take. Many of us might
say there are difficult decisions that most in the middle
classes take about changing jobs and other decisions
they will take, but if you have never worked before then
it is a massive decision to take that risk, to move into an
area that you have no experience of whatsoever. So
alongside of this, making work pay, we have to also
across the government explore how we can take the risk
out of that mobility, across wider areas with the
Department of Transport and Communities and Local
Government and others. I am not going to set down
specifics here today but I do reiterate the fact that it is an
area that any government of responsibility has to now
look at and it is an area that I know privately I have
talked to Labour politicians who have said to me that it
has been a massive source of puzzlement why some of
the money that they have pumped into many of these
cities – and there has been huge inward investment into
a number of cities – has had such a limited result when
it comes to those pockets of poverty in those cities. For
too long we have ignored the plight of those trapped in
these areas and we have to now look at this carefully.
Without the capacity to seek work, aspiration and hope
then become the proviso of the middle classes.
We are applying the same principle as well when I
move on to the last of these areas, which is pension
reform. I know that Steve Webb is going to be coming
here later this morning I think to talk about this so I
won’t go into too much detail but let me just set down
why I think it is important and the main themes. The
main point to note here is that unlike a previous
government I think we have to take responsibility now
for facing up to the long term challenges that are posed
by the fact that we are now living longer as a society.
That is why for example we have already made a start
by announcing through consultation the end of the
default retirement age. I am adamant that this has got to
go, I can’t conceive of any reason why a modern society
would let government tell people at this point that they
had to retire or let businesses use this as an excuse. In
my view no longer should we have employees who wish
to delay their retirement, forced out by an artificial
mechanism like this and so discussions with Vince Cable
and consultations, but we are set to eradicate this.
However, long term reform requires providing a
solid basic state pension that people can start to build on
whilst creating the right conditions to invigorate savings.
We have to change the record of the last 13 years which
has been abysmal when it comes to long term saving in
society. We save as a society far less than many of our
neighbours do, France and Germany for example, even
if that level of saving has risen slightly. We made a good
start, I believe, last week by announcing the restoration
of the earnings link with a triple guarantee for basic state
pensions. To build a floor under that saving is important
and to build one that is simple and easy for people to
understand, but that’s not enough, we have to go further
and that is why we will be taking forward the review of
the last government’s procedures on auto enrolment to
figure out how best this can be done to encourage and
bring people to that saving environment. I want to
reverse the decline in saving levels and ask people to
think carefully about how much they will need to fund
the type of retirement they want for their future.
32
www.reform.co.uk
Reforming welfare / Reform
We have already said that we are committed to
raising the state pension age to 66, that’s in the coalition
agreement. At the same time however, we have to help
people understand why this is the case and what the
benefits are of this when it comes to working slightly
longer. Our figures show that working a single year
beyond the current state pension age for example and
deferring your pension can increase retirement salary
thereafter by up to 10 per cent, something that most
people have absolutely no idea about at all. In fact I was
asked by somebody in my constituency, who simply
bumped into me and said he had been told by others he
should retire at 65 but he wanted to go on working but
that he would lose his
pension. I actually said
We have already made
to him, no, quite the
a start by announcing
you will gain if
through consultation the contrary,
you leave your
end of the default
retirement for a year or
whatever longer and he
retirement age. I am
adamant that this has got had no idea about that.
it is important for
to go, I can’t conceive of So
people to understand
any reason why a modern that these choices do
have benefits as well
society would let
and not just for
government tell people
it is also
at this point that they had individuals,
good for the economy.
to retire or let businesses Our records seem to
show at the moment
use this as an excuse
that if we extend the
effect of the working life of the country by just one year,
it is forecast that that would increase GDP by about 1
per cent, something like the equivalent of £13 billion. I
want you to set that in context of some of the tax
changes in the budget if you are thinking about it.
So 66 is the starting point for the debate. At
present, under the last government, there were plans in
place already to raise the state pension age to 68 by
2046. What I want is a debate about how that should
start and how fast is society prepared to accept the need
to raise the state pension age. Bearing in mind as I recall
that the original pension age of 65 was set for men back
in 1940, most men’s expectation of life is that they
would live for another six or seven years. Now you can
look forward to living almost a third of your life in
retirement as things stand right now so things have
changed dramatically. I am conscious that of course
there are pockets and areas where life expectancy is
stubbornly low. The way to deal with that is through the
reforms that I’m talking about, changes that direct those
life changing expectations at those areas, rather than
setting us against a change to the retirement age because
of those problems we need to deal with those
specifically. If we also want to be fair to the next
generation of taxpayers and be realistic about increasing
longevity, then we also need a serious debate about this
and I encourage us to engage in that.
So, in conclusion, this agenda is I believe a bold
agenda but I believe also we have absolutely no choice.
Letting it drift on as it is at the moment with the
perverse incentives and a workforce that is in a sense
more and more dependent and more and more needy, is
the wrong way to go. With the welfare budget ballooning
over the last few years we need to shift the culture which
underpins demand. There is nothing big about a society
which seems content to let a growing number of people
become dependent on the state and live without work,
aspiration or hope. Changing these life chances of the
people we look at when we look in many of these
deprived communities is the beginning of a Big Society
and it is only by doing that that we can achieve such an
outcome. The prize therefore is a society more in
balance where work is well distributed and where
children grow up seeing work as a normal activity and
responsibility is ingrained in them. A society where
people save for their retirement and where we can
afford a more secure future for those pensioners that do
retire. I believe that what I have to do in my department
is to work on this agenda and make it happen and that is
what I plan to do. Thank you very much.
Andrew Haldenby:
Iain, thank you very much indeed. I am going to take
five minutes for questions. That is going to push us just
over ten o’clock but only just. There are some people
standing at the back, if you want to take a seat please do.
This is very difficult as it is a short time but I am going
to take three questions. I am going to ask James
Bartholemew there, I am going to ask the person whose
name I don’t know in the green top at the very back and
then you madam with the blue top there. So can I take
those three questions together?
James Bartholemew:
Thank you. James Bartholemew. I want to ask you how
it feels to be certainly the first Secretary of State in my
lifetime, and perhaps ever who has become Secretary of
State for what used to be called Social Security and
actually has been studying it for many years beforehand
and making it his business and now, uniquely, you are in
a position of being, as it
There is nothing big about were, ready to roll with
ideas and proposals and
a society which seems
doing lots of things
content to let a growing
immediately whereas
number of people become most people in the job
dependent on the state
take about two years to
understand what it’s all
and live without work,
about. Is this a very
aspiration or hope
exciting time for you,
are you daunted and just as a supplementary, have you
considered – you haven’t mentioned Workfare and real
pressure on people to work, are these on your list?
Jess Steele:
Jess Steele, I am the chair of the Create Consortium
which is aiming to bring in the community allowance.
You talked about mobility and cultural change. Cultural
mobility starts locally we would argue and in the context
of the Big Society ideas, the community allowance would
allow local community organisations to pay local people
on benefits to do the part time seasonal work that needs
doing in local communities, in those communities you
talked about. I’m from Hastings which is as poor as Hull,
a South East town that’s as poor as anything in the North,
so will you, while we wait for the bigger reform to get to
your dynamic benefit situation, can we bring in a smaller
reform that focuses on these small scale but win-win
opportunities in local communities so local people in
those communities can do that work themselves without
getting immediately penalised in the way you described?
After a lot of dithering negotiations with the previous
Government can we get on with it now?
Rosie Bennett:
Thank you, Rosie Bennett from The Times. I have no
doubt whatever of your commitment to remove
disincentives to work in the benefit system but it seems
some of your Cabinet colleagues have made your life a
lot more difficult, even in the last few weeks. George
Osborne actually managed to increase disincentives in
his changes to tax credits and Michael Gove scrapped
plans for free school meals for half a million of the
lowest paid families, which I know you have talked
about a lot in Opposition. How do you stop other
departments undermining what you are trying to
achieve as they look for cuts?
Andrew Haldenby:
Three very well made questions, Iain.
Iain Duncan Smith:
James, the answer is frightening because the one thing
you do notice when you come in to government is the
scale of government and the time it seems to take to turn
this massive super tanker around and you wonder
sometimes if there are enough years in the scale of
government. So of course, but I’m not undaunted. I do
think that if we start early, which is what we are trying to
do – somebody said why are you in such a hurry and I
said I am in a hurry not to be late and that’s the trouble,
we have to get moving. Each day that passes at the
moment is a day lost if I don’t move on it so we are
moving on all of these things very fast, so in due course
you will hear more about this but definitely.
On the Workfare side of things, sometimes we
look at America and we do pluck stuff from America
and sometimes slightly out of context because there are
contextually different parts. Well America is slightly
different in a social sense from us but the Work
Programme that we have introduced has I think some of
the best elements of the things that work in terms of
both incentives to work, support to work and also
conditionality. As I say, the conditionality will be
enforced, we do expect people once supported to take
the jobs that are available and I think it is important for
them to recognise that. I think for the most part people
will, I don’t think we’ll have to introduce that very much
and I think that was the thing when Peter Lilley was in
charge, intriguingly once they realised that the
conditionality was actually being used, how very quickly
people never reached the point of conditionality but
actually took the work. So it is more of a warning than I
think a reality for many people because people
recognise that there is a limit and then they will move
before the limit.
Cultural mobility, absolutely. Maybe we can chat
a little bit more. I accept that we have got some things
we need to do in the meantime to get this stuff moving
in the shorter term while we get other stuff going and
we’ll take a note of that and maybe if I can grab you
afterwards and have another quick word about it. But
absolutely, I agree hugely with the voluntary sector, we
can do a lot of work in the meantime to get stuff
moving, to condition people to work. I am absolutely
open to that without any question at all. I recognise that
and I’d be very interested in seeing how that can work.
Rosie, why do you suppose for any moment that
anybody in the rest of Government will make it difficult
for me in any shape or form? We are all in this together!
We are a coalition, which is wonderful. So that said,
www.reform.co.uk
33
Reforming welfare / Reform
therefore, I can only simply say to you that I have an ace
in my back pocket right now which I will be playing
shortly and that is to say that it is accepted that the
concept of social justice must travel across the
Government and so we are making provision for that
within Cabinet Committees. That’s all I will say for a
second. Anyway, yes, of course in the short term you’re
right, sometimes things you do in the short term may
make the longer term project more difficult but they
don’t make it impossible. The key point about what I
was saying today is when I look at the reform
programme that we want to bring forward, it will
embrace all of that within one structure and then make
that structure work directly to make work pay. That’s all
I can say to you right now. So in a sense I am not
actually concerned about that particularly because
whatever short term changes are made will be swept up
as we move forward in the next phase of reform. So I
am moderately relaxed about that and my colleagues of
course chatted to me first about all of that and we were
together, always together.You’ve noticed that I’m sure,
so thank you.
Andrew Haldenby:
Iain, that was an absolutely fascinating 35 minutes, not
just the clearest possible framework, intellectual and
policy framework about how you are approaching
these questions and your division into a phase one of
Housing Benefit and the Work Programme and in the
phase two of the more fundamental questions about
making work pay and pensions reform. I think that is
incredibly helpful for us all, not just for this morning
but also to think about how we can support you for the
rest of your time in office. Also we just got a sense
there of how this Government is approaching these
questions and how you are working with colleagues
and how you are going to marshal the resources of all
of the Government to change the situations of people
in hardship. That is just what I would have hoped for
today actually, that at the beginning of this Parliament,
of this Government, we can get a sense of how you are
going to do it.
Let me just, before we go on, our next panel is
going to rush up and we’ll introduce them and the next
session, Mike and I and Iain will go. So Iain, we’re
thrilled you’re here and thank you for taking such
trouble over such an excellent presentation, thank you.
Local solutions and the
Big Society
Nick Seddon:
Ladies and gentlemen, what an excellent presentation.
The quote that stood out, particularly given what we are
talking about today, is “there is nothing big about a
society that is content to allow a growing number of
people to become dependent upon the state.”
I’m Nick Seddon, I’m the Deputy Director of
Reform and we’ve got a fantastic panel here. Each is
going to talk for, well Douglas is going to talk for ten
minutes and each of the other three is going talk for
five minutes and I shall start tinkling a glass very
irritatingly once they start going over the five minutes
so that we will have time for Q&A. The premise of this
discussion really and IDS, Iain Duncan Smith, set the
scene very well for us, the Big Society agenda is very
real for the Conservative Government as I understand
34
www.reform.co.uk
Reforming welfare / Reform
it. The Prime Minister has said there is such a thing as
society, it is just not the same thing as the state. The
Deputy Prime Minister
The welfare state isn’t
has talked about a
working. Every year billions fundamental
resettlement of the
of pounds are spent
relationship between
supporting millions of
the state and the
people in a state of
citizen. We are so used
dependency rather than in to being cynical about
what politicians say
alleviating poverty
that sometimes we try
and read the runes but sometimes we should
remember that exactly what they say is what they mean
and that we are talking about a fundamental
resettlement.
So we have some very exciting speakers here.
Douglas has written and spoken a great deal about
localism particularly and the way that devolution might
happen and Stephen Bubb, the Chief Executive of
ACEVO, wrote a very interesting piece recently about
civil society and partnership with the state moving from
romanticism to reality. We also have David Ellis from
Catalyst Housing Group, which does a great deal of
work in neighbourhoods, particularly to get people out
of destitution and Sally Burton who is the Chief
Executive of the Shaw Trust, which is the largest third
sector provider of employment services. So we have got
some real experts in the field and I am looking forward
to hearing what each of you has to say. Douglas.
Douglas Carswell:
Ladies and gentlemen, I wanted to use my ten minutes
this morning to talk about some of the fundamental
reforms that I think we do need over our welfare system
and to show some of the ideas outlined in a book I wrote
called The Plan and before that a series of papers I
wrote on this called The Localist Papers.
The welfare state isn’t working. Every year
billions of pounds are spent supporting millions of
people in a state of dependency rather than in alleviating
poverty. Almost 70 years after the Beveridge Report laid
the foundations for the modern welfare state we are not
so much ending the dependency but spending a lot of
money perpetuating social ills that Beveridge would
have recognised. Half a century after the introduction of
universal welfare provision, today more households
depend on some form of welfare than at any time in our
history. Far from creating a post-war New Jerusalem we
have created something very, very different. Benefits
that were supposed to become transformative have
become permanent. Millions of people are trapped in
the squalor of low expectations and disincentives.
It is all done at an extraordinary cost and I don’t
just mean an extraordinary cost to the Exchequer, I
mean an extraordinary cost in terms of squandered
talent, ability and potential. What should we do about
it? Well successive governments over the past 30 if not
more years have tried. Labour’s Welfare Reform
Programme, the Conservatives attempted some
reforms in the 1990s, but to date none has significantly
managed to cut welfare dependency and I think we
need to ask why.
The problem I believe is that our welfare system is
founded on a model of universal provision achieved by
a highly centralised model presided over by a remote
technocracy. There is almost no scope for pluralism,
innovation or any pressure to pioneer new ways of
alleviating poverty. The purpose of welfare I think
should be to provide for those in need who are unable to
provide for themselves, but to do so in a way that
encourages those who might be able to contribute to
their own well being to do so.
By definition, if we are going to do that I think we
need some sort of assessment of people’s personal
circumstances, of individual need. Who is needy, for
how long? At some point someone, somewhere, ought
to be making value judgements. Trying to devise a single
universal scheme that can take all of the details of
personal circumstances and conditions into account is
going to be difficult, yet fundamentally this is what
Beveridge’s recommended universality pre-dictates. I
think we need a new approach. Instead of universalised
welfare which must by necessity be centralised, we need
to look at localised provision, something which would
allow pluralism, innovation and accountability.
Welfare reform is an incredibly difficult thing to
achieve but there is one example that stands out in the
western world and that is the example of the United
States in the mid-1990s. In 1996 Bill Clinton signed the
Personal Responsibility and Work Opportunity
Reconciliation Act or Workfare. It was remarkably
successful by almost any measure. The number of
families on welfare over the decade that followed fell
from five million down to two million, 1.6 million fewer
children were in poverty a decade afterwards, poverty
amongst African American children, who are
traditionally very disadvantaged, fell from 42 per cent to
33 per cent. Amongst single mums poverty fell from
50 per cent down to 42 per cent.
What is it that those reforms did that was so
successful? What is the magic formula? Well it is not
really what Washington did that mattered or counted
but it’s what Washington stopped trying to do. The
Workfare reforms, the mid 1990s American reforms,
devolved responsibility over welfare and over the
schemes down from a Federal level down to a state
level. It offered much greater freedom, some states had
already pioneered with innovative programmes which
were based on them being able to exempt themselves
from Federal programmes. It allowed states to go far
further and it was a freedom that many states seized
with real gusto. Some incentivised employers to take
on the workless, others organised schemes themselves,
most tended to make the receipt of benefits
conditional, best practice spread. Without officials in
Washington best practice spread because people could
see what worked.
Could we try something similar in Britain? Yes, we
could but I get very, very cross when I hear people
talking about adopting the Wisconsin system or the
Florida system, that’s precisely what we should not look
to try to do. What we should do if we are to learn from
the American system is not to ape one particular state
model, it is to decentralise control in the way that the
United States did. What works in Wisconsin or Florida
works in Wisconsin or Florida because it’s devised for
their conditions and their circumstances. We should try
the same approach to allow people to devise welfare
programmes that work in the localities of this island, not
try to ape those in America.
I think we should allow local authorities to
determine levels of entitlement. Ideally such a reform, a
devolution of responsibility over welfare to county and
metropolitan level, would be accompanied by
fundamental reform of local government finance. In
The Plan we set out ideas to do that, I don’t want to go
off at a tangent on to that but I think it is important to
remember that several British counties and cities have
larger populations than several US states and the most
successful US states, notably Florida and Wisconsin,
were the ones that devolved responsibility even further,
even more locally
within the states to
Pluralism would allow
welfare boards and
best practice to spread,
county authorities.
to spread itself
Devolving control
over welfare, both
geographically and by giving responsibility to non state
players, to smaller players, would have a number of
advantages. I am conscious of the time so I’ll just skate
through five of them very quickly. First, large
bureaucracies tend to create unintended consequences.
I see the consequence of this in my surgeries almost
every week. Vulnerable people who have been missed
out by the system because the tick box assessment
doesn’t take into account all of the factors. Second, I
think if we localised control it would become more
responsive to individual cases. Local case workers could
see instances where the universal rules had failed.
Thirdly, I think pluralism would allow best practice to
spread, to spread itself. Local authorities could come up
with ideas and pilot schemes that, with respect, not even
the wisest civil servants in Whitehall would be able to
envisage. Instead of aping what happens in other
countries I hope we would soon start to move towards a
system where people talked about adopting not the
Wisconsin system but perhaps the Essex system or the
Kentish or the Surrey system. Fourth, I think non state
players, voluntary groups, businesses, charities,
churches, could have a much greater role if we devolved
responsibility away from the centre. I know a number of
voluntary organisations in my own constituency who
are already tackling
Localism would transform some of the
consequences of
attitudes
poverty, I think they
would be far better placed to actually address more of
the responsibility and take on a bigger share of the
responsibility than some of the statutory players.
Fifth, and I think this is perhaps the most
important, localism would transform attitudes. I think it
would give a legitimacy to conditionality that perhaps
might not exist otherwise. In 2006 the Government
revealed that fraud and error cost the welfare system
£2.6 billion, at the moment many see benefit fraud as
cheating the system rather than their neighbours, rather
than something over which they have ownership. One of
the most depressing things to me about our welfare
system is the aggressive but ineffectual response that
welfare fraud provokes from the state, TV ads that
somehow imply that people on welfare are somehow
fraudulent. I think it is demeaning, I think it’s belittling, I
think it is actually quite pathetic – is this what
Beveridge’s great vision has come to, advertisements on
television that imply that Big Brother is watching you in
case you are claiming something you are not entitled to?
I think if we localise control over welfare we are
going to have a very different attitude to a neighbour
who through no fault of their own needed our support.
I think we would have a very different attitude to a
www.reform.co.uk
35
Reforming welfare / Reform
neighbour who we perhaps knew didn’t require support
and was perhaps claiming something that they didn’t
need. It would legitimise the system in a way the current
system doesn’t do.
Finally, and perhaps most importantly, I think
localism would restore a notion of responsibility. Our
responsibility to ourselves, if we can support ourselves,
our responsibility to those around us, not an abstract
category of the underprivileged but our visible
neighbours, people in our communities who for
whatever reason cannot support themselves. It would
no longer be our obligation to simply discharge our
responsibilities when we pay our taxes, it wouldn’t be up
to they, the state, it would be more a case of we, our
street. Localism in short I think would make welfare
better; it would also make us better citizens.
Nick Seddon:
Thank you very much indeed Douglas.
Stephen Bubb:
Thank you Nick and colleagues. Let me take you back
to 1273 and perhaps one of the earliest work
programmes to tackle a national crisis, that of returning
Crusaders, no jobs and causing a bit of a muck. In 1273,
one of my members established a charity to provide
work for returning Crusaders, still going strong, still
providing work programmes and support in Hartlepool.
So we have been doing it for quite a long time and
actually a longer time than the state.
I have a prediction about the latest Work
Programme and the prediction is that it will fail if it is
simply an efficient supply chain sausage machine and
if it does not significantly involve charities and social
enterprises and other third sector organisations in a
way that simply hasn’t been seen since the War. There
has been a growing involvement of our sector, now
many of the welfare work programmes, 40 per cent,
are delivered through our organisations, but we need
to go much further.
Just to give you a few examples of what I mean.
Jason, a lad who at 19, a black lad, South London, went
in to prison, a six month sentence. What support did he
receive? He got an anger management course and
nothing else and when he came out of course the local
authorities weren’t interested, he wasn’t a priority for
housing so he was sofa swapping, drug problems,
inappropriate relationships, actually did want a job.
Who got him a job? The Prince’s Trust. There’s Carole
who’s in her 40s, actually significant serious disabilities
and someone who would have on all measures remained
on Incapacity Benefit but actually wanted a job and
helped into a job by the Shaw Trust. A record, let me tell
you, 57 per cent of working with people with profound
severe disabilities
against a national
It will fail if it is simply
an efficient supply chain average of nine per
cent, but that required
sausage machine
intensive work,
mentoring support, the
sort of work that simply isn’t available from the state.
And then finally Mark in his 40s, autism. Actually he
has had various periods of work but what actually
worked is the National Autistic Society, who fundraised
to provide a work programme and that got Mark into a
job, but that involved serious support for him in that
job, a mentoring programme.
36
www.reform.co.uk
Reforming welfare / Reform
That programme has now ended so what I am
suggesting is that you need a programme, the Work
Programme, that supports those organisations and
more than that, you need to encourage a whole raft of
community organisations and national charities who
are not currently involved in providing work
programmes. So RNID who have serious expertise
with profoundly deaf people, RNIB, those big charities
were not involved and are not incentivised to take part
in providing support but could be if you devise the
right sort of programme.
The Future Jobs Fund which was a brilliant
scheme, devised in our sector and largely delivered by
our sector, for the first time actually meant that there
were community organisations who were only
providing one job, one job for a young person, and
they did that because the third sector got itself together
and organised consortia working. Now, unless the
Work Programme replicates that type of approach it
will fail.
I completely do not doubt Iain Duncan Smith’s
commitment to social justice and if social justice is not
really the thing that underpins the Work Programme
then it will fail. I know he understands that and he
understands our role, I do also know that the Treasury
do not. The Treasury do not have systems for
recognising the wider social benefit. This isn’t simply
about cutting the bill for Incapacity Benefit, it is about
driving a better social justice system. People contribute
because they’re working, because their relationships are
better and because they can make a contribution and
that’s important, but it is not incentivised enough in our
current system.
So what do we need to do? Mohammed Yunus
who has written a recent book on establishing a social
business, said you need two things to succeed.You
need people of goodwill and passion and a framework
and he said you can’t just rely on goodwill and passion,
you have got to have the framework. The framework
for us is about addressing the capacity issues in our
sector, even our well established charities like the Shaw
Trust are still small scale in comparison with the
commercial sector.You need capital: there is no point
in telling us to take part in a scheme of payment by
results if you don’t also capitalise that scheme. David
Freud completely understands this point but has yet to
find the mechanisms to provide capital.You need to
incentivise smaller organisations and finally I’d suggest
Jobcentre Plus – why is that still a national service?
Perhaps we should transfer that into local Jobcentre
Trusts run in the third sector.
So very, very finally before Nick completely
throws me off the stage, let me just make a point about
Big Society. The Big Society is not about the state
withdrawing, it is about what David Cameron describes
as a smart, strategic state but if Big Society turns out to
be the state retrenching, cutting back, withdrawing and
leaving us to pick up the pieces, it will be a charade.
Thank you.
David Ellis:
Thank you Stephen and some of your points resonate
greatly with the work that we’re doing at the moment.
I am going to try and talk to you about how we are
making Big Society real, how it’s actually happening
and how we are making a real difference to real people
and saving money here in London today.
I am from Catalyst Housing Group and we are a
charitable housing association that looks after about
20,000 homes across the South East and London. As a
housing association, part of our job is to create good,
decent homes for people to live in and to create safe
and vibrant neighbourhoods. That’s the given but also
at Catalyst we see our job is to provide and promote
choice and opportunity to our citizens in those
communities, to help them lift their horizons and raise
their aspirations. Our communities know us very well
and they are very familiar with us so therefore we are
ideally placed to see, hear and do something about the
broader range of problems that they face. The most
socially inactive and the most disadvantaged face
problems around housing needs, financial advice and
assistance, health and well being, crime, employment
and educational opportunities and we do this across
the whole cross section of society from the young to
the elderly.
I want to focus on one strand of our work to give
you a flavour of how community organisations can
actually build a bigger society but I also want to
highlight some of the challenges we face in the work that
we do. At Catalyst we are working with some of the
most alienated young people in our communities, those
who are very hard to reach and who have already
started down a path of criminality or fallen into gangs.
We run programmes on our estates that are helping
these disaffected youths find a better path, a way both
out of financial and
Community organisations academic poverty. But
can actually build a bigger first of all I want to give
you some context for
society
that. Most of you here
will know the standard
figures that children living in poverty are three times less
likely to get five GCSEs than their richer peers.You
probably already know as well that the Sats exam results
are one of the indicators that predict future prison
populations but given the austere working environments
that we’re in, I wanted to give you some harder facts that
we come across.
In the average London borough it costs £4,300
per year to educate a child from year seven to nine,
that’s ages eleven to fourteen. If that child becomes bad
and gets excluded or expelled from mainstream school,
it costs the state £9,000 a year to look after that child
and educate them. If they continue on that path and end
up potentially going into a young offenders’ institute,
then the average cost to society goes up to £52,000 a
year. If they graduate to big boy prison then we’re
talking about £100,000 a year in taxpayers’ money.
I want to tell a story, the story is true, the names
are different but we’ll call this boy Michael. He was a
typically good kid and unfortunately he fell in to some
bad company and started being influenced by some
gangs. Quite soon he became a very disaffected snarling
young man who went by the name Sniper. Now Sniper
ended up having an argument with a rival gang leader
about some disrespect that was shown on his Facebook
page, they ended up having a fight, Sniper pulled a
knife, the gang leader ended up telling one of his crew to
shoot him. He died. Michael was 15, the gang leader
was 15, the guy that pulled the trigger was 13. Both of
those gang members were given very long prison
sentences. The death of that young person cost us £1.7
million in tax. Our job as evangelists for Big Society is to
make sure events like that don’t happen. The tragedy of
the life lost, the tragedy of the lives wasted in prison, the
tragedy of the lives destined to be unfulfilled. And of
course the tragedy of the money wasted picking up the
pieces after the event when we can see all these things
hurtling towards us. That’s why we must and can stop
these things and to us that’s Big Society.
So for someone like Catalyst and others it is about
applying resources in a way that breaks the cycle and
producing and embedding positive change. We have
youth programmes where we link with a variety of
different partners and institutions. Our man at Catalyst
who actually runs this programme is a former gang
leader from Los Angeles who broke out of this cycle of
violence and brokered a peace deal between the Bloods
and the Crips and now he is mentoring young people
on our estates in London, fixing them before they get
broken. We have learned how to build programmes
around mentoring but importantly we have tailored
them to the specific and local needs of young people in
the communities in which we work. This isn’t theory,
this is tried and tested reality.
Does it work? Yes. In some of our hardest to reach
estates we have had a 38 per cent reduction in crime.
More importantly we have seen the young people come
through these programmes, turn their lives around, at
university, in secure jobs and become active economic
citizens who buy their own homes and also are coming
back into the mentoring programme and becoming the
next tier of mentors that are helping other young people
on our estates. So when we talk about building and
change, it works when you are close enough and have
the right philosophy and that’s about the big picture
meeting the local context. For me that’s what Big
Society does when it works.
The programmes challenge ideas that are
ingrained in the children and young adults that working
and living off benefits is not a good life choice. We teach
them how to access opportunity because if you fall out
of school early you don’t actually have the thought
process in how to understand how to change things and
we present a path which is lawful and a way to help
them in reclaiming back their lives. So we are offering a
way into work and away from hopelessness. My
challenge, our challenge, is to make this Big Society
happen in a big way.
Sally Burton:
Thank you. I am mindful of the time before you start
rattling and it is quite nice to come last because I can
perhaps sew a few of the issues together. I do want to
thank Stephen for his generous comments about Shaw
Trust actually because some people in the room may
know that we are in quite an awkward position in that
we have been waiting for 49 days plus to know as an
organisation whether the Government feels able to sign
a contract that we were preferred bidders for earlier in
the year. I don’t want to make commercial points but I
just want to pick up some of the points that Stephen
raised because they are really, really important about
effectiveness, efficiency and evidence based. I’ll say a
little bit as well about the third sector and the Welfare to
Work arena in particular.
As Stephen said, we are the biggest. We will have
a turnover this year of around £100 million, that
places us about three times bigger than any other
welfare to work charity, but you will all know that in
www.reform.co.uk
37
Reforming welfare / Reform
the scale of some of the huge companies that work,
and some of them are represented here today and in
the audience and we work well with those
organisations, that’s tiny money. It is a public record
that we have about £33 million in our reserves, again
for many of you that is like a drop in the ocean and we
realise that, but we are one of the most wealthy
charities in terms of the amount of working capital that
we can bring to the table.Yet with the Work
Programme we know, our calculations tell us, that that
won’t be enough money to enable us to play the kind
of role we would like to bring, bringing our evidence,
our effectiveness and our track record to the table.
So we have to work in joint ventures, we have to
work in partnerships and we have to work with the rest
of the third sector and in the programmes we run we
bring along with us 70 or 80 third sector organisations,
many of them very specialised organisations like RNIB
and so on, who are able to bring real expertise to the
table with regard to supporting particular individuals.
We work with offender organisations, housing
organisations, single parent organisations and so on as
well as what we see as the core of our organisation,
around disability.
So what am I saying about the third sector? We
can play a huge bridging role but we cannot play the
role of the organisations that bring the huge levels of
working capital that are needed for the Work
Programme to the table. Some of you may be trustees
of charities; would you want us to put significant
amounts of those resources up front on a payment by
results regime when we may not be able to guarantee
getting that money back because of economic factors
beyond our control? Those are the dilemmas that are
going to face the third sector if we are going to be able
to really, really support the Government in its Big
Society agenda.
A couple of figures around our success rate,
particularly around people who are hardest to place in
employment. We have programmes of work where as
an organisation we are running out of steam so 57 per
cent of conversions into work, that is people moving
totally from benefits into full open employment,
people with complex disabilities, every one of whom
who would continue to be eligible for a higher rate of
benefit even if they had gone through a more stringent
medical assessment as the Secretary of State has laid
out. I think even more impressive than that though is
that we are keeping 92 per cent of those people in jobs
over six months. We measure at six months, twelve
months and so on, and our figures at six months are
92 per cent. I think you would all be proud of that as
employers actually with any group of people.
I have said there is some evidence there about
effectiveness, I want to just say something about
efficiency as well because we’ve heard about what goes
on in a local area and one of the things we have been
working on intensively is to try and understand where
the lost clients are, the people we have heard about in
case studies here today, where they are. We won’t find
them by the current model. I could tell you about a
lady, let’s call her Doreen, who works in a large
supermarket chain, who has got significant health
problems, not known to anybody, just managing,
plodding on, got arthritis, got depression, failing at
work, being absent, all of those issues, at risk of getting
into a disciplinary situation. Gets suggested by one of
38
www.reform.co.uk
Reforming welfare / Reform
her friends, why don’t you go down and talk to them at
Jobcentre Plus about what you can do but because she
is not on a benefits stream she gets turned away. The
fact that she might lose her job, the fact that she might
be eligible for some support, she doesn’t quite fit the
box so she gets turned away.
Let me tell you about Deepak, a man who spent
all his life in the military and who now has a criminal
record because of something that happened in the
military. He has recovered from cancer and has a
serious mental health problem. Because he is receiving
intensive support and medical support through the
secondary mental health services, again he is not seen
as a priority, not seen as job ready. Actually coming in
to the third sector, being given intensive support, not
only have his medication levels dropped and his very
high cost to the health system dropped, but he is now
back into employment as a result of organisations like
Shaw Trust.
So we have got these case studies but unless we
do things around galvanising our capital and our
intellectual capital and our social impact in an area, we
won’t capture those people. What Shaw Trust has been
doing is working on something that we are broadly
calling an iBox. It’s our differentiator and I might be
giving you commercial information here, but it is
about saying at the local level how can we create a
strong footprint that isn’t predicated on us having a
contract that might end in a year or two’s time, is a
genuine investment in a local area so we can bring
people into the system regardless of benefit level,
regardless of the level of needs that they have and start
to think about how we triage them and get the most
effective services for them.
We have been working intensively with
employment psychologists who have been able to help
us think about this journey from the customer’s point
of view and we have also been trying to think
intensively about the evidence there is about the best
way to get traction for individuals in work. We have
developed tools which we have tested out with a
number of large employers which have enabled us to
get a much more significant job match so that the
attrition rate is low, people succeed, and they do their
work placement experience. Over 40 per cent
improvement in the rate of people getting accepted
into jobs and maintaining those jobs when we use
those types of assessment tools.
The last thing I would like to just say to you
about the kind of things we have been investing in is
actually a distance travelled tool, because this is all
about evidence. Every council, whether these services
are commissioned at DWP level, at a national level or
at a local level, the commissioner needs to know that
they are getting value for money. The commissioner
needs to know that the interventions they have
commissioned are saving them money, that they are
getting a return on investment, not a pure financial
one but hopefully one that is about social impact as
well. We have been developing a tool that we have
now built into our IT system which measures
distance travelled. So we can identify when a person
starts with us, the kinds of interventions they might
have – and that might be hugely varied, it might be
driving lessons, it might be intensive counselling,
coaching and so on – and we can put a cost on that
intervention and we can feed that cost back to the
commissioner so that they know the evidence is there
about which services are most effective and they can
then continue to invest more in that.
I could talk for much longer. Nick’s been very
polite, he hasn’t rattled his glass but he’s pointed to his
watch! The point I want to make really here is that the
third sector is not all soft and cuddly; the third sector is
tough and commercial. I have been an NHS Chief
Executive before, believe you and me, the NHS is
significantly more
The point I want to make commercially astute, it
really here is that the third understands both
financial value and
sector is not all soft and
social value in a way
cuddly; the third sector is that many, many other
organisations don’t and
tough and commercial
we want to be at the
heart of Big Society, working with local authorities,
working nationally with government. But there is a
price for that and the only reason we have been able to
invest in that level of research and evidence based and
improving our systems and process that I’ve just
outlined to you is because over many years we have
been prudent and built up those reserves very carefully
so that we have got them there to invest in continuous
improvement and we won’t be able to do that in the
future if we cannot play at a very high level in this
market. Thank you.
Nick Seddon:
Thank you very, very much each of you, that was
really fantastic. We have probably got just over ten
minutes for discussions and question. I am going to
take the chair’s liberty to just point out a couple of
things, continuities and things that I have found very
interesting. There is clearly this.You very brilliantly
outlined the need for greater devolution and the self
denying ordinance of government that actually stops
doing things. Stephen, you also tested or challenged
the fact that the Government mustn’t abrogate
responsibility at the same time and then there was a
message from all three of you about the third sector at
the heart of Big Society which I think is great. We have
talked about capacity, we have talked about capital, we
have talked about impact and effectiveness, there are
all sorts of things hopefully we will pick up on now. So
I am going to take questions in clutches, if they come
in clutches, and then give the panellists a chance to
respond.Yes, down here.
Adrian Thacker:
Adrian Thacker, The Prince’s Trust. Thank you
Stephen. We have about 40,000 young people every
year for education and training, I think the issue for the
third sector was well outlined by Sally and by you, and
that is of course payment by results. If payment was
only going to be at the end perhaps of 12 months in a
job, there is going to be a tremendous cash flow issue.
Certainly one of the things I am looking to get out of
today is some direction that but actually a question for
Douglas about local delivery of welfare across the
board. It is interesting but let’s not kid ourselves that
local providers too can be quite distant bureaucracies.
I’d be interested to know how you see your local delivery
fitting in with ever larger welfare to work programmes
that go across geographical boundaries, how do you see
that working?
Douglas Carswell:
It is certainly true that local government is not a panacea
for everything. Localising responsibility and
accountability is not going to mean that, it’s not the be all
and the end all but generally speaking local government,
most research tends to show, that generally speaking
local government is better at running things than
Whitehall. I think we have tested to destruction the
notion that Ministers in London, however wise and
brilliant they may be as individuals, can devise a set of
rules that can manage every situation and alleviate
poverty effectively, I think we’ve tried it.
If you give local authorities, local councils, more
responsibility I think you allow the possibility for
innovation and change, you begin a process of change.
The decentralisation of responsibility over welfare
shouldn’t just be done to localities, I think there is an
important point of devolving responsibility to
organisations that perhaps may not define themselves in
purely geographic terms. I think we need to experiment,
I think we need to innovate. For example, I know a
charity that does a lot of work dealing with offenders that
have drug and alcohol problems. It doesn’t necessarily
have a regional or local reach, why not try to give it
responsibility not so much for a particular area in terms
of geography but for a particular area in terms of
problem? I think decentralisation need not just be on a
geographical basis.
Nick Seddon:
Do any of the others of you want to come in on this?
Stephen?
Stephen Bubb:
Can I just go back to the capital issue? Swapping hats I
am a non-executive chair of the Social Investment
Business, which is a third sector organisation which
provides loans to the sector. It runs three funds, the
Future Builders Fund, the Community Builders Fund
and a Social Enterprise Fund. Money is provided
through government loans of £400 million into the
sector, and this has been hugely successful. The
difficulty is that the Future Builders Fund is now fully
committed and that was a fund specifically for
organisations to deliver more services and that is now
closed. The Work Programme system which it is based
on, and probably rightly, actually is a good system of
payment by results, but getting to there from here is a
huge challenge for us and the Government has yet to
consider how they ensure that capital flows into
organisations so they can operate that scheme. There is
talk about commitment to a Big Society Bank, which is
probably eighteen months to two years off. The one
point about the Future Builders example is that these
were all unbankable loans, the rule was if it was
bankable we didn’t make the loan. The reality is that the
commercial sector, the banks, don’t lend into our sector
for all sorts of reasons. That’s not going to change, that
has actually got worse, so unless we devise a system that
brings capital in to our sector, traditionally a sector
which is hugely under capitalised, we just aren’t going to
be able to step up to the plate.
Nick Seddon:
I was just going to ask Sally, you talked about value for
money and obviously George Osborne has stressed the
importance of value for money at the centre of
www.reform.co.uk
39
Reforming welfare / Reform
everything and I just wondered whether or not the
question of local authorities that was brought up here
and the way that they relate to organisations at a local
level, whether or not there was a reflection that you
might have there?
Sally Burton:
I’ve spent most of my career in local government and on
one level my instincts say get things out locally much
nearer to the people but I would also share your point
about distance actually and some are very monolithic.
Actually Nick Hurd yesterday was asking me what some
of the barriers were to charities working more on
developing their social enterprise capacity to help local
authorities engage more volunteers, develop new ways
of running public services and we were talking about
things like park services where Shaw Trust runs a lot of
horticultural enterprises, could we grow and develop
those to maintain parks?
He asked me what the barriers were, well one of
the barriers will be actually within the local authority.
They are not that sophisticated at commissioning.
They will tend to have a block costing volume
approach and in areas which might lend themselves to
being run as social enterprises involving organisations
like the Prince’s Trust, bringing in disadvantaged
people to be employed or work as volunteers, often the
business has already gone to the huge big national, in
that case environmental companies, enterprise or
whoever has won that business. So how do we help our
local authorities commission in a way that actually
kind of splits the contacts down or builds different
models of commissioning in, when they are under
huge pressure as you say to grow and grow and grow
their contracts and more and more done on a regional
basis to try and get economies of scale? I think that’s
one major challenge.
I think one of the others I have to say sadly is still
attitude within staff, that even with all we know about
the economy and so on, there is a protectionism and I
think local authorities of all political colours are still in
many cases very committed to being state providers
rather than shapers, enablers, facilitators, holders of
equity. I’ll give you a small example. In a very wealthy
part of the West Country where Shaw Trust actually
runs personalisation services on behalf of the Social
Services department, we were running a pilot for the
Department of Health which was about seeing how
much we could help customers with cash in their
pocket, use volunteers as part of their own personal
care plan and the local
There is something really authority workers
appealing about the local sabotaged it. They
thought volunteers
answer, the Savile Row
would take their jobs
suit as opposed to the
away. They didn’t think
Maoist overalls, one size they would be
professional, they
fits all
didn’t think they would
meet personal needs. It wasn’t perhaps deliberate but
actually what they did inadvertently was took away
choice and control from the frail older people who the
scheme was targeted at because of their anxiety about
job security and so on.
So I think there are a couple of barriers,
commissioning is the big one, how we help the
workforce in local authorities come to terms with the
40
www.reform.co.uk
Reforming welfare / Reform
fact that there is always going to be work for them in
dealing with the most vulnerable but actually we have to
have a much broader church of people involved in
delivering services.
sustainable amounts of money from high net worth
individuals. We might be able to get it for a particular
cause at one particular time but actually there are
multiple routes that we have to keep looking at as well.
Nick Seddon:
Can we squeeze three more questions in? One, two and
three.
Stephen Bubb:
The social impact bond is very interesting. Social
investment business put money into that and we have
made a proposal to the MOJ to seriously roll that model
out. The point I would make however is that there is
very little evidence at the moment that the commercial,
the banking and financial sector, is seriously interested
in supporting this because they don’t see the
commercial return, that’s the problem. Where these
things have happened it is because the state has actually
provided that capital support.
Now perhaps in ten years we will see a different
approach as we have had in America but that is not
happening now. What is needed now is for the state to
look seriously at how they are providing capital and it
has got to be on a much, much bigger scale.
Peterborough for example is on a very, very small scale.
Randeep Ramesh:
Randeep Ramesh from The Guardian. Can I just ask
you about the capitalisation issue? The model
promoted by a company called Social Finance who are
working with reoffenders in Peterborough, basically
ask for money from high net-worth individuals to see
whether they can reduce reoffending rates and the
savings to the public purse are shared with those
investors on a return basis. It is a bit like sponsor an
ex-offender in your area. Could the same approach be
used to capitalise Welfare to Work?
Audience Member:
There has been a lot of talk about the necessary links
between government and the third sector. Stephen, you
mentioned the disastrous repercussions if government
were to roll back and leave the third sector to pick up the
pieces. What role does the private sector have to play
apart from just funding? What other role can the private
sector play in this?
Dominic Nutt:
Hi, Dominic Nutt from Catalyst Housing Group. There
is something really appealing about the local answer, the
Savile Row suit as opposed to the Maoist overalls, one
size fits all, but there is something also comforting about
the state solution. I know what I am going to get if I fall
out of work – and bearing in mind that my boss is on the
panel, I hope that’s not the case – how do I know that
my local church or society is going to look after me if I
fall out of work or how do I know if I am going to have
to move to another parish? It sounds a little bit arbitrary.
Nick Seddon:
Thank you. David, why don’t you go first and then
we’ll go Stephen, Sally and Douglas, if you would say
the final word.
David Ellis:
Okay. If I can just make one point about Adrian’s point
about accessing things across different geographies? I
think that works very well if you have people that work
across different geographies but where the partnerships
seem to break down all the time, and I think this also
plays to our second question about how we can learn
from the private sector, is having a clarity of purpose
and approach and how we measure what those
outcomes should be. I know Frank Field is talking about
how do we measure when people are coming out of
poverty but it is having that framework of operation
before you engage that is very, very useful to be able to
have a bigger impact at a local level.
When it goes back to the point about how do we
bring in high net worth individuals to help capitalise the
programmes we work, then I suppose the answer is
that’s one of the ways of doing it. It is very – well from
our experience, I’ll defer to the bigger charities here –
but it is very difficult to raise in particular long term
Sally Burton:
Can I just add some figures? These are estimates and
there are officials I understand from the DWP in the
audience so you may well think I’ve got this a bit wrong
but potentially we are looking at being able to manage a
cash flow of £30 to £40 million and I think the rewards
are probably more likely after two years plus, not one
year. We have talked to a number of high street banks
who have quoted around 8 per cent to10 per cent, they
are not that keen on it by the sound of it. We have also
on David Freud’s advice spoken to a number of venture
capitalists and external investors who have been quite
clear that they think the risks are very high so it goes
back then and therefore in effect it would cost the public
purse more because they would want to take such a high
reward at the end of the period that it might actually
over that period of time have cost the public purse more
than trying to raise the money in other ways. That’s
always a risk isn’t it?
Going back to that question that perhaps links to
the issue about what else does the private sector bring to
this other than cash, I think that really is important.
Actually the private sector brings huge expertise in many
areas at having that ability to manage large supply chains,
at having the infrastructure capability, at being able to
bring economies of scale across the system with regard to
HR and IT and all of those issues and we mustn’t belittle
that because those organisations have made huge
investment in that over many years. In many areas there
are things the private sector brings because they have a
pluralistic business model which will mean they have a
footprint which is a much more sustainable footprint.You
have got many charities in an area, you’ve got contracts
and if at the end of that you lose it, you may end up
having to move out because there is no infrastructure. If
private organisations have got that footprint then actually
it enables other organisations to work with them in way
which is much more sustainable as well in any one locality
and really starts to create some social impact, I believe.
Douglas Carswell:
It is very comforting isn’t it, talk of a universal welfare
system, of standardised assessment, that it’s there for
you and that everyone is equal, but look at the reality for
so many people. It is in fact very different from what it’s
meant to be, from the Beveridge idea. As I said at the
beginning, it entraps people in the squalor of low
expectation and dependency. It squanders not simply
the cost to the tax payer, it squanders so much in terms
of human capital and lives not fulfilled to their full.
We often hear people talking about opposition to
localism through what they call the postcode lottery. I
can think of few things more arbitrary than the welfare
system as I see it in my constituency. It is through its tick
box assessment every bit as arbitrary and random as
when you choose your lottery numbers in some cases, it
is a very arbitrary and unfair system. I think if we were
to localise control, if we were to transform the welfare
system into being what it should be – local solutions to
alleviating poverty – we would create a system that was
more dynamic, more innovative, that did what it was
supposed to do and I’ll
It entraps people in the
put it like this, listening
squalor of low expectation to many people on the
panel today, if I were a
and dependency. It
vulnerable person in
squanders not simply the need of help I would
cost to the taxpayer, it
have greater confidence
in some of your
squanders so much in
agencies and
terms of human capital
organisations helping
and lives not fulfilled to
me address some of my
their full
problems than leaving it
to remote officials in
Whitehall. We have tested to destruction the idea that
Whitehall knows best, it’s time to give control to
localities and to the third sector.
Nick Seddon:
That was brilliant, thank you. Forgive me, we have
overrun but let’s have a quick coffee break and then
return. Oh forgive me doubly, we have another session!
A new welfare settlement
Andrew Haldenby:
As the more observant of you will have already have
noticed, Julian Le Grand is not Nicholas Timmins. He is
taller and less bearded but has been able to step in and
help us by chairing this session. So Julian, thank you so
much and I will hand over to you.
Julian Le Grand:
Thank you so much. I was thinking of trying to pass
myself off as the Nick Timmins who has stopped
smoking but the differences are a bit greater than that.
I am very pleased to be here and to welcome such a
distinguished panel. There is a real problem that this
session would like to address, which is the potentially
growing unaffordability of the welfare state. I am
struck by two statistics when looking at the ageing of
the population issue. One is that life expectancy has
increased by three months in every year since the
Beveridge Report was written, with the result that we
are now living at least on average 15 years longer
which is ultimately a good thing but obviously does
create problems. The other statistic is that one in four
children born today will live to be 100 years old and
although it ultimately has to be a good thing, there are
problems for the healthcare system, for the social care
system and for pensions.
www.reform.co.uk
41
Reforming welfare / Reform
The healthcare problems are rather less than
many people think partly because actually we are not
seeing disability increasing very sharply along with life
expectancy. But social care, there are clearly enormous
problems and there are big problems for the pension
system. It is a pension system that was originally
designed for a much shorter degree of life expectancy
and we shall no doubt be hearing more about that later
on. There are problems elsewhere, at least in the social
security aspects of the welfare state; the enormous rise
in the various incapacity benefits, invalidity and so on
and of course we do
have a problem ­–
The other statistic is
that one in four children hopefully a relatively
short term problem
born today will live to
– but we do have a
be 100 years old
problem of
unemployment. In all of
these things we are going to have to consider how
meeting these needs is going to be financed and
provided for, in that, we are probably going to have to
consider various ways of mobilising the private sector
resources as well as public sector ones.
We have three very distinguished members of the
panel who are going to talk to us about this. First of all
we have the Minister of State for Pensions, Steven
Webb, who I am delighted to welcome. We have been, I
suppose, colleagues actually for quite a long time in
various capacities. He is an economist like me, worked
at the Institute for Fiscal Studies and then at the
University of Bath and has been spokesperson for work
and pensions for quite a while. He is now a Minister of
State for Pensions in the new coalition government and
I can imagine very few people are as qualified as him to
pronounce on the particular issues confronting the
pensions system. So without further ado, over to Steven.
Steve Webb:
Julian, thank you very much. Only my mother calls me
Steven but … It’s good to be with you today and it is
nice to see Julian here actually as I owe my career to
him. Because what he didn’t mention, and may indeed
have forgotten, was that day when I got on the train at
Bristol Parkway, when I was still working at the IFS, and
Julian got on and said did you know there is a chair in
Social Policy coming up at Bath, in a kind of equal
opportunities sort of way, I applied for it, became
Professor of Social Policy and the rest of history. So a
belated thank you, Julian, for that.
One of the things that it is good to think about
today is the role of the state specifically in the context of
pensions and trying to draw some boundary lines
between what the state is good at and will do effectively
and what the markets should be doing and whether that
dividing line has shifted or will shift. I want to identify
two things that I think the state in pension provision is
good at and will do better than the market and then
where that boundary line should stop.
First of all in terms of providing a firm
foundation, we need a single, fair, decent, understandable
foundation for people on which to build and secondly
we need to encourage individuals to take responsibility
for their own provision and to try and make sure that in
doing the one, we don’t undermine the other. So what
do we need to do about getting the state pension right?
I have become known as something of a bore at pension
conferences – I know you may find that hard to believe
42
www.reform.co.uk
Reforming welfare / Reform
– but I had a little postcard which said whatever the
question is, the answer is get the state pension right first
because if you do not get the foundation right the
problem becomes three times as difficult to solve. So we
have got to sort out the basic state pension and as you all
know, Julian mentioned he was out of the country when
the Budget happened, but we restored the earnings link,
which is something that for 30 years the basic pension
has been declining relative to earnings, and we finally
said that has gone on for too long. Now I know Reform
argued, for understandable reasons, that we should
delay that decision, clearly big pressures on the public
finances, tackling the deficit is a big priority so why do
that? It sounds a bit like old fashioned tax and spend. So
why is it actually a rational sensible thing to do?
Well actually 30 years of breaking the link, 30
years of letting the state pension decline and decline and
decline, relative to the earnings which it is meant to
replace, has created a chasm on retirement.You retire,
you had earnings here and the pension is going down
and down and down and down, so there is suddenly this
huge gap between what the state is providing as a basic
pension and what you expect to live on in retirement.
What happened then is that the government provided a
second pension on top, SERPS, state second pension or
whatever, with complicated arrangements for opting
out of it for people in other schemes. Then we realised
that those two pensions together were not enough to live
on. So we have created a third pension, called Pension
Credit, which accounts for about a third of pensions
received, and we wonder why people are confused. So
our goal was stopping the rot first of all, letting the
pension decline no longer but of course that comes with
a price tag.
So how do we tackle that? Well one of the things
we announced was a review of state pension ages. As
Julian mentioned, longevity has been growing. When the
state pension age was set at 65, male life expectancy at
birth was 64 and a bit. Cunning if you can get away with
it. I now understand that male life expectancy at birth is
89 and a bit so I can today announce that the state
pension age will be rising to 90 … no, sorry! [Laughter]
But we do need to look at what’s been going on. We are
still at 65. Reform has come up with their own proposals
and they are very welcome to do so. I always look at
submissions with great care for fresh ideas. I could not
sleep last night because I have been chewing on Reform’s
specific proposal, and I quote, that ‘the retirement age
for females should increase at the rate of 12 months for
every calendar year’. Now I have read that sentence
seven times now and I
think it means we are
I now understand that
going to ban retirement
male life expectancy at
which is taking austerity
birth is 89 and a bit so
a bit far probably but I
I can today announce that kind of know what you
the state pension age will mean. Certainly we are
be rising to 90 … no, sorry! going to have to look at
raising state pension
ages and we have decided on an immediate look at 66.
We are going to bring that one forward, and then
consider in the longer term what should follow from that.
So we need to make sure that people get the
pension at the right age and that it is a decent pension
when they get it. The crucial thing is that increasingly
the state pension regime is becoming more flat rate. So
we have an essentially flat rate basic pension which
increasingly women coming up to pension age will get
in full as well. That has not always been the case. The
second tier which historically, Barbara Castle and
SERPs was meant to be very earnings related but the
new second tier is gradually becoming more and more
and more flat rate and on present policies over the next
couple of decades we will have a flat rate basic pension
and eventually another flat rate pension on top of that
and that raises questions in my mind.
But we are heading towards flat rate provision
with more and more people in the second tier because
contracting out is, well, contracting I suppose. Then the
question is, and one of the questions for this session, is
how do we enable people to handle risk against that
backdrop and it seems to me that if the state provides
people with a firm foundation, they will have greater
confidence to take risk because they know whatever
happens they have got the foundation. So in a world
where more pensions are going to be defined
contribution, where you do not know what you are
going to get, what you get depends on what the stock
markets are doing when you retire, it will depend on
how long people are living when you retire – there is a
lot more uncertainty in the future than there has been in
the past which actually funnily enough makes the case
for a firm foundation from the state stronger. A decent
state pension then becomes the foundation on which
people will have greater confidence to move into a
defined contribution pension world. We therefore need
to encourage people to save and also protect the
vulnerable who can’t save.
So how are we going to encourage saving? Well we
know that probably more than half the workforce now is
not saving significantly for their retirement. It is estimated
that getting on for ten million people aren’t saving
enough, many millions of those work for a company and
either aren’t in the scheme that the company provides
or there is no pension at all and the plan to which the
coalition is committed is to move ahead with what’s
called auto enrolment which is to say over a phased
period, people who join a company will automatically
be put into a pension scheme, either one the company
runs if it is good enough or what’s called NEST, the
national scheme that is a sort of default option for
people to go into. We set up a three month review to test
if that is going to work effectively, we are committed
absolutely to the principle of automatic enrolment and
the idea Julian and I were talking about, this idea of
nudging people.You put people in and they can still opt
out, it’s not mandatory but once people are in a lot of
people can’t be bothered to opt out or will see they get
tax relief or see they get employer contribution and will
start think, actually maybe this isn’t such a bad thing.
We think this could transform the pensions
landscape fairly quickly. Estimates of anything between
five and nine million people going in to new pension
saving because of this, so we will have a firm state
foundation and then an automatically enrolled
supplement to that or occupational provision as people
have. One of the things that our review will be looking at
is the idea of NEST. That is to say historically the
market hasn’t been interested, not just with people at the
bottom but people in the middle, the market hasn’t
provided pension products that are suitable for those
people but as part of the review we have asked our
review team to say is there a market solution we should
be looking at or is NEST the best way forward?
Our conclusion from all of this is certainly that
the role of the state is not to remove the need for
individual responsibility and indeed the role of the state
is to avoid putting structures in place which depress
individual responsibility which is what mass means
testing does. What we need is a complementary system,
the state playing its part with a firm foundation and then
something on which people can build so when they save
they know they are going to be better off and they can
save with confidence. That’s the goal and that I think is a
constructive and better way forward than where we’ve
come from. Thank you very much.
Julian Le Grand:
Thank you very much indeed, Steve. I’m quite relieved
the pension age isn’t going up to 90! We now have Tim
Breedon, he is the Group Chief Executive of Legal and
General and has been since 2006, he looks remarkably
well on it I must say given what’s happened to the
financial sector during that time! He is also about to take
on the even more challenging role as Chairman of the
Association of British Insurers so I believe he is going to
look at the extent to which the private insurers might
help complement some of the insurance problems that
the state will face. Tim, over to you.
Tim Breedon:
Listening to the Budget last week and the Secretary of
State this morning, it is very clear I think that welfare
will be at the heart of the programme to reduce the
deficit and get the economy back into balance and the
challenge is absolutely huge in two different ways. The
sheer scale of the spending reduction that has got to be
made, taking about a quarter of the spend out of our
£200 billion budget over the next four to five years and
the need to do so in a way that makes lasting policy
improvements to the way we handle welfare
dependency. The Secretary of State says he intends to
reform the system by slowing withdrawal rates and
ending the anomalies and traps which keep people out
of work and on benefits and he has thought long and
hard about it in Opposition and I would support the
approach that his Centre for Social Justice has set out,
as I hope that any sensible observer would.
Of course reform has spending implications, for
example the Centre for Social Justice cited an initial
cost of £2.7 billion would be incurred in slowing
withdrawal rates as part of a move towards a simplified
dynamic benefits system, though it would reap
rewards over time. Squaring this with the need to
reduce the overall bill will be the challenge for Iain and
his team and I hope they will give serious
consideration to greater use of risk sharing and to
partnership in particular with the private sector to
achieve these goals.
The insurance sector is particularly able and has
the capacity to play a role here. Much of the work we do
already as insurers overlaps with that of the DWP, we
fundamentally do the same things – social security
provision is itself a form of state insurance with
premiums being paid through tax, rather than to a
company like Legal and General. Now we know that
there are benefit recipients for whom the state will have
to pick up the bill, there is no one else to do so, these are
the neediest cases and it is right and proper that the
government provides at least a basic standard of living
for those people.
www.reform.co.uk
43
Reforming welfare / Reform
But as the Budget made clear, there are many
more middle income households on earnings over
£30,000 who benefit from DWP spending. It feels
inevitable that they will have to bear the brunt of
spending cuts and I think we can help here in two ways.
First, by encouraging greater complementary take up of
insurance either direct from customers or particularly
through their employers. This way cover can be
arranged which provides necessary funding for families
and individuals in the event of bereavement, critical
illness or unemployment, reducing the risk of those
individuals falling back on the state. We are talking here
about individuals who can afford the premiums in the
good times and who can therefore avoid becoming
future rather than current claimants on the state and
this is something that already works well for example in
products like group risk where employers arrange cover
which pays out when an employee is sick and unable to
work. This is the model we have in pensions where
people incentivise through the tax system to
complement their entitlement to state pension with
private pension savings. We should be exploring other
areas where this principle could be applied.
The second way is by transferring cover from
the state to the private sector. An estimate by Deloitte
in 2007 suggested there was an addressable risk
market, they called it, of £340 billion consisting of
individual and occupational pensions, accident and
health cover, income protection and £8 billion motor
insurance for example, which is entirely a private
sector product. Of this addressable risk market the
state has 65 per cent and the private sector has 35 per
cent. Shifting the balance by 5 per cent towards the
private sector would
We are talking here about take some £17 billion
individuals who can afford off DWP spending
on 2007
the premiums in the good based
numbers, and 5 per
times and who can
cent of course is a
therefore avoid becoming massive number but
future rather than current even a far smaller shift
in the balance, affecting
claimants on the state
what I call the top tier
of welfare state client base, would be very meaningful
considering the big numbers involved. My suggestion
today is that this kind of transfer could deliver the
funding needed for a really fundamental reform of the
benefits system, ending the absurd marginal rates of
tax paid by claimants when they try to get into the
world of work and live independently of the state.
Could the insurance sector deliver? Well provided
there was a commercial rate of return, I believe it could,
to save the £2.7 billion the Secretary of State needs to
implement the Centre for Social Justice proposals for
example requires less than a 1 per cent shift in the
balance from public to private provision and when we,
the private sector, occupy less than 5 per cent of the
combined accident and health and income protection
markets for the state having 95 per cent, the capacity is
definitely there. So we want to help, we are able to help
and I like to think that today we have seen the beginnings
of a programme of co-operation and partnership to
investigate areas where for mutual benefit, that’s the
benefit of the policy holder, the claimant, the state and
the taxpayer, we could deliver a better shape and
implement some of the very sensible proposals that the
Centre for Social Justice has put forward. Thank you.
44
www.reform.co.uk
Reforming welfare / Reform
Julian Le Grand:
Thank you very much indeed, Tim. Andrew Harrop is
our next speaker, he is Director of Policy and Public
Affairs at Age UK. He joined Age Concern England in
2003 and has led the charity’s policy on employment
and equality. He has worked previously at the New
Policy Institute and as a research assistant for Ann
Campbell. He has got a degree from the LSE which is
clearly his major qualification.
Andrew Harrop:
Thank you very much Julian. Let me start for a
moment to talk about people in the decade or so
leading up to pension age and then I’ll talk about post
pension age as well. Actually there are an awful lot in
that age group who are not in the formal state system
but are out of work, exactly the sort of people we just
heard about who are in one way or another finding
resources from insurance or savings or whatever and
that’s a group that is often forgotten about when we
talk about increasing the numbers in work. We rightly
focus on the welfare system and people on benefits.
There are also an awful lot of people on inactive
benefits in their 50s and early 60s and when we focus
on benefit reform, welfare reform, we need to see the
system through the prism of people in their mid-50s
onwards who have been out of work for a long time. If
we can get the reforms that the Secretary of State
talked about earlier to work for people between 55 and
65, we can get them to work for everyone. But we
mustn’t create a system which isn’t effective with
people having low skills, poor health, potentially also
facing age discrimination and of course what we know
about the labour market at the moment where there
simply may not be the jobs available. So we are entirely
supportive of the principles we’ve heard today but the
devil is in the detail.
We need to make sure that they work for the
over 50s, particularly so because almost without
being noticed we started a major change in our
welfare system back in April when we started to
increase the women’s pension age and also the age at
which you must actively participate in the labour
market to get most benefits, which rises with the
women’s state pension age. The DWP and its
contractors have no experience of an active labour
market policy for people in their 60s and we will see
this rise over the next few years and it is the success
of working with people in their 60s, I would argue,
that should be the main driving factor for how
quickly we increase the state pension age. If we
cannot work with people detached from the labour
market in their early 60s up to 65 then we need to
think very carefully before increasing the pension age
to 66. So that is, if you like, the key judgement factor
on how quickly you should increase the state pension
age. We agree that broadly speaking the state pension
age needs to reflect growing longevity but again the
devil is in the detail.
Turning to pensions and people over the state
pension age, our view is that there has been a wave of
pension reform from the last Government, attracting
broad cross party support, brought together by Adair
Turner’s Pension Commission which was a non-party
process and much of that sets us on a good track for the
future and an affordable track for the future. We will see
the pension system, the state pension system,
consuming a slightly higher share of GDP than it does
today, but that’s a managed growth path which over a
50 year period is our capability to afford. Compared to
the huge swings in public spending up and down we’ve
seen over the last year, demographics in the pension
system is nothing to be worried about.
However, our view is that the pension system we
have inherited from the previous government is if you
like a bare minimum and we are ambitious to go much
further than that and that’s where the relationship
between the private sector and the state is so important.
We want to see what Steve talked about – that firm,
clear, transparent state platform for everyone to save on,
we think the way to do that is to bring the two pension
systems Steve talked a
When we focus on benefit basic state pension and
the second pension,
reform, welfare reform,
as it once was
we need to see the system SERPS
– together to provide a
through the prism of
single high universal
payment which is the
people in their mid-50s
onwards who have been platform for everyone’s
But on top of
out of work for a long time saving.
that it is absolutely the
role of employers, the private sector and the state in
terms of framing the choices through the large
economics we’ve heard talked about, to focus individual
responsibility. We are never going to have a system that
provides everyone with the sorts of replacement ratios
that they really should be expecting for themselves,
merely through the state system.
I also want to mention long term care because I
think we are much further behind, in a very similar set
of difficult issues between the balance between private
and public sector here. Arguably we won’t in the current
climate be able to afford the sort of universal, available
to everyone system that the previous government was
talking about so you’d have free personal care with if
you like a state organised payment system. If you look at
the numbers on care and support and the demographics
of it, it will be a huge job for the tax payer to simply
provide really good quality care for people within the
current means tested system. That will itself require a
large increase in spending so I would suggest that the
private sector provides many of the answers for people
outside the lowest income groups in terms of ensuring
for their future care needs and indeed in terms of other
ways of saving or tapping into capital that they have
already got and we are really keen that this new Care
Commission looks for new solutions, working with the
private sector rather than just the previous government,
if you like, very state organised proposal.
Finally because it is a Reform platform, I just
wanted to say something about what is referred to as
middle class welfare, the universal payments that have
been criticised, particularly the winter fuel payment and
the free bus pass. The context for those payments is that
we have the least generous basic universal state pension
in the developed world so to see individual chunks of
the welfare state and take them apart is very easy and we
can have that debate but if you don’t look at it in the
round and what the whole pension system looking to
achieve, I think we’ll lose sight, you know, the wood
from the trees. If our whole pension system is not there
to tackle pension poverty and improve the replacement
ratio from lifetime earnings, then it will be failing and we
think that winter fuel payment is a really important
payment given that the basic state pension today is set at
such a low level. Thank you very much.
Julian Le Grand:
Thank you Andrew. We have a little time for Q&A, the
Minister is a little constrained for time but has just
indicated to me that we don’t necessarily need to cut
things very short for that. So we will take two or three
questions at a time and proceed from there.
Andrew Haldenby:
Hello, Andrew Haldenby. A question for Tim. I am
personally all in favour of the agenda that you set out
but one question that has been raised about it is the
sense that there is a cost to savers in accessing products
from companies such as your own, the charges
associated with savings and pension products, also a
complexity, even a product as simple as an ISA is too
complex for many people. So my sense is that if
companies such as your own are able to reduce the costs
of your products and perhaps work with regulators to
produce more simple products, then it will aid what you
are trying to achieve and I wondered if I was right about
that.
Chris Melvin:
Chris Melvin from Reed in Partnership. We, among
other things, provide services for the Department for
Work and Pensions and I just wanted to bring together
the point about pensions and work. The oldest person
we have placed into work was 87, he is called William
and he works two days a week in the Tate in Liverpool.
One of the concerns I have with pension reform is we
see pensions work and social services in different silos
and actually they all link across, they all have an effect
on one another so Bill may well be a healthier person
because he’s working and have less demand on other
social services, but
The oldest person we have equally he might
placed into work was 87, possibly be penalised
through the means
he is called William and
testing that other things
he works two days a week take on board. So I
wonder, in terms of the
in the Tate in Liverpool
more medium term
reform, what solutions there might be to encourage
people to work longer but still save for their retirement
during perhaps their middle ages?
James Bartholemew:
James Bartholemew. This is a question for Steve Webb, I
wonder what you really think of the pension credit, it
appears to be a means tested benefit with a lot of bad
aspects to it, a lot of elderly people won’t actually get
round to claiming it so some of the poorest people won’t
get it, it discourages saving. Are you going to get rid of it
or will you think about it?
Julian Le Grand:
Tim, perhaps you could start off on the complexity
question.
Tim Breedon:
I completely agree with the sentiments. Legal and
General, as you probably know, has long been a pioneer
of low cost and simple insurance and savings products.
When one looks at the cost and complexity of these
www.reform.co.uk
45
Reforming welfare / Reform
products, these are not choices of the manufacturer, the
costs are largely costs of distribution, particularly the
cost of advice and the cost of regulation. The way to get
cheaper products to people is to make them simple,
make them repeatable so that the same product can be
sold to multiple numbers of people and to do it in high
volume without also having to bear other people’s costs,
possibly in some cases over engineered costs for the
type of product or customer that we’re talking about.
These are particularly important in the area of
distribution and regulation which I think is something
that the government through the reformed FSA really
needs to look at. Otherwise I’m afraid however cheaply
and simply we manufacture our products, we won’t get
simple products at the right price to the right customers
in the right way.
Julian Le Grand:
Steve, medium term savings and pension credit?
Steve Webb:
Yes, delighted to hear that Chris has got some 87 year
olds back to work. We visited Asda with Iain Duncan
Smith last week and the 76 year old meeter and greeter
was there and explained that frankly it gave him
something to get out of bed for in the morning and I
said how long do you plan to carry on for and he said,
‘til I drop. But that’s not official government policy I
have to say! [Laughter] Good job this is all off the
record isn’t it!
You do make an important point about the links
between work and so on, there are clear beneficial
effects for people who want to work longer. One of the
things that we want to do very quickly is to get rid of
mandatory retirement. That is all part of the cultural
shift. At the moment it is illegal to sack someone for
being female or disabled but it’s fine to sack someone
for being old. That’s outrageous and we want to get rid
of that as quickly as we can and I think raising the state
pension age sends clear signals. We have got so used to
65, indeed 60, it is part of the national psyche. Once
that number starts changing, once it becomes illegal to
sack people for being over 65, I think we will start
thinking about these things differently. But I take
Andrew’s point that the Department will want to do a
lot more with potential older workers and to do that as
effectively as we can.
On James’s point about pension credit, it seems
to me that the goal has got to be – and I take the
criticisms that you make – the goal has got be to get
people to retirement with enough to live on, not let
them end up retiring poor and then try and catch them
through a means test and this is far too many people.
So the structure has got to tackle the cause to try and
make sure people are saving more wherever they can,
make sure they are building up a decent flat rate state
pension. I think you will always need a residual means
test for say disabled people or people who for whatever
reason weren’t able to save, but my long term goal
would be that means testing should be the exception
rather than the norm.
Andrew Harrop:
I completely agree with the points on means testing but
we do have this delicate balance. If you pay universal
benefit you get criticised for it being given to the wrong
people. If you tightly means test it you have all the
46
www.reform.co.uk
Reforming welfare / Reform
disincentives and all the lack of take up, so a gradual
shift to more universal provision that is a basic building
block for everyone. But clearly during the present fiscal
situation means testing is very important because it
means that people that would otherwise be in severe
poverty are protected. Chris’s point on employment,
the pension system and the social care system coming
together, I totally agree and actually it will become
easier I think with the move local government is
making in terms of paying personal budgets rather
than commissioning traditional services where care
and support will look a lot more like social security in
the future and hopefully that will mean it is much
easier to have a much more integrated approach to
thinking about.
Julian Le Grand:
Thank you, if we can have another few questions.
Actually I’ll just abuse my position and ask one quick
question of Steve – well it’s not really a quick question
but I’m sure the answer will be quick! A particular
interest of mine has always been tax relief on private
pensions which is very costly, is highly regressive and is
not transparent. We do need a form of government aid
for private provision, I would prefer to see something
like a matching grant system, but does he think there is
any scope for reform of the tax relief system? Somebody
else? Yes, the lady there.
Deidre Boyd:
Hi, Deidre Boyd, the Addiction Recovery Foundation.
Just a question to put Tim Breedon on the spot. A highly
disproportionate number of the long term unemployed
have alcohol and drug problems which may be chicken
and egg or may not be. To my knowledge there is only
one insurance company in this country that will cover
people actually getting
appropriate treatment
Tax relief and private
so they can actually get
pensions which is very
into work, so that
costly, is highly regressive back
they can go to rehab.
and is not transparent
Would Legal and
General be prepared or
does it have something I don’t know about, but would it
be prepared, to offer addiction cover for people?
Julian Le Grand:
That is a tough question. At the back there.
Anna Wallace:
Hi, Anna Wallace, Charted Institute of Personnel and
Development.You touched very briefly, Minister, on
auto enrolment and we have seen speculation in the
press about the review. I just wondered if you could
confirm or deny any rumours that the Government is
considering opting certain groups out of the scheme,
for example older workers or small businesses.
Julian Le Grand:
Okay, should we just ask Tim to address the issue about
addiction first.
Tim Breedon:
The clear interest of the individual, the employer and
society is to get people who are moving towards
confronting issues which may lead to increasing
difficulties to work, to get to those issues early. So
addiction, it may be things like stress or mental illness,
because these are the things where if you intervene early
and can deal with the causes, you are alerted to the
causes, you have the capacity to deal with those causes
at an early stage, you will keep people off Incapacity
Benefit for the long term because the number of people
who move from what appears to be quite a short term
need in terms of ability to work to long term
unemployment or incapacity, unemployability, is just
too high, too high.
The way this is provided very well is by the
group Risk Providers, including Legal and General,
who do intervene very early alongside companies to
deal with employees with those issues and addiction
might be one of those issues. They do make available
large amounts of expertise and large amounts of
support to try and get
these employees back
I just wondered if you
to work. The reason we
could confirm or deny
do this, firstly, it is not
any rumours that the
all altruistic. Clearly the
Government is considering claims are lower if we
opting certain groups out get people back to work
of the scheme, for example but it is also very good
for the individual
older workers or small
because as we were
businesses
hearing earlier today, a
long period out of the
workplace makes it very difficult for people to
re-engage with employment and it is clearly good for
society in terms of economic potential and also
avoiding some of these cultural issues regarding
unemployment and incapacity that we heard about
today. So all of these things are happening in this area.
As regards the individual side of the product,
these are individuals buying insurance products for
income protection. I will have to come back to you and
let you know exactly what it is that we do cover under
what circumstances but certainly, and I think very
properly, is covered by pooling risk.
Julian Le Grand:
Steve, tax relief and auto enrolment.
Steve Webb:
On tax relief, the previous Government’s plans to
restrict high rate tax relief and the particular way that
was going to be done raised a number of concerns and
so the Budget announced instead that our colleagues
at the Treasury will be consulting on an annual cap of
between £30,000 and £45,000 on the contributions
that are tax relieved and obviously that will tackle to
some extent the regressive nature of the existing
subsidy. The Treasury said they wanted to cut the
amount of relief by essentially the same amount as
restriction relief would have done but through this
mechanism, so it will be less regressive as a result. But
in the longer term the Treasury are very much talking
in the language of restoring a savings culture after a
decade of runaway consumer expenditure and debt,
government debt. The idea that we get back into the
idea of savings is going to be a big agenda for them and
matching I’m sure is something that will be looked at
in that context.
On Anna’s question about the scope of the review,
the terms of reference that have been given to the review
are to look at the scope of auto enrolment so the terms
of reference refer to things you mention, so looking at
particular age groups, looking at size of firm, looking at
income levels and so on. Simply to say, the version of
auto enrolment that we’ve come up with or inherited is
pretty much as comprehensive as it could be and we’ve
simply asked the question, is it right for all of those
groups? If the review comes and says well yes, actually
there is a good reason for being comprehensive, then we
will go with that so there is no confirm or deny. Those
are the things we’ve asked them to look at and we will
make a judgement later in the year.
Julian Le Grand:
Just time for one or two more quick questions, yes, the
gentleman there.
Aaron Barbour:
Good morning, my name is Aaron Barbour from
Community Links. We’re a local charity just a little
further east, working with many of the people we’ve
been talking about today. Just a very specific point, just
picking up on your last point, Minister, around savings
and in terms of our culture, particularly through people
that are working. I understand that in the Budget you
just cut the savings gateway roll out. Surely that was
shown to actually be a very valuable model in
engendering that culture of savings. What else are you
thinking about to put in its place, not just for people
reaching retirement but for people much further down
the age scale?
Julian Le Grand:
Can I also mention the cutting of the Child Trust Fund.
Yes?
Helen McAnally:
Hello, I am Helen McAnally from Parkhouse Bell.
I own and operate two businesses, one in England and
one in Australia and despite my accent I am British.
I am not quite sure why the UK just doesn’t adopt the
system in Australia in terms of superannuation.
Perhaps the Minister should go out in the next quarter
on a fact finding mission to Australia, before it gets too
hot, and have a look at the system because in a nutshell
it is very simple, it’s transparent, it has been around for
about 13 years. Pension contributions are compulsory
from both the employer and the employee and it seems
to me despite it costing me money as a business owner,
it works.
Julian Le Grand:
Okay, I think we’ll close it there. So Great Barrier Reef
calling Steve and Savings Gateway and Child Trust
Fund.
Steve Webb:
I must say, I have been thinking since I was appointed
that we need to have more reciprocal pension
arrangements with the Caribbean, so that’s on the list!
On Aaron’s perfectly fair question about how do you
encourage savings, one of the things that we’re keen to
look at is that pension saving tends to be terribly all or
nothing. It tends to be tie your money up and you can’t
touch it again for forty years. I think whereas there are
some people for whom that is quite reassuring, don’t let
me touch it otherwise I might touch it kind of thing, I
think there is another set of people who would actually
www.reform.co.uk
47
Reforming welfare / Reform
be willing to save if there was a safety valve in the system
that said actually if there was a crisis or if I need some
cash, I can access some of that.
So one of the things we want to look at is what we
call early access, so the idea is that with a pension fund,
when they retire people tend to take a quarter of it as a
cash lump sum. Very often it never gets turned into a
pension, you never pay tax on it, people spend it on
what they want to. At the moment, say you were 40 and
about to be repossessed because you are £5,000 in
mortgage arrears, you could have far more than that in a
pension fund, not be allowed to touch it, lose your
house, a very valuable asset that could give you a real
standard of living in retirement. Why shouldn’t you
potentially be able to access part of your pension fund
early, with limits, but access early?
The question in my mind is we are going to auto
enrol getting on for ten million people shortly and they
are going to have to decide whether to stay in pensions
or come out and I think they may be more attracted to
staying in if the product is less terrifying, less all or
nothing, more flexible. Many of the people who we will
auto enrol are just the people we are talking about, they
are part timers, people in temporary jobs, just the
people who are under pensioned and under saving so it
may be one of the things we can do there.
Helen’s question about Australia. I think I’m right
in saying, correct me if I’m wrong, when the system of
compulsory pension contributions was introduced in
Australia, I think I’m right in saying, there was
centralised pay bargaining which means there was an
across the board hold down on pay so that it wasn’t
perceived – you’re nodding, which is reassuring – in
other words, something that I don’t think we could do in
this country. It was accepted at first because it wasn’t
perceived to be a direct tax taken out of people’s pay,
pay was held down and the money went into the
pensions, which I think probably smoothed the
transition. We are going to be going quite a long way in
the direction you are describing, it will be interesting to
see where we go from there but I am very keen to learn
from other country’s examples, the Kiwi Saver in New
Zealand being an obvious parallel as well to some extent
with what we are doing but also the institutional
arrangements are often very different so they don’t
always translate directly.
The other issue of course is the whole sort of pay
to save issue. If the state forces you to save and then you
discover at the end that you are no better off because we
means test it away from you, that raises quite different
issues whereas I think that may again be less in the
Australian insurance context.
Julian Le Grand:
Okay, well I feel we have to close now. Coffee is going to
be held at the back of the auditorium but before that I
would like to thank our speakers very much. We had a
really substantive session with some real substance in
both the talks and in the question and answer session.
So thank you all very much and over to coffee.
The unemployment challenge
Patrick Nolan:
Thank you for returning to what is the final session for
the day, hopefully you have had a good fix of caffeine,
not that you’ll need it because we are about to deal with
48
www.reform.co.uk
Reforming welfare / Reform
some incredibly important and real issues here, we are
going to talk about the unemployment challenge. As we
all know we have just been through a major recession
and one of the implications of that is that it does have
important consequences for the labour market. The
private sector labour market has been very weak over
the past years, it is starting to strengthen now, but we are
starting to see a public sector recession developing and
that is going to have important implications for
unemployment as well.
So given that it is an incredibly important
discussion to have and we almost couldn’t have a better
panel to discuss it, so I am very pleased that we have
Yvette Cooper who brings incredible political
experience, being a former Secretary of State for Work
and Pensions but also has studied at Oxford, Harvard
and the LSE – Julian Le Grand, who has gone now,
would be very pleased! We have also got David Banks
who is the Group Managing Director of G4S Care and
Justice Service and Chris Melvin who is the Chief
Executive of Reed in Partnership and of course Janet
Daley, who among other things writes for the Sunday
Telegraph. Thank you, over to you Yvette.
Yvette Cooper:
I think this is a hugely timely debate and not in fact
because of the new Government but because of the
time we’ve reached now in the economic cycle, having
come through the recession, but also the experiences
now if we look back on what happened in the 80s and
90s recessions, understanding that actually this is the
critical moment when it comes to addressing
unemployment and particularly long term
unemployment as well. The reason that I say that is if
you look back at what happened after the 80s and 90s
recessions, once the economy started to grow, that was
actually the time at which long term unemployment
really grew and in fact unemployment kept rising for
years after the recession finished. In the 1980s, youth
unemployment rose for four years after the recession
finished and that was when the real damage was done
in terms of the kind of long term unemployed that
actually scarred the whole nation for many
generations, had particular damage for some
communities where you saw the long term scars from
long term unemployment having an effect on wider
communities and families as well. So that’s why I think
we should never let that happen again. This is a critical
moment and what we do now really matters.
What I wanted to do was just reflect a little on
the approach that Labour took over the last 13 years,
what made a difference, what didn’t, what had the
greatest impact over
the past period and the
I think this is a hugely
approach that we took.
timely debate and not in
Secondly to respond to
fact because of the new
what I think is a deeply
Government but because damaging approach
of the time we’ve reached that I think that the
now in the economic cycle new Tory Liberal
Government is taking
and the potential risk that they are taking and the scars
that they could be creating now for future new
generations and then, thirdly, to just say something
about what I think is the approach we should now take
in the new circumstances and what should be the way
forward now.
The approach we took, I think, to unemployment
was at the heart of the welfare reforms and the changes
that we made after 1997.You can look at some of the
most immediate things that we did as a new
Government after 1997 as the introduction of the New
Deal. It was an approach to tackling unemployment but
also wider worklessness that said that work is the best
route out of poverty. It is also the route to supporting
human dignity, supporting communities and that it is a
worthwhile thing, that everybody who can work should
be working and that those who can’t work, maybe those
who might be able to work again in the future, should
still be kept close to the labour market, should still be
keeping up their skills, should be supported so that they
can get back into work in future. In order to do that
what we needed was both more opportunities and more
support, but also stronger conditions on people,
stronger requirements on people to take up the work
and the opportunities that were on offer and as well as
looking at the problems that individuals faced, whether
that be around child care, whether it be around low
skills, whether it be around attitudes towards
employment and work experience but also looking at
the wider issues around communities, so the
regeneration that was required. The fact is that some
areas, including areas in my constituency, simply had
too few jobs and needed the regeneration as well.
That was the approach throughout so what were
the things that we did? I have talked about the New
Deal, the first New Deal for Young People was set up.
No fifth option, there were four options you could take
up in terms of voluntary work, working for a
community taskforce, jobs in the economy or training,
but there was no fifth option. After six months you
would be offered these options, you would have to take
one of them up otherwise your benefit would be cut.
That was the first time that that had been made so
explicit as part of the employment programmes. We
started with young people but it was an approach that
we then extended and started to build across the
welfare state.
We also brought together the benefits agencies
and the job centres into Jobcentre Plus, and I don’t
think that anybody should underestimate the
significance of that reform because it brought together
for the first time the people who were advising about
people’s benefit claims and the money people were
getting, alongside the people who were advising about
what should you do to look for work, what should you
do to get back into employment, what were the skills
that you might need. Bringing those together into a
single agency was a very effective reform and we
shouldn’t underestimate the impact that that had
actually during the current recession when it really
proved its worth as well.
We then also had a series of different employment
programmes which evolved over time. We took quite a
pragmatic approach to the delivery. We have had the
development of the Flexible New Deal, the new
approach to contracting and to private sector incentives,
alongside the additional support during the recession,
things like the Future Jobs Fund, the Youth Guarantee
as well and then other areas for lone parents, the gradual
roll out of conditions for lone parents with children over
seven to start looking for work but also the support for
child care, Child Care Tax Credits, and for sickness
benefit claims the reassessment of everyone on sickness
benefits. That’s an area I think we should have started
earlier with the new assessment for sickness benefit
claimants and alongside support to get people back into
work as well. It is welcomed that the new Government
have said they will implement those reforms that we had
started a couple of years ago.
We also had reforms to improve the incentives for
people to work, particularly the Tax Credits and the
Minimum Wage, to make sure that people were better
off in work and then of course tackling the wider causes,
things like Sure Start, the Neighbourhood and
Community Regeneration, looking at housing, Regional
Development Agencies and some of the family
intervention projects that were addressing the problems
for the most difficult families.
So those were the measures we put in place, how
did we get on? If you look at the areas around
unemployment, what happened during the recession I
think is very interesting because it was very, very
different from previous recessions. Despite the huge
global recession we
Bringing those together
faced, despite the huge
into a single agency was drop in growth and
GDP, we actually only
a very effective reform
had the claimant count
and we shouldn’t
rise to 5 per cent at the
underestimate the impact most compared to 10
per cent in the 80s and
that that had actually
90s recession, so it was
during the current
much, much lower. It
recession when it really
was also much lower
proved its worth
than everybody
expected, currently I
think around three quarters of a million lower than
people had predicted even just over a year ago and that
saves money, saving around £15 billion over the next
four years as a result of keeping unemployment lower.
A lot of that I think is to do with the work that the
Jobcentre Plus has done. It is partly about changes in the
wider economy and the work that firms did in order to
keep hold of labour but also it is about the work of
Jobcentre Plus because people have been staying on
unemployment benefit for much shorter than in
previous recessions. They have been leaving
unemployment benefit, going back into work and back
into things much faster than in previous recessions as
well. Contrast that to the 1980s recession when actually
because no extra investment was put in to provide that
same Jobcentre support, conditionality, requirements on
people – they had to keep looking for things – as a result
what you had was the condition to look for work in the
1980s was actually made voluntary for a whole period
because the support was not put in to the Jobcentre staff
to actually make sure that people were meeting the
requirements to keep looking for work. We have also got
long term unemployment which is now about a quarter
of the level that it was in the 80s and 90s as well.
The areas that have been more difficult have been
around the sickness benefits and I think that we should
have started some of those reforms earlier. They are
making a big difference now. Although we stopped what
was a thirty year increase of people on long term
sickness benefits, it is still too high and I think there are
more people who could move in to work if they have got
the right kind of support. We were more successful
around lone parents, things like the New Deal for Lone
Parents and child care made a big difference, there are a
www.reform.co.uk
49
Reforming welfare / Reform
lot more lone parents in work and a lot more children
lifted out of poverty as a result but also some difficulty
around the complexity of the benefits system, although
in practice things like the Tax Credit and the Minimum
Wage have made a lot of people substantially better off
in work. Because of the complexity of things like tax
credits and housing benefit and the interaction between
them, for a lot of people they will perceive they are not
better off in work, they are worried about moving in to
work and worried about losing things like housing
benefit or free school meals as a result.
So what do we do next and what are the
challenges now? At this stage in the recovery the
challenges aren’t just on the supply side, it is not just
about what you do to
It is also about what you help the workless, to
help the long term
do to make sure there
unemployed back into
are actually jobs in the
work. It is also about
economy for people to go what you do to make
to and that currently is the sure there are actually
jobs in the economy for
most severe risk of all
people to go to and that
currently is the most severe risk of all. We have already
seen the Office for Budget Responsibility saying that
this Budget increases the number of people
unemployed by up to 100,000, reduces the level of
employment, the number of jobs in the economy by
100,000 as a consequence of the Budget but actually
even that may be based on some heroic assumptions.
We saw the things that were in The Guardian
today, that actually what they are predicting are
hundreds and thousands of jobs in both the private
sector as well as the public sector being lost as a result
of the £40 billion additional cuts that are being put
into place. Also there are some really heroic
assumptions that 2.5 million private sector jobs are
going to be created, again based on some incredibly
heroic assumptions about the expansion in business
investment and the expansion in exports that are on a
scale we have never seen in decades of our history.
That is what they are assuming is going to drive the
growth in the economy, the private sector growth and
the growth of the new jobs. I just think it is utterly
unrealistic and it is a massive risk therefore to assume
that’s going to happen, to assume these jobs are going
to come and to simultaneously take real substantive
actions that are going to cut jobs in both the private
and the public sector.
The approach they seem to be taking is that
ultimately a short term hit like this will be worth it
because then the economy will grow, but that
misunderstands the labour market. Unemployment
scars. If you keep people unemployed for a long time,
if you keep people out of work right now because you
are putting the economy through a tough time but
it’ll be all right in the future, when you get to that
future you will find that a lot of those people have
been so scarred they will find it much more difficult
to get back into work. That was the experience of the
80s and 90s and I think it is an approach where they
are saying in the 90s it was unemployment is a price
worth paying in order to get inflation down, now it is
unemployment is a price worth paying in order to cut
the deficit. Actually it will be counter-productive
because we will pay the cost of that higher
unemployment for years to come.
50
www.reform.co.uk
Reforming welfare / Reform
Briefly, I want to say something about the
approach on the supply side because I think it is tragic
that they have cut things like the Future Jobs Fund
which was providing temporary jobs, support, real jobs
and work for people during a difficult time, during the
recession. Far better for those young people to be in jobs
than on the dole, far better for them but also far better
for the rest of us, far better for the economy, far better
for our future as well. All cut. Billions of pounds cut
from those employment programmes at a time when we
should be supporting people, keeping people close to
the labour market. The consequence of course is that
they have cut the conditions as well because if you can’t
guarantee people a job, you can’t require people to take
it up. So that is deeply disruptive I think.
Secondly, they are saying they are going to have
the Work Programme in its place. The Work
Programme is not going to be in place until at least next
summer, we haven’t seen the details yet but there are
some key components missing. There are no
reassurances that this is actually going to include
guaranteed work or guaranteed training for everyone or
about how they are going to avoid having people parked
because the incentive to help everybody as opposed to
simply those who are going to be most valuable and
most cost effective to get back in to work. There is no
clear clue as to how they are doing it. I think there is a
considerable risk to the contracting structure which may
well mean this is not value for money because of the
massive scale for such huge work programme contracts
going ahead without doing the testing. The pilots that
we had put in place to properly test these approaches
simply seem to have just been ditched in the name of a
kind of ideological approach which is just get this in
place fast and not, as I said, doing the guarantees.
The approach to benefit reform – I would
welcome something which aimed at benefit
simplification but we looked at this and found that
actually some of these things were hugely costly or they
massively cut benefits for a lot of people. The approach
has been taken that says let’s slash Housing Benefit for
people who can’t find a job within a year, at the same
time as cutting the jobs for them to go to. I just think this
is mean and nasty as well as being hugely
counterproductive for the economy as well. Of course
finally, cutting things like the Regional Development
Agencies and the support that will actually get the jobs
into the deprived areas.
So finally, what should we do now? I think we
should take, first of all, a different approach to
supporting the economy. Don’t do the extra £40 billion
cuts, I just think it’s madness. Secondly, to have an
approach that says what we should do is increasingly try
to build on the work of the Youth Guarantee, guarantee
people jobs or training but in return a requirement to
take them up. So rather than simply just guaranteeing
people a bit of advice, actually say if you haven’t been
able to find work, if you have been playing by the rules,
you have been doing your bit, then ultimately through
things like the Future Jobs Fund there is guaranteed
work for you, maybe in the community and the
voluntary sector, but you have got to take it up.
Also we had looked at a couple of areas which we
thought were cheaper ways of doing the same kind of
work incentives which is to have a better off in work
guarantee. So you just guarantee that everybody will be
£40, £50 a week better off and without trying the
massive reform of all of the benefit system, which could
prove hugely expensive as a result and also extending
Housing Benefit, having housing benefit run on so that
when you move in to work you have extended housing
benefit periods as well.
I think there is more that could be done, which
the Work Programme may do, has the capacity to do,
around some of the personalised approaches,
including looking at families and I think there is
potential for it to do that. So overall I think that you
have to learn lessons of the last 13 years and some of
the lessons of things that really did work compared to
what happened in the 80s and 90s were around
unemployment. Some of the things where we were too
slow were in some areas around Incapacity Benefit. It’s
good that they are being taken forward now but what
you have got to do now is combine the support and the
conditions with making sure there is also job growth
and at the moment what the new Government seems
to be doing is slashing job growth, also slashing the
support and job guarantees and simply trying to
increase the conditions but with nothing for people to
go to. That will be deeply destructive and I think it
risks costing all of us more for many years to come.
Thank you.
David Banks:
Good morning. First of all can I congratulate Reform on
putting together such an interesting morning. It is
certainly very timely and at G4S we are very pleased to
be helping sponsor the event.
There are currently five and a half million people
of working age in the UK who do not have a job. I know
that with the right support and funding we could help
most of these people to find productive and sustainable
work. This is as bit an opportunity as it is a challenge,
halving worklessness in this country would directly
transform the lives of two million people and their
families. The state would save £20 billion a year in
primary benefits alone and we would make enormous
inroads into eradicating child poverty and kick starting
social mobility. There simply doesn’t need to be the level
of worklessness that we currently see in the UK.
In my article in the magazine I set out three core
areas where I think we could make a difference
immediately and I would like to focus on the third area
in this speech – leveraging the benefit savings that
would be made by helping people into work by helping
to generate those savings. It is in this area where I feel
G4S has the most to offer. The DEL-AME challenge
is often presented as a problem of funding, in order to
help more people into employment we need to invest
more upfront. Prime contractors will be paid back out
of the benefits savings they achieve, this will happen at
some point in the future so there is a short term need
for capital. Indeed we heard those concerns from the
voluntary sector in an earlier session and those
concerns are really important to us because over 50
per cent of our delivery partners are from the third
sector. I would suggest that the formulation of this
problem is wrong, there is no funding challenge.
Raising the capital required by the Work Programme
is not in itself difficult, although the sums of money are
large they are readily attainable by credible, stable,
potential prime contractors so I think that the good
news is that there is not currently a funding challenge
as it is conceived.
I do think however that there is a real challenge
around getting the risk balance right. At present we
collectively don’t know enough about how much it costs
to help a long term employment support allowance
claimant into work. Nobody knows how long this might
take and nobody knows what levels of sustainability we
might be able to achieve over say a three year period.
Without that surety around costs and confidence of
outcomes for this client group, it is difficult to justify up
front funding. If DEL-AME looks more like a gamble
than an investment then credible, stable, potential
providers won’t take part. So I think the challenge is not
about funding but about how we start to generate surety
around costs and outcomes for this client group. I think
the best way we can do this is experience. I would like to
give my support to a discovery phase start to the Work
Programme. This will allow prime contractors to
generate the data needed to be reasonably confident
about costs and outcome for this client group. A
discovery phase period that properly shares risk and
reward between prime contractors and the state would
generate the data needed to erode the uncertainty which
currently makes up so much of the risk in this market.
A discovery phase would reduce the overall cost of the
Work Programme, increase the amount of up front
funding invested in the programme and encourage
sensible stable organisations to compete, creating a
sustainable functioning marketplace. The discovery
phase can then be followed by a period of accelerated
risk transfer to private contractors leading to a 100 per
cent DEL-AME funded work programme down the
line as our collective knowledge increases.
One of the key questions we ask ourselves in G4S
is how to generate as much initial investment as possible
for the Work Programme whilst retaining a clear link to
outcome payments to incentivise performance. Initial
investment is maximised
If DEL-AME looks more
by de-risking future
revenues. If investors
like a gamble than an
confidence they
investment then credible, have
will see a return on their
stable, potential providers money, then they will
won’t take part
put that money in.
If they feel that their
money is at higher risk then they will not invest or at least
not without very high returns. Sally Burton earlier
commented on the response of the private equity industry
who are actually back funding at 8 to 9 per cent. It looks
really competitive as the risks are currently configured.
There is a further level of uncertainty in Welfare
to Work and that is the uncertainty generated by the
macro economic benefits environment. Welfare to Work
doesn’t exist in a vacuum, a growing macro economy
with a large scale private sector job creation is a
prerequisite for the success of any active labour market
programme and at G4S we are working on designing
contractual mechanisms that will help Government and
prime contractors hedge against these external
variables. In getting this right we can ensure that
providers are only paid for outcomes that they caused
and are not penalised for factors beyond their control.
This is an area which genuinely excites us at G4S.
Through the Work Programme we see a real
opportunity to make a huge difference to the lives of a
significant segment of our society. We look forward to
contributing as fully as we can over the next months and
years. Thank you.
www.reform.co.uk
51
Reforming welfare / Reform
Chris Melvin:
Thanks David and thank you to Reform for giving me
the opportunity to speak today. We are delighted we can
take part in this. When people ask me what is it that
Reed in Partnership does I like to say that we are in the
restoration business because we restore hope, dignity
and well-being for people through work. I think much of
that has already been touched upon today. Work makes
individuals generally more healthy, it supports
communities. Children who come from working
families are likely to do better at school and they are
likely to earn more as adults and are less likely to be
unemployed, so for all of us, work is important.
When Reed in Partnership became the first
private sector company to deliver the New Deal
contract back in 1998, there was a lot of political noise
about this, a lot of concern amongst other sectors as to
the involvement of the private sector. In our latest
programme in South Yorkshire we have a whole host of
organisations working with us but our largest delivery
partner is Barnsley Metropolitan Council and I think
that says a lot about how far this market has come in the
last 12 years that I have been involved.
What I would like to look at very briefly today are
some lessons from those 12 years and how we might
apply that to the Work Programme going forward. The
new coalition government, as we’ve heard, has
announced an ambitious programme of reform in terms
of both benefits and the structural employment support
and previous contributions have focused on how that
might work in terms of helping long term unemployed.
My particular take is what has happened over the
last 12 years and how can we learn from this, and I think
one of the biggest challenges over the last decade has
been partly a lack of consistency around employment
support and partly a lack of learning lessons from that
which has been taken forward. That’s not to decry at all
the success that the previous Government had in this
marketplace nor the contribution they made to ensuring
that unemployment didn’t rise to previous levels during
the recession, but having said that we did, over the last
ten years, have some nine Secretaries of State at the
Department of Work and Pensions,Yvette was one of
those that was very good but they were a mixed bag if
I’m going to be frank! I think it is important even if we
do want to have that change in personnel at the very top,
that there is a context in which all those engaged in the
market can move forward.
There is clearly a political desire for innovation
but that needs to be based on learning from best
practice and the Work Programme does provide, I
believe, a genuinely new way forward and is an exciting
development for the Welfare to Work industry. The
creation of a single
programme should not
one of the biggest
only simplify the
challenges over the last
employment support
decade has been partly
structure but could
a lack of consistency
allow providers to bring
a much broader range
around employment
support and partly a lack of services to bear on
unemployed people in a
of learning lessons
much more cost
effective way.
The correct development of the Work
Programme therefore is crucial in terms of providing
this country with an ongoing infrastructure in which to
52
www.reform.co.uk
Reforming welfare / Reform
tackle unemployment and for that reason many people
in the sector welcome its introduction. To echo some of
David’s contribution, it is important that it sets off on
the right foot and many of the questions around this
contracting framework are yet to be answered so in this
respect I would urge one word of advice on Ministers
and civil servants engaged in the development of the
Work Programme. That is for this initial stage,
simplicity. Let’s be simple about the funding
mechanism when we start off.Yes, we can have risk and
reward, we can have payment for results but it needs to
be around value for money on the one hand and a
programme which encourages investment from all
sectors on the other hand.
Let’s be simple about the way we measure
success. It needs to be transparent, which providers are
doing well. We need to be clear that it is long term
sustainable jobs that we are rewarding and finally let’s
be simplistic in engaging all stakeholders in the Work
Programme – unemployed people, community groups,
employers as well as providers because those other
three key groups are just as important. There are lots
of ideas in the current climate of excitement around
streaming of customers, accelerated payments, the
connection between price and performance, let’s just
get something going which we know is going to deliver
and for a period, maybe a year, allow providers to learn
with Government so that that risk transfer that we’ve
talked about can be done in an effective cost effective
way. That way I think we’ll get the Work Programme
off to a good start. Thank you.
Janet Daley:
As the very last speaker of this conference I think I am
entitled to take something of an overview and I think
I’ve been so impressed and rather moved actually
today by the extraordinary enthusiasm and
commitment and innovation that’s been presented
here in terms of various ways of breaking the death
grip of central Government on the sort of welfare and
unemployment crisis and of the willingness to cross
ideological boundaries between public and private
sector which is very inspiring but as a caveat I would
say that none of this – well perhaps that’s too strong,
not much of this – is going to work unless we can alter
the political culture and the discourse in which these
problems are discussed.
We seem to have got ourselves into a situation
where being, as it’s called, ‘forced into looking for work’
or sometimes it’s described as being ‘forced into taking
low paid jobs’ is seen as a form of punishment. That’s
what you will do if you have lost the race, if you can’t
persuade the state if you are deserving of being
supported. Somehow the whole logic of what a previous
generation would have taken for granted, which is that
being self supporting, being responsible for your own
life and your loved ones was a normal expectation of
adult existence, that was the normal grown up
expectation of what life was like. Somehow this has been
lost, and unless we can re-establish it, unless we can
return to a conception that not only is work the best
route out of poverty but it is the normal condition for
grownups. We have confused, I think, very often
protecting the poor with protecting poverty so that the
poor become a fixed entity, an immovable tranche of the
population who must be protected, must be looked
after, must be supported, must be treated as
permanently vulnerable when in fact poverty should
always be, especially in a reasonably dynamic economy
or free market economy, a temporary condition. There
is no shame in being poor, there is no shame in being
unemployed, but it should always be temporary. The
poor will always be with us but they shouldn’t be the
same people.
Which brings me back to this phrase about
forcing people to take low paid jobs. Virtually all of the
statistical evidence that has come out of the welfare
reform programmes in America shows that when fairly
stringent welfare reforms were brought in to play like
Clinton’s 1996 Welfare Reform Act and so on, a great
many people did take minimum wage jobs. There were
far more people being pushed into minimum wage jobs
but they didn’t stay in minimum wage jobs, they moved
up the earnings ladder really relatively quickly and their
places at the bottom were filled by other new recruits, it
was a dynamic, organic growth of possibilities, of
opportunities. So while there is a permanent tranche of
people in America who are working in minimum wage
jobs, in low wage jobs, they are not the same people and
that is an extremely important consideration when we’re
talking about protecting the poor. As often as not we
end up protecting them from the only possibility of
what we have all been hearing about this morning – self
respect, self determination, the opportunity to fulfil
ones potential but we are also protecting the poor, that
is to say keeping them where they are, creating a
terrible problem of social alienation which we’ve also
been hearing about in great detail today and with
great eloquence.
As my personal hero, Arthur Laffer, said, if you
pay people to be poor you will never run out of poor
people. If you create
We have confused, I think, disincentives to people
very often protecting the coming out of poverty,
make it much more
poor with protecting poverty you
difficult by removing
their benefits in proportion to how much they earn, you
are creating a situation in which it is a perfectly rational
decision to remain unemployed. Rational but
depressing, which is why the great increase in the
number of people who are claiming incapacity benefit
comes from stress and depression. The tabloid notoriety
of this is that these people are scrounging or that their
depression is a phoney complaint and it isn’t, being long
term unemployed is very depressing and once you get
classified as officially clinically depressed you then
become eligible for even more incapacity benefit which
traps you even further and makes it even harder for you
to emerge from this cocoon of supposed support which
you are receiving from Government agencies.
Somehow we have got to crack the vocabulary
with which we’re discussing this, we have got to return
to a point where seeking employment isn’t a
punishment, it isn’t a way that you get driven out of the
safe haven of Government protection but it is the
normal expectation for sound and healthy human
beings. Of course there are some people who are
incapable of employment. There are people who are
serious victims of disability and genuine incapacity,
comprehensive incapacity, who are incapable of being
gainfully employed and they have to be looked after.
Any compassionate society has to look after those
people but they are small proportion of the population
and the idea that in a time of unprecedented prosperity
and well being where longevity and general health
outcomes have improved so dramatically, more so than
ever in human history, the idea that we should now have
a greater number of people on incapacity benefit is
simply perverse, there
Somehow we have got to has been a breakdown
crack the vocabulary with of the logic. Somehow
we have to break
which we’re discussing
through this notion that
this, we have got to return we are actually
to a point where seeking protecting people who
we are supporting by
employment isn’t a
refusing to allow them
punishment
to become or creating
disincentives for them
to become independent and self supporting and without
that I fear that the political price that will be paid by all
the attempts at innovation, all the attempts of breaking
out of this cycle will become too great for any
generation of politicians to endure. Thank you.
Patrick Nolan:
Well thank you Janet and all our panellists for what I
thought were four very interesting and provocative
presentations. We have got about ten minutes for
questions so I’ll take a group of three. In fact I’ll go to
my boss first.
Andrew Haldenby:
Well done Patrick! Can I ask about the regional question
of this? Iain Duncan Smith this morning said that there
are unemployment black spots in every region and it is
wrong to get particularly worried therefore about the
situation in areas outside the south east of England. I
just wondered if the panellists would agree with that.
Audience Member:
Hi. I’m from the Prince’s Trust. I just wanted to say
something about the numbers, we have asked young
people a lot about what would help to get them off
benefits and one of the key things they come back with
is more entry level jobs so it’s not that they won’t take
low skilled jobs, it’s just that there are not enough low
skilled jobs in their areas for those young people.
Aaron Barbour:
Aaron Barbour from Community Links again. We’ve
heard a lot from providers today, we haven’t heard too
much from employers and we definitely haven’t heard
from anybody that has actually been on benefits which
is a shame just as a comment, but my question is: where
are the jobs? We have just done some research in
Newham and for every one vacancy there are nine
people going for that job, in London it is eight to one
and in nationally it is five to one, so people need jobs
today, yes they do want to work but where are they
going to go?
Patrick Nolan:
Great, three really good questions and all interrelated in
a way so I’ll just start with David, do you have any
thoughts on any of those three questions?
David Banks:
Well the regional question is really interesting. What I
took from the comments this morning was the issue
about mobility and mobility as being a barrier and that
www.reform.co.uk
53
Reforming welfare / Reform
really resonated as to how we can actually, we need to
work so that there isn’t actually a disadvantage to being
mobile to actually gain work. In terms of help to get off
benefit, the employers’ job, I guess G4S is the second
largest private sector employer in the world so I guess
we have got a point of view on that and many of our
jobs are close to entry level jobs so that’s really relevant.
If you like, the supply side is something that is of real
interest to us in terms of how we can actually play out
part for the vacancies that come up to assist with these
very difficult group of people.
Chris Melvin:
I’ll start with the regional question because I think it
leads in to the other questions nicely. I come from the
North East, all of my family except myself work for
the public sector and if I wanted not to be a teacher,
which is what most of my family do very, very well, I
had to move to London. That is slightly paraphrasing
but that’s what it was like in the early 90s in the last
recession. So there is a difference and the difference
is around opportunity. There are less private sector
opportunities in Easington than there are in the
majority of London, even places like Newham where
I think you said it was eight to one or whatever it was,
in Glasgow there are 16 people chasing every job
for example.
Having said that, if you look at the fact that jobs
are still out there,Yvette did say that people have spent
less time on unemployment in this recession, they have
got off Job Seekers Allowance quickly and jobs do
create jobs. As people work, pay taxes, then that creates
more economic activity. It is very challenging for
young people at the moment; there is no doubt about
it. We have done a lot of research around what young
people think they need to help them start their career
and certainly echoing the question, our research felt
that one of the greatest things that stopped them
finding a job was excess competition so you can
translate that into not enough opportunities. Equally
lots of young people
For every one vacancy
said they weren’t
prepared to do things
there are nine people
like internships and
going for that job
they weren’t prepared
to do things like work experience and unfortunately in
this kind of economic time you have to do something
that stands you out from the crowd, and I think that is
the investment that we will need to do in the future.
Patrick Nolan:
Janet, I don’t know if you want to pick up on the issue of
young people, especially as I was taken by your remarks
on the logic of the previous generation being lost.
Janet Daley:
I think your comment just now that people are
unwilling to take on internships, unwilling to do work
experience, if there were – to put it brutally, if there
were not the choice of welfare dependency as a
lifestyle choice, then the question of whether you
were prepared to do what was necessary to do work
would become an imperative. It wouldn’t become,
well I don’t fancy that, I’m not going to do that,
what’s the point of doing that, I’m not going to put
myself out to do that just on the off-chance that I
might get a job.
54
www.reform.co.uk
Reforming welfare / Reform
Just another point too about welfare reforms
releasing people on to the job market. After the 1996
Welfare Reform Act in America there was a mini boom
because so many people were actually pushed out in to
the job market. It is amazing the ways that people can
find to make money if they have to. America, true, is
perhaps a rather more entrepreneurial society but
people did find work and their work, their paid
employment actually contributed to a boom.
Yvette Cooper:
There is a serious danger of people just
misunderstanding the nature of the labour market that
we have at the moment. It is true that when the
economy is growing steadily, if you have more people
into the labour market, what you will also have is an
expansion of jobs because you have a growing
economy, demand will grow as well and you will get
into that virtuous spiral that in fact we have had for
very many years. But that is not the nature of the
economy that we are in at the moment and the risk is
actually the reverse at the moment, that we will get into
a tailspin in which you actually have contracting
demand as a result of contracting jobs and that will in
itself lead to lower growth and so on. So I think this
question about where are the jobs for people to go to is
an incredibly important one so as well as making sure
that individuals are job ready, that there are
requirements on people to take jobs, you also have
to make sure the economy is growing and jobs are
being created.
Our approach to the recession was to say, look,
we are going to get through this recession, it’s going to
be hard. During the recession we should protect
people and make sure they stay job ready so protecting
people is not simply about paying them benefits, it is
actually about giving them work and that’s what the
Future Jobs Fund was all about. It was about saying
people need to be in work during this recession and,
yes, that does mean the Government needs to fund the
Future Jobs Fund, working with the voluntary sector
to keep people in work and keep people employable.
The issue about young people in particular is really
important. So many young people we talked to said
I apply for jobs, they say I need experience, how can
I get experience if I can’t get my first job? Things like
Future Job Fund were exactly about providing people
with that first bit of experience so they can get to jobs.
I disagree with Janet because I think actually, a
lot of the things you were saying about the importance
of work and the importance of having requirements of
people to look for work and expectations I completely
agree with, but that’s why I think you are wrong about
needing a change of political culture now. Actually that
political change in culture took place decades ago
because the whole principle behind the New Deal was
that you give people opportunities and you require
people to take it up. There have been more difficulties
with sickness benefits and I think sickness benefit
reform should have been taken earlier but the
approach to young people has been very clear – you
give people opportunities but you do require them to
take them up. But if you take away the opportunities
you stuff people and on the issue about the regional
thing, just finally to finish on the regional thing, it is
true, there are communities in every part of the
country, in every region, where you have high levels of
unemployment, where you have problems of severe
deprivation or particular barriers, perhaps transport
barriers, child care barriers and so on but equally you
can look across the regions and overall you will see in
certain regions there are lower levels of demand as well
and so regions have been more heavily hit by the
recession. If I look at my constituency, the coalfield has
been devastated as the result of pit closures. The
regeneration through the RDAs has led to some pit
sites with more jobs above ground now than there were
below ground when the pits were open. There has been
fantastic regeneration but it is heavily hit now by the
recession. The key question now is can we get it back
again, can we get it growing again because if we can
we’re on a roll, if we can’t we’ll see a return to those
long term problems all over again.
Janet Daley:
I just want to ask you about what you say about young
people being prepared for work and having readiness
for work, are you in favour then of Workfare schemes?
Yvette Cooper:
What actually we set out in the Youth Guarantee meant
you had to take up one of a series of options and that
included either the Future Jobs Fund and they were jobs
paid at the minimum wage, good jobs for people,
hundreds and thousands of them that we were funding,
90,000 of them have now been cut as a result of the new
Government’s decision, or training places, or a
community task force or work in the voluntary sector,
but you had to take up one of them.You can describe it
as Workfare and say maybe the voluntary sector option
was like Workfare because you were paid your benefit
plus maybe an additional training allowance. I actually
think the best thing to do is to get people into jobs paid
at least the minimum wage and that is what the Future
Jobs Fund was about, but we provided other options as
well. But there was no fifth option, you couldn’t just say
I don’t like any of them, I’m not going to do them. For
young people there wasn’t.
Janet Daley:
There was no fifth option? For young people who were
not in education, training or employment?
I think this event has really worked in those terms,
we have a much clearer idea I think than we did at the
beginning of the day about the issues that we need to
focus on and those are issues that we have talked about
in those sessions particularly around the provision of
services, how best to do that and around insurance,
savings and pensions.
Both Iain Duncan Smith and Steve Webb said do
please send in your ideas, we need them for our reviews,
for the spending review, so we will take them at their
word and as I said at the beginning, what we are going
to do with this event is write it up, summarise and
transcribe it and send it in to the Treasury and to the
opposition party to help with their thinking on the
spending review and these crucial questions. So thank
you so much for coming and for giving this event its life
and also for raising
We wanted to bring
these ideas that we will
capture. What we will
people together, the
then do is keep working
people that matter
on these issues and we
will have major research projects led by Patrick and
others on both the provision side of welfare and also
what I think of as the financing side, who is going to pay
for welfare and how is it going to fit into the macro
economy. We have got all your email addresses so if we
can keep contacting you and keeping you involved in
events like this I will be delighted to do that.
My penultimate thanks go to our sponsors, I
won’t read out the names because they are right there,
but one thing we know at Reform is we need the
contribution of particularly effective companies to
support the policy debate. It is still, in my view, that
Whitehall can be too often a little bit inward looking
and doesn’t benefit from the experience of these
leading organisations and so that’s why I am
particularly glad these organisations have been able to
put their intellectual capital on the table today, so
thank you again.
My last thanks go to our speakers who have just
meant this event has just had a torrent of energy and
ideas and has flown by so thank you very much indeed.
Yvette Cooper:
Under the Youth Guarantee if they had been
unemployed for over ten months then they would not
be getting benefit.
Patrick Nolan:
I am afraid we are very much out of time. I am sorry, I
hate to interrupt such a good discussion, but fortunately
we have lunch after this so stay around and we can
continue this over lunch. I am going to hand over to
Andrew but if you can all join me in thanking the panel.
Closing Remarks
Andrew Haldenby:
Well just to close the event. As I said at the beginning we
are doing these conferences because we wanted to bring
people together, the people that matter at the beginning
of this incredibly important Parliament, to get a sense of
where the debate is and to encourage that debate and to
feed ideas in.
www.reform.co.uk
55
Education / Reform
Schools for the future / Reform
Programme
Schools for
the future
The state of education
Supporting quality teaching
Raising the bar
Education for less
08.30 – 09.00
Breakfast
09.00 – 09.15
Welcome and
introduction
09.15 – 10.15
The state of education
Paul Woodgates, Head of Consulting to the Education Sector, PA Consulting Group
Camilla Cavendish, Chief Leader Writer, The Times
Professor Francis O’Gorman, Head of English, University of Leeds
Professor Dylan Wiliam, Deputy Director, Institute of Education
10.15 – 10.30
Coffee
10.30 – 11.30
Supporting quality
teaching
A panel debate chaired by Nick Seddon, Deputy Director, Reform
Evidence consistently shows that quality teaching is the single most important factor to influence
educational outcomes. Yet there is an increasing emphasis on technology being introduced into
the classroom, often with little consideration to its impact on pedagogy. This session will examine
how good teaching can best be supported, and will consider whether there is a role for technology
in helping teachers to innovate and maximise the benefit of their classroom experience and
pedagogical expertise.
Rt Hon Lord Knight of Weymouth, Former Minister of State for Schools and Learners
Rod Bristow, President, Pearson UK
Professor Sir John Holman, Director, National Science Learning Centre
Professor Judy Sebba, School of Education and Social Work, University of Sussex
11.30 – 12.00
With Steve Beswick, Rod Bristow, Chris Davies, Professor Deborah
Eyre, Nick Gibb MP, Professor Sir John Holman, Rt Hon Lord Knight of
Weymouth, Simon Lebus, Ros McMullen, Professor Francis O’Gorman,
Professor Judy Sebba, Amanda Spielman, Professor Dylan Wiliam and
Paul Woodgates
A panel debate chaired by Andrew Haldenby, Director, Reform
Before the general election, all three Parties identified some of the problems still facing the
system today. Labour acknowledged the need to get more, better teachers into schools.
The Conservatives emphasised the importance of genuine school choice. The Liberal Democrats
rightly observed that the poorest are often still left behind. Can these proposals transform
schools, or does England need a fundamental reappraisal of what education is for and how to
deliver it?
Nick Gibb MP
keynote speech
12.00 – 12.45
Lunch
12.45 – 13.45
Raising the bar
A keynote speech by Nick Gibb MP, chaired by Andrew Haldenby, Director, Reform
The Minister of State for Schools will set out his agenda for reforming school education
A panel debate chaired by Dale Bassett, Senior Researcher, Reform
The quality of school education, and the differences between academic and vocational routes, are
more hotly debated than ever. To what extent should children be “selected” to follow an academic
or vocational route at 14? Will academic or vocational education best serve the needs of individuals
and the economy in the future? How can the quality of education be raised? Would a liberalisation
of the qualifications market be a driver for improving or falling standards?
Amanda Spielman, Research and Development Director, ARK Schools
Ros McMullen, Principal, David Young Community Academy
Professor Deborah Eyre, Visiting Senior Research Fellow, University of Oxford
Simon Lebus, Chief Executive, Cambridge Assessment
13.45 – 14.45
Education for less
A panel debate chaired by Andrew Haldenby, Director, Reform
The schools budget will come under increasing pressure as public spending is brought under
control. Does a reduction in spending have to mean a reduction in quality? This session will examine
the potential for waste reduction, workforce reform and tackling national agreements to reduce
costs while improving the quality of school education.
Dale Bassett, Senior Researcher, Reform
Shaun Fenton, Headmaster, Pate’s Grammar School
Chris Davies, Education Director, Tribal
Steve Beswick, Director of Education, Microsoft
14.45 – 15.00
56
www.reform.co.uk
Close
Closing remarks on the day’s discussions from Andrew Haldenby, Director, Reform
www.reform.co.uk
57
Schools for the future / Reform
Schools for the future / Reform
The Reform team –
setting the agenda
The state
of education
Andrew Haldenby,
Director, Reform
Nick Seddon,
Deputy Director,
Reform
As the UK seeks to set
itself back on the path
to prosperity, nothing
matters more for the future
strength of our economy
and society than
education. It is the primary
driver of social mobility.
It is essential for strong
economic growth. Now,
more than ever, the outlook
for the country rests on its
education system.
Successful schools across the country,
some of whose leaders join us today,
show what can be achieved. Yet more
than half of all 16 year olds still leave
school without a decent set of
qualifications. England’s performance in
the international school league tables
gets ever less impressive. We have a
narrower and shallower curriculum than
our international competitors.
58
www.reform.co.uk
Dale Bassett,
Senior Researcher,
Reform
Kimberley Trewhitt,
Researcher, Reform
Before the general election, all three
Parties identified some of the problems
still facing the system today. Labour
acknowledged the need to get more,
better teachers into schools. The
Conservatives emphasised the
importance of genuine school choice.
The Liberal Democrats rightly observed
that the poorest are often still left behind.
These issues inform our agenda today.
To secure the future of the English
education system, a number of key
questions still need to be answered.
Should there be a “core” in the
education system followed by all pupils
– and if so, what should it be? How can
quality teaching best be supported and
how can we improve the quality of
teaching in schools? How can schools
continue to deliver in an era of falling
budgets? Is it possible to deliver school
choice without extra cost? Can
education avoid the trap of league tables
in trying to move from input-based to
output-based measures of success?
It is clear that, for all the progress that
has been made, the system is still not
delivering for those most in need.
Children on free school meals are half as
likely to get five good GCSEs as those
who are not. And while there have been
substantial increases in university
participation among the least
advantaged 40 per cent of young people
compared to the mid-1990s, the
participation rate among the same group
of young people at the top third of
selective universities has remained
almost flat over the same period.
The new Government has made
encouraging steps in its early days,
freeing more schools from local authority
control, allowing parents to set up new
schools and giving heads more freedom
over curriculum and teachers’ pay. These
changes alone will not create great
schools for the future. But teachers and
parents have a rare opportunity to take
advantage of the reforms that are
currently being introduced. If they can
seize this chance to reshape the
education system, English schools can do
even more to help those most in need,
and to build the future the UK needs and
its children deserve.
The state has gradually expanded its
role in education. There are Sure Start
centres, the Early Years Foundation
Stage curriculum, school curricula that
tell teachers how to teach, targets on
community cohesion and spiritual and
cultural development and weekly cash
payments to encourage 17 and 18 year
olds to stay in school.
We have become used to the idea that
the state should do increasingly more in
education, in terms of both prescription
and provision. This has come at a
significant cost, with per pupil funding
now more than double the level of 1997-98.
The danger is that all this activity distracts
from what really matters – children
learning the knowledge and skills they
need to go on to bigger and better things.
It is time to consider what the state can
and should provide. The state is
withdrawing from some parts of education
– notably through the introduction of
tuition fees in higher education. The new
Government should take the fiscal crisis
as an opportunity to refocus state
education on what it should be about –
giving every child the start in life that will
allow them to go on to great things.
Professor Francis
O’Gorman
One piece of the
puzzle
We should be ambitious for
education. But we should also not
make the mistake of assuming it
can do the work of a whole society.
Almost all established
academic subjects, well taught,
develop invaluable skills and
impart invaluable knowledge.
Almost all established academic
subjects have exceptional
significance in an educational
system that aims to prepare
young people for life and work
(not one or the other).Welltaught and well-conceptualised,
those subjects give the student the
capacity, apart from anything
else, to learn how to learn.
Education is not about learning
skills in the abstract, though it is
about skill; it is not about learning
knowledge in the abstract, though
it is about knowledge. An
education that is overwhelmed by
techniques, by defined and
confined skills, risks becoming
quickly out of date.The ability to
carry on learning and developing
is a companion for life, and it is
essential for us all in enabling us
to meet the challenges of a
changing society, a changing
workplace, and a changing nation.
Education works best where
there is passion, encouragement,
and expertise. Education delivers
most where it is believed in,
and where institutions, teachers,
and leaders, know it has a
transformative power. Education
works best, too, where
institutions are ambitious for
their students, but not oppressive
in over-burdening assessment, in
regulation, in expectation. In an
environment that tries to define
in exhaustive detail exactly what
can and should be achieved in a
class room, the surprise and
passion of education can be
stunted into routine and judged
by false standards of what
constitutes success. Education is
partly a science, partly an art
– but it also needs some alchemy.
It is worth educators
becoming students themselves
every now and again. Doing this
helps re-invigorate an
understanding of what we can
do as teachers, and affirm how
central passion, encouragement,
and expertise are. How flat the
word “competence” sounds.
And yet how important it is.
Education can transform, but
it cannot transform everything. It
cannot entirely mend what it did
not break. A country that puts
faith in education is wise. But
one that puts too much faith in it
may be trying to shift attention
from social problems that
education alone cannot change.
Professor Francis O’Gorman,
Professor ofVictorian Literature
and Head of the School of English,
University of Leeds
www.reform.co.uk
59
Schools for the future / Reform
Paul Woodgates
Policy into practice
Schools matter. Our social,
economic and cultural future
relies upon schools that ensure
our young people develop,
learn, and fulfil their potential.
The pressure on our schools to
improve is therefore
unrelenting. Increasingly, the
consensus is that putting
communities in control of the
schools that educate their
children should be at the heart
of reform; the passion people
feel for education should be
harnessed to achieve schools
that are focused on children and
best equipped to deliver the
education that parents want.
The challenge now is
implementation – defining the
practical steps needed to make
change happen. In the past,
education reform was
implemented through two types
of intervention: by applying new
and ring-fenced money, and
by setting rules, targets and
performance frameworks.
But neither approach is now
applicable – it goes without
saying that there will be no new
money (indeed substantial
savings will be required) and
where the very purpose of
reform is to enable localism and
decentralisation, top-down
centrally-managed
implementation is hardly likely
to be appropriate.
A new way of making change
happen is therefore required.
Instead of top-down planning
driving action, this new
approach must release the latent
energy within the system and
create change bottom-up.
Instead of issuing directives to
be cascaded down through
management structures, it must
take a system-wide view of the
schools sector and promote
those elements of that system
that will drive reform.
There cannot be a blueprint
for every school, but it is
60
www.reform.co.uk
possible to set out a range of
models for how schools can
operate – how they can
collaborate, how they can define
their distinctive identities, how
they can source their support
services, how they can innovate,
and how they can meet the
aspirations of the communities
they serve.
Above all, implementation
must reflect the fact that schools
are not just institutions: they are
the sum of the children, teachers,
heads, governors, parents and
partners that make them up.
Policy implementation must
recognise that school reform
depends entirely upon them.
PaulWoodgates, Head of
Consulting to the Education
Sector, PA Consulting Group
Professor
Dylan Wiliam
Making our existing
teachers better
With higher educational
achievement, individuals live
longer, are healthier, and earn
more money. Society also
benefits from higher educational
achievement in the form of
reduced health-care costs,
reduced criminal justice costs,
and increased economic growth.
Raising the scores of all
England’s 15-year olds by 25
points (roughly half the gap
between England and Finland)
on PISA (the tests used by the
OECD to compare educational
achievement in literacy,
mathematics and science) would
have a net present value of £4
trillion—roughly the value of
everything in England, and more
than enough to wipe out current
and future budget deficits.
Understandably, therefore,
governments have tried various
measures to raise student
achievement. The previous
government spent over £1
Schools for the future / Reform
billion on the national strategies,
which, over five years, appears
to have resulted in
approximately one extra child
per primary school reaching
level 4 in the key stage 2 tests.
Worse, a similar amount is being
spent each year on classroom
assistants who actually lower the
performance of the students
they are intended to help.
Other reforms have changed
school governance and
structures. Specialist schools do
get better results than nonspecialist schools, but that is
only because they get more
money, and academies improve
no quicker than similarly
low-performing schools that are
not converted into academies.
The Conservatives promise
parent-led schools along
Swedish lines even though the
evidence is that they have had
no effect on student
achievement.
These reforms have failed
because they fail to address
head on the dominant variable
in the education system: teacher
quality. As Sir Michael Barber
says the quality of an education
system cannot exceed the
quality of its teachers.
Getting better entrants into
the profession is part of the
answer, but only a small part, for
two reasons. First, it is very slow:
it will be 30 years before the
effect of new entrants into the
profession works its way through
the system, and we just can’t wait
that long. Second, it is hard to
identify good teachers until they
teach. “Teach for America”—
the model for Teach First — has
attracted able graduates into
teaching, but they turn out to be
no better than those trained in
traditional ways.
If we are serious about
securing our future economic
prosperity, therefore, we need to
improve the performance of
teachers already working in
schools. Previous models of
teacher professional
development have failed to
deliver the improvements we
need, so we need a relentless
focusing of professional
development on what improves
outcomes for students.
Nick Gibb MP
Raising standards
Professor Dylan Wiliam, Deputy
Director, Institute of Education
Nick Gibb MP, Minister of State
for Schools
This Coalition Government is
determined to raise standards
right across the education sector.
To achieve this we will provide
more freedoms for teachers and
heads, more choice for parents,
less bureaucracy, and a diverse
system of education provision in
which all children and parents
benefit from high standards and
real choice.
There is no doubt in my mind
that our school system needs
reforming if we are to tackle the
educational inequality, which has
widened in recent years.We have
started this process of reform by
opening up the state sector to
more talent and more innovation
by giving parents, teachers,
charities and local communities
the chance to set up new schools.
Alongside this, we must
ensure that there are robust
standards and the highest
quality teaching. We will give
schools greater freedom over
the curriculum, but we will
ensure that the acquisition of
knowledge is at its heart, and
subject disciplines are valued. It
is through deepening knowledge
that real understanding and
thinking skills are embedded.
As well as freeing up schools
from bureaucratic control, we
intend to create more flexibility
in the exams system so that state
schools can offer qualifications
similar to those offered by
independent schools. For too
long there has been a target
driven approach in state
education, which has increased
the gap between our state and
independent schools.
Above all, I want an education
system that reflects the will of
society, one that ensures
potential is realised, and that
makes sure every child gets the
best possible education.
Supporting
quality
teaching
Spending on the workforce makes up the
largest proportion of the schools budget.
On average 78 per cent of a school’s
budget goes on staffing. There has been a
substantial increase in numbers, with 10
per cent more teachers and two-and-a-half
times as many teaching assistants as a
decade ago.
Yet there is a danger of focusing on
quantity instead of quality. Academic
evidence consistently shows that teacher
quality is by far the biggest factor that
affects educational outcomes. A teacher
whose quality is two standard deviations
above the average will double a pupil’s
speed of learning.
Given the financial investment in the
workforce and teachers’ importance in
improving the quality of education,
government policy must focus on driving
up the quality of teaching, through the right
recruitment, management and continuing
professional development (CPD). Just
putting more adults in a classroom is not
the right course of action. It is time for
policymakers to reverse their priorities.
Rt Hon Lord Knight
of Weymouth
Supporting quality
teaching
We know that quality of
teaching is the most important
thing to influence educational
outcomes. In the same way the
success of a school is
determined by the quality of
leadership. The success of
individual children is first and
foremost down to the quality of
parenting. It therefore follows
that supporting quality
teaching cannot be seen in
isolation but must in part be
about how to ease the
collaboration with other
teachers, with school
management and with home.
The Government is right to
expand Teach First, and to
develop Transition to Teaching.
They have inherited a great
legacy of the best generation of
young teachers we have ever
seen. This is vital to continue
the improvement in recent
years, especially in the basics of
English, mathematics and ICT.
I include ICT because it is
now a fundamental skill in the
workplace almost regardless of
what occupation a child
pursues. It is also now a key
tool in engaging children in
learning across the curriculum
and the new generation of
teachers are using technology
more and more in the
classroom.
With the demise of BECTA
it is now vital we continue to
share next practice in
technology-enabled pedagogy.
Good use of technology allows
learners to collaborate, to learn
from each other, to proceed at
their own pace and for the
teacher to personalise the
learning. Of course it also
allows management to monitor
performance. Finally it is
crucial in improving the
home-school relationship as
real time reporting develops
and evolves into real time
accountability.
Online collaboration is
especially powerful in
developing subject specialism.
Sharing of best practice, rating
material that works in the
classroom and linking parts of
the curriculum are all made
easier and cheaper online.
Society is changing rapidly.
The demands and needs of
young people change with it.
The fundamental truth of the
importance of quality teaching
remains a constant, but the
pedagogy needs to be dynamic
if we are to keep up with the
world outside the school gate.
Rt Hon Lord Knight ofWeymouth,
former Minister of State for
Schools and Learners
Rod Bristow
Improving
educational
attainment
Pearson, the world’s leading
education company has a simple
goal: to improve educational
attainment and so help people
make progress in their lives. That
is why we are so pleased to
sponsor this conference.
We understand the critical
role that teachers play in truly
engaging and stretching learners
to achieve more. We are the
teachers’ and parents’ partners
in helping learners achieve
more. It is at home as well as at
school where the framework for
success for young people is built
and yet often where the need for
support is greatest.
Although any framework
needs to be flexible enough to
be able to respond to individual
needs, we believe three features
are critical.
First, qualifications that can
inspire learning, enthuse
teachers and provide nationally
recognised benchmarks of
www.reform.co.uk
61
Schools for the future / Reform
success.We worked closely with
teachers and professional bodies
to re-design our suite of Edexcel
and BTEC qualifications to
ensure they provide the skills and
knowledge young people need.
These provide a range of
alternatives for teachers and
students and we are pleased
about the new Secretary of
State’s commitment to providing
as much choice as possible
within the qualification system.
Second, an assessment
regime that can record progress,
generate feedback and uphold
public confidence whatever the
form of learning undertaken. As
a major contractor for national
tests and a leading player in
developing assessment systems
for applied learning, we have
helped transform exam and
assessment systems, using new
technology to speed up the
transmission of data while being
developing individualised data
on student performance.
Third, the right support that
brings together learning
materials, published resources
and teacher support within easy
to use packages along with
regular professional
development and updating. We
are using technology to tailor
the learning ‘relationship’
between the learner, the teacher
and the parent through the
development of the fronter
learning platform and other
learning technologies.
Rod Bristow, President, Pearson UK
Professor
Sir John Holman
The importance
of subjects
Subject expertise is at the heart
of teachers’ professionalism,
especially in secondary schools.
The large majority of a teacher’s
time is spent in a classroom or
laboratory teaching a specific
subject and it is this that defines
62
www.reform.co.uk
pupils’ experiences, day in, day
out. For most teachers, teaching
a subject well is the main way
they judge their success.
This has always been true,
but we may have lost sight of it a
bit over the last ten years as we
have followed an ever-wider
agenda in schools, trying to
solve more and more of society’s
problems (health, obesity,
happiness or lack of it, antisocial behaviour …) as well as
pursuing better and better
grades in examinations.
How do teachers become
expert in their subject? Part of
it is about their initial degree
subject. Evidence from Ofsted
makes it clear that, other things
being equal, a subject specialist
gets better outcomes than a
non-specialist. Of course, we all
know examples of teachers
with superb subject
qualifications who are
ineffective and vice-versa. But
these are exceptions to the rule
that deep subject knowledge
and understanding makes a
teacher better equipped to
explain – and to inspire with
insights into the subject beyond
the exam syllabus.
So we must continue to
recruit and, if necessary, retrain
specialist teachers, especially in
shortage subjects like
mathematics and the sciences.
And we need a stronger
emphasis on subject-specific
continuing professional
development. In a 2005 study,
the Wellcome Trust found that
50 per cent of all secondary
school science teachers have
had no subject knowledge CPD
in the past five years. Teachers
need opportunities to keep up
with developments in their
subject and to meet other
teachers of the same subject to
share ideas.
Does this mean that
whole-school issues like health
and behaviour are no longer
important? Of course not, but if
we get the basics of subject
specialist teaching right, much
of the rest – such as behaviour
– will follow.
Professor Sir John Holman,
Director, National Science
Learning Centre
Schools for the future / Reform
Professor Judy
Sebba
What policy makers
can do to support
high quality teaching
Research evidence tells us that
two factors make the greatest
impact on pupils’ learning;
quality of teaching and quality
of school leadership. There is
well established evidence on
what contributes to high quality
teaching.
There are three ways in
which policy makers and school
leaders can contribute to
improving the quality of
teaching. They do not require
additional investment as they
involve doing things differently,
rather than increasing what is
done. We know that learning in
children and adults is more
likely to occur when feedback
on performance is negotiated,
focused, clear and identifies
possible improvements. This
can be provided for teachers
through coaching. However, the
most effective way of
implementing this is least often
used. The person who learns
most from “coaching” is the
coach or person undertaking
the observation of teaching, not
the person being observed
teaching. However, we persist
(e.g. through the Masters in
Teaching and Learning) to set
up coaching that assumes that
the person observed is being
coached.
Secondly, feedback on
teaching must be given by
those who consume it hourly
– the pupils. Those who argue
that pupils evaluating teaching
is a threat to the profession are
missing the point that pupils
observe teachers all the time,
though we rarely invite their
feedback. Schools that seek
pupil feedback from pupils,
who are trained to give it
sensitively, improve the quality
of their teaching.
Finally, teachers’ practice has
been “mandated” for the last
13 years. We need to give
teachers back the responsibility
to make professional
judgements in the classroom
and support them by providing
accessible, synthesised, robust
evidence about what works and
how it works. Informed by this
evidence, teachers need a
licence to “experiment” or what
some have referred to as
“tinker”,
in order to improve their own
quality of teaching.
Professor Judy Sebba, Professor of
Education, University of Sussex
Raising the bar
For everything else that the education
system does, it is impossible to get away
from the fact that still, in the second
decade of the 21st century, more than half
of all 16 year olds leave school without
five decent GCSEs including English
and maths.
Successive governments’ response to this
problem has been to fashion alternative
“vocational” qualifications for those pupils
deemed unsuited to academic study.
“Parity of esteem” have been pursued,
with non-academic qualifications assigned
“equivalent” values to academic ones.
Simon Lebus
Liberalise
qualifications,
improve standards?
There is a need for students to
have a sensible set of choices
according to their interests and
the way they learn best.
Whether that it is through
vocational or academic routes,
following modular or linear
courses, the educational
imperative is how best to drive
learning and ensure that a good
education is delivered to all
students.
Dominance of the centre
over the qualifications system is
not the way to drive up
standards. Central control of
A-levels for example, through
regulator-specified
qualification and subject
criteria, has reduced flexibility
and restricted the scope for
innovation, while inhibiting the
alignment of curriculum,
teaching and assessment that is
desirable for the best
educational results.
Now more than ever, in a
time of economic certainty,
what is important is enabling a
qualifications system which is
flexible, encouraging bottomup innovation in direct
response to the economy. What
will not help is a system fixated
on coherence, which stifles a
rapid response to economic
change.
Flexibility is also needed in
the system when teachers and
students are making decisions
about which type of
qualifications to pursue.
Steering those who learn best
by hands-on activity towards
purely theoretical lessons will
benefit no-one. In fact, the
argument between vocational
and academic qualifications is
in no way as stark as a division
between two different ‘types’ of
student. Many students now
combine some GCSEs with
one or two vocational
programmes, and many subject
areas can be approached in
either an academic or
vocational style.
Where the problem lies is in
the attempt to compare
academic and vocational
The result is that fewer and fewer pupils are
studying once-core academic subjects:
only 30 per cent study history; the
proportion of pupils studying languages at
GCSE has fallen from 70 per cent to 45 per
cent since this was dropped as a
compulsory requirement. But, as ever, it is
those most in need who suffer. 70 per cent
of Teach First teachers (high-flying
graduates in poorly-performing schools)
thought their schools encouraged pupils to
pick qualifications that were in the school’s
interest, rather than the pupil’s. That is no
way to offer opportunity to all.
qualifications through an
artificial system of
equivalencies created for the
purpose of school
accountability. One solution
would be to get rid of the points
system for measuring schools,
retaining English and Maths to
ensure that an element of
accountability remains, but
freeing up everything else,
allowing teachers to pick the
academic or vocational route
that works best for students.
And just as genuine choice
should enable students to
decide between academic and
vocational routes, it should also
allow state schools to access
provision available in the
independent sector. The
decision to make the
International GCSE available
to state school students is one
example of this choice – and
one we believe is crucial in
giving all students the flexibility
to learn in the most appropriate
way for them.
Simon Lebus, Chief Executive,
Cambridge Assessment
Professor
Deborah Eyre
Making the cut
Everyone says they want a
high performing education
system but what that looks like
is certainly a matter for debate.
My interest is in securing high
cognitive performance in
students and again how best to
do that is contested. In the UK
we continue to assume that
that only a small minority can
reach these levels and
structure our system
accordingly. And since it is
only a small minority we give
them little attention. Indeed we
go further and presume that
child’s educational destiny can
be more-or-less determined at
birth by looking at a
combination of their genetics
and family background. Those
who do well and come from
disadvantaged backgrounds
surprise us – they are said to
www.reform.co.uk
63
Schools for the future / Reform
succeed against the odds. Can
we afford to be so complacent
and squander talent in this way
is a question to consider?
Meanwhile some of our
economic rivals are taking a
different view. Their education
systems have much greater
aspirations. They equate high
educational outcomes with
future economic growth and
success. They are more
optimistic about what can be
achieved educationally with this
generation of children and they
structure their education
systems with this in mind. These
countries are looking at the
contemporary evidence around
children’s cognitive
development and concluding
that high cognitive performance
is so strongly influenced by
environmental factors that we
could and should expect it from
far more students. They are not
looking to label students as
unable to cope with traditional
academic work but rather
expecting excellence in a wide
variety of domains and valuing
them all. Their debate is not who
is capable of doing what but
rather what do we need as a
country and how can we secure
it. In these systems the
individual student from any
background is empowered to
achieve. In our system students
and their families are always
keeping one eye on whether they
will ‘make the cut’. Isn’t it time
for a change?
choice between carrying on to
university and pursuing the
career of their choice. Since our
schools in the main serve areas
of high disadvantage, this vision
represents a very high aspiration
and correspondingly high
expectations of schools, teachers
and students.
How does this mean we view
“academic” versus “vocational”
routes? The short answer is that
we do not want them to be
alternatives, especially at age 14.
We want our 14 year olds to
continue studying a range of
academic subjects that is broad
enough to give them a proper
range of A-level or similar
choices post 16.We are also
happy for schools to offer high
quality vocational qualifications
for pupils who want them; but as
an addition to rather than as an
alternative to academic study.
We are also not comfortable
with the current equivalence
model, because it puts too much
pressure on schools to steer
pupils into heavily vocational
routes from age 14. In our
transition schools we have found
many bright pupils in Key Stage
4 signed up to English, maths
and double science – but beyond
that only to vocational
qualifications in (say) IT and
business studies. This often
amounts to closing down their
options prematurely.
So what will help ARK and
our pupils? Our wish list would
include:
Professor Deborah Eyre, Visiting
Senior Research Fellow, University
of Oxford
• A qualifications regime that
supports good education rather
than micro-prescribing the
post-14 curriculum and
teaching.
• An accountability framework
that treats academic
qualifications fairly.
• Academic qualifications that
fully reflect university
expectations of entrants.
• Fewer vocational
qualifications, but of greater
value to employers.
Amanda Spielman
The right
qualifications
ARK Schools has a clear
educational vision: for all our
pupils to be fully equipped for
higher education by the age of
18, so that they have a true
64
www.reform.co.uk
Amanda Spielman, Research
and Development Director,
ARK Schools
Schools for the future / Reform
Ros McMullen
Raising the bar
David Young Community
Academy opened in 2006
replacing two low-performing
secondary schools (83 per cent
student attendance in both
schools, with 18 per cent in the
smaller and 10 per cent in the
larger of students achieving five
or more GCSE passes including
English and maths). Student
attendance at the Academy is
over 90 per cent and the GCSE
results expected this summer
will see over 90 per cent of
students obtaining 5 or more
grade A* to C passes, with a real
chance of around 40 per cent
achieving 5 or more A* to C
grades including English and
maths. I have adopted a strategy
of utilising the broadest range of
qualifications available to build
genuine personalisation into the
curriculum and to establish a
culture of success.
One of the major problems
with all curriculum change is
that too often we talk as if “one
size fits all”. We can clearly see
that the rush to improve places
in school league tables and
collect as many exam certificates
as possible has had a limiting
effect on the development of
students’ abilities to analyse,
interpret and formulate
innovative argument and ideas
backed up with academic rigour.
This needs to be remedied,
particularly for the most able
students who need this
academic rigour for success at
university and for leadership
and entrepreneurship in public
service and industry.
By the same token
developing a curriculum which
treats the academic and
vocational as completely
separate pathways leads to a lack
of respect for core competencies
required by all students to
succeed in the workplace and
can demotivate and undervalue
students.
In “Raising the Bar” at
DYCA, leaders were challenged
to ensure that all students
experienced success, began to
see that education was not
something that would finish at
16 and that they needed to
become life long learners to
prepare for economic activity.
For all these reason Diplomas
have been embraced by the
Academy, and in addition to
GCSEs and BTECs, City and
Guilds qualifications are being
introduced, as well as the
International Baccalaureate.
The Academy attempts to
personalise the curriculum for
every student with a clear focus
on destinations and raising the
aspiration of every student
and family.
Ros McMullen, Principal, David
Young Community Academy
Education for less
School education is becoming more and more expensive, but a
doubling of per-pupil funding over the past decade has not seen
a doubling in results. (And, even if it had, concerns over quality
and grade inflation remain.)
Reform has identified three principal causes of poor value for
money in schools. Firstly, politicians like to spend money on the
wrong things. They prefer to fund visible legacies like staff
numbers and buildings, despite evidence that class sizes and the
building environment make a negligible difference to outcomes.
They should instead focus on the one thing that really affects
outcomes – teacher quality.
Secondly, there is a problem with culture and management in
many schools, which have rigid ideas about pay and are
(understandably) focused on what happens in the classroom
rather than fiddling with budgets. This can be tackled with the
help of businesses and charities who know how to budget, and
by creating incentives for schools and parents to save money.
The third factor is the great “mission creep” – the expansion of
education under successive government into areas away from –
and at the expense of – the academic core. To solve this,
policymakers must ask what they really want education to be for.
Steve Beswick
Partnerships with
professionals
Our commitment at Microsoft
is to the success of each teacher
and student, to help them realise
their full potential.
To do this we create
partnerships with education
communities around the world
to deliver relevant, effective, and
scalable technologies, services
and programs that focus the
contributions of many on
improved learning outcomes for
all.We recognise that students use
technology widely, in their social
life as well as in school, and they
will need the right skills to work
in the technology-rich workplace.
We have a role to play in helping
education professionals to reach,
motivate and ensure the success
of every student and teacher
with education-specific tools
and technologies that can help
them achieve their greatest
potential. We also see that our
technology can be used to
enable vibrant learning
communities with programs
and services that help bring
people together to communicate
and collaborate – professionals,
students and families.
There is demand to help
schools, teachers, and students to
meet evolving education needs
without increasing costs, and to
provide schools with the flexibility
to respond to rapid change.
Our technology sits at the heart
of many of the innovations in
schools today, and is being used
to develop new styles of teaching
and learning. Microsoft solutions
also create the foundation for
scalable, data-driven education,
through an open, interoperable
technology infrastructure that is
specific to education and scales
easily and cost-effectively.
You can find out more about
the work of the Education Team
at Microsoft, and the work that
we do with schools, on our
website at www.microsoft.com/
uk/education.
Steve Beswick, Director of
Education, Microsoft
Chris Davies
The pupil premium
School finance is hardly the
raciest topic when it comes to
thinking about education
reform.Where it appeared in the
election debate, it was mainly in
relation to introduction of the
pupil premium. Now the
politicians are stuck into the
business of government,
however, it is a subject which will
have to attract their attention.
School finance has remained
a fairly uncontroversial subject
up until now thanks largely to
increases in spending: between
1997/8 and 2009/10, funding per
pupil increased by 109 per cent,
almost three times the rate of
inflation. These years of plenty
have treated schools well. In 2008,
there were 40,000 more teachers
than in 1997 (an increase of
10 per cent), while the number
of teaching assistants increased
by almost 200 per cent over the
same period, to 177,000. Few
headteachers in post today have
had to manage in straitened
times: indeed, the last time there
was a hint of financial trouble
– over the increase in national
insurance in 2003 – the previous
government stepped in to bail
schools out.
All this means that few school
leaders have had to make difficult
choices about how to use their
resources. It also means that
many think of efficiency
exclusively in terms of non-pay
spend; “how can I make savings
when 80 per cent of my budget
goes on staffing?” is a common
refrain. Any toughening of the
financial regime for schools will
therefore present school leaders
with a set of novel challenges.
They will need to think more
carefully about what works to
improve educational outcomes
– and what that means about the
way staff are used. Fundamental
questions will need to be asked
about the staffing models that
have become received wisdom,
particularly the use of teaching
assistants. And school leaders
will have to grapple with the
consequences of restructuring,
often without the help from
local authorities that they have
become used to.
There is no doubt that schools
can make savings and even
become more efficient.The move
to greater independence may help
many with this process. But while
schools are encouraged to stand
on their own at the same time
as the downward pressure on
public spending increases, the
challenges facing schools are
likely only to grow. We may be
about to enter one of those rare
times when school finance comes
back to the top of the agenda.
Chris Davies, Education Director,
Tribal
www.reform.co.uk
65
Schools for the future / Reform
Schools for the future / Reform
Transcript
Nick Seddon:
Good morning, ladies and gentlemen and welcome to
this major Reform conference on reforming education.
My name is Nick Seddon and I am the deputy director
at Reform, which is an independent, non-party think
thank whose mission is to set out a better way to deliver
public services and economic prosperity.You’ll notice
that I am not Andrew Haldenby, Director. He is going
to be slightly late – although, hopefully, on time for the
first session – because he has been invited to breakfast at
Number Eleven.
Before we go on: two bits of housekeeping. If
there is a fire, I am told to tell you not to panic. Try to
get out and congregate in an orderly fashion outside
Marks and Spencer on Victoria Street. And I should also
say that, for those avid Twitter feeders who are less
Luddite than myself, that you need to use the hash tag,
which is now not up there … Oh, yes it is …
#reformschools – up there.
This is the second of four major policy
conferences that we are holding. And our aim is to bring
together the people that matter, to discuss the issues that
matter in the first hundred days of the new government.
For those of you that are interested, today is number 50.
There is a magnificent attendance today and that really
delights me because I think it is going to give the
discussions that we have real authority, both in the panel
and the conversations that are had with the floor.
The other thing to say is that we are recording
today. We will write it up and we are going to submit it to
each of the three main political parties and also to the
Treasury, as a submission for the spending review. And
you will all get a copy of that document when it comes
out. Andrew has just arrived.
So let me talk you through the programme on
page one of the brochure because we are going to talk
through four main things. The first is the state of
education in the UK. With half of sixteen year-olds still
leaving school without a basic set of educational
qualifications, the really big question that we have to
examine a bit further is ‘What can be done?’ There are
radical ideas being advanced and radical ideas have
been advanced – such as putting universities in charge
of the curriculum, allowing profit-making companies to
run schools – and the question that we have to keep on
returning to is ‘Can these proposals transform schools?’
The second question that we are going to look at is that
of supporting quality teaching. The evidence
consistently shows that the quality of teachers is more
important than the quantity of teachers; indeed, this is
the single most important factor in determining
educational outcomes. And so this session is going to
examine how we can sponsor and promote and support
quality teaching. And then we are going to have a
speech by Nick Gibb, the Minister for Schools, chaired
by Andrew. We are absolutely thrilled that he has agreed
to come and speak today and give us the new
government’s view on the reform of education. And
then we will go for lunch.
The third panel discussion, in the afternoon, is
about raising the bar. The quality of school education
and the differences between educational and vocational
66
www.reform.co.uk
the Institute of Education and, in his distinguished
career, has also worked in all levels of education and has
been voted teacher and a teacher of teachers, having
been the dean of a school of education.
So, Paul: you go first.
routes are more hotly debated than ever and we are
going to ask the question, ‘Which one is more
important?’ or ‘What are the different things that are
most important in raising the quality of education?’ And
the fourth session is about Education for Less. The
schools’ budget is going to come under increasing
pressure in this brave new world as public spending is
brought under pressure. And here, the question is, ‘does
a reduction in spending automatically have to lead to
reduction in the quality?’ As the physicist, Ernest
Rutherford pointed out, ‘we haven’t got the money so
we’ll have to think.’ We will then close, hopefully
promptly, at 3 pm.
Because this event has very, very generous
sponsors, we have been able to produce it properly for a
big audience and, more importantly, we are going to
benefit from their intellectual capital. Paul Woodgates of
PA Consulting, who’s on the panel now, is going to talk
about the state of education. Rod Bristow from Pearson
will talk about supporting quality teaching. Steve Lebus
of Cambridge Assessment will talk about raising the bar
and Steve Beswick of Microsoft will talk about
education for less. I am extremely grateful to all of you
for your support and, of course, my profound thanks to
Microsoft for hosting today and giving us such
wonderful hospitality. So it is a great pleasure to have
you all here today. I am looking forward to our
discussions. Thank you.
The state of education
Andrew Haldenby:
Well, thank you Nick. Let’s go straight into the first
session – the state of education. What we are going to
do, I hope, in the next hour, is to think in advance:
‘What should Nick Gibb tell us later?’ Imagine you are
the new education minister – or one of them. What are
the headings of the speech that he should give today?
What is it that he is really thinking about? We all know
the answer to this question. What is good in state
education? What is not so good? And in the other
sectors as well: given that there are limited resources,
where should we all – as a policy community – really be
focussing our attention. And what I would like to do is
ask our four speakers to give us five minutes each on
that subject and I will try and be tough here so we have
got time – a lot of time – for questions, which is really
the purpose of today – or discussion.
Let me introduce the panel. Paul Woodgates is the
head of consulting to the education sector at PA
Consulting, which is one of the key consulting firms,
working with the private sector and the public sector in
the UK. Paul’s remit goes from the start of education to
the end of it, whenever that is, and he has worked in the
UK and the Middle East. Next to Paul, Camilla
Cavendish is the chief leader writer at The Times. She
was Campaigning Journalist of the Year last year. And,
given that she is pretty-much now the only campaigning
journalist, I suspect she’ll win it again this year. Francis
O’Gorman is the professor of Victorian literature and
head of the School of English at the University of Leeds.
And Professor Dylan Wiliam is the deputy director of
Paul Woodgates:
Thank you. I am going to stand up because it is a flat
room but, also, because it is tough for management
consultants at the moment so I need all the sympathy I
can get and you should know about that. So I will stand
up for a few minutes.
I think we are here today because we probably all
agree that schools matter: schools are really important.
And, whatever your view of the reform agenda that
there’s been in the past, probably we can agree that it is
a really important thing for the future that schools
improve and continue to improve. That is important
from an individual perspective of fulfilling individuals
potential; it is important for social reasons. It is
important for economic reasons and so on.
There has been a lot of radical thought going on, I
think, about the education agenda and how it can be
reformed. I am sure we’re going to hear some of that
throughout the day. The general consensus – or perhaps
the locus of thought – has been towards notions of
decentralisation, notions of localism, notions of allowing
schools – and, indeed the communities that they serve
– to take control of school level education and to have
much more ownership and the ability to drive that
education in their locality.
Now, others are going to talk today about what that
really means and the policies that will enable that.What I
wanted to do, just in the next few minutes, is to say
something about implementation and how those policy
changes can become real. And the reason for doing that
at the beginning is to suggest that that needs to be borne
in mind all the way through these discussions. History is
littered with great ideas for education reform that have
been poorly executed. So my suggestion is we need to
think about implementation from the very start and how
we can make great ideas into real practice that make a
difference in classrooms to children.
Now, the reason I think that implementation is
challenging is because, in the recent past, there have been
essentially two approaches to delivering government
policy on education reform.The first is, broadly speaking,
to chuck money at it. And, whenever the government has
wanted to reform the curriculum or assessment or put
more technology in or whatever, it’s put a pot of money
– new money – in place to do that. It may not feel like that
in schools but that is what’s happened essentially at
national level. Now, as Nick said, let us not even pretend
that there is any possibility of that in the future.There is
not going to be new money; indeed, we have got to make
better use of the money that is there. So that, realistically,
is not going to work.
The second thing that has happened in the past is
that central government has defined a set of rules and
targets and guidance and frameworks and so on that it
has sort of cascaded down through the system. And
that, I suppose, has worked in the context of centrallydriven change. But if, here, we are talking about
decentralisation – about localisation, about empowering
schools – the notion of a sort of performance
management driven approach to implementation
clearly does not make sense anymore and it cannot be
driven from the centre in the same way. So those two
approaches to implementation are unlikely to be a valid
way of proceeding in the future. That suggests a new
model is required: a model that is going to release the
latent energy that exists in schools and in communities.
And that’s easy to say – a bit of cliché. There is evidence
for it, though; there is evidence that it is there.You have
only got to look at the interest in academies and, indeed,
in free schools. And all of us, probably, have met heads
and teachers and governors and parents and, indeed,
children, who passionately want to make their schools
better and, indeed, have the capability to do so if we can
just harness that energy and release it in a way that will
have a positive impact.
So, ‘What does that mean then in terms of
implementation?’ – which I said I would touch on.
What it cannot mean is a sort of blueprint for reform
in every school. That cannot work in this notion of
decentralisation. But it could mean a set of different
sorts of models under which schools work, different
ways that they can innovate, different ways in which
they can create their
own identity, different
We need to think about
ways in which they can
implementation from the
collaborate between
very start and how we
each other. So, in
can make great ideas into practice, that will mean
real practice that make a different models of
difference in the classrooms working for different
sorts of schools: for
academies, for free schools, for local authority
managed schools and so on. It’s going to mean a very
different role for chains and federations and, indeed,
probably new models emerging around the way
schools collaborate. It is also, I think, going to mean the
emergence of what I would broadly call ‘providers’ in
the sector. And, most obviously, that will be
organisations providing back office and support
services but it might also mean technology
infrastructure, for example, and other things that are
actually supporting classroom teaching.
Now, that might be on a proper outsourced –
‘proper’ in inverted commas – full-scale, outsourced basis.
Or it might simply be collaboration between schools in
new ways that will emerge over the coming years.
I am going to stop there, in the spirit of keeping to
five minutes. So, my plea for today is that we think about
implementation; that we think about policy and reform
in the context of how it can be delivered, not just in
conceptual terms – and that we think of decentralisation
and localism as not being simply leaving schools to go it
alone, but allowing them to collaborate and work
together to deliver substantial reform. Thank you.
Andrew Haldenby:
Paul, that is fantastic. Camilla Cavendish.
Camilla Cavendish:
I think I am going to stand up too because I cannot see
anybody at the back otherwise. I am afraid all pretence
I had to be an expert on the subject has vanished this
morning because, apparently, The Times has printed
the supplement of the big business summit we had on
Monday where I was chairing a group on education –
we had various other things – and, apparently, we have
spelt the word ‘education’ wrong. So that is a great
start to my day.
www.reform.co.uk
67
Schools for the future / Reform
Very briefly, on the state of education, I do think
this argument gets rather polarised. The fact is it is all
the way from alpha to gamma, is not it? I was talking on
Monday to Martin Rhys at Cambridge. We have Silicon
Fair – if you like – in Cambridge, which is not quite
Silicon Valley but it is extraordinary. We have
universities pairing up with businesses, creating patents,
building the economy, creating amazing technological
ideas. On the other hand, we have one in six kids
between the age of eighteen to twenty-four not in a job
or in training or in education. I mean, we have got this
very polarised system. And I was absolutely inspired, a
few years ago, to see, [Irina Tyck] who is actually here –
I saw her this morning – who is a fantastic head-teacher,
sitting in Toynbee Hall in East London – which is a
dilapidated old Victorian building – in two big rooms
which I am sure did not meet any Health and Safety
requirement – I do not know how they got away with it
– teaching Bangladeshi children in a summer school. I
think Irena basically raised the level of those children’s
reading, writing and mathematics skills within two
weeks beyond where they had come to in the entire year
of education in the comprehensive system. So there are
fantastic examples of that. On the other hand, as one of
the Bangladeshi fathers said to me – because he was
educated here – he said, ‘do you know, I really feel the
kind of school I went to just does not exist anymore.’
And that is obviously a problem. The ‘could do better’
on the report card, to me, comes down to the growing
gulf between the independent sector and the state
sector. And the figures are just absolutely shocking. And
I am sure you all know them. Independent schools
produce more pupils with three As at A level than all the
state schools put together. There is something
fundamentally wrong about that in terms of our
aspirations, in terms of our expectations, in terms of our
ability to get children through the system. And just one
more statistic for you: children on free school meals
– which is about one in eight of children – 40 per cent of
children on free school meals last year did not get a
single C at GCSE. And I think we have to stop fussing
about independent schools and public benefit and ‘oh,
my God! Can we cream a bit off them?’ and start
focussing on the rest of the system and ‘what are we
doing for the children at the bottom?’
A friend of mine from Italy said to me the other
day, she said ‘in Italy, children repeat a year. If they do
not get it right, they repeat a year. And, actually, she
said, ‘when I was …’ She was at school in Italy, she said,
‘it was the one thing I did not want to do. The one
motivation I had was to not be with the younger kids.’
You just sort of think: there must be a few basic
psychological things we could do. Perhaps in the Tory
nudge – the new fashion for nudging – maybe that is
just one of the things we should do.
On the structures that Paul … I mean Paul talked
about … You said, ‘releasing the latent energy that is
there’ and, obviously, there is a lot of this around. And I
am sure Nick Gibb will talk, later on, about the free
schools. I just wanted to make one point on that,
Andrew, which is, I am slightly worried that the Free
Schools Initiative is actually going to be far too limited.
And one of the reasons why is – I have not realised until
recently – I thought it was going to parents and other
providers are going to come in and create this,
supposedly, great pluristic, diversified system. Now, my
understanding – I am sure you know this better than I
68
www.reform.co.uk
Schools for the future / Reform
do – but my understanding is that, actually, the trust has
to be set up by parents. That means it is quite … At the
moment – and I think you should ask Nick Gibb about
this – it is quite limited because I think the deal has so
far had about forty or fifty parents’ groups of which
probably about twenty are going to meet the criteria.
There are quite a lot of big, private companies out there
with very, very deep
pockets, which I think
Can you somehow tap
the big providers who have would quite like to
come into this market.
got very deep pockets and At the moment they are
could be investing?
going to have to be
contractors to the
parents’ trusts. Now that raises a real question of
financial risk. “Who takes the financial risk?” Because,
in fact, if you are a parents’ group, you are going to get
the government funding per pupil but, if you do not fill
your school, you have got a serious cash flow problem.
So I just think you should raise that with Nick as to who
is actually going to be taking the risk on those schools?
Can you somehow tap the big providers who have got
very deep pockets and could be investing? I just think
there’s an issue there that I suspect the government has
not thought about, which is just it is a business issue.
In the interest of time, I am just going to come
onto … There are so many issues in the education
system but, to me, they always do come back to
teaching. And we get obsessed with standards and
structures and everything else; teaching is what we all
remember. It was the great teacher; it was the teacher
who was, usually, cleverer than we were – person who
actually just spotted the one thing that made us tick
and got on with it. And I think teaching is a very
peculiar profession. I’ve worked in business most of
my life and I was at Pearson – which I’m delighted to
see have sponsored this conference – for a while. A lot
of the people we had at Pearson were teachers –
because Pearson is a very large education company –
particularly in America – it is a fantastic educational
publisher. Now a lot of the best staff we had were
people who were refugees from teaching because it
was one of the only organisations where they could
work because they always had a direct interest. A lot of
those people, very able, they had actually got a bit tired
of teaching; they had got tired of the politics of the
staff room; they had got tired of the problems with
discipline – particularly in this country where,
obviously, that is a whole issue that the government are
trying to address.
And one of the things that really struck me and
has struck me again and again when I visited schools in
America and Britain is that teaching has become
increasingly peculiar in the sense that we regard it as a
job for life. And there are very few other professions
now that you regard as a job for life. And a lot of
people leaving university today think ‘well, I’d quite
like to try that. I might not be any good at it’ – because,
obviously, your ability to teach does not really relate to
the quality of your degree; it is a really different skill
– and they are thinking ‘well, I don’t want to get
trapped in this.’ And one of the reasons that Teach
First was started – which is something I was involved
in many years ago – was because some of us
discovered Teach For America, where they had gone to
Ivy League universities, said to students ‘come on,
you’re going to get a job at Goldman Sachs but why
don’t you teach for two years first and then Goldman
Sachs will actually give you the job?’ Now, the result in
America was that 50 per cent of the people who tried
teaching stayed in teaching and were some of the best
people they had. The other 50 per cent probably were
not very good at it, did not have the patience, could not
figure out how to teach kids who were not as clever as
them and did not have that mentality. But it was a
really enormous injection of quality into the system.
And a lot of the schools here, which have been
taking on Teach First students have actually been very
flexible about the way that they have welcomed these
students and taken them in. So I think, for me, that just
raises a bigger question really – about how government
looks at the teaching profession. Do the pensions
create a problem? Should we actually be just divorcing
pensions now from pay? – Which is true for most of us,
certainly in my generation. I mean, we are not
expecting our companies to pay us a pension anymore.
Pensions have become a drag on people. They are
building up a pot of money and they are thinking,
‘God! Actually, I’d better not leave because I’m not
going to get the benefit at the end.’
One of the best people I met in New York when I
was visiting charter schools there is guy called Steve
Mariani, who was [inaudible] the Bronx. He was
working in Wall Street. He was freaked out working in
the Bronx. For some reason, he decided that the way to
deal with his personal problem was to go and teach in
the toughest school in the city. He decided to teach
maths because he did not really know anything else.
He had an entire term in which no child listened to
anything he said; they all shuffled their feet and threw
things at each other. Despaired he took the four worst
kids out to dinner and said to them ‘do you remember
anything I have taught you?’ And one of them said
‘well, you know, it was quite interesting that time when
you talked about your business – what you did in the
City.’ And this guy had
remembered every
If we can be more open
single figure. And he
about who we take into
said ‘and I thought …
teaching, if we can see
That must have meant
it as a flexible profession – you’d made a profit of
and maybe, controversially, … Your margin was …’
if we can let teachers have This guy – Steve
Mariani – as a result of
more control over the
that conversation and
curriculum – we might get several others created
an entirely new way of
a better product
teaching maths which
is now called ‘The National Foundation for
Entrepreneurship’, I think, in the States. And he
decided that, obviously, kids at that level, ‘what are they
interested in?’ They’re interested in making money.
And that curriculum has swept through the States. It is
being used here.
I suppose my only argument there would simply
be, if we can be more open about who we take into
teaching, if we can see it as a flexible profession – and
maybe, controversially, if we can let teachers have more
control over the curriculum – we might get a better
product. And I had better sit down because my time up.
Andrew Haldenby:
Camilla, thank you very much. Straight on to Francis
O’Gorman.
Francis O’Gorman:
Thanks very much. I am used to talking in fifty-five
minute slots! So, faced with this radical contraction, the
only thing I can come up with is a list, which I hope is
coherent in some way. But, forgive its disjointedness, I
think I would like to use this opportunity to say
something I have always wanted to say to Radio 4 and
the news on the television, which is that education does
not consist only of schools. The slippage that you see
between the equivalence of ‘Education = Schools’ – and
therefore, what exactly do universities do? ‘Oh, they do
business and they put things back into the economy.’ We
need to watch that. I am very conscious, as a literary
historian, of the nineteenth century – of the circularity
of many arguments about education. And I think this is
one of the two big challenges that always faces anybody
talking about education. We do cover the same ground
that has been covered in the past. And I do think it is
very helpful to have some awareness of that. The other
thing that is a challenge for us is that, rather like Arthur
and the Roundtable, education is absolutely steeped in
myth. I think we have to stop repeatedly when
articulating any idea about education and just ask
whether it springs from some intuitive sense of how
things should be, our own experience of being at school
or being a teacher, or whether it has anything more
substantial behind it than that.
This is a debate full of belief – and that’s a good
thing because it engenders passion – and it is a bad
thing, because it does not always engender clarity of
thought. We, in universities are a little bit, I think, like car
mechanics or plumbers when it comes to schools: we
have a wonderful habit of looking at our first year
students and saying, ‘oh, for goodness’ sake! Who did
that? Who taught them to think like this or to write like
that or to have such a reckless regard for the semicolon?” That is a myth. We need to be careful of that.
And I am probably about to […] in my own words, but I
will just give some perspectives on where I see things
particularly challenging for my subject at the moment. I
do think we do have quite a serious problem with
expectations about independence of thought and I think
that comes from a regime of high – if not over –
assessment. The setting of hoops to jump through tends
to produce among good students people who are very
good at jumping through hoops, rather than somehow
thinking a little bit more broader than that. It is one of
the unintended consequences of an admirable effort to
give people clear markers as to how they are getting on.
And certainly, of course, we do struggle also with
the assumption – quite rife, in my experience – that
education ought to be, at some profound level, easy: that
it should be a matter – as for us in the National Students
Survey – we are told – should be a matter of student
satisfaction. Ah! We don’t do satisfaction! We give people
desires and ambitions and knowledge and competences
that they did not know when they started, that they
might have or be able to obtain. So we might say we are
in the creative dissatisfaction business. But we are a bit
stalled by, I think, the assumption that we, as it were,
should give what is asked for.
I do think that confidence – real, personal
confidence – the real transformative effect of education
– comes through attempting that which is challenging
and succeeding – or partially succeeding – or, at any
rate, doing better than we had thought. And, in order for
that to happen, I do think we need space for students to
www.reform.co.uk
69
Schools for the future / Reform
be able to make mistakes: in a sense, to be able to fail this
or that, rather than being relentlessly pursued by the
dark shadow of ‘assessment’ all the time.
I do not particularly want to get into the skills
versus knowledge debate, although I am sure, like
everybody in this room, I have plenty of views on it.
I am very interested – I told you this was a list – I am
very interested in the notion of the free schools and
I would like to hear more about this. I do have a big
question about what exactly they might be free from
because I think there are some serious impediments to
the development of education across the board. In my
little patch some 1970s’ assumptions about industrial
relations are significant impediments and I should
be very interested to know whether free schools might
be free of those. And, on that philosophic point,
I shall stop.
Andrew Haldenby:
Fantastic. Professor Dylan Wiliam.
Dylan Wiliam:
Thank you. I think our future economic prosperity is
going to depend on our ability to distinguish myth from
fact in these debates. And what is extraordinary is how
many myths pervade so much government policy. So,
for example – and you are not going to like this, but it is
true – the quality of teaching in the average independent
school is worse than the quality of teaching in the
average state school. We know this from OECD data
that shows the gap between private and state schools is
bigger in England than it is in any other country, but
entirely accounted for by the social class of the students
going to those schools. Take that effect out and the
superiority of the private schools disappears. And the
private schools are teaching those kids in classes of
thirteen and the state schools are teaching those kids in
classes of twenty-five. So either, class size makes no
difference at all or the teaching is worse in private
schools. Classes are small in private schools because
their teaching is so bad, they have to get the class size
down to thirteen to match what the state schools are
doing in classes of twenty-five.
If we are going to improve education we have to
look at the data and what is extraordinary is how much
we have failed to do that. There is still this discourse of
‘good schools’ and ‘bad schools.’ Some schools are
much worse than others but they do not have that big
an impact on student achievement. So, of the
difference in results that we see between high
performing schools and low performing schools, about
93 per cent of that is
Class size does not make nothing to do with the
that much of a difference; school. It is the kids
and their family
what matters is teacher
backgrounds that
quality
explains that
difference. If you go to
a good school, you will do better but not that much.
So, if you have got an average school and you end up
with, say, a class of thirty kids getting five good grades
at GCSE. In a so-called ‘good school’, seventeen will
and, in a so-called ‘bad school’, thirteen will. So, for
those four kids it makes a difference but the differences
are much smaller than most people assume.
By and large, as long as you go to school, it does
not matter very much which school you go to, but it
70
www.reform.co.uk
Schools for the future / Reform
matters very much which class you are in that school.
And, as we have heard already, class size does not
make that much of a difference; what matters is
teacher quality. And, in fact, class size reduction
programmes generally lower teacher quality. It is
axiomatic. When you reduce class size, you need more
teachers and, when you need more teachers, you tend
to train them quickly and you let in people who should
not have been let in.
So it all comes down to improving teacher
quality. Now one of the things we know is that pay is
not important. Finland pays their teachers about 108
per cent of average
Imagine having this
salaries – whereas we
conversation with your GP: pay our teachers about
130 per cent of average
‘Why did you end up as a
salaries. So that is not
GP?’ ‘Well, I wanted to be what is making
a teacher but I was not
Finland’s teachers so
good. Finland does
good enough.’
have this smart habit of
getting the cleverest people in the country to want to
be teachers. There are so many universities in Finland,
where it is harder to get into the teacher training
programme than it is to get into medical school.
Imagine having this conversation with your GP: ‘Why
did you end up as a GP?’ ‘Well, I wanted to be a
teacher but I was not good enough.’
But Ireland provides an example of the countercase, which is that just getting the smartest people to
want to be teachers is not enough by itself, because
Ireland also chooses its teachers from the top 10 or 20
per cent of the college-going population and has a very
modest set of outcomes, even though they pay their
teachers well, give them great conditions of service –
and yet the outcomes are modest. So, what we need to
be aware of is that we need to be much more careful
about analysing these positive formulations. And, what
I really find most depressing of all is this idea that almost
all policies tinker around the edges. So, first of all, ‘how
many free schools are there going to be?’ ‘Are there
going to be 5,000?’ – I doubt it very much. So, if you are
not going to get 5,000 of these things then you are
wasting your time. And these things, by-and-large, are
not generally harmful. I mean, academies are not
generally worse than the schools that they are replacing
but, actually, no better than the schools they are
replacing. Steve Machin’s research shows that
academies do get better results than non-academies but
they start from a lower baseline, which is why they get
made into academies in the first place. And academies
improve at the same rate as non-academies, starting
from the same baseline. Specialist schools get better
results than non-specialist schools but they get more
money: they get £129 per student per year more. And,
by a spooky coincidence, the improvement of results
that you get is exactly what you’d expect if you just gave
the schools £129 per student, per year.
So we need to be very clear about the logic of
our reforms. And one of the things I am suggesting –
and this picks up on Paul’s point – we need to have a
very clearly articulated logic model: ‘If we do this, then
we think this is likely the result and this will be the
consequence and then, and then, and then … and this
is how it is going to result in higher student
achievement.’ And, when you force people to articulate
a logic model, it does two things: it makes them, first of
all, look at the existing research evidence to see ‘are the
links in the chain supported by the existing research
evidence?’ But then – and this is crucial in terms of
Paul’s point – it provides you with a framework that I
call ‘tight but loose.’ We have to make our reforms
loose enough to be able to adapt into settings that are
different from the ones that were envisaged. And,
sometimes, you need to take advantages of affordances
that are present in those settings that we had not
envisaged: things that will make the form run better.
But, at the same time, we must not allow the reforms to
be so loosely articulated that they lose their
effectiveness when implemented. Most educational
reforms I see suffer from what Ed Hartle calls ‘lethal
mutations.’ They get changed as they move through
the layers of the system and, by the time they actually
get into the classroom, they are completely ineffective.
So, what you have is schools, trying to broaden
their recruitment. I have seen it already. I was looking in
Newham and the governors are discussing how to get
more kids from the nice, middle-class primary schools
coming to their school because that will make more of a
difference than improving the quality of teaching and
learning. So we need intelligent accountability that holds
schools accountable for the kinds of progress the kids
make. And, with that – and then focussing on leadership
for that – then we also will have a chance of success.
One last point about leadership: I work a lot with
heads and one of the things that I find is that most heads
never saw an educational idea they did not like. So some
heads have got something like seventy or eighty things
going on in their schools at the same time. And one of
the things I say to those heads is that ‘when everything is
a priority, nothing is.’ And effective leadership, in my
view, consists of stopping people doing good and
valuable things to give them the time and the mental
energy to focus on even better things. And so, if we are
going to succeed, we need to simplify the agenda so that
most heads are focusing on one or two small things: i.e.,
improving the daily living experience of every single kid
in every single classroom. If that is our focus, we will
succeed. If we allow it to be dissipated by focusing on
other things, then we will be a third-world country in
forty years’ time. Thank you.
Andrew Haldenby:
Thank you. We have covered the ground. Paul
Woodgates said that we need to think about how all this
works and he said that we need to start thinking, in an
open minded way, about new ways of delivering school
education. Camilla Cavendish said that there is a
polarisation in education and the best way to deal with
problems of low achievement in the schools’ system is
to be more flexible about the curriculum and teachers.
Francis O’Gorman said ‘for God’s sake, don’t just talk
about schools.’ Don’t worry, Francis, we will also talk
about universities. And, I guess, then, if your
constituency, Francis, as it were, is the kids at
university, you are worried about over assessment and
therefore a lack of independent thought. And you
raised the value of education, which you thought was
about challenge and so kids are not consumers in that
sense; they have to be taught. Excuse the word! And
Professor Wiliam said that ‘don’t fall into the
temptation of over politicising education,’ if you like,
‘there are the fundamentals here about kids’
achievement being as much about their background as
about other things which maybe put education into the
wider economic debate: how do we become a wealthier
society?’ But he also stressed the quality of teaching
and the right methods to make teaching better. So the
question is ‘are those the right headings that we need
Nick Gibb to tell us about later?’ Let me open it up: do
we agree? Or there other things we want Nick to tell us?
I will take questions in twos or threes. But there is one
here. And the microphone will come round. Will you
just say who you are?
David Perks:
Hi. David Perks. I am a teacher from South London.
The one thing that I think strikes me as being
absolutely vital, if this new administration is going to
clear the decks and give us a new start, is to tell the
truth about where we are. And so, if we look at the
school improvement agenda and what it has produced
over the past ten or so years, then it has produced
schools which are determined to get their position on
the league table and
If we look at the school
nothing else. And, in
improvement agenda and terms of how they do
they will ditch
what it has produced over that,
education for anything
the past ten or so years,
that gives them that
then it has produced
position. So my one
way of explaining this
schools which are
clearly is – I am a
determined to get their
science teacher –
school on the league table physics teacher – is that
and nothing else.
the number of state
schools now who are
rushing away from academic science education at
GCSE is unbelievable – and using pseudo vocational
qualifications to lie about their achievements in the
league tables. If you do not understand that, level two
BTech is worth two or four GCSEs grade C, 100 per
cent internally assessed, kids sit no exam. In fact, if you
understand that, it means the teacher drives it or, in a
lot of cases, does it for them.
What does that mean? It means that the league
tables that we have mean nothing. And, if you actually
took that equivalence being slightly facetious fake
qualifications away, then you would find that schools
have nothing – absolutely nothing – to give. Now, that is
not to say that the teachers are rubbish, the schools are
rubbish: it is to say they have been driven down that by
an agenda that absolutely needs to be squashed flat now.
So my question for Nick Gibb is ‘are you getting rid of
the equivalences now?’ and ‘if not, then you’re going to
get labelled with the same thing the previous
administration did.’
Andrew Haldenby:
Does anybody else want to come in to support that?
The gentleman … I can just see your hand in the white
shirt … That’s it.
Audience Member:
Thank you. Actually, it is a question really that could
be picked up by Dylan Wiliam. I absolutely agree
entirely. I am the headteacher of a school in
Cheltenham. I’ve worked with Dylan Wiliam before
and it is one of the pleasures of my career to see some
of the proper research on the impact on learning that
Dylan Wiliam and his team have developed. But the
www.reform.co.uk
71
Schools for the future / Reform
point about the social capital that a child and their
family can bring to a school being often this story that
lies behind an improved school – the school is
gentrified – that, I think, is at the crux … I agree with
the equivalences issue but, at a more fundamental
level, ‘how do we overcome that?’ Because, if we
overcome that, then we can … So many other things
are really just about how we do it. But the fundamental
question is ‘if we can overcome the social background’.
Tony Gardiner:
Tony Gardiner, University of Birmingham,
mathematician. I hope the four strands we saw at the
front will get bound together, rather than remaining
separate streams, as I think they often do. I am not sure
that I can accept Dylan’s comment that there is no
difference – or that the teaching in independent schools
is worse – I am not sure. But I think the last comments
are focussed on the fact that what is different between
state and independent schools is the ethos within which
the teachers they have got are working. I have no
independent school background at all and I would not
want one. But my wife teaches in one and I observe
what happens. And I started the National Mathematics
Challenges and ran them for a long time and I see the
response from schools to extra-curricular opportunities
that challenge with hard stuff. And state schools find it
harder to respond because they are in the position that
we heard here: trying to get their position in the league
tables up. Somehow, it has got to change, the ethos and
free state schools, not from controls, but to educate – to
rediscover – not to throw out education, but to rethink,
‘What is education?’ And, if we can do that, we will get
somewhere; if we do not, we’ll go the way Dylan has
told us we’re going.
Andrew Haldenby:
Let’s just put those to the panel. So, if you like the
questions for Nick Gibb would be – and the panel can
tell us their answers – the last Conservative
government introduced, it was the last Conservative
government, wasn’t it, introduced league tables, which
have been modified over the years, but it’s the same
point, they’ve driven schools towards something which
actually isn’t education – and David used the word
‘fake.’ It sounds a bit like the financial markets selling
products which don’t even have any value. So we’ve
created this completely fake activity. Is that right? What
are you going to do about that? I don’t think you gave a
name, the headteacher from Cheltenham, but,
absolutely fundamental: ‘Nick Gibb, what are you
going to do, faced with the fact that the social
background of kids is one of the key determinants of
education?’ ‘How would you respond to that?’ And
then, as Tony Gardiner says, ‘how do you encourage
the ethos of schools,’ which might actually be stronger
in independent schools. The real question is ‘how do
we foster the ethos of education in schools?’ And we
won’t do it in the same order. So why don’t we start
with Francis and Dylan, then Camilla and Paul?
Francis O’Gorman:
I very much agree with what Camilla said about the
division between independent and state schools being
fundamental. I think, crudely put, a substantial
amount of the middle classes have a real interest in
state education and do not have the option of simply
72
www.reform.co.uk
Schools for the future / Reform
buying their way out it. We have a real problem. I think,
for me, the question of league tables was very clearly
put and enabling. It connects slightly awkwardly, I
think, with what Dylan had been saying about
accountability because I think league tables are often
the product of an attempt to create the regime of
accountability. That’s a noble aim but its consequences
have been very … they’ve driven very unacceptable
behaviours. And that’s true in the university sector as
well as in the schools sector. So I think that, picking up
on what Dylan had said about … was it supportive
accountability?
Dylan Wiliam:
Intelligent accountability.
Francis O’Gorman:
… Intelligent accountability …
Dylan Wiliam:
And supportive accountability.
Francis O’Gorman:
Wow! I would like to hear a hell of a lot more about that.
Dylan Wiliam:
Let me flesh out a few of the elements of an intelligent
accountability system. So, for example, one of the first
things I recommend for Nick Gibb to do is to take the
equivalence tariff – the read off table – off the DFE
[Department for Education] and give it to Ofqual. We
have to have an independent assessment of whether the
standards reached in these quadruple GCSEs in
information technology – which I’m told schools do in
an afternoon a week
We need to turn our schools these days – and yet
into being talent factories give you four GCSEs
those really
so that we are generating –arewhether
equivalent to a
talent; we are nurturing it; GCSE grade C in
we are incubating it and we computer science. So I
mean, I think we need
are finding talent where
to take that away from
we didn’t think it existed,
government because,
rather than just being
clearly, there’s been a
neutral about hoping that vested interest. We’re
the talent will rise to the top. letting the fox guard the
hen house and that’s
not a good idea. The other important thing about the
intelligent accountability is that it needs to not to create
incentives for people to do things we don’t want them to
do. It’s the simplest idea in the world. And yet, we do
things that are exactly counter to what we want them to
do. We put in place incentives for schools to choose the
highest achieving students. So now we’re moving away
from CVA [Contextualised Valued Added] – which
people may not like it but it is, by some margin, the best
measure we have of how much kids are learning in a
school – and we’re placing more emphasis on raw
results. Ofsted has reduced its emphasis on CVA and is
now looking at the quality of teaching. I have no faith in
Ofsted’s ability to know good teaching when it sees it
because the kinds of schools it celebrates are actually
not that good. Of the 12 outstanding secondary schools,
six had got worse the following year. So I call this ‘the
curse of Ofsted.’ I think the other important thing is
then to see ‘what are schools doing to advantage the
kinds of things a society wants them to do?’
And I think, in particular, this notion of
combating disadvantage is particularly relevant here.
What we’ve discovered recently is that … For many
years, I believed that schools cannot compensate for
society and I listened to [Russell Bernstein] when he
said that. And what I have been amazed to discover is
that, in the classrooms of the very best teachers, children
with disadvantaged backgrounds learn just as much as
those from advantaged backgrounds. Those with
emotional and behavioural difficulties learn just as
much as those without those difficulties. And so, what
we have is a fundamental paradox: equal distribution of
teacher quality does not produce equal outcomes.
Because, being middle class confers an immunity
against bad teaching. Middle class kids make sense of
bad teaching in a way that working class kids can’t. And
therefore, if we’re serious about maximising the talent in
this country, we have to make sure that we’re getting the
best teachers for the kids who need them most.
Our current policy is treating education like a
talent refinery: we allow kids to come up … We put a
little knowledge in front of kids and we expect the best
ones to rise to the top. And, if they don’t rise to the top,
‘Well, they’re not meant to do that subject.’ We need to
change our schools into being talent factories so that we
are generating talent; we are nurturing it; we are
incubating it and we are finding talent where we didn’t
think it existed, rather than just being neutral about
hoping that the talent will rise to the top.
Camilla Cavendish:
Yes. Just on that point that’s one of the things that
Teach for America and Teach First will try to do – is
put supposedly bright, energetic people into the
worst schools. So there is a sort of model there,
perhaps. On the league tables, there are a number of
other factors, I would suggest, which are also driving
this problem. One is the early specialisation. I mean
we are asking children to choose a very narrow range
of subjects at a very early age. And that, I think, also
first of all, it’s not very good for late developers but,
also, it does encourage, even more, the choice of soft
subjects over hard ones. And, in fact, at this summit
we had at The Times on Monday, Sir John Rolls, who’s
head of Rolls Royce, said ‘do you think that people in
China and India are worrying about the thousands
and tens of thousands of graduates in media studies?’
None of whom, have ever, to my knowledge have got
a job in journalism. So it’s back to David Perks’ point,
we are constantly misleading our kids about what
actually represents value later on and how they’re
going to get a job.
So early specialisation is a problem. I think one
of the other issues between independent and state
schools is that, of course, as you know, the independent
schools are now able to choose international exams.
They’re able to choose
We are constantly
the IGCSE, the
misleading our kids about International
Baccalaureate; state
what actually represents
schools are not allowed
value later on and how
to move to those
they’re going to get a job.
exams. Again, that’s
going to be another
gulf: if we don’t have challenging enough exams. Then
you’ve got the modularisation problem. A lot of bright
kids at schools I go to feel they’ve absolutely lost all
interest in learning anything with these … They’ve got
the multiple choice problem; you’ve got the
modularisation problem; it’s absolutely … It’s exactly
… As you said, it’s the unintended consequence of this
that we’re just squashing out all creativity from the
system. And the only other thing I’d say is that, on
Francis’ point, I know exactly what you mean about
independent versus state and I’m always surprised.
But we still only seem to have seven per cent of people
in the independent sector. So we’ve got a hell of a lot of
other middle class people who are not actually buying
their way out. But they’re doing it through post code,
aren’t they? Which is a slightly different thing.
Andrew Haldenby:
They’re buying property in catchment areas, aren’t they?
Camilla Cavendish:
Yes, but they’re still in the state-funded sector.
Andrew Haldenby:
Yes. Paul?
Paul Woodgates:
I was struck by the last comment from the floor about
the binding together some of the things that we’d
spoken about in our introductory pieces – which is
absolutely right. We’re talking here about a system
which is a system in the true sense of the word. A whole
series of things that are hugely interlinked and really
quite complex.
And that, I think, draws us to Dylan’s point
about having a logic model that really lets us
understand ‘if you do this and if you do that, then this
will happen.’ And that has to be based on evidence. It
has to based on a proper understanding and testing
and real research of the fact that ‘if you do these two
things, this will be the outcome.’ That’s how we avoid
the unintended outcomes.
The other thing that struck me was, Camilla, I
think it was you that mentioned that everybody’s an
expert in education. And, I have to admit, I find myself
doing that. It’s very, very easy, based on eleven years of
schooling and three years of university to believe that
you know all about how education works. And,
actually, as Dylan shows, it’s actually a bit more
complex than you think. I have traditionally believed
that small class sizes are a good thing. Having seen
some of Dylan’s research, actually, it’s not a simple as
that. There’s a whole lot more stuff going on in there.
And it’s that that needs to be brought into that debate
about ‘if you do A and if you B, then C happens.’ And
part of that has to be about the implementation
challenge as well: that there are some human
behaviours in here – that individual people need to do
individual things in order for reform to happen. And
it’s that, in the end, that will drive it. Otherwise, it’s
purely an academic exercise.
One other thing I want to point out: Francis, I
absolutely agree, it absolutely is about universities.
Schools don’t exist in isolation. Just, let’s also not forget
there’s a further education sector and a whole set of
stuff around that which is important as well. And,
actually, this is about the whole span of education, from
birth to grave, of which schools is clearly an important
part but not the only part.
www.reform.co.uk
73
Schools for the future / Reform
Andrew Haldenby:
Seven minutes to go till coffee. Let me just take
another three from you. Just an observation: the
tendency in discussions like this is almost to slightly
look to the negative and whether people want to
touch on things that don’t need to be ripped up and
can be encouraged, we might have a bit of that. And
now there’s thirty hands so this is impossible. So I’ll
be unfair and just pick another three. So the
gentleman here and the two hands that were at the
front here.
Bene’t Steinberg:
Hi. Bene’t Steinberg from Cambridge Assessment.
When we look at things like this we also need to look
– as Professor O’Gorman said – back to the past and
‘what was the case before we started?’ When we didn’t
have league tables, nobody actually knew anything
about schools and there was very little accountability
and you had to go round and ask all sorts of people to
find out whether the school you wanted to go to was
actually any good. That was the first thing. The second
thing is league tables weren’t invented by the
government, they were invented by The Sunday
Telegraph. Once the government started producing the
figures The Telegraph started producing league tables
and everybody else went along with it and the league
tables are different for every newspaper because they
all had their own axe to grind. Thirdly, before there
were equivalences, hardly anybody did any vocational
qualifications at all, they came out of school with no
qualifications at sixteen and they got some kind of
peasant job. Peasant jobs don’t exist in this country
anymore, so one can think about what you do with
equivalences but, again, back to the usual, it’s a lot
more complicated than that.
Tessa Keswick:
Tessa Keswick. So many interesting points have been
raised. It’s a fascinating discussion but I just wanted
to say, if we want to improve … I think the section
we’re talking about really is primary level and
learning to read, write and add up. The statistics there
remain extremely as they were in 1997 – about 28 per
cent, I think, on the HMI or Ofsted figures. If we
want to do something quickly about this key area,
surely we do have to look at getting rid of bad
teachers. I understand, and I hate to say this in this
august company, but I understand less than a dozen
teachers have been sacked in the last ten years. And
this does seem completely incredible really. We need
to do things quicker to get these children up to speed.
And I go all over the Far East where we see children
learning – admittedly by rote – two alphabets, quite
often, and they all learn to read. They work very, very
hard at it, they learn to add up, they learn the basics.
I’d ask Camilla – second question – it’s all very
well, these new schools – which, no doubt will be
excellent – but, unless you work out exactly who the
good teachers are, you’re giving independence and
freedom to people who may not be very good. And
where do you go from there? How do you control it?
Who controls it? And who will be the authority there?
Andrew Haldenby:
Thank you. And one other hand is just behind. Forgive
me; this is a bit arbitrary.
74
www.reform.co.uk
Schools for the future / Reform
Chris Kirk:
Chris Kirk from PricewaterhouseCoopers. I guess I just
want to lift the descending gloom a little bit as well
because I feel more optimistic about some of the things
that we could do now. And I think we have to be careful
not to let the average statistics – which, I agree with
Dylan, entirely show that social background is the big
determinate – get us away from the fact that one can still
find case studies of schools which completely buck that
trend. And that is possible. I was in a very inspiring
school just a few days ago where the previous school
regime had pretty well given up on the community that
it was in. And a new head came in, decided ‘actually, the
first thing we need to do is really, is not so much about
“how can the community learn about our school?” it’s
“how can our school learn about the community, what it
needs, how we can really engage with it and then start to
find a way to help pupils learn?”’ And we’ve been doing
some work on ‘capable communities’ with IPPR and, I
guess, looking at the notion of Big Society, ‘can it be
made to work if the background is such a big
determinate?’ ‘What can schools do to get involved in
that?’ I believe they can, I believe they do and I think
we’ve probably all seen schools that have achieved that.
I think the big question for me is ‘how do we scale that?’
‘Is that scalable and what do we do?’ And I would
caution against thinking that simply academies or free
schools is the answer. Some of them will be. As with the
academies programmes, some of them won’t be. And I
think we need to understand what sits behind that that’s
been the recipes for success.
Andrew Haldenby:
So those comments are a little bit more now into the
detail of it. Bene’t Steinberg said that these things may
not be perfect, they were invented for a reason. And
then two points on teaching: firstly, isn’t there just an
immediate thing for Nick Gibb or any minister to do, if
teaching matters, then about poor quality teachers? But
then, on the positive side, ‘how can effective teaching,
and how that works in a school setting, be scaled up? So
can we just take comments on that from the panel and
we’ll start with Professor Wiliam and go this way.
Dylan Wiliam:
It turns out to be much more difficult than it looks
because Teach for America – for example – doesn’t
seem to produce any better student progress than
teachers brought in through other routes. But we do
know that teacher IQ matters. One of the
extraordinary successes of our educational system
over the past thirty or forty years is to get anything
like the quality we used to have when women – very
smart young women – are no longer tied to teaching
in the way that they were thirty, forty, fifty years ago.
So there is evidence in the US – slightly less strong
evidence here – that teacher IQs are actually
dropping in this country, mostly because females are
now having a wider set of opportunities. But, having
smarter teachers does seem to make a difference. So
I’m in favour of anything that will actually improve
the quality of teachers. So, let’s, by all means, deselect
the bad teachers but there’s no point in deselecting
them if the ones you end up replacing them with are
worse. So Dunlop’s approach was to fire 10 per cent
of every company’s workforce and replace them. But
it worked because, generally, you could get in better
people. But you’d better check that you can get in
better people, otherwise you’ll be hiring back the
people you’ve just sacked.
But the point is that, if we’re serious about scaling
these solutions, the top end – Teach for America –
getting really smart Oxbridge graduates into our
schools and getting rid of the least effective teachers
– are not going to move the system in any kind of way
that’s scalable over a timescale of less than twenty years.
If you’re serious about improving education, you have
to have a relentless focus on getting teachers to improve
their practice – their day-to-day, in the classroom,
practice. That’s what’s got to get better. We know how to
do it in groups of twenty or thirty teachers, we don’t
know how to do it across 300,000 classrooms.
Francis O’Gorman:
I guess, this sounds a perverse thing to say, I don’t really
like the equivalence between smartness and IQ. And I,
personally, think that smartness is quite a challenging
metric to use for ‘good teaching.’ It seems to me that
there’s a nature of belief in a good teacher – a kind of
passion and a commitment – which is from themselves,
which is fundamental. And I wouldn’t want to use any
other metrics – so-to-speak – at the top of the pile – than
that. I think I’m going to pause it there.
Camilla Cavendish:
Okay. Very briefly because we’re running out of time.
On Tessa’s specific point about ‘who will control the free
schools?’ I mean, it’s going to be governing bodies. So
there is an issue about ‘are governing bodies good
enough to make these sorts of decisions?’ I mean that’s
quite an interesting issue. But, on the general teaching
point, I spent most of
my career in business
What we need to do is
before I became a
decide what’s important journalist. And we seem
which, based on this
to forget about
discussion, is all about
management. I mean, a
teacher quality - and create lot of employees – just
an accountability framework like teachers – are not
good or bad
that’s specifically designed necessarily
at their job. They can be
to improve teacher quality. doing terribly badly but,
if they have right
management, they can do a hell of a lot better. So I
think, obviously, you’ve always got some bad apples but
I think a lot of this goes back to what I said at the
beginning about teaching about being a rather odd
profession and being regarded in a different way to
every other. Well, actually, the truth is you’ve got a team:
you’ve got a headteacher, you manage those people.
Frankly, you should probably also pay them by
performance and a whole lot of other things that you
would do if you were in the private sector. But I just
think the management issue should not be overlooked.
Paul Woodgates:
A final thought from me. In terms of a word that’s come
up a number of times in this debate – it is ‘accountability’
and the problems with accountability that have been
driven down into league tables and so on. At heart it
seems to me that that debate is actually quite simple.
What we need to do is decide what’s important – which,
based on this discussion, is all about teacher quality – and
create an accountability framework that’s specifically
designed to improve teacher quality. If that happens, then
the right dynamics go into the system and the right things
– whether that’s dismissing poor teachers or coaching
existing teachers or recruiting better new teachers – all of
those things come out if the accountability framework is
fundamentally designed to deliver that outcome.
Andrew Haldenby:
Right. Well, that’s finished now because we’re four
minutes over – for which I apologise. So, what I’ll do is,
I’ll say to Nick Gibb that in our previous discussion, we
thought that what he needs to focus on is teacher quality
and also a sense that state education has become skewed
by the wrong kind of accountability – David made the
point which everyone has supported – and he needs to
stop that right now and think about the right model of
accountability to move the system.
So thank you.That’s a very lively way to begin the
day, which is great. And thank you for your enthusiasm.
We will go straight to coffee and come back five minutes
later – 10.35. And thank you to our panel.
Supporting quality teaching
Nick Seddon:
Thank you for joining us again for the next session.
Before I start, I’m told that Cambridge Assessment
want to tell you that you shouldn’t worry too much
about ethics and they want you to steal stuff from the
stand over there. So we’re going to talk about quality in
this session, and of course we’ve already started, we’ve
already done a fair amount of talking about quality in
the first session and hopefully we’ll be able to continue
and develop the thinking that’s happened there, but I
was just remembering as I was sitting watching, in the
spirit of erudition, that there’s a line in Hamlet when he
says ‘come, show us a taste of your quality,’ and that I
hope what we’ll get a chance to do today.
There are lots of issues to talk about, and some of those
were started off this morning, the question of the quality
of teaching and quality and quantity, and what the most
important factors are, and Dylan Wiliam of course
made it very clear that it was about the quality of the
teaching not the quantity. But we’re also going to talk
about technology and about innovation, and about the
kinds of tools that will help teaching to become more
effective and help schools to deliver teaching in a more
effective way, and of course I’m sure we’ll also talk
about accountability and the different accountability
measures that we were talking about this morning and
develop some of our thinking there. I’m joined by a
superb panel of speakers and each will speak for five
minutes, and then we’ll go to the same kind of Q&A that
we had this morning. We have the recently lauded, I
don’t know what the phrase is?
Jim Knight:
Ennobled is the term.
Nick Seddon:
Ennobled, there we go, ennobled Jim Knight, for which
should go many congratulations, who is going to have to
leave slightly early because he is going to give his
maiden speech today in the House of Lords, which is
very exciting. As many of you will know, Jim spent nine
years as an MP and five of those as a Minister with
www.reform.co.uk
75
Schools for the future / Reform
portfolios across a number of different departments,
Environment, Education, Employment and Digital
Technology, so he knows what he’s talking about. As do,
indeed, the other people that are on the panel, many of
whom, I think all of whom, have spent their entire lives
in education one way or another. We have Rod Bristow,
who has certainly spent his entire time in education, and
he’s the President of Pearson UK. We have Sir John
Holman, who has spent his life in science and
particularly chemistry as far as I understand it, in both
the school and the university context, and is now the
Director of The National Science Learning Centre at
the University of York. And we have Professor Judy
Sebba, who has been both a teacher and a senior civil
servant, and researcher at Cambridge and Manchester
Universities. She is now Professor of Education and
Director of Research and Knowledge Exchange at the
University of Sussex. So we will, Jim Knight, Lord
Knight, sorry, I’m terrible.
Jim Knight:
Call me Jim.
Nick Seddon:
Lord Knight is not going to start the speaking.
Jim Knight:
I can if you like?
Nick Seddon:
Let’s start with Rod and we’ll go down, and then we’ll
come to Jim last. So, Rod, thank you.
Rod Bristow:
Okay, thank you. Well I feel quite privileged to work for
Pearson, not just because Pearson is one of the UK’s
leading education companies at a time when education
is more important than it has ever been, but also
because of the diversity of things that we get the
opportunity to get involved in, whether it be with
publishing, through technology or through our
awarding body, Edexcel. I often get asked ‘what is it, you
know, of all the things that you’re involved in, what are
the things that make the most difference, what are the
things that improve learning more than anything?’, and
my answer is invariably: ‘I’m afraid it is not great
publishing, it is not great textbooks, it’s not the great
curriculum that we’ve devised, it’s not even the great
technology that we’ve got, it is actually great teachers.’ It
is great teaching that really does make the biggest
difference in education, and I know that not just
through my experience, I still do remember when I was
at school, but I know it as a parent, and I know how
important the teachers are to my kids, and I know what
a difference it makes having really great teachers. I do
think a lot about what it is about a teacher that really
does make that difference, and I wouldn’t like to actually
come up with just a list of characteristics because I
actually think that there are many. There’s real value in
diversity and I think there are lots of different teachers,
who are quite different than each other, that can be
great teachers. But I do think that all great teachers have
the ability to get the very most out of the students, the
kids that are in their charge: if you like they get their kids
to really work hard.You can express that in terms of
they’re really well engaged or they knuckle down,
whichever way you want to put it, they really do have
76
www.reform.co.uk
Schools for the future / Reform
the ability, and I think really, really great teachers have
the ability to get the kids to actually want to do it
without being made to.
So I think that having great teachers, of course, is
central to our ability to improve learning. But, I think as
we look forward the pressures that teachers are under
and thinking about the fact that education is more
important than it has ever been, that the expectations of
education are more important, that we’re constantly
looking for improvements, improvements in learning
outcomes: we’re in an environment where everybody is
demanding more, whether it be employers, parents,
indeed politicians, are looking for more to come out,
rightly to come out of the education system. And it is
not just looking at our improvement year-on-year, I
think increasingly we’re looking at how we as a country
are doing when we compare ourselves with other
countries in the world.
So even though great teachers in their own right
are crucially important, it seems to me that great
teachers are going to need more help as time goes on,
for them to do it on their own as time goes on, it’s
unlikely to be enough. And when I think about what
great teachers have to do, it is about getting kids to
work hard, to really, truly engage, to engage in
something that’s not just engaging but is also
worthwhile, stretching if you like that is meaningful,
that really does take the learner to a different place, a
different level of understanding. So they’ve got to do
that on the one hand, but the other thing that a teacher
has to do is to have a pretty good understanding of the
needs of the students in front of them, to know where
they are in their learning, for the whole class but for
the individual learner as well, to really understand
what it is for that particular student that they may be
struggling with, what they may have mastered
particularly well. So that engagement and that
understanding, if you like, the data, are the two really
important things that teachers have to do. On the data
point, I think it’s something that Michael Gove calls
‘intelligent accountability,’ and increasingly we are
bound to be looking more and more to an evidence
based approach to education. How well are our kids
really doing and what can we learn from how well
they’re really doing? That data is crucially important.
Now, as an industry, in education, we’ve made a
lot of progress. There’s a lot more data available now
than there’s ever been. It’s true of Edexcel. But it’s not
only true of Edexcel, other exam boards have also
implemented systems of on-screen marking, whereby a
huge amount of data, as a result of the technology that’s
been used to do the marking, is now available to schools.
They can see how well individual cohorts have done in
an exam, they can compare their performance with
other schools, other similar schools, and they can look in
a very, very granular way down as well into individual
papers, into individual questions, individual students on
individual questions, and as a result of that are able to
form conclusions about where maybe for the next
cohort they could improve, what types of learning did
they perhaps fall down on in that last paper. So there’s a
huge amount of data available. Not all that data is being
used, I have to say. There is the take-up of it, it’s patchy,
and when I talk to teachers about it they often tell me,
‘well yeah, actually we haven’t got round to it, we didn’t
know about it.’ There are many reasons why they’re not
using it, but it’s not all being used as much as it could be.
The other thing that is afforded through
technology is this idea of engagement. The thing that
technology can really bring is this idea of learning-bydoing, and we know that this is not just about
vocational learning, even for academic subjects the
learning-by-doing approach makes an enormous
difference. If you take mathematics, most teachers, and
indeed mathematics professors that I talk to, all talk
about the importance of learning-by-doing in terms of
really getting to understand those concepts. Learningby-doing is a lot harder when you’re sitting down with
a blank bit of paper and textbook than it is when you’re
sitting with a piece of
technology, a
Bring a teacher from 100
years ago to today, they’d sophisticated
homework system that
pretty much know where
can tell you where
they were. They’d be
you’ve gone wrong, not
standing in front of a class just that you’ve gone
wrong but where
… and they’d be doing
you’ve gone wrong.
whole class teaching
And in my case, when
I’ve been trying to help
my son, who’s doing his GCSE maths, or has just done
his GCSE maths, I’ve been trying to help him do his
homework and every now and then I might stumble
across a question that I actually get right and I don’t
know why I’ve got it right, it tells you, it might tell you
why you’ve got it right as well.
You can click on a button and you can find out,
you can get a lot more ‘try this,’ ‘try that,’ you can get
an infinite number of worked examples which a
textbook can never give you, and it gives you a lot of
data as well, it gives you the data as a learner as to
where you’re going wrong and it can create a
personalised learning plan for you, and it gives that
data back to the teacher. But it’s very much learningby-doing, and the nature of it being relatively
impersonal because it is computer-based, there’s no
threat to you as a learner, it really does improve, it
really does improve that engagement and that idea of
learning-by-doing, and we know that the kids actually
work harder when they’ve got these systems than they
do when they’ve got to sit down with a pen and paper,
they do more work.
Now the interesting thing about all these
fantastic technologies that are out there is they’re not
yet really being used. There is that old analogy that if
you were to bring a doctor from a 100 years ago into
the future and bring them into a hospital and they
were surrounded by computer screens and medical
equipment and scanners and the like, they really
wouldn’t know where they were or what to do. If you
do the same thing for a teacher, bring a teacher from
100 years ago to today, they’d pretty much know
where they were. They’d be standing in front of a
class, they might have an electronic whiteboard but
they’d still have something at the front, they’d be
standing there and they’d be doing whole class
teaching. The environment hasn’t yet been really
transformed in education, but it seems to me that it is
just a question of time. Why would education be
immune from the progress that technology has
brought to every other sphere of life? But it is about
the commitment, the belief in that technology, and I
think we’re at a very important point in our
development in that regard.
Nick Seddon:
Thank you very much. John, would you like to?
John Holman:
I think we’re all implicitly assuming that what we’re
talking here today about is England, but I’d just like to
remind everyone that the UK includes three other
education systems as well.
[Really?]
Where are you from? I actually want to talk about
something that you will think is blindingly obvious, but I
think it’s so important that I’m going to say it and spend
five minutes developing it, and that is that the really
important thing about what goes on in schools is
teaching subjects well, and good teaching and learning
in schools is about good teaching of a particular subject
by a person who really knows that subject well. So that’s
my thesis. Now, as I said, this may seem blindingly
obvious, but it’s quite easy to take your eye off that
particular ball. When you’re a head teacher, for
example, you have many other agendas going on;
obesity, healthy schools, teenage pregnancy, we can
think of many, many other things which schools are
often expected to deal with. And in handling all of those
agendas head teachers and their management teams
often tend to take away what should be a relentless focus
on people, teachers in classrooms teaching subjects very
well, because that’s what goes on day in, day out in
schools. Subject teaching is what defines the agenda in
schools, and what children take home from schools is
about what happened in a particular subject with a
particular teacher; that’s particularly true in secondary
schools, but it’s true in primary schools as well. And for
teachers, being an expert in teaching your subject is, for
most teachers, the definition of their professionalism.
It’s how they feel about themselves, about their position
in that school, and about whether they’re doing their job
well or not, it’s at the heart of their professionalism. And
by the way, that is also true in primary schools, despite
the fact that teachers have to be specialist across more
than one subject.
Why is this so important? Well it’s important
because, firstly, there is very clear evidence that teachers
who are specialist in their subject teach that subject
more successfully than those who aren’t, as evidenced
from Ofsted and elsewhere about that. Now we can all
think of examples. For
There is very clear evidence example, a physics
teacher who has a PhD,
that teachers who are
knew everything there
specialist in their subject
was to know about
teach that subject more
physics: terrible teacher.
successfully than those
We can all think of
opposite examples, of a
who aren’t
PE teacher who didn’t
know much history but was a superb history teacher.
But those cases don’t prove that the rule is not generally
true, that when other things are equal subject specialist
are more effective, and particularly if they are up-todate with their subject and the ways of teaching it.
I have to say that head teachers don’t always have
that at the top of their mind when appointing. I know
that, and I’ve been a head teacher, and I know that when
faced with a vacancy for a mathematics teacher at the
end of May, what you really want to do is to get
someone in front of those kids, who will be able to
control them and get some kind of learning going on.
www.reform.co.uk
77
Schools for the future / Reform
Those sorts of considerations often drive head teachers
to make compromises, which in the long-term are not in
the best interest of high quality subject teaching.
So there’s a lot here about school management
and about the behaviour of head teachers and
leadership teams and governors around celebrating
really good subject knowledge and subject teaching, and
publicly celebrating it and publicly prioritising it, and
helping teachers to see that that is where they should
focus and to help them to navigate their way through all
the many other agendas that go on in schools during the
day, for example, behaviour management.
Just to develop once more why subject knowledge
is so important, if a teacher is teaching a mixed ability
class, he or she will often have a situation where they need
to explain in depth a complex idea. If their knowledge is
in depth, if their understanding of that complex idea is
secure, they can think around how to explain it. Now I
know that that physicist PhD who knows everything
there is to know about physics may not have a clear
feeling for where the class’ sense lies, but that’s about
training and that’s about professional development.The
rule still applies. And
There’s still a long, long way another point about
to go in bedding in schools subject knowledge and
of subject
with head teachers a culture depth
knowledge is that if
that says ‘continuing
bright youngsters,
professional development youngsters who are very
much ahead of things,
is important for teachers’
they’re miles ahead of
where the class is, keep asking questions, a teacher with
good, rich, deep subject knowledge can respond and
stimulate.
So that’s the thesis, now what do we do about it?
It’s about, as always with issues around teacher quality,
it’s about recruiting and about training those who are
already in place. So it’s about recruiting subject
specialists into teaching who have the best possible
qualifications we have, so we’ve heard earlier about the
importance of teacher quality. There is some good news
around there, the Training and Development Agency
has just reported very significant increases in
applications to train as teachers; 40 per cent, for
example, increase in science, 33 per cent increase in
mathematics. They’ve also reported an increase in the
quality, so 5 per cent increase in the numbers of
teachers who have Firsts or 2.1s. Of course this is a
result of all sorts of things, many of them economic.
We have a spike we should take advantage of, keep
recruiting, get them into the schools, and give them
great experiences so that those teachers stay in schools.
So that’s about the recruitment. The second part
of it is about up-to-date subject knowledge, and here
continuing professional development, there’s still a long,
long way to go in bedding in schools with head teachers
a culture that says ‘continuing professional development
is important for teachers,’ and that the most important
part of it is around their subject knowledge. Much
professional development in schools tends to be generic,
whole school issues. I’m not saying that these aren’t
important, but this can take the eye off the really
important part of keeping a teacher up-to-date with his
or her subject knowledge and skills in how to teach it.
So this isn’t a call for back to basics, let me be very
clear about that. I’ve deliberately not defined what
subjects are, haven’t said anything about skills and facts
78
www.reform.co.uk
Schools for the future / Reform
and learning and any of those issues. It’s not about going
back to a particular type of subject or type of
curriculum, it’s about focusing on subjects for the
benefit of teacher and for the pupils that they teach.
Subject teaching is part of the rhythm of school life, it
defines the experience for pupils and teachers, and if
you get subject teaching right most of the other whole
school thing such as behaviour will follow.
Nick Seddon:
Thank you very much. Judy? We’re still going to
squeeze in I think.
Judy Sebba:
Okay. Right, well thank you very much, it’s always a
challenge to squeeze 35 years of research in education
into five minutes, so it’s no different to what I had to do
in my six years in the Department.
Okay, in the current climate nothing I’m going to
say is going to imply extra funding.That won’t surprise
you. I really am concerned to build on a point actually
that Rod has made, that we have a great deal more
evidence than we use and a great deal more data than we
use, and therefore how we jig things so that people can
make better use of it is what underlies what I want to say.
We have two major factors which we know impact
on pupils’ learning – school leadership and the quality
of teaching. Today, this session is about specifically the
quality of teaching, but therefore I’d like to see the
school leaders alongside the policy makers as facilitators
and supporters of that quality of teaching, and so I want
to make four points. The first is not in the little written
bit in there I’m afraid, that a recent study on teacher
effectiveness defined in terms of pupil outcomes
concluded that, first of all, teachers in the later phases of
their careers were more vulnerable to pressures of
various sorts, such as illness or family circumstances or
whatever, even professional pressures within the school.
Yet we very understandably, given the early dropout
rate, sorry, the high dropout rate from early teachers, we
focus our investment I think at the moment
predominantly in the early years of teaching, and I think
this is a bit of a problem that we need to reconsider. I’m
not saying we don’t need to do that, to invest in the early
years, I’m simply saying we need to look at that balance.
Secondly, that teachers who are on an upward
trajectory, and we don’t have time in this session to
define what that is, or a stable trajectory, in other words
they are developing and that is well explained in the
research, have better outcomes for pupils, which merely
goes to confirm what other speakers have already said
this morning, that while schools matter, teaching
matters more, and that is regardless of either levels of
deprivation or school context. My second main point is
to say that we all learn better when we get feedback on
our performance that identifies the next steps we need
to take to improve, and teachers are no different, but
one of the main ways in which we’ve implemented
support for teachers on this, and are continuing to do so
and I’m delighted about this, is through teacher
coaching of one another. However, the way in which
we’ve implemented teacher coaching, and continue to
do so, is actually not the way that the research suggests
is most effective, and that’s because the research
findings in this area are counter intuitive. The person
who learns most in the coaching situation is the
observer, not the person being observed, and yet we
continue to persist in implementing a coaching policy,
and I’m delighted that it is being implemented but let’s
try and get it right, which works the other way round.
Thirdly, pupils are ongoing consumers of
teaching. There has been a small but very vocal
proportion of the teaching profession who have
regarded pupils’ evaluation of teaching as a threat, and
that has been rather highly publicised in the press.
Schools that seek pupils’ evaluation of teaching on a
regular basis, train pupils to evaluate sensitively and
feedback sensitively, manage to improve the quality of
their teaching considerably, and we have excellent
examples of this from the UNICEF UK’s Rights
Respecting Schools Programme, which now has a
thousand schools in it, one of the best examples actually
is in your area of Dorset. So I would argue here that we
need to reconsider this, it can’t be right for us to say ‘we
can’t have pupils evaluating teaching,’ they do so every
day of their school life, it’s just that we don’t ask them
for the feedback.
Fourthly, and finally, dictating to teachers every
step that they must take has been a misinterpretation
of developing an evidence-informed profession. We
need to provide accessible, synthesised, robust
evidence for teachers. We’ve made some progress on
this but nowhere near enough, and, more
problematically, we need to create an expectation and
space in their busy days for them to use it, which
comes back to your data use problem, because at the
moment some other professions, not many have
expectation to use research and to use evidence in their
professional standards, and teaching does not in the
regular standard, and then to let teachers experiment,
or what some colleagues have called ‘tinker’, in order
to improve the quality of teaching for all pupils for
whom they’re responsible.
So, in conclusion, I would say accessible evidence
and a licence to experiment, with ongoing feedback
from pupils and properly implemented coaching, the
quality of teaching will improve. It is now up to the
policy makers and the school leaders to implement it.
Nick Seddon:
Thank you. Jim? I’m sorry we’ve overrun.
Jim Knight:
That’s fine, but I will magically disappear in six
minutes. It’s really good to be back in front of an
education audience again after a year’s break in the
world of employment. It was slightly challenging to
see all of the problems that we didn’t fix in education
then coming home to roost for me in employment,
but it is generally good to be back and I’ve chosen to
be here rather than being told to be here by my diary
secretary, and that’s also a good thing because it is an
area where I want to dwell on as a member now in the
House of Lords.
In respect of high quality teaching I almost
choked on my muesli a couple of weeks ago when the
new Secretary of State, my good friend, Michael,
talked about what a good generation of new teachers
we’ve got. It’s about the first time he’s paid tribute to
the legacy that he’s received, and in many ways I think
he does have a good legacy in respect of the quality of
the teaching profession, and as the introduction to this
in the Reform brochure says, we’ve got many more
teachers and support staff, and in many ways that is
why I think we’ve seen the steady improvement in
educational performance over the last 10-15 years. It’s
because we have invested in the workforce and they’ve
got better, so it shouldn’t really be a great surprise. The
challenge now is of course that there probably isn’t
going to be any more growth in the numbers of
teachers because of
Whilst the biggest
funding constraints,
and we’ve got to get
determinant of success
productivity up
in a classroom is teaching, their
and keep that
success for a school is
improvement. But,
more down to the quality
alongside it, if we are
going to make the big
of leadership
step changes in
improvement, you’ve also got to look at leadership,
because whilst the biggest determinants of success in a
classroom is teaching, success for a school is more
down to the quality of leadership, and of course the
success of the child, him or herself, is down to the
quality of the parenting. So this isn’t just about
teaching, so that’s a bit of a warning shot around the
subject for discussion, but I’ll just leave that aside.
In terms of recruitment, as we’ve heard,
recession helps, and my recent background in
employment makes me worry somewhat that
unemployment will go back up again. So I think we
will have a nice window over a period of time where
people will want to go into teaching as long as public
servants aren’t ridiculed too much in the popular
press, and so that’s a good opportunity with things like
Teach First, with things like the Graduate Teacher
Programme, Transition to Teaching as well as the
traditional routes in, to bring in a really good swathe of
new and enthusiastic teachers, particularly in the
shortage subjects like science that John looks after, and
then continue I hope with some of the CPD, like a
Masters in Teaching and Learning I think, from what
Judy’s been saying, around making sure we get that
collaborative coaching right, but I think we’ve got
some really good practice to build on there.
Similarly, I hope that, in a time of funding
constraint, that it’s the support staff and the teaching
assistants who don’t then pay the price and that we
lose those in classrooms again, because I think they’re
a fantastic resource in supporting high quality
teaching. I have my worries about how they’re being
deployed in some cases, that they’ve been used as the
place to park the difficult children, those with special
needs, those who are just struggling to be with the
majority that the teaching is being aimed at, and that in
the end you therefore get the more highly qualified
teacher in the classroom focusing on those that need
the help less than the minority, who get parked with
the less qualified. I think that’s something that we need
to have the confidence to address within schools and
within classrooms, and that requires flexibility.
Some of you may remember that the moment
when I got into the most trouble I think, apart from
my spelling as Schools Minister, was when I had an
ATL conference, someone asked me about class size,
and I said I’d seen a fantastic maths class I think it
was in a class size of 70. Now what I went on to say
was that there was more than one teacher in that
class, but the headline was good so they ran with it,
but that kind of practice, of having more than one
teacher in larger, more flexible spaces, it goes back to
www.reform.co.uk
79
Schools for the future / Reform
what was said about getting the design right, has the
opportunity to create much more engaging, much
more personalised learning. If you then are also using
technology and you’re using the possibility of
collaboration between pupils as well as between
teachers, teachers learning from each other in a
classroom, that is an opportunity that we should
grasp more, alongside a more flexible curriculum.
And I have to say I regret the Rose Primary
Curriculum being abandoned because I think that
was offering much more flexibility within the
curriculum for teachers to be able to use their
professionalism better, but there are new tools now
that then we can use to increase the productivity and
the success of teaching further.
We’ve talked a bit about accountability, I share
some of my friends and the unions’ concerns about
something as crude as Rate My Teacher, but I
absolutely agree around pupil evaluation, and we
should systematise that and roll that out as widely and
as rapidly as we can, done sensitively, with proper
training for pupils, and technology and data does
allow better accountability. There is a problem
around measurability and what is measurable,
because I think we focus too much in this country
and in many educational jurisdictions on the
academic. We have a system that’s still designed
around creating professors rather than necessarily
meeting the skills needs of the wider economy, and
again, as a former Employment Minister, I’m a little
bit more conscious of that. So we need a system of
accountability that also measures things that are
much more difficult to measure. Creativity is
something that employers tell me all the time they
want to see; collaboration, leadership,
communication, all of those things that are somewhat
more challenging than whether or not you’re good at
maths, perhaps. Technology also allows us better
parental engagement and allows us to develop new
pedagogy, it allows us true subject associations and
brings subject teachers together online to develop
more collaboration and to extend and deepen that
subject specialism and share what works in the
classroom better.
So I think there are plenty of things we can use
the new tools for. We’ve got to be cautious about the
market. I was very concerned around school
management systems, that there was a market that
was pretty much dominated by one or two players,
and bringing in new products, new flexibilities within
that market is something that needs to be managed.
But in the end what I’d say to you about the future is,
we have to grasp, particularly with the demise of
BECTA, there’s a challenge for us now to make sure
that we’ve got good enough engagement and good
enough collaboration across the system to really use
these tools, because the future, and education is
about that, the future workplace that people are going
into, the future world and leisure world that people
are going into, is about collaboration and creativity.
These technology tools allow us to do that, they allow
us to do education in a more engaging and exciting
way, and if we don’t grasp that opportunity and learn
from each other and collaborate with each other on
how we do that best then we miss a massive trick for
the country as a whole, as well as for all the children
who live here. Thank you, I must go.
80
www.reform.co.uk
Schools for the future / Reform
Nick Seddon:
Thank you. Thank you very much. Right, l’ve lots
and lots to chew on here. Clearly a very, very strong
stress on the importance of teaching across each of
the speakers, with also an emphasis on the
importance of tools that can help transform the way
that they teach and support teaching. John put a
particularly strong emphasis on the importance of
teaching subjects and subject specialism, and also you
expressed some optimism about the quality and
specialism of teachers, which is also something that
Jim Knight did. And Judy, you put a very strong
stress not only on the quality of teaching but also on
the accessibility of evidence and evaluation, and also
the way that teachers are managed, that school
leaders deploy teachers. And then Jim talked about
the connection between employment and education
quite a lot, and the way that education feeds into the
wider economy. I mean, that was a lovely phrase, ‘the
problems we didn’t fix in education are coming home
to roost in employment.’ So there are all sorts of
things for us to feed on, so if questions come I’ll take
them in clutches and then we can go through them.
Okay, yes, gentleman here?
Robert Butler:
Name’s Robert Butler, I come from deepest Devon,
and that’s enough said really. My question is about
leadership, and in a way it’s not really a question, it’s
the hope that you might have dealt with it before I
asked, and I know Professor Sebba chose between
two choices, to talk about quality rather than
leadership, and so I’m afraid we might get to Mr
Gibb without ever bringing it up as a question he
should consider, because it is in the end now I think a
politician’s problem. Michael Gove has dropped us a
bundle of spillikins on the table with this academy
programme, and down in Devon it’s a huge problem,
its unsettling everybody, we’re taking it on all
frightened of it, as we might be, and the local
authority is not going to be able to cope with the
problem and shows us they don’t really know what to
do about it, so everyone’s on the back foot.
Leadership is the core there, but in any case it’s a core
problem, and Professor Sebba herself used the
commercial expression of a school leader and I’m
sure didn’t mean it as such, leadership is a very tricky,
difficult thing, school management is usually what
you get. I was in the services, so I know a system
where leadership is terribly important, it’s getting
people to do something they don’t want to do, and
that’s the teachers. What I wonder is whether Michael
Gove and Mr Gibb will find a way to project
leadership right down to those teachers, through the
rest of us, in order to wake them up to do what at the
moment they don’t want to do.
Nick Seddon:
Okay, thank you, thank you. There was a question
further, gentleman over there, and then we’ll take one
more, the lady.
David Daniels:
Yes, good morning, David Daniels, Principal of the
Petchey Academy in Hackney. I’m a bit puzzled by
the emphasis on the word ‘teaching’ here, because
five years ago when we planned and opened the new
Academy, we determined that all our staff were going
to be educators, not just as teaching staff. At the
moment 95 per cent of my staff are in some way
implicitly involved in the educational progress of
children, we are
One of the most effective
predicting 86 per cent
five A* to C, including
people I employ is a man
and maths
who has done time at Her English
next year, and I put
Majesty’s pleasure and in that down to the fact
dealing with some of our
that the team work of
more challenging children all the educators is
part of that
he has an amazing impact actually
success rate. I’ll give
on their motivation, their
you one example, one
self worth and so on. Not
of the most effective
people I employ is a
to call him an educator
who has done
and to actually talk about man
time at Her Majesty’s
the quality of education
pleasure and in dealing
would be a total mistake
with some of our more
challenging children
in my view.
he has an amazing
impact on their motivation, their self worth and so on.
Not to call him an educator and to actually talk about
the quality of education would be a total mistake in
my view. Thank you.
Nick Seddon:
Thank you and the lady down here as well, third row.
We’ve got about 10 minutes, so if we can keep the
questions as short as possible, sorry.
Irina Tyk:
There was a perception this morning I felt of a chasm
that exists between the state and the independent
sector. I would just like to add a word of caution.
Both, if you like, are beholden to Ofsted, to the
education establishment, and one of the tragedies I
think that has come through in the last however many
years is the emphasis on child-centred education.
Now it’s a lovely word, of course children matter, but
what matters is the teacher in the classroom. Now we
have had a suggestion of subject knowledge, subject
knowledge is extremely important because it allows a
teacher to improvise on the spot, so to speak, with a
wider subject knowledge. Teachers have to be able to
communicate, that is important. This all comes in
something that has been lost, the art of whole class
teaching. This is not in the schools because you have
to tutor, you have to go on a one-to-one, and I think
this is a tragedy. Lastly, accountability, a lot of the
accountability stresses through Ofsted that we must
do health and safety, that we are not doing something
incorrect in the classroom, that we have to prove
everything but the intellectual development of the
child. So if I can just throw that in. Thank you
very much.
Nick Seddon:
Thank you very much. So we have three questions
here. One is that of leadership, one is the idea that
educational progress is about more than just teachers,
and the other is about the particular techniques of
teaching, child-centred, and the accountability
structures around them. John, would you like to start
us off?
John Holman:
Could I just say something about leadership, it’s a very
interesting and important question. I think often the
question focuses almost exclusively on head teachers
and their leadership teams, and I think there are
important questions to be asked about governing
bodies, particularly when we’re talking about the
difficulties that are caused if the accountability systems
aren’t right. Governing bodies are a very important part
of holding schools to account, and I think we need some
very clear thinking about the quality of governing
bodies, their ability to hold schools to account, thinking
about the quality of governing bodies that brings you to
thoughts about particularly Chairs of Governors,
they’re crucial, and have we simply got too many
governing bodies, with so many primary schools each
having a governing body? Can we have some wins
about quality of governing bodies, their ability to hold
schools to account and help the leaders to lead by
thinking creatively about governing bodies? Maybe we
should be paying Chairs for example.
Nick Seddon:
Thank you. Judy?
Judy Sebba:
Yes. Well thank you for the question about leadership.
The reason I focused on quality of teaching was simply
because of the nature of this particular session, but I
certainly wouldn’t want to have given the impression I
didn’t think the school leadership was important. Also,
you’re quite right, I did slip into making it sound as if we
were only talking about head teachers, and certainly that
was not intentional. Interestingly we’ve seen, not many,
but a few schools improve dramatically despite the head
teacher rather than because of the head teacher. I have
to say, I think the head teacher usually helps, but there
are exceptions, there have been exceptions in some of
the school improvement work I’ve been involved with in
the past. The key thing we know now, and it’s only
relatively recently, that we’ve been able to link pupil
outcomes to the quality of school leadership
successfully. There were many attempts to do this for
many years, where people have been unable to
demonstrate the relationship, and it’s only just
beginning to be a bit better established. One thing we do
know is that we need those school leaders to focus on
teaching and learning issues, that’s quite problematic
given the very large number of other problems and
issues which they face. So I’ll leave it at that.
Nick Seddon:
Thank you, that’s great. Rod, do you want to pick up on
any of this?
Rod Bristow:
Perhaps a couple of points. On the leadership point I
wholeheartedly agree with the point about the school
leaders being critically important, and just an example
of it, relating it to my theme around technology, in
London we have the London Grid For Learning, and
the Chief Executive of the London Grid For Learning,
Brian Durrant, who’s done an excellent job in
encouraging schools in London to adopt these sort of
communication and collaboration technologies, a lot of
proactivity tools as well as learning technologies that Jim
Knight was talking about. His focus in doing that, and
www.reform.co.uk
81
Schools for the future / Reform
he’s made huge progress, we’ve worked with him and
he’s made much more progress than I thought he ever
would I have to say, but the approach that he’s taken is
very much one of focusing on school leadership and on
the leaders and engaging the leaders of the schools in
the technology, realising that if you just sort of put it out
there and hope that the teachers will pick it up it will not
happen, it does require leadership, it does require a
sense of purpose in setting these objectives. So I think
leadership is crucially important when it comes to
technology, and, perhaps related to the leadership point,
this issue of the gentleman who was talking about
having a lot more, you know, 85 per cent educators or
whatever, more people who are on the front line of
doing the teaching if you like. I also think that’s very,
very important, but I wonder if it also says that those
people who perhaps aren’t every day on that front line
in teaching, that they also, if there are fewer of them, in
themselves they become much more important too. It’s
much more important that the quality of the people that
are in those roles is also upgraded, especially if there are
fewer of them, it’s important the contribution they make
is even more. I was thinking, within our own company,
and its true for any company, we have a lot of data about
how we’re doing on lots and lots of different measures,
that data would never get picked up by the managers
that need to pick it up in our organisation were it not for
a very few people, very talented people who get to grips
with it and understand how to interpret it for the
managers in the company, these are really high quality
people. Do we have enough high quality people in these
kinds of roles in schools?
Nick Seddon:
Thank you. I’m slightly in two minds. We’ve got
about two minutes left because we overran slightly.
I just wonder whether or not we can take questions,
if anybody can make quick-stab questions rather than
statements, and then quick responses from each of
the panel, that would be fantastic. Yes, gentleman
here? Yes, here.
Mark Dale-Emberton:
Mark Dale-Emberton, Charlton School, special school,
secondary. With the demise of local authorities school
improvement teams in effect, how can we collectively, as
a head teacher and others, support high quality teaching
so that our high quality teachers that are already there
can share their best practice with their colleagues?
Those mechanisms are going to be extremely difficult
for head teachers and their teams to manage, but clearly
that’s a real big task upon us. Where do we purchase and
procure the high quality support from? Who will they
be? How much will it cost us if the local authorities are
no longer there?
Nick Seddon:
Thank you.We’ve had a hand that’s stayed up over there?
Daniel Cremin:
Daniel Cremin, Bellenden. Do you see the concept of
chain schools, of multi-area providers, being a good
thing for CPD? Do you see there being innovative
things we could do with their Continued Professional
Development and subject knowledge as a result of
having across large swathes of the country different
schools operating over the similar ethos in a more
82
www.reform.co.uk
Schools for the future / Reform
diverse curriculum? And, how can we get teachers in
different parts of the country to meet and collaborate
more effectively? Thanks.
Nick Seddon:
Thank you, and whoever puts up their hand fastest?
There’s actually somebody at the back there. Sorry, I
know this is very unfair.
Catherine Holston:
It’s a very quick question. Catherine Holston from One
Plus One, my history is in research in education. I think
what’s really important is to cut across all of the
speakers and really try and understand how we’re
defining education and what the role of the school is? So
that’s just a quick question.
Nick Seddon:
Thank you very much. So we have three small
statements. The question of the demise of local
authorities and how mechanisms will be instituted to
replace or support quality, how the chain schools might
work and the role of Continuous Professional
Development and what is education. In five seconds
each. Rob, do you want to go first?
Rod Bristow:
Five seconds, okay. I’m going to link the first two, how do
we get more access, better access to school improvement,
and this issue of innovating in CPD collaboration.
Perhaps they’re linked actually, you know, there is going
to be a need for capturing the best, you know, the best
practice if you like around the country, and I think that
it’s a really big need, I think it’s a huge need. I think it is a
need that will get bigger of course with the advent of
more independent, if you like, free, schools. I can
certainly say, as an organisation, we are thinking very
hard about the role that we can play to help facilitate that,
but I think it’s a huge issue. What is education? Well I’m
going to give a personal, and its highly personal, view, it
is about giving young people confidence to engage in
society and make real progress in their lives, make a
contribution, and it links into the employability agenda
as well, and I think education is therefore much more
than about just an academic learning, it also includes this
idea of skills and employability, and we must make sure
that our education system embraces both of those ideas
going forwards.
John Holman:
Well I’ll duck the third question and join the first two
together, because they are very linked. One is that it’s
about support and professional development, and those
are essentially the same
Governing bodies are a very thing. I think we can do
more for less where
important part of holding
schools to account, and I professional
development is
think we need some very
concerned, schools are
clear thinking about the
already often in some
quality of governing bodies places working
extremely well together,
you need to have more of that, schools supporting each
other in professional development. But we’ve got to
remember that it’s possible to share bad practice as well
as good practice, so you do need to have, in some sense,
a kind of external validation and the feeding in of
external expertise. So we can’t do without, for example,
science learning centres, support specialists, we can
probably do more though with less of them, and I think
we’re going to have to.
Judy Sebba:
I’ll just make a quick comment about mainly the first
one, it links to the second one, and that is that I think
your particular challenge as a special school is that
local authorities have been good about trying to bring
together special schools who are sometimes quite
isolated because there isn’t another one like them
nearby, and so that’s a particular challenge. More
broadly, local authorities have worked hard to bring
schools together in different ways, and what I think
we mustn’t lose out of this, what other people have
talked about in terms of getting schools to help each
other on CPD, is the challenge aspect. The problem,
as you said, John, I think, is that you can be
regurgitating less effective practice, you do need an
external challenge there. I don’t see that actually that
necessarily requires again more money, it’s about a
different use of expenditure.
Thank you all very, very much. So we’ve heard
quite clearly I think today that teaching quality is
axiomatic, about the importance of subject knowledge
for teachers, but also that teachers need to be very well
managed and that the leadership in schools and
perhaps more generally locally is important. We’ve also
heard something about the importance of
accountability, whether that be the use of information
or of pupil feedback and evaluation, and the
importance of accessible evidence has come through
as a theme and much of what’s been said, and also the
importance of tools to support, that while teaching is
absolutely important, teachers can be aided with good
support. And finally we also did quite well to get a
good stab at what education is, and I was very glad to
hear from John that we can do more for less. Thank
you very, very much indeed. Please can we thank all
the speakers in the usual way.
Keynote speech by Nick Gibb MP
Andrew Haldenby:
We are absolutely thrilled that you are able to join us. I
was reflecting on this idea of the hundred days, the first
hundred days of the government, and I just cannot
imagine your in-tray and the demands on you and the
demands on your time. So for you to even give up an
hour, including travel time, to come to this event is really
extremely good of you and I think we have got a good
and lively audience to give you some ideas.
Just let me summarise where we have got today,
because I said I would. In our first session we heard
from particularly a school system which in some ways
is crying out for relief. Somehow good ideas about
accountability have gone wrong and have led to
something going on in schools whether it is teaching
the wrong kind of curriculum or trying to improve
your results by getting kids from the better estate down
the road rather than the worst estates. This isn’t
education and something has been lost sight of. So that
was the first session and much more positively in that
session there was a great focus on teaching and
obviously while there is support for things like Teach
First and ways of getting new people into the
profession, there is a strong feeling that what this is
about is improving the quality of the existing
workforce and there is a huge amount that can be
done, particularly around subject teaching and CPD,
around that, which could make a difference.
So I just wanted to feed that back to you before
your words and then let me just introduce Nick and
then I think you are going to take some questions
afterwards which is great. As you know Nick Gibb is
the Minister of State for Schools, has been an MP
since 1997 and has held the education brief for his
party since 2005.Yesterday we had a similar
conference on welfare policy where Iain Duncan
Smith spoke and I said that it’s not often in politics that
someone who has a passion for a job gets to do that
job. Iain Duncan Smith is one of those people and
actually of course, Nick, you are another one of those
people so thank you very much indeed for joining us
and we look forward to your words.
Nick Gibb:
Thank you very much Andrew. Going back to the
previous session, to Professor Sebba, I’m not sure how
many schools do improve despite their head teacher but
I bet there are a lot of schools that improve despite
education ministers! Andrew, can I just say thank you
very much for that introduction and for giving me the
opportunity to speak today. I greatly admire the work
you and your colleagues do and in these difficult
economic times that this government has inherited,
Reform is, I believe, very well placed to have a real and
lasting influence.
Over the last decade, Reform has developed a
deep understanding of the problems facing Britain’s
public services and has brought together people of
real experience from
across the world to a
I’m not sure how many
schools do improve despite really practical agenda
for reform and while
their head teacher but I bet you have recognised
there are a lot of schools
that investment can be
that improve despite their part of the solution,
you have also argued
education ministers!
that reform of the way
money is spent is just as important and sometimes
more important as a driver of improvement. That
insight is always important but it is particularly
important in the current climate and the years ahead.
You have also taken a serious and independent
approach. Reform’s publications are based on firm
research and you have worked with reform minded
politicians from across the political spectrum and in
education you have I believe rightly argued for the
extension of choice as a driver for improved
standards but have also recognised that there is a role
that government has to play to ensure greater
concentration on academic rigour and the passing on
of core knowledge.
So as I start work as the Minister responsible for
driving through significant changes to help raise
standards in schools, I know that Reform will be a friend
but like the best friends, will never be afraid to tell us
when you think we have got things wrong, or indeed
where we can do things better.
Like everything in the agreement that unites the
Coalition Government, education policies are guided by
the three principles of freedom, responsibility and
www.reform.co.uk
83
Schools for the future / Reform
fairness. We are going to give schools a greater freedom
and parents more opportunity to choose good schools.
We are going to place greater trust in professionals to
give teachers more freedom to decide how to teach and
we are going to reduce bureaucracy so that schools can
get on with their core business. In just one year under
the last government, the Department produced over
6,000 pages of guidance for schools, more than twice
the length of the Complete Works of Shakespeare but
much less illuminating and certainly less readable. We
want to put an end to
the reams of paperwork
Britain’s school system
and bureaucratic
today is frankly unfair.
burdens piled on to
Too often provision is
teachers and schools,
denied in a lottery of
not just the jargoneducation position where heavy instructions
telling people how to do
geography or parental
their jobs but the
income determines
posters and DVDs that
outcomes rather than
gather dust in supply
cupboards.
academic ability or hard
Outstanding schools
work and the figures are
will be freed from
familiar but nonetheless
inspection to refocus
shocking for all their
Ofsted’s resources on
those schools that are
repetition
coasting or struggling
and which are failing to deliver the best quality of
education to their students. We agree with Reform that
extending choice will improve quality.
Academies introduced by the last government
have been very successful in raising standards so we
want to see many more. And the Academies Bill which
is now going through the House of Lords will allow
more schools to benefit from the freedoms of academy
status including, for the first time, primary schools and
indeed special schools. Academies are free from local
authority control, they can deploy resources as they
deem best and they have the ability to set their own pay
and conditions for staff. They have greater freedoms
over the curriculum and the length of terms and school
days yet they operate within a broad framework of
accountability which is designed to ensure that
standards remain high and consistent. Already more
than 1,700 schools have expressed an interest in
becoming an academy and those schools that have been
rated outstanding by Ofsted will have their applications
fast-tracked so that some can become academies this
September. We are making it much easier for parents,
for teachers and for education providers to set up new
schools so that there is real choice in every area.
The second Coalition principle I mentioned is
responsibility and everyone must take their share in the
education system. The government has a responsibility
to ensure high standards. Schools have a responsibility
to promote an ethos of excellence and aspiration with
opportunities for extra curricular activities and sport.
And it is the responsibility of pupils and their parents to
ensure that their behaviour at school is of a standard
that delivers a safe and happy environment where
children can concentrate and learn.
We will support that by giving teachers and head
teachers the powers they need to deal effectively with
poor behaviour and we are working to ensure that
teachers are protected from the professional and social
humiliation of false accusations. But the Coalition
84
www.reform.co.uk
Schools for the future / Reform
principle I want to concentrate on now is fairness.
Britain’s school system today is frankly unfair, too often
provision is denied in a lottery of education position
where geography or parental income determines
outcomes rather than academic ability or hard work and
the figures are familiar but nonetheless shocking for all
their repetition.
The chances of a child who is eligible for free
school meals getting five good GCSEs including
English and Maths are less than one third for those of
children from better off families. 42 per cent of pupils
eligible for free school meals didn’t achieve a single
GCSE above a Grade D in 2008 and in the last year for
which we have data, more pupils from Eton went to
Oxford or Cambridge than from the entire cohort of the
80,000 students eligible for free school meals. This is
simply unacceptable and I don’t believe that less able
children or those children from disadvantaged
backgrounds are not capable of having an academic
education or indeed that their parents necessarily hold
lower ambitions for their children. I absolutely agree
with Alan Milburn in his speech to the National
Education Trust in March when he said, and I quote,
“it is sometimes argued that parents in the most
disadvantaged areas are less aspirational for their
children in better off areas. The figures on school
appeals repudiates such assumptions with a large
number of parents from disadvantaged parts of the
country using the appeal system to try to get their
children out of poorly performing schools and in to
better ones.”
Alan Milburn is absolutely right, it is a natural
instinct for parents to want the best for their children
and to want better opportunities than they had
themselves. Britain’s educational problems are not
primarily the result of a lack of private aspiration; it is
rather the state’s failure to provide enough good schools.
It is socially unfair and economically damaging. As
Reform has highlighted, England’s performance in
international league tables is now amongst the worst of
large developed economies. The Progress in Reading
Literacy Study, PIRLS, of 10 year olds, marks England
fourth and third out of 35 countries in 2001 to 15th out
of 40 countries in 2006 and a PISA study shows that
only two countries out of 57 have a wider gap in
attainment between the lowest and highest achievers
compared to England.
Now I don’t cite these figures in order to attack
the last government or to criticise the fantastic work that
is done in our schools by teachers and pupils alike,
rather this is an issue which highlights a fundamental
ideological debate about education which runs much
deeper than decisions of Ministers in the last few years.
Indeed I pay tribute to the work done by Andrew
Adonis and Jim Knight, who I saw running to make his
maiden speech on the way in and tribute also to
previous Conservative Secretaries of State such as Ken
Baker and John Patten who tried to tackle some of the
underlying causes of the problems we face.
On one side of the ideological debate are those
who believe that children should learn when they are
ready through child-initiated activities and self
discovery, what Plowden called “finding out.” It is an
ideology that puts the emphasis on the processes of
learning rather than on the content of knowledge that
needs to be learnt. The American educational
academic E.D. Hirsch traces this ideology back to the
1920s, to Teachers College Columbia in New York and
the influence of educationalists such as John Dewey
and William Heard Kilpatrick and added to that
ideology is the notion that there is so much knowledge
in the world that it is impossible to teach it all and very
difficult to discern what should be selected to be
taught in our schools. So instead, the argument goes,
children should be taught how to learn.You hear
educationalists extolling the virtues of the teacher as
learning manager who must equip young people with
the basic skill of learnacy, or learning to learn, and it
can be summed up about an argument between
knowledge versus the skill of learning.
I believe very strongly that education is about the
transfer of knowledge from one generation to the next.
Knowledge is the basic building block for a successful
life and without understanding the fundamental
concepts of maths or science, it is impossible properly to
comprehend huge areas of modern life. With little or no
knowledge of our nation’s history, understanding the
present is that much harder. Getting to grips with the
basics of elements of metals, of halogens, of acids, of
what happens when hydrogen and oxygen come
together, of photosynthesis of cells, it is difficult but
once learnt you have the ability, at least, to comprehend
some of the great advances in genetics and physics and
other scientific fields that are revolutionising our lives.
Once these concepts are grasped, it opens up and
develops the mind and takes you one step further to
understanding the complex world in which we live.
Each new concept facilitates deeper understanding and
the ability to think more creatively and more
independently about the way the world works and about
society, so learning knowledge, acquiring knowledge
and concept, that’s how you learn how to learn.Yet to
more and more people Miss Haversham is a stranger
and even the most basic history and geography are a
mystery and these concepts must be taught and they
must be taught to everyone and sadly this is not always
the case.
Professor Derek Matthews’ practice of quizzing
his first year history undergraduates over a three year
period shows depressing evidence of the state of
teaching knowledge in history. Almost twice as many
students thought that Nelson rather than Wellington was
in charge at the Battle of Waterloo and nearly 90 per
cent couldn’t name a single British Prime Minister from
the 19th century – there
were 20 including
It is the duty of schools to
Disraeli and Gladstone
provide each child with
and these were
the knowledge and skills –students
at a university
requisite for academic
where the entry
requirement was an A
progress, regardless of
and two B’s at A-Level.
home background
Again, I don’t intend to
criticise Professor Matthews students or indeed their
teachers, these were bright young people who had
worked hard and had achieved good exam results. What
is to be criticised is an education system which has
relegated the importance of knowledge in favour of ill
defined learning skills.
I want to spend the remaining few minutes just
setting out the approach that the Coalition Government
plans to take to put knowledge and subjects at the centre
of curriculum. Professor David Conway in his
fascinating paper Liberal Education and the National
Curriculum, quotes Matthew Arnold’s view of the
world and the purpose of education as introducing
children to the best that has been thought and said. That
must be the case for all children and not the privileged
few in an education system that has fairness at its core.
Children who come from a knowledge and
education rich background start school with an in-built
advantage over those who do not. If a school then fails
to make up the knowledge deficit, these divisions widen
still further. Leon Feinstein’s research has shown that
low ability children from wealthy backgrounds often
overtake and outperform more able children from
poorer backgrounds by the age of five and that division,
that gap continues to widen as those children go
through school.
E.D. Hirsch writes brilliantly about the
importance of knowledge gained early on. He says, “just
as it takes money to make money, it takes knowledge to
make knowledge” and he goes on to say that those
children “who possess the intellectual capital when they
first arrive at school have the mental scaffolding and
Velcro to gain still more knowledge but those children
who arrive at school lacking the basic experience and
vocabulary, they see not, neither do they understand.”
Which is why he believes, as I do, that it is the duty of
schools to provide each child with the knowledge and
skills requisite for academic progress, regardless of
home background.
So we will introduce a pupil premium which will
direct resources to children from disadvantaged
backgrounds who need it most. Head teachers will then
have the freedom to decide how best to use that money,
whether to reduce class sizes, provide extra tuition or
recruit the best teachers. But we need to sharpen our
focus on the core process of teaching at every level,
starting with the basics and in particular reading. A
quarter of adults still have literacy problems but even
after the literacy strategy in primary schools introduced
in the late 90s, we still have nearly one in five 11 year
olds leaving primary schools still struggling with
reading. Again the ideologically driven child-centred
approach to education has led to the belief that the mere
exposure to books and text and the repetition of high
frequency words will lead to a child learning to read, as
if by osmosis – another scientific concept. That
“look-and-say” or whole language approach ignores the
importance of teaching children the 44 sounds of the
alphabetic code and how to blend those sounds into
words. Although phonics does play a part in how
reading is taught, as Ofsted reported in their last annual
report, and I quote, “weaknesses in the teaching of
literacy remain and inspectors continue to report a lack
of focus on basic literacy for low attainers” so we are
determined to focus on making sure that reading is
taught effectively in primary schools and we’ll say more
on this in the coming months.
It is because of that necessary focus on the basics
and our belief in giving teachers more flexibility that we
have decided not to proceed with the primary
curriculum as recommended by Sir Jim Rose. Instead
we want to restore the National Curriculum to its
intended purpose, a core national entitlement organised
around subject disciplines. So we will slim down the
National Curriculum to ensure that pupils have the
knowledge they need at each stage of their education
and restore parity between our curriculum and
qualifications and the best the world has to offer,
www.reform.co.uk
85
Schools for the future / Reform
whether that is Massachusetts, Singapore, Finland,
Hong Kong, Alberta or wherever. We will reform league
tables so that parents have the reassurance they need
that their child is progressing and we must also restore
confidence in our exam system. Pupils should be
entered for qualifications that are in their best interests,
not with a view to boosting schools performance in the
league tables and we have opened up qualifications
unfairly closed off to pupils in state maintained schools
such as the IGCSE, to offer pupils greater choice and
ensure that they are afforded the same opportunities as
those who have the money to go to independent schools.
Andrew, I have set out today an overview of how
we intend to tackle some of the problems in our
education system and how we intend to start to close the
achievement gap between those from the richest and
poorest in society and as you would expect from this
Coalition Government, it is based on a conservative
belief in a liberal education. E.D. Hirsch writes that “an
early inequity in the distribution of intellectual capital
may be the single most important source of avoidable
injustice in a free society.” It is remedying that injustice
that is the driving force behind this government’s
educational reforms. Thank you very much Andrew.
Andrew Haldenby:
Thank you very much indeed. I am going to ask David
Perks to repeat his point from earlier because I think it
summed up so much and then let me just take a couple
of questions. What you didn’t talk about, and what
people have already raised, Minister, is free schools and
I don’t know if people want to bring that up as well.
David, if you just want to go.
David Perks:
David Perks, a teacher in South London. The point I
was making earlier on was the idea that schools today
are obsessed by their position in league tables. Which is
driven by, if you like, the availability of qualifications on
an equivalence basis so between GCSE and pseudo
vocational qualifications and GCSEs of all different
kinds. Therefore there is a massive pressure on schools
to just get their place in league tables. The way this can
be got rid of is to scrap the equivalencies between
GCSEs and other qualifications that don’t really merit
the same level of worth. Will that happen? Will you be
able to do that because if you do there are two things
about it. One, it will give a real incentive to schools to do
what you have just said, which I wholly endorse, which
is teach, educate young people to the best of our ability
academically but there are a lot of schools which will
suddenly collapse in their performance across the
country because they have gone down the other route.
Can you take that hit, that’s the question really? I really
hope that you can stand up now and do that and that we
can get an answer from you.
Sarah Ebner:
Hi, Sarah Ebner from The Times. Too many things for
me to mention so I’m going to pick one. At the
leadership debate originally with the three party leaders
there was a student who asked a question and got lots of
publicity for it, and said students are over examined and
under taught. He was in the sixth form, because I’ve
spoken to him since, and he was saying something that
comes up a lot, that because of AS-levels, children,
pupils and students, don’t have the time when they are
86
www.reform.co.uk
Schools for the future / Reform
doing their A-levels to really get into a subject, they
don’t get deep subject knowledge. They have to go from
one exam at GCSEs to AS-levels and they start
university and it affects their expertise when they start
there. No one seems to know why this change really
happened, no one seems to be in favour of it and I think
it would really make a difference to learning and to
student experience at school if they went back to having
one year without exams where they could really get into
their three or four A-levels and enjoy that and then
move on and have better expertise.
John Holland:
John Holland, I work for Tribal. I don’t know if we
have to wait until day 75 but I’d be extremely
interested to know what subjects you would define in
the core curriculum. Would it include a modern
foreign language for example? I think many people
would recognise that vocational qualifications have a
place as well in motivating and engaging young
people and I wondered how you see the role of
vocational qualifications, albeit not as a replacement
in the way my colleague mentioned previously.
Nick Gibb:
All good questions. David Perks, can we take the hit?
Well absolutely. I’m not interested in saying things
have gone up by X per cent and Y per cent if the reality
beneath that is that standards are not improving and
I’m always very influenced by what Professor Tymms
at Durham University and the research he has done
over the last ten years or so about standards in schools.
We want to have honesty in data and we want to have
lots of data out there. One of the things we are
committed to doing is getting on to the website all the
data that is kept back at the Department, it should be
available for people to look at, for parents in particular
to see which school is the best for physics, so one
school may be best for their child or another school
may be best for physics, but in terms of equivalencies,
that is something that we are going to reform – the
league tables, absolutely. And we want to do in that
reform process is to remove perverse incentives, to do
things that are not in the interests of children. Children
should not be entered for exams that are not in their
interests, whether that is a vocational exam or an
academic qualification, it should be what is in the
pupil’s interests and never what’s in the interests of
boosting the school in the league table. So we are going
to look at league tables, again look for the outcome of
that but we are certainly looking at that and the point
you make is very well taken.
In terms of the modular AS and A2 exams, again
the answer is the same as that one. We are looking at
qualifications – this is what happens when you ask
questions on day 50 – but what we have said is that we
want the qualifications to be on a par with the best that
the world has to offer so we are going to look to see
what the best qualifications are and when we look at
the curriculum we are going to look at what children
are learning and at what age in the best jurisdictions
throughout the world, to make sure we are on a par
with that. The issue of vocational qualifications,
modern languages yes are very important and it is of
concern that the numbers taking GCSEs in modern
languages have fallen so dramatically just since 2004
and it is a very worrying sign.
In terms of vocational qualifications, yes, they
are very important and many children benefit from
those qualifications. We have to ensure they are of a
high quality and again we need to ensure that the data
is available so if a parent is choosing a school they
need to know which schools get the best results in
certain vocational qualifications, the ones they’re
interested in and that’s why putting the data out there
is so important.
Greg Rosen:
Greg Rosen, consultant director at Reform. A quick how
question.You said you were keen to reduce the burden
of central direction on teachers and you outlined that.
At the same time you said you were keen to encourage
teachers to move away from what you called the Dewey
inspired teaching methods on which you were less keen.
I just wondered how you proposed to do the two things
at the same time?
Robert Moreland:
Robert Moreland, I am chairman of a boys’
secondary Church of England comprehensive just
across the river by Kennington Oval called
Archbishop Tennison’s and the question I want to ask
which in a way comes from what Professor Holman
said before is really what you intend to do about
Ofsted and its criteria? My question is quite simply
that I am very conscious in all the work we have had
to do on the school evaluation form, that we are
spending hours and hours on safeguarding
community cohesion and indeed you don’t get your
top mark if any of those go below it etc, etc, oh and
down at the bottom,
pupil progress. I
Isn’t there something that
wonder if, dare I say it,
we need to do to up the
we do all these things,
attention given to pupil
we’re desperately keen
progress
on safeguarding, we’re
desperately keen on
community cohesion and I’m spending my time
visiting community groups but my real point is, isn’t
there something that we need to do to up the
attention given to pupil progress?
Andrew Haldenby:
Very good, this is the last point and you have been very
generous with your time but Camilla Cavendish wanted
me to ask you about free schools and this is a slightly
technical point but it is an interesting one, is it true that
parent groups have to lead them? Anyway I’ll pass those
on to you and then we’ll go for lunch.
Terry De Quincy:
Hi, Terry de Quincy, head of a primary school in
Southwark. I’d just like to ask at the bottom end of the
spectrum to follow on from the gentleman who just
spoke about Ofsted and their judgements in early
years in particular. We are an outstanding school and
it is quite alarming that very recently my staff were
told that they are teaching five year olds too much
and if you haven’t got an 80 per cent child free play
20 per cent direct teaching ratio then you are actually
only satisfactory in that area of the school. Could you
please look at that?
Julian Stanley:
Julian Stanley, I am chief executive of the Teacher
Support Network and did have the opportunity to
speak to Nick prior to the election but I am just
interested in your plans and proposals for improving
parent teacher relations really because there’s a
triangle here between parents, teachers and pupils. It
is an important dialogue between the three, so what
are your thoughts are on how to improve those
relations? There have been lots of different initiatives
tried, I’m interested in that. Also the fact that
sickness absence amongst teachers is one of the
highest of all professions and so it is interesting to
know that there is something like £248 million I
think spent on sickness absence. What do you think
could be done to improve health and well-being for
teachers as we try and improve their status and shift
perceptions particularly in the media of teachers?
Thank you.
Nick Gibb:
Okay, first on the Ofsted criteria, Robert Moreland’s
question. We are going to reduce the number of criteria
from eighteen to four so the four will be leadership,
teaching, attainment, behaviour and safety and there
will be no limiting judgements, so the whole concept of
limiting judgements will go. However if a school is
performing very badly attainment wise it would be
difficult to become an outstanding school but that’s the
key principle behind our reforms to Ofsted.
On the issue about early years and Ofsted
inspectors who require a play based approach, based on
the EarlyYears Foundation Stage, we are going to look at
these issues in more detail in due course. But this issue
does highlight the necessity for a debate.What I am keen
to do is for these issues to be debated in public, in the
open.These debates about child- initiated, child-centred
learning, that ideology, versus a practical evidence based
approach which has been shown to work, I think we
should have that debate in public and it should not be a
debate that just takes place behind closed doors amongst
educationalists who all share the same outlook. I am very
keen to have that debate. Also at the end of the day we
want choice in schools so there will be [inaudible word] in
our choice agenda.There will be schools that undertake
that ideology and if parents want that form of school they
should be able to choose it and if they don’t, if they want a
more traditional approach, well there should be schools
available for them to take that view as well which partially
answers one of the other questions.
The issue about parent teacher relationships, it is
important that schools do engage with parents and the
community and even though we are moving towards
Academy autonomy from local authorities, that does
not mean we expect these schools to be islands unto
themselves. They won’t flourish, the schools, unless they
engage with the community and have an active dialogue
with parents and I think that will increase as new schools
enter the internal market and want to attract pupils. In
terms of stress levels, first of all we want to raise the
professional status of teachers, that’s one of our driving
ambitions but also a lot of stress is driven by poor
behaviour and so one of our key priorities is raising
standards of behaviour in our schools and again I hope
we will have something to say on that fairly soon.
Reducing burdens, yes, I partially answered that
question I think but again it is about a debate, it is not
going to be the anti John Dewey act as our third piece of
legislation, it’s not. There is a place for progressive if you
www.reform.co.uk
87
Schools for the future / Reform
like, so called progressive education and more
traditional education in our system but I think there
should be a debate about it. Reducing burdens is a
separate point, we are spending a lot of time at the
moment going through and finding out what is
necessary and what isn’t necessary and in terms of free
schools, do they have to be led by parents? No, that’s
just an example and an example of which there are
many examples. There are parents out there who want
to set up free schools but any group, parent groups,
teacher groups, education foundations, philanthropic
groups, can set up schools and I hope very much that
they will.
Andrew Haldenby:
Thank you. I suspect we could go on and on but I am
going to respect the Minister’s diary and end it there.
Just to say, we will be transcribing this debate and …
Nick Gibb:
Oh now you say that! [Laughter]
Andrew Haldenby:
… we will send you all the proceedings of today so none
of this will be lost. It was wonderful for us to get a sense
of two things really. One is the priority that you are
setting. This, just as you are beginning this journey and
the debate you want to have and the fact that you have
asked us to help with these debates which I am sure
people will respond to. But also as David Perks said,
what is also clear is your own personal commitment to
education and to the value of education and for that
reason, if nothing else, we wish you extremely well.
Thank you.
Raising the bar
Dale Bassett:
Good afternoon ladies and gentlemen, welcome back.
I hope you are all feeling suitably refreshed after lunch
and fired up for some more vigorous debate this
afternoon, of which I think we will have plenty for you.
I am Dale Bassett, I’m a senior researcher, and I lead
on the education policy work at Reform. I have a
distinguished group of people with me who are going to
discuss the subject of “Raising the Bar.” Quite useful I
think having Nick Gibb’s speech immediately prior to
this session. I think he has probably given us a lot of
food for thought and a lot of what he talked about is
going to feed directly into issues that we are going to
discuss now.
Just a couple of things that the Minister said. He
talked about the importance of fairness, and described
the lottery of educational provision that exists at the
moment. He talked about the distinction between what
to learn and how to learn, or the other way he put it was
knowledge versus the skill of learning. He said you learn
how to learn by acquiring knowledge and concept and
said that the current system has, “relegated the
importance of knowledge in favour of ill defined
learning skills.” While I’m sure that is not the only
ground that we are going to cover, I can imagine it is
some of it.
Let me briefly introduce the panel. Sitting
immediately to my right is Amanda Spielman, who is
Research and Development Director of ARK Schools, a
charitable academies operator. She is also responsible
88
www.reform.co.uk
Schools for the future / Reform
for strategic, legal, governance and regulatory matters
there, and since being there in the very early days of
ARK it has grown from two to over a thousand
employees. She is also a director of the New Schools
Network, recently set up as we know to help groups of
parents (and not just parents as we heard this morning);
to set up new free schools. She was also a member of Sir
Richard Sykes’ review into qualifications that was set up
by the Conservatives before the election.
To her right is Ros McMullen, who is principal of
the David Young Community Academy in Seacroft in
Leeds. She was a head teacher in Wigan prior to that,
where she turned round a school that was the 15th
worst performing in the country into one of the most
improved. In 2005 she became principal of the David
Young Community Academy, where she spent five
terms preparing for the opening in September 2006.
I’m not going to give you all the facts and figures of the
results that they have achieved there. Suffice to say that
they are impressive, and having been and seen the
school myself, the school as a whole is impressive. I have
to say that in the two years I have been doing this job,
the day I spent at the David Young Community
Academy is the single day that has had by far the biggest
impact on me. Ros and her team have done some
wonderful things there.
To my left is Deborah Eyre, who is a Visiting
Senior Research Fellow at Oxford. She is internationally
recognised for her work on gifted education and school
reform. Working internationally, she was Director of the
government’s National Academy for Gifted and
Talented Youth and she as a consultant has clients
including the King of Saudi Arabia and many other
international clients.
Finally, last but not least, to her left, Simon Lebus,
who is the Group Chief Executive of Cambridge
Assessment, a position that he has held since 2002. He
is a fellow of Emmanuel College and spent his career
“operating in complex and competitive business
environments and driving for excellence, quality, good
teamwork and continuous improvement.” Prior to that,
he worked in a variety of senior management roles.
Over to the panel I think, and speaking first is
Amanda.
Amanda Spielman:
I’d like to apologise for the horrible croak. I wouldn’t
croak if I could help it! First of all, as Dale said, I work
for ARK. We are Academy operators and we have a
particularly aspirational academy model. Our aim is to
have everybody who goes through one of our schools
leave school equipped for higher education, and
obviously by equipped we don’t just mean UCAS
points – we mean the intellectual development, the
aspiration, the interpersonal, the study, the other skills as
well as the qualifications. Unsurprisingly I start with a
clear preference for being as academic and as
aspirational for as many pupils as possible.
I’ll tell you a little story from one of our transition
schools. Many of our academies are transition schools,
and one of the things about taking on a school is that
you spend your first two years teaching GCSE courses
that have been chosen by pupils under the previous
regime, and this really came home to me. I was
interviewing some of the brightest pupils in a couple of
our transition schools to be given scholarships to go on
a wonderful summer programme at Phillips Exeter
Academy. First of all I was very surprised, because on
the CVs of people who were saying they wanted to be
doctors, study engineering at Oxford, things like that, all
of them were doing at least one IT qualification, at least
one business studies and usually three or four GCSEs
worth was going in to quasi academic qualifications or
vocational qualifications, and these were the very top
pupils in the schools.
I asked them about their choices and almost none
of them had ever had it suggested to them that, as the
most academic pupils in the school, they might consider
doing two humanities or doing a GCSE in a language. It
came as a surprise. One girl, when I asked her about
this, said rather sadly “they told us it was worth four
GCSEs and now I realise it wasn’t.” It brought it home
– this poor girl was now wanting to embark on A-levels
for medical school and with the thinnest base of
academic GCSEs with which to try and get to A levels.
And it’s not just us. Tristram Hunt and Anastasia
De Waal are knocking academies right, left and centre at
the moment, but actually it’s a problem in many schools
that it is only a minority that are following an academic
path and many, many children are being prematurely
being steered towards vocational and quasi vocational
qualifications. It is a particular problem in schools that
have got a disproportionately low priority for entry.
Anybody who wants to look at that only has to look at
something like the London Challenge data set, which I
think you can still get off the Department for Education
website, which gives school entries for every subject.
Does it matter? Some people argue it doesn’t
matter, that there’s lots of motivation and engagement
for children and it is all a good thing. We actually think it
matters a lot, because the intellectual development is not
the same in every qualification and most, not all but
most vocational qualifications actually add very little to
pupils’ intellectual development. They are limiting those
individuals’ horizons unless they happen to be directly
relevant to the career
path that that individual
Many, many children are
wants to follow. So they
being prematurely being
are not a preparation
steered towards vocational for further study in
and quasi vocational
most cases and in some
instances they are not
qualifications
useful even for a
particular career path. Alison Wolf’s work on GNVQs
was very interesting on that front.
So at ARK we see an extremely limited role for
vocational qualifications for almost any pupils at age 14.
It is important to understand in all this that first of all
pupils are being rational. Most 13 year olds will default
to what seems easiest in the absence of either some very
strong intrinsic motivation that only a few of them have
or parent pressure or school pressure. The girl I spoke
to had strong intrinsic motivation, but the poor girl
misguidedly thought that the more GCSEs the better,
and therefore had made some very bad choices.
Schools are also being rational. Accountability
measures don’t work very well. CVA and average point
score, which count for a lot, both do not differentiate
between the intellectual demands of the qualifications
that are included in them. A fascinating illustration for
me of how much actually rides on CVA and average
point score is the recently published SSAT value added
work. They publish a non contextual value added
indicator for all schools, and I looked at the very worst
schools, the schools where the proportion of schools
with pupils getting five plus including English and
maths was at least 15 per cent lower than you would
predict off those pupils attainment at key stage two, and
I found about half of them were on notice to improve or
special measures or already closed or closing, but the
other half really stuck out. They were actually very little
different from the ones in special measures, except
nearly all of them were brilliant to playing the
equivalence game and, notwithstanding a miserable
result on the five including English and maths, had
managed to keep their CVA up in the normal range. I
don’t think that’s a good place for schools to be in, to
have a very strong incentive to steer pupils to what are
essentially the cheapest qualifications, irrespective of
whether they are really right for those pupils.
We do what we can. We have some quite strong
policies in our schools to try and establish academic
paths as the default, and that students should be advised
carefully before moving off them, and as much good
information brought to bear before people make career
limiting choices. But we only have a slice of the schools
bandwidth – Ofsted has a very strong share of schools
ear and in some respects what we say almost seems to
disappear into the wind because schools are so tuned in
to pleasing Ofsted.
We think that for changes to truly to flow through,
for users of qualifications, for employers and for
universities to be much more open and honest about
what they value, so that the qualifications that are really
and truly less valuable wither and die. I recently gave
our IT director a list of all the IT qualifications
commonly entered for at school and said which did he
think were important, which would they look at on a CV
and value on a CV for somebody apply at 18 or 21 and
there was only one that he thought was of any value, but
nobody says that. So I am interested in transparency in
education and honesty with pupils so that children get
to make the choices that they ought to be making.
Thank you.
Ros McMullen:
A little bit about the journey I think would probably be
relevant, and then about the philosophy that I’ve used
around qualifications and what I think about at the
moment. I actually think that qualifications are fairly
irrelevant to education to be honest with you, and I
don’t care what hoops they give me. I’ll get through the
hoops but that’s an irrelevancy. I’ll educate the kids at
the same time because they will change the hoops,
because the hoops unfortunately are determined by
people who have some kind of political standpoint and
want to decide on one thing or another, where I’m
interested really in getting kids engaged and intelligent.
I would like to say right at the beginning that I
don’t believe that knowledge transfer is what education
is about at all. I believe that interacting intelligently with
that knowledge is what education is about and
unfortunately if we think that just transferring of
knowledge on to people, one generation transferring
their knowledge on to the next generation, we are
regarding the whole of humanity as nothing more than a
rather complex computer system when actually the
whole thing about us is that we are intelligent. It seems
to me that people who are entrepreneurial and
intelligent and wealth-makers are what our society, what
our world needs. God knows we need our next
www.reform.co.uk
89
Schools for the future / Reform
generation to be real problem solvers and I don’t
actually think that making sure they know the entire
canon of Dickens or the rivers of the world is going to
assist us with that.
However, well I’ll come on to other things and
there is so much I want to say about this really. Let me
tell you a little bit about my children and about my
school. My predecessor school had a huge amount of
intervention taking place with it. The larger of my two
predecessor schools had 10 per cent of children
achieving 5 A to C including English and Maths, 21
per cent without and had attendance of 83 per cent,
which I’ll tell you was a great work of fiction, it was
more like 60. By the way, my deprivation indices have
worsened since the Academy started, not got better, 40
per cent of my students are in the bottom 3 per cent on
the index of multiple deprivation, 60 per cent are in
the bottom 5 per cent and 87 per cent are in the
bottom 10 per cent. It is the most deprived school in
Leeds and that’s going it some.
So what are they doing now? Well 94 per cent will
have 5 grade A to C this summer and I am hoping 40
per cent will have it including English and Maths which
will be a huge amount with value added. More
importantly, attendance is at 90 per cent and actually
this academic year, because our academic year starts in
June, this academic year it is actually running at 94 per
cent. We have played a lot of the equivalence game in
raising 5 A* to C from 20 per cent to 94 per cent – a
huge amount – and I think the equivalence does need to
be looked at, but actually we wouldn’t have got it from
10 per cent to 40 per cent without having played some
of the equivalence game as a motivator for young
people, and I think that’s important.
I do think however, that the thing about
curriculum and the thing about teaching is that those
are the important thing, the qualifications aren’t, and
what you do is you do what’s right for where your
community is at that time and you keep it under
constant review. And yes, you do have to jump through
the hoops. Perhaps some of the softer indicators at my
place is that all my children want to go to university and
every year – I’ve only been there four years – my first
sixth form had eight students in it, they all went to
university, and they
were all the first people
I don’t think the choice is
in their family to go to
between academic and
university. Now you
vocational actually at all
could be cynical and
and I think what you do is you could say they got
to university on
you educate the children
and you get your curriculum equivalence, they got
BTEC Level 3
right and then you find
equivalence but do you
what hoop it is and
know what, those
qualification it is that most children would have
been in jail, not
suits it
university. They were
the first people in their family to ever go to university,
and I’ll tell you about sixth form now – sixth form now
has got 150 kids and they all want to go to university.
But it was our first new intake parents evening
this year when nobody came drunk or picked a fight
with us, you know? It was our first options evening for
prep year, which is what we call year eight and I’ll tell
you about that in a minute, which was packed to the
rafters with parents all of whom wanted their children to
90
www.reform.co.uk
Schools for the future / Reform
go to university. Now these things are important and it
is how you get that aspiration that’s important.
I don’t think the choice is between academic and
vocational actually at all and I think what you do is you
educate the children and you get your curriculum right
and then you find what hoop it is and qualification it is
that most suits it. We have really embraced Diplomas
and we have embraced Diplomas because we want to
get rid of BTech actually. We think teaching the kids is
fine and it’s great to get them these BTECs and
whatever, but actually we don’t think it really holds any
value in itself. We have embraced Diplomas because
actually when we are working with industry and with
university admissions departments, we have discovered
that some of these Diplomas are absolutely fantastic.
So right at the start I absolutely refused to talk
about Hair and Beauty, I refused to have Hair and
Beauty BTEC anywhere near. What is the point of
saying to any underclass girl, you’ll be interested in Hair
and Beauty as an excuse not to educate them? To
reinforce that sort of stuff just goes against the grain, we
wouldn’t engage with Hair and Beauty Diplomas or any
nonsense like that but with the engineering Diploma,
construction and the built environment Diploma. I had
seven students go on to study architecture at Lincoln
this year as undergraduates, and we are working very
hard with employers.
Local authority collaboratives are a load of
rubbish when it comes to Diplomas. What works with
diplomas is working with local employers and university
admissions departments, and picking the diplomas and
getting the curriculum right for the young people. But
we are also interested and have engaged in the
International Baccalaureate next year. The reason why
we have engaged in that is actually because the whole A
level thing to me – what a joke. I am really feeling very
strongly about this at the moment and, the way we
arrange our curriculum perhaps would be helpful.
Our academic year starts in June and it finishes in
May. The reason why it starts in June is because we all
know what happens in primary schools after Key Stage
2 SATS and until the summer holidays. It’s great and
my children have really benefited from that and have
loved it because my children spend the summer
holidays in Florence with me around art galleries and all
the rest of it and they get a lot of stimulation at home.
But the children I teach, the children I serve do not get
taken to Tuscany in the summer, they don’t have any
books in their houses and actually all the enrichment
activities that take place and all the lack of academic
pushing after Key Stage 2 SATS to summer just serves
to push them back further and they are one year behind
by the time they’re three. I am not going to afford any
more time. We don’t have a six week summer holiday,
we have a four week summer holiday so by the time
everybody else starts in Year 7, mine have already had a
good ten weeks of secondary education.
We also don’t mess about with all these bell
changes and off you move to another lesson business.
We have one lesson in the morning, we have another
lesson in the afternoon, we don’t waste time. We get
them involved in deep learning. We call them freshers
when they start, they then move the following June to
what we call the prep year and then the following year
they move to senior education, senior one, senior two
and senior three. At the end of senior two they jump
through whatever hoops the government have put at us,
and then we start in senior three, which is the last year of
compulsory education, we start teaching them – have I
got time?
Well I am going to finish with an anecdote. The
senior three class, the most academic students – and
when we are talking about the most academic students
in my context we are talking about students whose
prior attainment before they came to us is very, very
low. We have nobody whose parents went in to higher
education, we are talking about the deprivation issues
I’ve told you about, but we have identified these kids. I
think I’ve got 28 of them and I actually teach them on
Monday afternoons and I’m teaching them politics,
philosophy and economics and I thought a good start
would be if I got hold of the A level syllabus around
politics. What a load of rubbish! I was absolutely and
utterly appalled and I thought right, I’m just going to
have to teach these kids to think. Now these children
may not have A* on their GCSEs, and I don’t actually
care because those GCSE syllabuses, don’t think
GCSEs are the Holy Grail when it comes to the
academic. These kids have got to jump through that
hoop, fine, let’s get them through it but actually if they
get Bs at the end of senior two, great, we’ve got that, it’s
in the bank, let’s educate you.
They are doing Maths, they’re doing English,
they’re doing politics, philosophy and economics with
me but what I said to these children was okay, we had a
really good lesson on Monday afternoon, and I said to
them right, I want you to write me 500 words on why
the coalition government is under stress and can you
email it to me. I had emailed to me, they are interacting
with knowledge. I gave them some knowledge about
how we arrived at a coalition government, what it
means, all of that kind of stuff, we did that discussion in
class but actually these kids need to think, they need to
be able to be directed down to the political
commentators of our time, to interact with the
knowledge they got from me and to think intelligently
and I am getting in some stuff that’s great. These kids
may only have a B at GCSE but I don’t care. I am
preparing them to think, and when they go in to sixth
form that is what the International Baccalaureate course
will do with these children. My aim is I am going to get
these kids from the worst estate in Leeds in to Oxbridge,
and whatever hoops I have to jump through, I’ll do it,
but don’t think that you can just think GCSEs are
marvellous and A Levels are marvellous. Load of
rubbish, they’re not.
Dale Bassett:
Ros, thank you very much and if at all possible in
five minutes so we have time for questions, here’s
Deborah Eyre.
Deborah Eyre:
Thank you. I suppose in the piece I am going to talk
about in my five minutes, I guess I want to start by saying
I am really interested in high performing education
systems, so I am interested in high performing education
systems as measured by high performing students.
My starting position is I think a lot of people
could be high performing students, and if after 150
years of education we are not any better at it now than
we were when we started then there is something
radically wrong. So the fact that is our education as
good now as it was? I don’t think that’s the question. Is
our education moving slightly forward and improving?
That’s not the question. We’ve been at it for a long time,
if we don’t know how to teach and we don’t know how
to help children learn better there is something very
wrong with the system.
So I was interested in going and having a closer
look at some of the systems which seem to work and find
out more about them, and also I am interested in working
with countries that are keen to make high performance
the focus of their educational work. So I guess what I
want to start by saying is that there are certain
characteristics about countries that seem to be doing well
in all these league tables, the PIRLS and the TIMSS and
all the others and it is quite interesting in the light of some
of the discussions we have heard today.
One is very much in line with what we have been
talking about in terms of high expectations for all but it
really means it. It doesn’t mean just a bit better than you
did before. It doesn’t just mean going to university, it
means going to a good university, a university that offers
really high standards of qualifications, and I am going to
come back to that. The second is that they avoid
polarisation, they avoid the idea that this is right and this
is wrong, phonics good, look and say wrong. Phonics
works for some, look and say works for others, find the
right way. What you want is the outcome. Try one
method, if it doesn’t work try another.
They learn from others, not just sharing best
practice, which I’m not sure I understand what that is.
They learn from others all over the place. Why am I
working with them? Because they have reached out
halfway across the world to someone who knows
something about something they want to develop and
they get them in. How often do we see that in this
country, where we’re learning from other countries?
We’re sending out people all over the world, we’re not
really learning from others in that kind of way.
They’re pragmatic, they realise that some things
will work in some circumstances and not in others, and
they focus relentlessly on getting high levels of
performance for as many as possible. They don’t, for
example, have a polarised debate about whether
traditional subject knowledge is the key to the future or
whether skills and processes are going to replace all
knowledge, or indeed whether practical work related
activity is going to be the panacea. They recognise – and
it seems to me absolute common sense – that all three of
those have a part to play in education, so the basis of
having high aspirational academic qualifications is a
good thing for all, but it would be ludicrous to suggest,
as was suggested in my view earlier this morning, that
creativity and collaboration was not a part of high
academic performance. How do you get to high
academic performance if you don’t have some creative
ideas? Do you really do it in a shed at the bottom of the
garden on your own? Not in this day and age. It’s a
polarisation which is truly unhelpful.
Why am I working in a place like Hong Kong at the
moment which is scoring really highly on all these things?
Because they have got brilliant subject knowledge, but
their schools aren’t very good at helping know how to use
it, use it practically in a work related environment. So they
have identified the problem, they are trying to solve it. It’s
a kind of pragmatic view.
I think we are held back in this country in a
number of different kinds of ways. We tend to focus on
the detail. We focus on have we got the qualifications
www.reform.co.uk
91
Schools for the future / Reform
right. Perhaps now but really it seems to me that one of
the things that holds us back most is this question that
only a small minority of people are capable of doing
well. It is fundamentally embedded in our whole view,
and we spend an inordinate amount of time trying to
work out which people are going to go in which
direction because ultimately we genuinely believe that
only a few of them can be really successful, unlike many
other countries where they start with the much more
optimistic assumption which is to say that with this new
generation of young children coming through, better
fed, better educated, better supported than in many
other generations, we should be able to do better.
Now I am not being hopelessly idealistic here and
suggesting that every child is better fed, better educated,
better supported – it’s all relative. Some of my family
come from Seacroft, I know it very well and I think in
relative terms the people who live in Seacroft now are
better off than the people who lived in Seacroft thirty
years ago, fifty years ago.
Ros McMullen:
Is that right?
Deborah Eyre:
It certainly is. So the question of can we be more
optimistic on behalf of our children is really part of
the proposition that I want to look at. Why do we not
really think that this is possible? I think we kind of
take the view in this country that we can presume
about a child’s educational destiny pretty much more
or less determined at birth by looking at a
combination of their genetics and their family
background. I am going to put the proposition that
that is a very early 20th century idea.
Firstly, genetics. In the world of psychology it is
no longer about finite ability – it is about
predispositions.You inherit the capacity to maybe
develop, but many of
I think we kind of take the us may not develop all
those predispositions,
view in this country that
but the idea that we are
we can presume about a
all born with a set of
child’s educational destiny abilities and that is as
much as you can do is
pretty much more or less
out. I was explaining to
determined at birth by
parents in Dubai very
looking at a combination
recently that I was 12th
of their genetics and their in my class at school,
and I thought I could
family background
only get to be 11th if
somebody left. I tried to fathom it out in a bored
moment, what would I have to do and somebody
would have to leave. Somebody asked a question in the
group and said well if you were 12th in your class, how
did you get to where you are now? I said, how do you
get to Carnegie Hall? Practice. And that is a serious
view which is that it takes hard work.
First of all, we know more people have the
predisposition to achieve and we have got to get out of
the idea of saying “these are the good ones and these are
the bad ones, these ones will never make it.” We don’t
know. We don’t know until we give them high quality
opportunities and that’s what many of these case studies
are doing.
So with the family, the family is not in a steady
state. A Chinese colleague of mine said “I don’t know
92
www.reform.co.uk
Schools for the future / Reform
why you think about families all the time when you are
in the UK and education, you’re obsessed with it.” She
said “I was brought up during the cultural revolution,
my father was an academic, we got moved to the north
west of China, he was
We have got to get out of
working down the coal
mines, I had a very
the idea of saying “these
strange upbringing
are the good ones and
where there was no
these are the bad ones,
money but a lot of ideas
these ones will never
and after that I came
back to Beijing and was
make it.” We don’t know.
in Tianenman Square
We don’t know until we
and then I thought I
give them high quality
might as well leave
opportunities and that’s
China and I went to
Australia and then I
what many of these case
went to America and
studies are doing
now I’m in Hong
Kong.” She said “what does that say about how my
children are going to perform in school?”
It’s a fast changing world, shift happens,
Microsoft stuff. It is a fast changing world, so that
means with our children, we shouldn’t be making all the
judgements on what their families did.
Finally self, the self person. We need to engender
that self belief. If you are being told all the time that
people who come from free school meals never go
anywhere, if you are getting free school meals you think
you don’t go there either. There are really serious issues
about how children perceive themselves and think about
themselves, so I’ll summarise by saying we need a
change in thinking and a change of culture.
Other countries don’t have a long tale of
underachievement because they don’t expect it – they
expect everybody is going to do well. We need to think
about what that means so we can sell the benefits of
education to children and parents, and that is exactly
what Ros was talking about, it was mentioned this
morning that there is no lack of private aspiration. We
can pursue high performance relentlessly and focus on
removing the barriers to achievement rather than
thinking, “well I’m sorry, some people can’t do it.”
Think about how to get over the barriers, don’t look
back. We can learn from things that have happened
before but it is a new world too and we can be more
optimistic about what this generation can achieve.
This morning on the way in I was reading The
Times and I see that Terry Leahy of Tesco is telling
Cameron today, forget village England, think global. If
we don’t up the levels of achievement in our education
system, believe me, the UK is falling further and further
behind. Thank you.
Simon Lebus:
There has been a lot of knocking of qualifications
today and I guess if I were to respond to all the
particular allegations I would need rather more than
five minutes. But Cambridge Assessment is part of the
university, it owns the universities various exam boards
which operate both in the UK as OCR supplying A
Levels, GCSEs, diplomas among other qualifications
and also internationally as Cambridge International
Exams, we do IGCSEs, we do international A Levels
and we also have a very large English language testing
organisation so we do have a global perspective in
approaching this, and I think one of the issues that’s
interesting in terms of how qualifications can actually
operate to raise the bar, to try and drive educational
improvements is actually being realistic about what the
nature of qualifications is. I fully agree with Ros’s
comment earlier that it is perfectly possible to be
educated without taking a single qualification – indeed
for much of human history that is precisely what
happened – but nonetheless it is a case that
qualifications have a role to play. They have a value and
they can help drive improvements.
Coming back to some of the things we were
hearing from the Minister this morning. He talks about
trusting the professionals, about reducing bureaucracy
and extending choice, and I think that is sort of the
manifesto we would like to see for qualifications. There
has been a lot of discussion and debate about what
qualifications ought to be available within the school
sector: should IGCSEs be permitted in the maintained
sector, how do you balance the different needs between
A Levels and diplomas, what’s the role of the IB and
we’ve introduced a new qualification, the Pre-U. There
is a lot of discussion about whether it is going to lead to
an apartheid of qualifications, is there a nuclear arms
race between qualifications, but the central point I
would want to make is that as all of our speakers have
been suggesting in various different ways, we have a
very diverse population.
Humanity comes in all sorts of shapes and sizes,
pupils come in all sorts of shapes and sizes and trying to
put them through a single door, trying to put them
down a single track is not an appropriate thing to do.
What we ought to be doing is offering a diverse range of
different routes, a diverse range of different
qualifications, and I think we need to create a system
that encourages that. There has been a lot of talk today
about the whole regime of equivalencies, and I would
make the point that I believe equivalencies are quite
damaging actually, do lead to perverse choices. I take
Ros’s point that they can also create useful incentives,
but I think perhaps what is not so well appreciated is
that in order to create those equivalencies there is a
whole regulatory apparatus to do with qualifications,
criteria, volume of guided learning hours and so on and
so forth. That creates real distortions in terms of the
qualifications that we can put together, the sorts of
learning experience that we can support with our
qualifications, so I think that is something that needs to
come under a very significant degree of scrutiny.
I think part of that is also about thinking seriously
about the regulatory regime we want. There was a lot of
activity to set up Ofqual as an independent regulator,
and I am thoroughly supportive of the concept of an
independent regulator, but I think one’s got to say “what
are we actually looking for?” Alison Wolf used the
concept of a weights and measures type role. I think
there is a place for a weights and measures type role for
a qualifications regulator, but I think as soon as you start
extending beyond that, as soon as you go from, if you
like, being an inspectorate to being an agency, there’s all
sorts of other stuff that happens, other drivers, all sorts
of regulatory creep and that makes our ability to make
qualifications, to respond to the sorts of educational
needs that schools have, that colleges have, that
employers have, that HE has, much more complex.
I think taking some of the discussion there was
about diplomas earlier on, they are a very good example
of how some of the political involvement, the
bureaucratic environment can make it very difficult to
create new qualifications. They took tens of millions,
possibly hundreds of millions of pounds to create, the
structure of delivery is thoroughly unwieldy, I don’t
think personally all of them will survive.You mentioned
two of them that are of very good quality, but I think
some of the quality is variable and these are all very
good examples of people saying “we’ve got some skills
shortages in the economy, what are we going to do
about it? Let’s create some qualifications because that’s
an easy lever to give a yank to.” And it’s not – it’s really
complex, it’s difficult, it’s expensive. I think stepping
back and letting qualifications professionals get on with
the job, removing some of the bureaucracy and allowing
us to extend choice, because we are good at developing
qualifications, we can respond to some of the
educational needs on the ground. I think that is a very
positive thing and we have got to focus on it.
There was also some talk earlier on about
modularity and the sort of discussion if you like about
skills versus knowledge and I think whether one has got
to question whether that’s a real dilemma. The reality is
that neither of them exist in a vacuum. Skills feed on
knowledge and knowledge feeds on skills but
nonetheless there have been some challenges of people’s
acceptance of the way the qualifications system is
structured. There has been a drift to modularity, and I
think that has occurred in an, again, peculiar way. I
don’t think anybody sat down and said “let’s go for
modularity,” I think what happened was a desire to
come up with an administratively neat universe of
qualifications in which qualifications were
interchangeable, in which you could switch and swap
routes in theory and of course it looks great on paper,
you see the Qualifications and Credit Framework but as
my colleague said, “it’s not a framework it’s just a
diagram.” Unfortunately, I think that is the reality of
how a lot of these centrally driven qualifications reforms
have happened and we
Qualifications are part of
have to think really
seriously about what it
the solution rather than
is it that we want from a
part of the problem
qualifications system.
How can it do what we like to feel we’re about which is
promoting educational excellence?
So I hope in five minutes I’ve given you at least a
sense that qualifications are part of the solution rather
than part of the problem. Thank you.
Dale Bassett:
Thank you very much indeed. A plethora of views
there and I think, despite the angles, quite a lot of
common agreement. Amanda talked about the
importance of aspiration. She warned that in many
cases that vocational qualifications add little to
intellectual development and can limit pupils’ horizons
and warned of the dangers of playing the equivalence
game. Ros said “qualifications are fairly irrelevant to
education,” and that curriculum and teaching were the
important things, talked about the importance of
engaging parents and raising their aspiration as well as
that of pupils. Deborah said that a lot of people could
be high performing students, that at the moment it is
almost determined at birth but other countries can be
optimistic and instil pupils with self belief and a sense
of expectation about what they can achieve, and
Simon said that qualifications could be part of the
www.reform.co.uk
93
Schools for the future / Reform
solution and warned that regulation means that we
have worse qualifications than we otherwise might.
We have got fifteen minutes so if I can ask both
questions and answers to be as brief as possible and
hopefully we can get through half a dozen or so. Let’s go
one two three as a starting point.
David Perks:
David Perks, teacher in south London. The thing I was
really interested in, because I’ve lived in Leeds and
probably know a little bit about where you’re based and
I taught in Harrogate in North Yorkshire, round the
back of Harrogate and my experience of Leeds schools
was get out fast. So if you have done something to turn
that around all power to your elbow. The problem is, if
you do believe in teaching academic knowledge on a
subject basis, then you have to believe in examining it as
well and making it something you can show to
somebody else that it’s worthwhile and I am just a little
bit nervous about how you explained what you are
trying to do.You can get kids to get stuff out of your
lessons, I’m absolutely sure you can do that, no problem
at all, but the bottom line is to get them where you want
them to be you’ve got to accept – and you may call it a
hoop or whatever it is – you have got to get them to a
qualification that makes sense to everybody else as well.
That may be a tough ask but that’s really what you have
got to do isn’t it?
Richard Taylor:
Richard Taylor. I had two questions, one is one of the
things about what Ros described as hoops. When you
look at the IB, isn’t one of the really interesting things
about it that it is immune to political interference? It’s
not based in a country, it’s based on an educational
philosophy and not on exams, so that independence
gives the user a whole lot more confidence, which we
don’t really have because every time the hoops are
moved it’s for political reasons rather than educational
ones. Also for Professor Eyre, whether you have actually
looked at things for example like the British military
education system, in Germany Forces education run the
equivalent of a small LEA. They get no more money,
they have the same teachers, the same curriculum and
yet they perform at a much higher level level than local
authority in the UK. We’re all happy to rush off to
Finland and Hong Kong and places like that whereas
there are places in this country that could possibly be
used by other schools and other educational authorities
to look at what’s working here already. I think one of the
other things I would promote to everyone who is here
today is to buy this book which is called The Case of
Working With Your Hands: Why office work is bad for
you and fixing things is good, which is the number one
education book in America at the moment and
apparently amongst the Conservative education team. I
have to say it debunks a lot of what you are talking about
because in the future the knowledge economy and all
our smart workers may actually have no jobs because
you can’t outsource to China someone painting your
house.You can certainly outsource your accounting and
all your medical records and all those other things
Gary Day:
Gary Day from De Montfort University, which I think
is probably not one of the best one according to one of
the speakers on the panel.
94
www.reform.co.uk
Schools for the future / Reform
Deborah Eyre:
I didn’t say that.
Gary Day:
No, but you did make a distinction about universities
and I think, with respect, it is that sort of attitude. If
people come from a very deprived background and it is
the first time they go to university, that is a hell of a big
achievement for them and I think that does need to be
recognised, but that’s not my point.
The wider culture acts a brake on the kinds of
attitudes that they’re talking about. We’re living in a
celebrity culture, kids want to be footballers, they want
to be pop stars, they find schools boring and those
pressures are there all the time, they are constant. I just
wonder how far the wider culture with its dismissal of
education, with terms like geeks and nerds and so on
and so forth, impacts on the kinds of changes that
you’re talking about, because if you went back into the
past, and you said don’t look back to the past too much
but the past is full of educational initiatives and
changing things and so on a so forth and those things
haven’t worked, we’ve still got the same problems. So
maybe these problems are deeper and more structural
and can’t be resolved simply by a change of attitude and
with all due respect to what you are doing, which is
absolutely marvellous but I think that’s partly due to
your own charisma really and strength of character and
not everybody is going to be able to do that. So it is
about the wider culture really.
Dale Bassett:
So if we can start with Simon and work our way along.
Simon Lebus:
I’d just like to respond to a couple of points. The first is
about the IB and the fact that it has been quite effective
at maintaining its standard over a period of years and is
not regarded as being a contentious qualification. I think
in some ways it is a good illustration of the point I was
trying to make. One of the problems we face as UK
awarding bodies is we don’t actually own the curricula,
we don’t own the standard. What has happened is that
there has been a process in which the responsibility for
the curriculum has gone to the government, the
responsibility for the standard has got to regulation and
the poor old awarding body is behind, trying to respond
to a set of different constraints imposed from two
different sets of agencies and institutions. I think
without that you don’t have the same sort of ownership
of the standard and it makes it much more difficult to
interact with schools and constituencies.
It does actually make this whole issue of
maintaining standards much more difficult and that
combined with a constant churn of qualifications
because of the constant cycle of regulation, we have to
change qualifications, get them re-accredited on a
cycle of every three to five years. Naturally the body of
knowledge in a particular subject doesn’t change every
five years in performance with the regulatory timetable
and I think these are real issues. The IB, because it
stands outside that set of arrangements has managed
to avoid some of those problems. I very much hope
that the signals we are now picking up is that we will
acquire more of those freedoms.
The second point I’d like to make is the issue of
the wider cultural context and I absolutely agree with
what you say. I think there are issues about how we
educate people within the culture in which we live, but I
also would just like to relate this specifically to the
question of exams and qualifications, because one of the
things I’ve been quite struck by is that we live and have
lived for quite a long time in a culture with institutional
assumptions about ever rising levels of achievement. We
also live in a society where people are rather reluctant to
submit themselves to judgement and yet of course
exams are a form of judgement, and it is not surprising
therefore that pupils are reluctant to submit themselves
to a form of judgement. If we have rising expectations,
people are far less ready to accept an exam system
where 30 or 40 years ago coming out with a set of exam
results that weren’t all As was a perfectly honourable
thing to do and many of us, myself included, managed
that and went on to live successful and happy lives. But
in a sense it is a serious point because we have tried to
introduce different qualifications, sometimes more
challenging qualifications, and people are very ready to
sign up for the educational challenge but perhaps less
ready to accept the consequence that not everybody is
going to get an A. I don’t know what the answer to that
is but it is a serious issue and it needs some thought
because unless we are ready to accept a wider level of
differentiation, different results, different qualifications,
we are not going to raise the bar.
Deborah Eyre:
Just to pick up on two or three things really. I guess like
others the point that Simon was making about how
regulation occurs in qualifications is a really important
one because the IB, the way in which the IB is put
together, it is a kind of values driven underpinning and
that is very important to the way it works so being
asked to accredit the qualifications where you have no
say in the way in which the underpinning principles of
the curriculum are scoped out is a strange artificial
divide, interesting.
The question of the Forces schools: it is not
something anyone has ever commissioned me to look
at particularly. My starting point – and I am very
interested in what is being said – is that I think it is
really good to learn from other people. When you have
to earn your living, I tend to go wherever someone is
paying me to find out. That is not to say that I don’t
look at other places but I think we just need to look
outside. We think we’ve looked a long way if we look in
Scotland or Northern Ireland – and of course we all
have to look at Finland because that’s what everybody
is looking at apparently for some reason – but I think it
is very important for us to look at ways that work
successfully wherever they are, especially if they
manage to work in a similar kind of way for less money.
What could be better?
I have to say I really feel quite passionately about
this whole question of young people and their
qualifications and what they’re offered in terms of
fairness and actually I’ve been having this discussion
over a period of time with various people with whom
I’ve come into contact who tell me they were
unsuccessful at school, people in their adult life who
were unsuccessful at school and it is very interesting
that other people told them they were no good and
other people told them that they wouldn’t do things and
now they are doing things because they are often self
employed and therefore are running their own small
business, but they would have found it much easier if
someone had helped them with those higher level skills
earlier on. So they are painters and decorators, but
painters and decorators on the whole are not just
painting their own house, they are painting other
people’s and that means they are invoicing for VAT and
everything else that kind of goes along with that and I
guess that links to the question of universities.
I apologise if you think I was implying in some
way that De Montfort was anything less than a really
good university, but I do think it is part of the point that
you were making about qualifications. Different
universities offer different things, and students applying
to go to them need to know what they are buying into
and what will be the outcome in terms of what they’re
doing. If you want to do animation, don’t go to Oxford,
it will be no help to you, go to Bournemouth. That’s the
kind of thing you need to know – you need to know
where is the place.
Finally, wider cultures. Big problem. I think wider
cultures is hugely a big problem, but we’re not the only
place that has them and what I am suggesting is other
places, the ubiquitous McDonald’s is in every country in
the world and so we’re grappling with that and other
people are grappling with it too. I’m just saying, in a
provocative way since we are in a seminar and it pays to
generate some debate, that it’s easy to rationalise why
these things are difficult, but we also need to get into
business of looking at what we can do about it.
Amanda Spielman:
Building aspiration is a very important part of our
model and we work on it from the first day of primary
school down to blatant things like naming our
classrooms after universities and our aim is by the time
our children are making career limiting choices, i.e., at
age 14, they should have a really clear idea of what life
has to offer them, the directions they think they might
want to go and what it would take to get there, so they
make choices that leave them room to do the sorts of
things that they should be aspiring to do.
Parallel to that, we have very explicitly high
expectations that we are communicating to teachers and
pupils from the very beginning and apart from a tiny
minority of pupils with really serious permanent
learning difficulties, the minimum expectation at every
stage in our school is the level that is good enough if you
continue on the trajectory to achieve the five plus
English and Maths and to go on and be able to study at
A level or similar courses. That has to go all the way
through our schools.
The third piece is we have to do a lot of teaching
of the behaviour and personal attributes. We don’t
assume that anybody arrives at secondary school
already understanding how to behave perfectly in
class. We know that we will have to teach a large
proportion of our pupils how to sit in class, how to ask
a question, when to ask a question, how to move
around a school without disruption. We put an
immense amount of effort into routines and things on
top of that which are the beginnings of self discipline,
perseverance, interpersonal skills – all the things
without which people will not succeed in adult life. We
see all of those pieces as essential to making our
children benefit from a spectacularly good education
so a good curriculum and good teaching leads to
education in the life they ought to have.
www.reform.co.uk
95
Schools for the future / Reform
Ros McMullen:
I wasn’t arguing that we shouldn’t have qualifications.
I totally appreciate the fact that we have got to have
qualifications. I think what I was saying is that a lot of
the rubbish that we’ve heard today about the false
juxtaposition between academic and vocational,
between do you teach people how to learn or do you
give them knowledge, these are just completely …
Because there is the political interference that actually
creates false juxtaposition that is just nonsense. The
qualifications are not what you base your curriculum
on. What you do is that you do absolutely what is right
for your children to raise their aspirations and for them
to have the highest possible aspirations, the highest
possible achievement and destinations and what you do
is take the qualifications that fit that. Did that all make
sense? I think it did.
I think that’s why the level of personalisation at
our academy is so strong. I don’t think you’ll find any
two students that have the same curriculum really and it
is why we have such a wide range of qualifications. The
ones you would expect we would have like your Hair
and Beauty, we haven’t got but we do have some
BTECs and we do have obviously GCSEs and we do
have Diplomas and we do IB and we are doing City and
Guilds for exactly the reasons you were saying and
actually it is absolutely ridiculous to suggest that
because somebody is going to get A* at GCSE and is
going to go on and do the International Baccalaureate in
the sixth form, that they shouldn’t be allowed to do a
City and Guilds qualification during their senior three
year in furniture making if they want to do it. Because
actually I wish to God I had some practical skills, they
would have come in very handy at various times in my
life, and students might want to do that and for some
students that might be absolutely vital to them being
economically active as well in the community. I think it
is the best possible variation that you have to fit raising
aspirations and to fit high achievement and to fit
actually having a place in society.
The argument I’m making is because of the
political interference that goes on with the curriculum
and the qualifications in this country, that actually – and
I just think it is absolute and utter nonsense, some of the
debates that we have about that – education is about
leading out and the problem is when we teach to an
exam syllabus whatever that is, whatever the
qualification is, we are narrowing in we’re not leading
out. In International Baccalaureate, the lack of political
interference, yes, that’s one of the great things about it,
and the other great thing that appeals to me about the
IB is that I think it is about that leading out, and I think it
is underpinned by the values. I also think that the
international dimension for the generation that we’re
educating now is really important, because I think the
way that I jump on a train to come to London which
would never have been thought of by the people who
were training me years ago. It’s the same for our kids
jumping on a plane going here, there and everywhere.
Their interaction with the BRIC countries is going to be
huge so I think they should be educated to an
international dimension.
The wider culture is very interesting. I refuse to
pay attention to the wider culture being a problem
because it’s there. I can tell you the ten common
characteristics of a failing school straight away, and the
first one is they will tell you about the culture within
96
www.reform.co.uk
Schools for the future / Reform
their community and they will tell you about our type of
kid. It always strikes me as rather bizarre that they have
got a different type of kid to everybody else’s type of kid,
but that is a common characteristic of a failing school.
Yes, the culture’s out there whether that culture is knife
wielding gangs and drug dealers, or whether that culture
is the emotional neglect and abuse that high aspirational
families can impose on their children and the fact that
those children need a lot more nurturing. Whatever it is,
the culture’s out there.
I actually think what’s important isn’t the wider
culture out there. What is important is the culture that
you have in your establishment. That’s what’s
important, because we cannot change anything but
what we have control of. There is that old saying, “give
me the courage to change the things I can and the
serenity to accept things I can’t and the wisdom to know
the difference”, and actually I can’t do anything about
footballers bloody wives, but what I can do is if
somebody tells me they want to grow up and marry a
footballer I can look down my nose at them and say that
girls that aspire to those sorts of things are the girls that
[inaudible] and walk off.You can set a culture.
Dale came to us and he was amazed because one
of the things that we do is we have our own language.
Because the kids do come from the most deprived area
of Leeds and it is tough out there, what we do is when
they come through the door they’re on stage and we all
maintain our roles for the entire day and nobody shouts
in our academy, nobody ever raises their voice and we
have conversations with each other so if I pass another
person in the corridor I’ll say ‘Are you having a nice
day?’ and they say ‘I’m having a wonderful day, Mrs
McMullen’ and the kids copy and it is really, really
interesting and we have children. As I say I’ve been there
four years now and it’s really embedded and the
children will say ‘I’ve made a poor choice’ or ‘I didn’t
press pause Miss, I hit him’. But they are actually using
the language that we have given them and we are
embedding the culture because it is all you can do, that
is all you can do.
Dale Bassett:
Thank you very much indeed. I’m afraid we are going
to have to leave it there because we are five minutes over
time but thank you to the panel.
Education for less
Andrew Haldenby:
Look, the schools budget is going to come under
pressure, all Government budgets are under pressure.
This isn’t going to stop any time soon because not only
does the deficit have to be paid off, which will take at
least one Parliament, but also the national debt then has
to be paid down, so it is a ten year thing not a one or two
or three year thing at least. So the question is, is Reform,
my organisation, are we right that it is possible to do
more for less, it is possible that by doing things
differently to achieve better outcomes at a lower cost or
will these so-called cuts mean lower quality and that’s
what we have to discuss in the next fifty minutes.
Let me introduce our panel. Steve Beswick,
Director of Education at Microsoft. He has been at
Microsoft for sixteen years and he is now in education
having worked previously on Microsoft’s work with
other public sector clients, so perhaps you will be able to
give us a comparison, Steve, between education and the
other sectors. Dale Bassett, of Reform, who you know.
Shaun Fenton, the Headmaster of Pate’s Grammar
School, which is a state grammar school in Cheltenham,
and previously to that Shaun has worked in a number of
schools from achieving in ones with failing measures to
ones with outstanding achievement. And lastly, Chris
Davies, the Education Director of Tribal, and also the
Governor of a primary school in south London. I am
going to give Dale a break and let’s ask Shaun Fenton to
speak first and then we’ll have Dale and then we’ll have
Chris and Steve and I should warn, I know there some
head teachers in the audience like Jill and deputy heads
like Mike who have yet to speak so I am going to draw
you in to ask questions at the end. Right, so Shaun first.
Shaun Fenton:
Thank you very much and good afternoon. I come to
the front and everyone leaves, it’s just like being at a staff
meeting at school! There are other heads in the audience
so there will be as many opinions on this as there are
people in the room and particularly as there are heads in
the room, as we are absolutely passionate and convinced
we are right and spend a lot of our career proving that to
other people.
I am optimistic about the future, I have to say.
There have been ten years where I have been pleased to
be involved in education. This is now my second
headship, previously in a comprehensive school and
working for the local authority and now in a grammar
school. I am also optimistic that there is a new way
forward and I am going to convince myself and as many
people as I can that we’ve seen all the benefits we can
get from just putting more and more money in
education and now we can take advantage of the
opportunities to look at it in a different way. Of course it
would be nice to keep getting more money but the
reality is that we have got to believe we can do things
better and differently because there won’t be.
Education for me is about children, about
building the school around every child, every day, a
bespoke brand new construction, so that the children
have a happy and successful school life. Qualifications
will open doors for them but their personal character,
their personal development, their framework of moral
reference will mean when those doors open for them,
they can do something with those opportunities, they
can make the world a better place. So we need good
schools for all our
We’ve seen all the benefits children. The
discussions we’ve been
we can get from just
having in our school
putting more and more
when we were
money in education
considering becoming
an Academy, we are
keen to become an Academy as soon as we can to
engage in really authentic collaboration and partnership
work and to also establish our identity as a state
grammar school clearly and securely in another
education system for the future – we have been having
discussions in school and one of the strong themes is
that we need to get rid of a system where there are
schools where teachers wouldn’t want to send their
children. We have got to have good enough schools for
all children.
So what are the opportunities for the future and
in doing more for less? Well there is loads I would like to
talk about, the equivalence agenda, the influence of
Ofsted – we had a really interesting discussion with
parents where we agreed that Ofsted forces us to try to
pretend everything is
we need to get rid of a
perfect rather than for
us to make anything
system where there are
better. Maybe that is a
schools where teachers
bit of a paranoid way of
wouldn’t want to send
looking at it but the
their children
compliance agenda is a
difficult one and I am
looking forward to freedoms at a time when finances are
drying up as well. I am hoping also at a time when a bit
more freedom is coming in to education that we will be
able to cling on to what we value rather than merely
valuing what we can measure. There is a big gap there
that has grown up over the compliance agenda.
There are as many opinions as there are people in
education but I would say that the national pay scales
are a barrier to innovation and improvement in our
schools. In the short term there could be a significant
impact on goodwill in the teaching profession if we take
that on, in the longer term it might even be that good
teachers get paid better than less effective teachers and
that might not be seen to be a crazy thing. The
performance management processes that have been
brought in most schools and mea culpa here, in most
schools heads – and I am sure there cases where this is
not the case but in many schools at least heads have let
the performance management and pay progression be
really that if you turn up for enough years, you get
promoted and you get put up the pay scales purely by
being barely competent rather than being excellent.
As well as national pay scales, I would say freeing
head teachers to do their job as leaders would be also
excellent. I feel I have a presumption against me as head
either by bureaucratic processes or union pressures or
whatever, we all know who the good teachers are, we
knew when we were at school, in any school community
we know who the better and more effective teachers are
and it is a diverse definition because you need to have,
children need a key relationship with an adult in the
school and you need a diverse group of adults, you need
to have space in a staff room for mavericks and we don’t
need to have a tick list approach to what makes a good
teacher but what we do need is to give heads the power,
well it’s not about hire and fire, that’s a bit emotive but
to take decisions about staffing, that if you are
appointed head of department at 28 it is not a job for
life, there might come a time when you are [inaudible].
So free heads to do their job.
Teaching and learning, those two things actually,
pay scales and teachers doing their jobs might save
some money because we might be able to run things
more efficiently, focusing on teaching and learning and
evidence based teaching and learning rather than
government initiative teaching and learning would also
be a good way forward. I can’t say how that’s going to
save money but it might be more effective and
technology, there may be some room for doing things
more cheaply where we combine the issues of teaching
and learning and technology. It might be that some of
my best teachers in the school I’m in now could teach
very effectively groups of thirty or forty or fifty
supported video conferencing, supported by being
recorded and put on the internet with resources there in
our virtual learning environment and some seminars
www.reform.co.uk
97
Schools for the future / Reform
there in smaller groups but maybe we need to challenge
whether or not it is actually about an excellent teacher
rather than a small class and that may be an area of
saving money, so larger classes with excellent teachers
rather than smaller classes with poor teachers.
A couple of other points from me. A culture
change – those were all things that could happen in my
school, a couple of things, observations about the
system. There is a danger in education that I perceive
that where things need to be improved, the intervention
to improve is measured more by the quantity of support
that a school gets rather than the impact of that support.
Certainly when I was working for the local education
authority, the description of what we were doing to
support schools – and it wasn’t in Gloucestershire by
the way, it was in a previous life – the description of
what we were doing to support schools was about how
many advisers and advanced skills teachers and
consultants had gone in rather than the impact on
student experience and learning and actually, usually
within a couple of days or less time, the advisors were
whispering to each other the thing that wasn’t allowed to
be said which was I can work for two years with this
teacher and that will never be enough for these children
but that wasn’t as important as showing evidence that
we’d intervened.
That investment in failure is a really interesting
feature of the last ten years. The most expensive place to
get an education in the state sector has been the schools
that have been getting the lowest results because of all
the extra support and money that has been thrown at
them and I guess if it
Per pupil spending, as
was my child, I would
want them not to be in a
most of you will know, is
school which is getting
now double in real terms
lots of investment
the level that it was in
thrown at it but in a
1997/98. Is the school
school that was just
system now twice as good really good. I’m in a
school because of all the
as it was in 1997/98?
work that the staff do,
the fact that we can recruit students that are able and it
actually is an outstanding school, if you said that we
would only be able to be outstanding if we also helped
another school to be very successful, boy would it
sharpen our mind and turn authentic partnership into a
real impact based partnership rather than just sometimes
a relationship that’s done because we feel we have to.
The very last point is on local authorities and local
authorities, really good stuff, they have done lots of good
things, there is lots to be said for them but just to illustrate
the point, we had a discussion the other day, a group of
heads said if Academy status means that a school might
get two or three hundred thousand pounds in addition to
their budget in the first year, is that worth more than the
support that they get from the local authority? No
question that that money is out of all proportion worth
far more than the support they get from the local
authority and there could be significant savings there to
the tune of hundreds and thousands of pounds for each
school across the local education authority, some
examples perhaps of where we could do more for less.
Andrew Haldenby:
You said all that in such a quiet and diplomatic way that
it took me a minute to realise just how radical you were
being! A very nice trick. Dale Bassett.
98
www.reform.co.uk
Schools for the future / Reform
Dale Bassett:
Thank you. An increase in school spending every year,
year on year, this year, next year and the year after were
words spoken by Ed Balls in January this year. Now I
suspect that had the election result been different that
wouldn’t have happened, given the election result we’ve
got it’s definitely not going to happen although we
should bear in mind that the Coalition has committed to
an as yet unspecified pupil premium to come from
outside the schools budget to be added on top so they
are basically still talking about spending more money.
It is not going to happen and in fact it has
already happened. Per pupil spending, as most of you
will know, is now double in real terms the level that it
was in 1997/98. Is the school system now twice as
good as it was in 1997/98? No. What can we say about
the school system today? Well for all the improvements
and there have been many along with the problems of
the last 13 years and indeed of the government before
that, we are still in a situation now in the second
decade of the 21st century where somehow more than
half of all 16 year olds still leave school without five
decent GCSEs including English and Maths.
Something is going terribly wrong and doubling
spending doesn’t appear to have fixed it.
Why? Well there are a whole host of reasons,
Shaun has just touched on a lot of them, I’m going to
talk about two very briefly. The first is policy-makers’
obsession with visible spending. It is all about inputs, it
has nothing whatever to do with outputs and the two big
areas in which this is manifested is staff and buildings.
Shaun touched on staff. Staff numbers and class sizes
are an obsession of politicians, I think because they are
an obsession of parents and as we’ve heard today, it is
quality not quantity that makes the difference when it
comes to teaching. This is where basically all the extra
money has gone. We know that 78 per cent of the
average school budget is spent on staff. Over the past
ten years we’ve seen a 10 per cent increase in the
number of teachers. We now have two and a half times
as many teaching assistants as a decade ago and we also
know, as per the Unison survey that came out last week,
that two thirds of those are taking whole classes which
they are not in any way qualified to do. We know that has
a bad effect on education, particularly those who need
the best education.
Academic research has fairly consistently shown
that class size has a negligible impact in the majority of
cases. There are some exceptions to that, particularly
reception and possibly Year 1, and there are certain
other situations, obviously I’m excluding SEN from this
area, but in the majority of cases, class sizes within
sensible parameters doesn’t have a huge impact. What’s
more, I think teachers know this and one indicator this
recently by the Association of School and College
Leaders found that two thirds of head teachers would
reduce class sizes as a priority measure given a cut of
just 2 per cent in their budget, which suggests that in
fact heads think that class sizes can be bigger without
affecting quality as well.
The other big area of capital spending is buildings
and capital expenditure. Building Schools for the
Future was, and still is, a huge mistake. There are and in
particular were a lot of schools that were falling down
and in dire need of repair, we should have repaired
those rather than focusing on rebuilding and
refurbishing every single school in the country. It is a
colossal waste of money, there are also huge
inefficiencies in the system and I know that Steve is
going to talk about that so I’ll leave that there but what
matters, as we’ve seen, is teacher quality and not
buildings and staff.
Just briefly, the other issue I want to touch on and
again it has been talked about today, the purpose of
education and mission creep, what are we actually trying
to achieve? The amount of stuff that schools have
responsibility for now I think is beyond most people’s
comprehension.The beginning of the day, the end of the
school day and what they are meant to do when they are
there, what are we actually trying to focus on? I think if
we ask ourselves that we will hopefully be able to get
better value for money.Thank you.
Steve Beswick:
Thank you. Education for less and the question was
does a reduction in spending mean a reduction in
quality? I suppose my answer to that is not necessarily,
but it does depend on how you spend your money. I am
going to concentrate on three areas: the contribution
schools can make, the contribution industry can make
and the contribution that government can make and
clearly I’ll have an IT theme around that given who I
work for and the job that I do.
Let’s look at the schools’ contribution first. I think
with the situation that schools find themselves in today
they have to look at themselves as a business as well as
an educational establishment and businesses today
invest in IT for two main reasons, one to improve
productivity and two, to save costs. Now I think we have
done a lot of work and we have been part of that over
many years, how IT can contribute to teaching and
learning and we will absolutely continue with that thing
but there is very little work being done in schools
around how IT can save costs in the same way that a
business would and I think that’s something that has to
be looked at.
We’ve done some work in that area and spoken to
a number of schools who have looked at this and just to
give you some examples of cost saving ideas that they
have come up with, first of all stop doing all the
photocopying. The photocopying bill in a secondary
school we’re told is actually bigger than the IT budget,
so start viewing the information instead of
photocopying it is one idea. Switch to virtualising some
of the servers you’ve got in your school, you can save a
ton of money on hardware by virtualisation and you can
save a ton of electricity if you use new software that’s
around today to reduce your electricity bill. So just three
ideas. In total we have got 14 different ideas on how to
save money, all the data has come from secondary
schools independently of us in terms of the use of
technology and when you add those up together, of
which I have given you three examples, the total is
£400,000 over three years cost saving. Actually you
reduce your costs and actually end up with quite a good
IT infrastructure as well because you have to invest in
IT to save money elsewhere.
The second point I want to make is industry
contribution and first of all I want to talk about this in
the context of industry trends and technology trends.
There are going to be new ways, there are new ways
today of delivering IT services and you hear a lot of
jargon in the industry called cloud computing. Cloud
computing is really a rich set of IT services that can be
delivered over the internet from large scale data centres
and we, along with other organisations, are investing a
lot in this area. Just to give you an idea, Microsoft is
investing and we purchase 10,000 servers a month to
put in our data centres around the world, so we are
making a big investment and there is very cost effective
ways of using IT, using the cloud. One service today
that we offer is free email services. There are a lot of
schools today with legacy systems paying for their
email, we are offering a very, very rich email service free
of charge so there is money saving that can happen
there as well. As an industry we have got to help schools,
and we take this very seriously, to understand the cloud
and as to how the cost savings can be made.
Another area where the industry has to, if you
like, help the school system is around things like
supporting quality teachers. We heard the theme today
around CPD, then we as an industry have got to do
much better work in terms of how do we embed the IT
with the CPD, in terms of what that’s going to look like
in the future. We do invest a lot of money today, we have
many programmes, one of them is called “partners in
learning” where we are investing in curriculum to help
teachers understand how it is easier to embed
technology into how they teach because that’s
something that is going to get more and more in the
future, so we think we have been listening in that but
there is an industry contribution to make.
The final one is the government contribution.
We can talk a lot about the government contribution to
cost saving, I just want to talk about one which is about
building schools. BSF is a hot topic at the moment if you
like but I just want to talk about one school we’re working
with, it’s a trust school, Monkseaton High School in
Newcastle, it was the first trust school I believe in the UK.
They have gone through a new build, outside of PFI,
outside of BSF, they’ve done an audit on their build, it is 9
per cent less than the average of the industry. It didn’t
include any consulting costs associated with the
programme itself and they went ahead outside the control
if you like of the local authority to go and built what is a
fantastic school and the costs being lower was no barrier
to the innovation and quality of what they’ve got up there.
Having been up there and seen it, there are lots of awards
for the construction and certainly the way the IT is
embedded is brilliant so three ideas for costs savings
– schools contribution, lots of ideas and ways there;
industry has got a point to make and obviously
government have got a contribution to make as well.
Andrew Haldenby:
Steve, fantastic and lastly Chris Davies.
Chris Davies:
I aim to be similarly brief and will build I suspect on a
lot of what has already been said. I was really
encouraged when I saw the format of this discussion
because I think schools resources hasn’t been a subject
that has been particularly high on the priority list in
terms of discussions around education and that is
exactly the reason that Dale has described in terms of
funding settlements, given that for the last 30 years it
has been steadily increasing why worry about how
schools are actually using their resources?
I think what we’ve seen is an increase in
[disengendering] and this increase in a culture amongst
many schools that it is something that they don’t
www.reform.co.uk
99
Schools for the future / Reform
particularly have to focus on and therefore haven’t
devoted an awful lot of attention to looking at for the
simple fact that by and large, in the majority of cases,
most schools have had enough resources to do broadly
what it is that they need to be doing. There are obviously
exceptions but most schools are in a pretty much okay
kind of position.
Coupled with that then, and we have heard a lot
about accountability today, we haven’t seen very much
grit around financial accountability for schools. Ofsted
makes a value for money judgement but that has got
nothing to do with how effectively a school manages its
budget and schools that run into deficit can go for really
quite a long time trundling along at that kind of level
before there is any serious intervention to deal with that
problem and of course last time there was a great
opportunity to put a bit of pressure on schools use of
resources, back in 2003 when the NI contributions
looked as if they were going to cause big pressure on the
staffing budget, the government stepped in, intervened
and bailed schools out of that. So this is not a subject
that by and large many school leaders have had to focus
on and that means the period that we are about to go
into is going to be hugely challenging for an awful lot of
school leaders. Most people weren’t there the last time
we were dealing with a declining budget.
The good news is that there are things that
schools can do, some are easier than others and one
thing that we see from a lot of the work that we do out in
schools is heads saying how on earth can we make
efficiencies when 80 per cent of my budget goes on
staffing? Well yes, you can make efficiencies out of the
20 per cent that goes on pay spend but clearly dealing
with workforce is going to be where you’re going to have
to go if you are going to have to deal with the 10-15 per
cent cuts that some people are suggesting are going to
come out of the spending review.
On procurement, I absolutely echo what Steve
has talked about, photocopying is a fantastic example of
where schools are hugely inefficient, not just in their use
of it but in the contracts they enter into. The research
that we’ve been doing shows that you could easily strip
out probably across the school estate as a whole
somewhere in the region of between three and five
hundred million pounds simply from getting schools to
manage demand and their contracts more effectively.
They don’t have to change suppliers, just get their
suppliers to do what they contracted them to do in the
first place, if they contracted them which is a wholly
separate issue.
Around workforce and getting into the meat of
how you get the most out of that, I think there are
some big challenges here for school leaders. Teaching
assistants I think we have already touched on, I think
that is a hugely challenging area. Areas round making
the best use of curriculum in order to drive changes
in workforce structures is a great opportunity and
linked to that is having a clear understanding of what
works and if you like what doesn’t and we’ll come
back to that in a second. I think there are also
opportunities for changing the ways that
management structures have developed over time
and part of this links obviously into things around
clusters and federations that are developing as a big
policy theme but even with schools there are
significant opportunities that we’ve found from many
of the schools that we’ve worked with. Then of course
100
www.reform.co.uk
Schools for the future / Reform
there is performance management and it is absolutely
right, we manage our teachers performance very
poorly and I think that means we’re not getting best
value out of many of them.
Alongside all that there are a whole series of
blockers. I think schools not knowing how to
approach this is a big challenge, and that is nothing to
do with the quality of leaders that we’ve got, I think
it’s to do with the experiences and training that we’ve
been given, we know there is very little decent training
around management as opposed to all the other things
that we expect head teachers and others to do. I think
there are likely to be difficulties therefore around how
schools can approach this from a strategic perspective
and understanding exactly what are they there to do,
what does that mean and the way in which they use
their resources. I think the point you raised Shaun
about how can you use learning from what works in
order to drive efficiencies, I think that comes from
having an understanding of how schools have added
to their burdens by
taking on more and
we manage our teachers’
more without giving
performance very poorly
up some things that are
and I think that means
less effective and I
we’re not getting best value think it was Dylan’s
point earlier about
out of many of them.
leadership being about
stopping people from doing good things in order that
they can do better things, I think that is absolutely
right and this notion of abandonment that is starting
to develop within the sector of giving things up is
something that we are going to start to see an awful lot
more of.
Lastly, I think one of the biggest challenges that
is going to prevent schools from getting the best out
of their resources is that increasingly they are going
to be on their own and I buy into the suggestion that
there is a lot of pent up talent in there but I also think
we need to come back to a bit of reality that alongside
all the inspirational heads, many of whom are here
and many of whom have sat up at this table, there are
a lot who will struggle with this sort of thing and as
the Department withdraws into the centre and as
local authorities start to wither on the vine, who’s
going to help those schools deal with these things in a
meaningful way so they don’t damage outcomes?
Andrew Haldenby:
Fantastic. So here we are – we are going to spend less
on bureaucracy, we are going to have bigger class
sizes, few staff, lower pay, we are going to grind our
suppliers’ faces in it until they lower their costs and
we’re going to cut deprivation spending in deprived
areas. Is that right? That is obviously where the
money is but is … oh sorry, we are also going to stop
building so many schools – so is that the right
territory and are we happy as a group that that can go
hand in hand with genuine improvement? I did say I
was going to pick on Gill Bal, who is a head teacher in
North London and Michael Haldenby, my cousin
indeed, who is a deputy headmaster in London and I
shall also pick on Amanda Spielman as well, because
these are people who know about school budgets and
I would be interested in your thoughts about how you
can cut 20 per cent out of your budgets in the next
two or three years.
Gill Bal:
Hi, I am Gill Bal, head of Wembley High. I think you
have to be rational and logical about this. In my school
about 80 per cent of the budget is spent on staffing so I
have to look at staffing. I think the school pay and
conditions document really does tie my hands up. The
kind of situation has arisen where because of the school
pay and conditions document I am not allowed to use
teachers for cover so problems are created through that.
We are looking, or my governors will be considering,
whether we can become an Academy and we have
expressed an interest in it so there may be some
freedoms in all sorts of places. I think the government
has got to stop throwing money at schools that are not
doing so well, that philosophy and way of thinking has
got to go and schools that perversely are not doing well
are the schools they thought would be best served under
BSF, so that’s even worse I think.
I think what you have to do is trust school leaders
to start working together, you have got to give them
freedoms to manage their budgets, to look at how they
can produce savings. They know how to run schools
efficiently, mine’s an outstanding school, I know how to
do it, I can work with others and help them and learn
from them how to do this so I think let us work together,
give us the job to do and we can do this job.
Michael Haldenby:
Thank you. Shaun , you made an interesting point, the
one I’ll focus on is freeing up school leaders, giving them
freedom which of course my ears pricked up at that
because that’s what we’re after the whole time.When I
analyse the work I do, in a nutshell it is making sure that
we don’t get sued that is the number one job on my list
every single day.That sounds flippant but we have got
safeguarding now which means we are safeguarding
training all summer so all the work on teaching and
learning has gone out of the window.We’ve got the Every
Child Matters agenda still there, you name it and we’re
avoiding being sued all the time and that culture of
litigation isn’t going to go away so in that context how
would you like to be freed up as a head teacher is my
question and is it at odds with what you can do in reality?
Amanda Spielman:
I think I’d like to add something rather than ask a
question if that’s all right which is simply to say we’ve got
eight schools, I think it would be wrong to regard schools
as paragons of perfection. In general I think the closer
decision making is to the pupils the better.We have got
that through all our schools but the very rapid growth in
school funding has led to a lot of inefficiency at school
level. I would also like to say I feel very strongly that the
quality of school spending would be enormously
improved if there could be transparency and certainty
from year to year about the level of funding rather than
opaque formulas and endlessly shifting money coming
from an endlessly shifting set of pots.
Andrew Haldenby:
Thank you, let’s take those and start with Shaun and
then Chris and Dale and Steve.
Shaun Fenton:
The mission creep you talked of, unfortunately that’s
just an inevitability now. If schools don’t also try to
help children develop their own self esteem, the
capacity to work with others, to understand their role
in society, everything from good manners to high
aspirations, if we don’t do that then we are leaving a
social problem that no one else is going to pick up. It
would be great if we could say let’s just focus on
getting the academic learning or something slightly
broader than that but I fear that’s not what we need
for our country.
I would just say, photocopying in my school is
£40,000. If we halve it it’s £20,000, 15 per cent of my
budget is going to a million pounds, so we need to keep
a sense of reality. There is a real danger that the private
sector says, oh it’s all sloppy in the public sector and
there is money sloshing around. Actually we do try to be
rigorous although I do agree that the “throw more
money at them every year” type of approach doesn’t
encourage that.
The comment I will just make on the freedoms,
there is a real danger of careful what you ask for. I
suspect the security of tenure for heads in the next ten
years, especially if they become heads of academies
and if there are more freedoms, security of tenure will
reduce because there will be more autonomy but also
more accountability and more of us getting pushed out
because we’re not performing well enough, which as a
turkey approaching the end of November, I’m feeling
a bit awkward about but for our children’s sake – well if
I say why should a head of department have a job for
life, then why should a head have a job for life? I
suppose if they’re doing a great job they’re fine, if
they’re not they move on to a different job. It’s an
awkward thing to say but it is probably an idea whose
time has come.
Andrew Haldenby:
That’s true and fine, you’re going to be more
accountable but the quid pro quo of that are greater
freedoms and do you want those greater freedoms to be
able to save money, that’s the question?
Shaun Fenton:
What heads have become very good at and in the last
ten, fifteen years that I have been in and around them,
is finding whatever they are supposed to be doing and
then perverting it into a way that works for their own
local context. If we didn’t have to do that ridiculous
rewriting of instructions and could just say … In fact
the profession has been beaten up. I said to some
teachers the other day, never mind what you think you
are supposed to do, just remember why you came in to
education. Re-light the torch of those values that you
came in for and what would be the right thing to do?
They looked at me really suspiciously, how could that
possibly be a question that anyone would genuinely
ask! [Laughter]
Chris Davies:
If I can I will just pick up on your question actually to
start with, I think I’d frame the question differently. It’s
not that heads should be given greater freedom in order
to save money, it’s that heads should be given greater
freedom to deploy the resources that they’ve got in the
best way in order to achieve the outcomes they want to
achieve. I think that’s part of the problem with this
subject, it becomes all about the [inaudible]
complexities and the pupil premium and funding
formulae when actually it is about how are you using the
www.reform.co.uk
101
Schools for the future / Reform
resources in order to do the best for the kids that you
have in the school at the time. I think that’s where Jill’s
point becomes interesting about working together, and
linking up with Shaun ’s point about there being greater
instability and uncertainty for tenure.
Certainly many of the heads that we’ve spoken to
would be delighted to help other schools but why would
they because what they are measured on and what
they’re assessed on is the performance of their school
and how they have done in relation to that. I think that is
one of the big challenges, that we are not necessarily
building a structure that will encourage schools to work
together in a way that they are going to need to in order
to achieve some of these things. It isn’t just taking 20
thousand quid off photocopiers, the reality is that it will
be cutting in to workforce and that’s people’s jobs and
that becomes much more difficult.
Dale Bassett:
Just briefly picking up on Amanda’s point on
transparency and particularly certainty in funding.
Chris said it is about heads using resources well and
the kind of funding system makes it pretty much
impossible for heads to
actually do that, the
It is about heads using
resources well and the kind fact that you don’t
know what is going to
of funding system makes it happen year on year,
pretty much impossible for particularly as far as
heads to actually do that … capital budgets are
You get the wrong spending concerned.You get the
wrong spending at the
at the wrong time, you
wrong time, you spend
spend the money because the money because
you’ve got to, the Audit
you’ve got to
Commission tells you
off for running a surplus, God forbid, and I think it is
going to become an increasingly big issue. At the
moment there is the minimum funding guarantee that
gives you, whilst not certainty, at least some idea that
the numbers are going to continue going in the right
direction. That presumably is not going to last. The
Government has, in my view commendably, said it is
going to try and move towards a national per pupil
funding formula. The complexity of the current
system means whether it can ever achieve that is a
question mark, but that would go a long way to helping
solve that particular problem.
Steve Beswick:
Just a couple of comments on some of the questions.
First of all the sharing of best practices and head
teachers getting together. I think in the future
technology has got a role to play now as well.
Everybody is busy but how do we share best practice?
We need that even more in a devolved system that’s
going to happen than maybe we’ve had previously so
we see good practice but very little way that systemic
change can happen around the use of IT across the
system so we think again that the industry, not just
Microsoft, but the industry has a role to play in how
we foster people getting together with very busy lives
and how you get head teachers talking to head
teachers, that’s the first point.
The freeing up of school leaders, yes, when I
look at it from a business point of view, as I say, if you
are a business person running a business like I do, you
102
www.reform.co.uk
Schools for the future / Reform
have to be free from the shackles if you like to make the
decisions in order to make the cost savings that I have
to do every day so I agree, in terms of freeing up
school leaders.
The other thing around transparency and round
year to year uncertainty, we’ve worked on projects
where there has been some certainty and seen some
fantastic results, where you are probably trying to get
parents involved more in the school, you are using
technology to link the parents to the school, not just
around how the pupils are doing but lots of other areas
as well and community interest as to how that school
can work within that community, to the extent where in
some areas of high deprivation where there was some
money over many years spent, we had a situation where
one parent who was long term unemployed found out
that by using the parental engagement system that he
was actually pretty good at IT and actually taught
himself because he wanted to find out about his child’s
progress, taught himself IT and got a job. I’ve just given
that as an example because that is multi-year type work,
multi-year type funding that has been available in the
past but those are the kind of results you can get when
you are looking at multi.
Andrew Haldenby:
If we can have Richard Taylor again and is that Tony
Gardiner at the back and then Robert again.
Richard Taylor:
I’ll be terribly quick, Andrew. I think that we should
be spending a lot less money on ICT, the rest of the
world calls it IT. BSF was £16.75 per pupil, the latest
figures from the Independent Schools Council
showed that independent schools spend £150 per
student per year so roughly they spend a third if you
look at the grossed up figure. Oddly enough
secondary government schools, according to the
Publishers Association, spend around £2 per pupil
on books, private schools spend about £100. So
perhaps we have a bit of a cargo cult which
unfortunately blinds us to things that might actually
lead to some real improvements.
We can also stop a hold of non evidenced based
large education programmes from the centre, things like
Teachers TV for
If the government had given example or laptops for
teachers where we
that money to Reform to
spent 20 million giving
do something in schools
away 200,000 laptops
and given you 20 million,
for absolutely no
purpose. Now if the
they wouldn’t have
expected to you to spend government had given
money to Reform to
15 million on the evaluation that
do something in schools
and five million on
and given you 20
delivering the programme. million, they wouldn’t
have expected to you to
spend 15 million on the evaluation and five million on
delivering the programme, so I think that is something
we have to look at.
Also I would disagree that free really means free
and a good example is that Sydney University went to
GMail. The problem they had was the huge information
security and information sovereignty issue that the
GMail service was based in America which meant that
all of their intellectual property would have been
available to US authorities if it was requested by a court.
So Sydney University’s GMail server is now based in
Switzerland. And whether you use Bing or use Google
to do a search, apparently according to the latest
research, one search on Google is the equivalent energy
use, because of all the servers in the background, of
boiling two kettles. So actually it is not really free at all, it
just means you have moved the cost base.
Tony Gardiner:
I don’t know if I’m alone in feeling we have got
hijacked by the ‘less’ and lost sight of the ‘education’.
I’d like to draw attention to and comment on two
aspects where I think this title applies which again
underlines the difference between the ethos
difference between independent and state schools.
One is professionalism and willingness to work out of
hours and out of term
time. Cover must be
I don’t think schools have
absolute curse for
been in the habit of saying an
an awful lot of heads,
we need to do something
somehow somebody
extra therefore we should
has to re-negotiate this
stop doing something else. whole deal, as they
have done with the
GPs but we’ll leave that aside, so that people will
behave professionally, will continue learning in the
vocations and not expect to be paid extra but may get
promotion as a result.
I think you can do a lot more for less if you
re-negotiate and get the job done on the cheap, where
I am not sure you can do it for much less, you can
abolish QCDA. The idea that you can go to
universities and find experts who will advise you on
how to do the curriculum is a complete joke because
the JMB 30 years ago was dominated by Leeds,
Sheffield, Liverpool, Birmingham, Manchester and
there were people in the universities who engaged
with the curriculum. Now there aren’t. So by all
means involve universities but there is a vacuum at
the moment as to how we are going to rethink the
curriculum. If you want to do the last session which
was raising the bar, you cannot do it with Curriculum
2007, it is awful. So we have got to redo something
and I’m not sure how we can do it for nothing.
Jonathan Holland:
Jonathan Holland, Tribal. Chris’s point that slipped
out at the end about abandonment is I do think is
very important. I don’t think schools have been in the
habit of saying we need to do something extra
therefore we should stop doing something else. I had
a practical example recently of a school that provides
online reporting to the parents suddenly realised why
on earth were we providing annual reports as well
and stopped doing it. That is a simple thing but it
saved a lot of activity.
The other point is taking your point about
education. CPD is going to become increasingly
important. We heard a lot this morning about
freedom but I also heard a lot about things that were
going to change which have a lot of CPD implications
in it and it links really with Steve’s point. We do have
the technology now to provide any time, anywhere
learning, to be bespoke, to be accessed whenever
teachers or staff want to use it, for them to self assess,
for them to go for materials that they need to support
them. Tribal has an NCTM model that has some
elements of this but the technology is there where you
can actually improve CPD at less cost and we ought
to be looking at things like that.
Robert Moreland:
Robert Moreland. I should also declare that I come
from Cheltenham and I know that school and have a
high regard for it, even if you have become mixed.
I quite simply want to pick up what the lady over
there said about money not being thrown at bad schools
and certainly looking at the area around my school, a lot
of money has been thrown under BSF to schools that
are low academically and we’re actually in the next
phase and I think one of the things that the government
has to look out for is it actually may well be starving the
schools that are gong to need the capital which we
certainly do.
My other question was quite simply, someone
who hasn’t been mentioned which is the School
Improvement Partners and I suspect this leads to a
difference between governors and heads because I get
the impression that heads like them, we as governors
hate them because we regard them as local authority
spies and indeed on the side of the head.
Joe Garrod:
Joe Garrod, Navigant. I was very interested to hear the
panels’ comments on how the concept of free schools
and how the associated costs of putting further surplus
places into the system along with the capital revenue
costs of establishing new smaller institutions can be
reconciled with at the same time delivering education
for less on a system wide basis. I’ve not heard a
convincing answer in that respect and would interested
if there any insights on the panel.
Andrew Haldenby:
There are quite a lot of points there, I might divide them
up. Steve, do you want to take Richard Taylor’s point on
the ICT and also the point from Tribal, a more positive
point, on ICT. Shaun , Tony Goddard is absolutely right
saying this is about more as well as less, is he right that
we should be getting more out of teachers in the
holidays? Chris and Dale, that’s a very important point
on free schools, do they make the system less efficient?
So let’s do those, Steve.
Steve Beswick:
First of all, Laptops for Teachers was quite some time
ago but you cannot just throw IT out there and expect
people to use it if they don’t know how to use it so you
have got to have it with CPD so that’s why investment
needs to be made by the industry to help. This idea of
just taking money and buying kit is wrong.
On the other point around free, I suppose when
I say free I mean from a Microsoft standpoint there’s
no licence, there’s a 10 gigabyte inbox that we don’t
charge for and a 25 gigabyte space so is there a cost in
setting that up by people? Yes. Will you save money
because you don’t have to buy servers? Yes. The data
resides in the EU, we’re not going to use it for
advertising at all, we’re not going to use any of the data
and we can guarantee that. It is an investment model
by us. Okay, free might not be absolutely free but my
point is that in the cloud data environment there are a
lot of savings to be made.
www.reform.co.uk
103
Schools for the future / Reform
Dale Bassett:
Yes, free schools and surplus places. Well obviously the
Government has a very neat answer to this, which is if
you give every pupil the same amount of money then it
doesn’t matter how many new schools you build, you
are still only spending the same amount of money for
the same number of pupils, the idea being to move the
surplus places from the bad schools into the good
schools. Well it is lovely in principle but how on earth is
it going to work in practice? It probably isn’t.
There are two parts to this, the first I think is on
capital and the answer is it’s not going to be a case of
building lovely shiny new schools like the first
generation of academies, that just isn’t going to be what
it is. It is going to be making do and mending with what
you can, it is going to be renting, it is going to be
innovative use of other spaces like office buildings and it
is also going to be the Government hopefully trying to
figure out some sort of way to provide a financial
guarantee to schools so they can go out to the private
sector, the financial sector and get capital expenditure
up front that they can amortise over time.
The thing about free schools is that they create
an incentive. If you give every pupil a fixed amount of
money and tell every parent they can take their child to
which ever school they are going to go to, the parent by
definition will, should anyway, seek out value for
money. They are going to seek out the school that is
going to deliver the most for that fixed amount of
money so in actual fact that can be a mechanism for
increasing efficiency rather than decreasing it,
assuming that it is set up right, assuming that the
information is there.
Shaun Fenton:
Just to add something on free schools. From a school
leader’s perspective I think it might increase a healthy
but sometimes uncomfortable dynamic where parents
and other groups might engage more with the existing
schools as part of their evaluation as to whether or not
they are going to go off
If you give every pupil a
and their expectations
fixed amount of money and of their ability to
influence the way
tell every parent they can
schools are run might
take their child to which
be raised and parents
ever school they are going may feel they are a
more empowered
to go to, the parent by
stakeholder because if
definition will, should
you don’t make it work,
anyway, seek out value
we’ll go off and set up
for money.
another school. There
will be loads of barriers
to entry but there may still be a dynamic there that
encourages that type of thinking.
Should we get more from teachers? We heard
an example, I can’t remember the exact figures but it
was something like between forty and fifty times
more was spent on books in an independent school
than in a state school. Before we compare the
outcomes of state school teachers with those from
independent schools have to remember the resource
in Cheltenham, the fees for the school that you
probably attended are probably four times as much
per head … over £20,000 a year compared to the few
thousand we get in our schools. So if you reversed the
funding model and state schools got four times the
104
www.reform.co.uk
Schools for the future / Reform
funding they get now and independent schools had to
work on a quarter the funding they get now, it might
not take too many generations before the problem
with independent schools was of under-performing
and not meeting parental expectations. So we need to
just be careful about that, my teachers work tirelessly
and endlessly.
Can we do it, can we get more for our teachers?
Well we have to. We’ll rethink, we’ll regroup, we’ll
come together because actually teachers are still
driven by vocation in many cases. Also we have got in
our care wonderful young people, the future of our
country, and for many teachers it is still a privilege to
walk with them on that journey from childhood to
young adulthood. So can we? We have to, we will,
because they only get one chance at a main education
and teachers will be committed enough to get it right
despite the funding cuts. That’s the hope and
optimism that I have, the positive education that
teachers will see the problems and find a way of
overcoming them.
Chris Davies:
I’ll just add to that briefly. I think that’s right, I think
that’s where Gill’s point about greater freedoms
around terms and conditions becomes important
because then you can have meaningful performance
management rather than the cargo cult version of
performance management that operates in most
schools at the moment.
I thought Dale’s exposition about the concept
behind free schools was excellent. I don’t know if it is a
convincing answer about what’s going to happen. The
bit that Dale didn’t touch on was the flip side of what
happens then with market failure because there will be
free schools that do go under and they will have a cost
associated with them and even more worryingly there
will be the state schools, the still in local authority
schools that really start to struggle and how do you
deal with those financial issues? I’m pretty sure the
Department and Ministers at the moment have no
idea how they are going to deal with that.
have a dialogue, he wants to stay in touch, he wants
our help with thinking about these questions so what
I would like to do is keep in touch with all of you
going forward now, if I may, to keep inviting you to
events like this, perhaps not always as big as this,
often smaller than this and to be one of the centres of
thinking in this crucial period about how we do
improve the education system on more limited
resources. So if Reform can do that it will be because
people like you do want to give up your time to come
so I am incredibly grateful.
Thanks again to our sponsors, to PA
Consulting, to Pearson, to Cambridge Assessment
and of course to Microsoft because events like this do
have a cost and they do take some resource to put on
so you will find your commitment is essential but also
you have been willing to come and engage and to
help us understand these issues and you have
knowledge which too often is ignored I think, so
thank you so much for that.
My last thank you must go I think to all of our
speakers because we have had an incredible range,
and all of them extremely strong presentations so
thank you very much indeed.
Andrew Haldenby:
Great. At the same time as closing the session I am
going to close the conference. Let me just say thank
you so much to people who have stayed in full
attention which is wonderful for an event like this. As I
said, what we are going to do is transcribe it and send it
to everyone here and also send it in to the Department
for Education and the Treasury as part of our
submission to the Spending Review. I think what Nick
Gibb will think when he reads the transcript is that
there are a hell of a lot of people out there who he
should keep in touch with, who will help him not just
on if you like the curriculum side which is clearly his
personal passion but also on the resourcing side which
we have just got into today. It hasn’t been front and
centre in the debate on how to save money in
education but it has clearly been on people’s minds,
the leaders here. So he can draw on all that.
Equally I think there is a slight sense, well a big
sense today of people wanting to get on with it and
not have another set of political initiatives coming in
and that might just be a bit of a challenge for him
because he wants to come in and make his mark, but
that’s all right because the key thing is he wants to
www.reform.co.uk
105
Public services and the deficit / Reform
Public sector productivity / Reform
Programme
Reducing the
deficit and improving
public services
Improving public sector productivity
Public sector management
A new era: the rights and
responsibilities of individuals
and the government
Government as commissioner
not provider?
With Colin Barrow CBE, Aidan Connolly, The Hon Sir Roger Douglas,
Alan Downey, John Fingleton, Allister Heath, Rt Hon Margaret Hodge MBE MP,
Michael D M Izza, Bernard Jenkin MP, Rt Hon Francis Maude MP,
Colm McCarthy, Tony McGuirk QFSM, John McTernan, Amyas Morse,
Paul Pindar, Colm Reilly and Julie Spence OBE QPM
08.15 – 08.45
Registration and tea and coffee
08.45 – 09.00
Welcome and
introduction
Andrew Haldenby, Director, Reform
Michael Izza, Chief Executive, ICAEW
09.00 – 09.30
Keynote speech
A keynote speech by Rt Hon Francis Maude MP, chaired by Andrew Haldenby, Director, Reform
As Minister for the Cabinet Office and Paymaster General, Francis Maude is responsible for
ensuring that public spending is brought under control without damaging public services. Mr
Maude will make a keynote speech setting out the Government’s plans for reducing the budget
deficit and improving public services.
09.30 – 10.30
Improving public
sector productivity
A panel debate chaired by Andrew Haldenby, Director, Reform
All public budgets will come under increased pressure as public spending is brought under control.
The good news is that the fiscal crisis presents an opportunity to drive innovation and productivity in
the public sector. But how can more for less be delivered in practice? What can be learnt from those
who are already cutting costs while improving quality? How will the front line of services have to
change?
Bernard Jenkin MP, Chair, Public Administration Select Committee
Aidan Connolly, Chief Executive, Sodexo UK & Ireland
Colm McCarthy, Chair of Irish Special Group on Public Service Numbers and Expenditure
Programmes and Lecturer in Economics, University College Dublin
Alan Downey, Partner and Head of UK Public Sector, KPMG
10.30 – 10.45
Coffee
10.45 – 11.45
Public sector
management
A panel discussion chaired by Greg Rosen, Consultant Director, Reform
Reforming public services will involve reshaping the front line. Management is the key to a new era
of greater productivity. A culture of poor performance management presents a barrier to those
effective managers who do want to bring about change. What is needed is to transform the
structure of our public services to support these leaders and to change the behaviour of the rest of
the public service workforce. The key problems with current performance management structures
and the changes needed to improve them will be discussed.
John McTernan, former Political Secretary to Tony Blair
Michael D M Izza, Chief Executive, ICAEW
Tony McGuirk QFSM, Chief Fire Officer, Merseyside Fire and Rescue Service
Julie Spence OBE QPM, Chief Constable, Cambridge Constabulary
11.45 – 12.45
A new era: the rights
and responsibilities
of individuals and the
government
A panel debate chaired by Lucy Parsons, Senior Economics Researcher, Reform
The link between taxation and public services has been broken, with the expectation that the UK
can have high levels of public spending for moderate taxes. The British public are waking up to the
realisation that we cannot have it all. The fiscal crisis will give way to new era of smaller government
and balanced budgets. But this will require a radical shift in people’s expectations of the services
and benefits available to them, and clarity from political leaders over the role of government.
Rt Hon Margaret Hodge MBE MP, Chair, Public Accounts Select Committee
The Hon Sir Roger Douglas MP, New Zealand Finance Minister 1984-88
Colm Reilly, Head of Government Practice, PA Consulting
Allister Heath, Editor, City A.M
12.45 – 13.30
Lunch
13.30 – 14.30
Government as
commissioner not
provider?
A panel discussion chaired by Nick Seddon, Deputy Director, Reform
In the new era of fiscal discipline government will have to do less. What it does do will have to be
done in different ways. This session will examine how the government can best deliver those areas
of public services that it is responsible for. How can it become a commissioner of more public
services, rather than a provider, and how would this improve value for money? What is needed to
improve procurement capabilities in the public sector? How can the private sector help drive
innovation in public services?
Cllr Colin Barrow CBE, Leader, Westminster Council
Paul Pindar, Chief Executive, The Capita Group plc
Amyas Morse, Comptroller and Auditor General, National Audit Office
John Fingleton, Chief Executive, Office of Fair Trading
14.30 – 14.45
106
www.reform.co.uk
Close
Closing remarks on the day’s discussions from Andrew Haldenby, Director, Reform and
Nick Seddon, Deputy Director, Reform
www.reform.co.uk
107
Public sector productivity / Reform
Public sector productivity / Reform
The Reform team –
setting the agenda
Improving
public sector
productivity
Andrew Haldenby,
Director, Reform
Nick Seddon,
Deputy Director,
Reform
Dr Patrick Nolan,
Chief Economist,
Reform
Lucy Parsons,
Senior Economics,
Researcher, Reform
The October Spending
Review will set out
unprecedented cuts in
departmental spending.
These cuts will not be pain
free. They will be felt by
public sector workers, by
users of public services
and by recipients of
benefits. But done in the
right way, they could lead
to better public services
and sustainable public
finances.
The October Spending Review will see
all public budgets come under
increased pressure as public spending
is brought under control. There is a right
way and a wrong way to cut public
spending. As Ruth Richardson – who
eliminated a deficit in New Zealand
between 1990 and 1993 – has warned,
“eliminating waste and salami-slicing
existing budgets tend to be the
politician’s stock answer, but none of
these approaches go to the heart of the
problem”. The right way involves
structural reform to allow services to
offer value for money. Improving public
sector productivity requires a radical
redesign of public services.
Reducing the deficit and improving
public services is a huge challenge. But
it can be done. Reform is bringing
together leaders from the public sector,
from private sector organisations and
from New Zealand and Ireland who have
successfully improved the quality of
services and increased fiscal credibility.
Their lessons will be welcomed as the
UK sets out to restore its economic and
fiscal position.
This approach will not be possible
without good public sector
management. Reform has spoken to
good managers in the public sector.
They are acutely conscious of costs to
the taxpayer and want to be held
personally accountable for
performance. But they do this despite
the system, not because of it.
Accountability to the users of services
to local electorates or to Ministers will
improve management and performance.
Kimberley Trewhitt,
Researcher, Reform
Greg Rosen
Consultant Director,
Reform
Reform will also require a redrawing of
the boundary between state and
individual responsibility. The link
between taxation and public services
has been broken, with the expectation
of the British public that the UK can
have high levels of public spending for
moderate taxes. The fiscal crisis will
give way to a new era of smaller
government and balanced budgets.
Individuals will need to take greater
responsibility for things like their
healthcare, their post-retirement
savings and their choices over higher
education.
In this new era of fiscal discipline, what
the state continues to do it will need to
do in different ways. Many of the UK’s
public services are still provided as
state-run monopolies. This means that
they have weak incentives for better
management and lower costs.
Government should more often limit its
role to funding public services, rather
than both funding and providng them.
Government as commissioner not
provider will lead to an improvement in
quality and a reduction in costs.
As policy makers turn to the October
Spending Review, they need to focus on
the difference between cuts and reform.
The traditional British response to a deficit
crisis is to reach for the salami-slice – that
is, to leave the structure of public services
intact but shave off a pay increase here or
a benefit increase there. George Osborne
wielded the salami-slice in his emergency
Budget, for example through a public sector
pay freeze. But such an approach leaves the
structural causes of inefficiency untouched.
What successful companies and successful
countries do is to change the whole business
of service delivery, securing savings and
better performance for the long-term.
Andrew Haldenby,
Director, Reform
Bernard Jenkin MP
Scrutinising
value for money
in Whitehall
As Chairman of the Public
Accounts Select Committee
(PASC), how the Coalition
Government delivers greater
productivity in the public sector
will be a key part of my brief
and we will be scrutinising the
Government’s progress very
closely. Measuring public sector
productivity is still a developing
area, given the difficulties in
108
www.reform.co.uk
defining some of the outputs
that the public sector produces,
but scrutiny of it is long overdue
and improving productivity has
now become an imperative
rather than a luxury.
PASC’s work in this area is
likely to focus on two key areas.
The first is doing “more with
less” and the second is “doing
less with less”. “Doing more with
less” will become a mantra over
the course of this Parliament and
PASC will be in a prime position
to focus attention on the
Government’s efforts to both
improve efficiency and to
promote innovation within
Whitehall and throughout the
public services more generally
Before the election, PASC
heard evidence that there
remained significant fat still to
be trimmed in the public sector.
The Committee also heard that
as time goes on it will become
increasingly difficult to find
efficiency savings. PASC will be
scrutinising the role of the
Efficiency and Reform Group
within the Cabinet Office which
has been tasked with finding
more efficiencies and
disseminating best practice
throughout Whitehall and
beyond.
PASC has already identified
three key elements for achieving
efficiency savings and I hope to
be working on each of these
during the coming months and
years. They are political support
effective processes and Civil
Service capacity. PASC has
already identified a need to
provide better in-house training
for the Civil Service to avoid
expensive outsourcing, and also
a need to remove underperforming staff more quickly,
rather than simply shuffling
them to another part of
government.
As important as improving
efficiency, however, will be
innovation. PASC will want to
look particularly at innovations
such as free schools and reforms
to the welfare system, but also at
the effects on productivity of the
plan to publish more data on
government spending in
individual areas.
Finally, PASC will be looking
at the experience of countries like
Canada, Ireland and Sweden, to
see how “doing less with less” can
be achieved and what the likely
impact will be of government
withdrawing from areas in which
it is currently involved.
Bernard Jenkin MP, Chair, Public
Administration Select Committee
Alan Downey
Payment for
success
Public sector organisations are
facing unprecedented cuts in
funding. If these are
implemented without
fundamental change in the
way public services are
managed and delivered, the
consequences will be severe.
Valuable front line services will
be damaged and inefficiency
will continue to be endemic.
It does not have to be like
that. We have an opportunity to
address problems that have
become increasingly apparent
over the last 30 years. If we
grasp the nettle of reform, we
can make the required savings
without compromising the
most important public services.
We can implement a model of
public service delivery that will
drive continuous
improvements in productivity,
yielding benefits long after the
economic crisis has passed.
It is clear that the current
approach has failed:
• We are paying a lot more for
our public services, but the
extra money is buying less.
According to the Office for
National Statistics, productivity
in the public sector declined by
more than 3 per cent between
1997 and 2007.
• There are huge variations in
efficiency across the public
sector. If the average UK public
service provider were as
efficient as the top quartile there
would be a 20-30 per cent saving.
• Instead of challenging public
service providers to do more for
less, through tougher prices and
greater freedom to respond, we
have tried and failed to manage
the efficiency problem from
Whitehall.
• Public sector funding is far
too “sticky”. Once providers
have funding, they tend to keep
it and have it increased every
year. Attempts at public sector
reform have failed to link good
ideas with financial
consequences and vice versa.
• Performance management
has improved significantly, but
has focused on eliminating the
worst performers rather than
liberating the best to thrive
and grow.
• Public service reform has not
been radical. The underlying
structure and culture of public
service professions, institutions
and management have not been
fundamentally challenged.
www.reform.co.uk
109
Public sector productivity / Reform
• Performance management
has, in most cases, been
undermined by its disconnect
from financial management,
which remains poor in many
parts of the public sector.
To address these problems,
we need to move from
“payment for activity” to
“payment for success”. By
focusing on three simple
principles, we can effect an
historic improvement in the way
public service providers are
incentivised and rewarded:
1.Three distinct customer
roles should be created for each
of the different types of service
– personal, local and national
– with each of the customers
radically empowered to decide
what they want and from whom.
2.“Payment for success”
should be implemented across
the public sector without
exception. Where it exists
already, it should be made more
forceful and sophisticated;
where it does not exist, it should
be introduced rapidly.
3.Public service providers
should be given almost total
freedom to respond effectively
to their customers and the
“payment for success” regime,
supported by the active
divestment of public sector staff
into independent providers in
control of their own future.
Alan Downey, Partner and Head
of UK Public Sector, KPMG
Colm McCarthy
Tough lessons
from Ireland
The macroeconomic downturn
in Ireland is more severe than in
almost any other European
country. The budget deficit,
excluding the Exchequer cost of
the banking collapse, has gone
from near zero in 2007 to 11.5
per cent of GDP in the current
year, despite fiscal cutbacks
110
www.reform.co.uk
which commenced in July 2008.
The banking collapse has been
system-wide – every single
domestic credit institution
required rescue, several
collapsed altogether, and the
total cost to the taxpayer could
approach 20 per cent of GDP.
Since the first quarter of 2008,
real GNP has fallen 17 per cent
and the unemployment rate has
gone from under 5 per cent to
13 per cent. Ireland’s sovereign
borrowing costs have risen
sharply and the AAA credit
rating has been a casualty. If the
medium-term fiscal
consolidation is delivered by
2014, the exit ratio of gross debt
to GDP could be around 100
per cent.
Government fiscal actions
included expenditure reduction
packages in July 2008 and
January 2009 as well as full
Budgets in October 2008, April
2009 and December 2009. The
cumulative impact has been to
stabilise the underlying deficit
at a level which is
acknowledged to be
unsustainable, but it is clear
that without these measures
access to sovereign credit
would already have been lost.
The government intends to cut
the deficit to 3 per cent of GDP
by 2014.
Without the banking
collapse Ireland would have
experienced a deep
contraction, but the creditfuelled property bubble has
made things considerably
worse. It came on top of a
steady decline in
competitiveness since 2000,
an excessive reliance on
volatile property-related tax
revenues and a high Euro
exchange rate. Fiscal
adjustment to date has
included tax increases, public
service pay cuts, reductions in
social welfare payments and
restrictions on programme
expenditures. The Special
Group report made extensive
proposals for streamlining
public service delivery,
including the abolition of
quangoes and the merger of
those which survived. Public
service numbers have not
declined noticeably despite
recruitment embargoes and
progress has been limited in
Public sector productivity / Reform
public service re-structuring,
to which there is trade union
opposition.
Politicians have shown
readiness to contemplate
unpopular tax increases and
expenditure cuts to a degree
which has been contrasted
favourably with fiscal
consolidation efforts in other
European countries, but reform
is a slower process, and cannot
quickly be dictated from the top.
Immediate expenditure savings
do not always follow restructuring, but can absorb
ministerial time and deplete
political capital to a degree
which, perhaps paradoxically,
can make reform a low priority
during periods of fiscal
austerity.
Colm McCarthy, Chair of Irish
Special Group on Public Service
Numbers and Expenditure
Programmes and Lecturer in
Economics, University College
Dublin
Aidan Connolly
Breaking the
cultural inertia in
the public sector
The gaping £156 billion hole
in the public finances will not
get filled by burying our heads
in the sand and so we broadly
welcome the strong medicine
prescribed in the new
Government’s Emergency
Budget.
The headline 25 per cent
cuts to spending by nonprotected government
departments are, frankly,
needed to bring the books back
into balance, but the manner in
which the cuts are made will be
absolutely critical. Salamislicing this deep will risk causing
serious damage to public
services and risk delivering
“much less for much less”.
If “more for less” is to remain
an achievable goal, the public
sector must have the courage to
be radical in reforming how
public services are delivered.
Whilst there are beacons of
excellence across the UK, all too
often we see wide variation in
performance standards – in
productivity, in consistency and
in outcomes.
Outsourcing can have a
critical role to play in driving
transformational improvements
in public services. Simply
opening up a service to
competition can in itself drive
cost savings and innovation.
Tapping into the accumulated
experience of third party
providers can help to re-think
the way things are done. At
Sodexo, for example, we can
draw on our many years of
supporting clients across
private and public sectors in
80 countries in responding to
challenges, no matter how large
No example illustrates this
better than our recent
experience with the £12 billion
Defence Training Review for
the Ministry of Defence.
Through building a consortium
of “best in class” companies,
we have developed an
integrated solution for a brand
new military training estate that
will deliver world-class
technical training, whilst at the
same time releasing over 1,100
military personnel back to front
line duty and saving at least
£500 million over the project’s
lifetime.
So outsourcing can bring
tremendous benefits. But we
were lucky to have a Ministry of
Defence client with a
sophisticated approach to
procurement. Elsewhere in the
public sector it is still too
common to find a risk-averse,
prescriptive approach which
inevitably creates a race to the
bottom at the expense of quality
and innovation. Fine for
cost-trimming, but no good for
paradigm shifts.
To really deliver on the
quantum of spending cuts
required, the ultimate obstacle is
not the potential of the private
sector to help, but the cultural
inertia in the public sector to do
things differently.
Aidan Connolly, Chief Executive,
Sodexo UK & Ireland
Public sector
management
Voters were told by all Parties that while
cutting the deficit they would safeguard
the “front line” by securing savings from
efficiencies and waste. Yet barely weeks
after the Coalition takes office there is
already speculation that the Home Office
budget will be reduced simply by axing
thousands of police officers. What could
be more front line than that?
History shows that no government has
achieved the holy grail of protecting the
“front line” while cutting costs purely
through slashing waste and boosting
efficiency. Sometimes this reflects a failure
of ministerial will. More often, Ministers
have simply failed to recognise the
fundamental changes needed in public
services and the operation of Whitehall to
enable real improvements to take place.
Margaret Thatcher’s Government was
most publicly engaged in the quest to cut
waste, but it too found it more convenient
to salami-slice and to cut capital
investment than to achieve real
efficiencies. The mechanisms to enable
Ministers to identify where efficiencies
could actually be found, such as through
better performance management of public
servants, were simply insufficient. And
Ministers failed to invest the time to build
them for their successors. Will this
Government do any better?
Greg Rosen,
Consultant Director, Reform
John McTernan
The punch-bag
of lazy politicians
Michael D M Izza
Fiscal
responsibility
Public service managers are the
punch-bag of the lazy politician
or commentator. How often
have we heard the absurd and
inaccurate statement that “it is
shocking and shameful that
there are more managers in
hospitals than there are beds”?
A cheap attack is all too often a
substitute for clear analysis.
The reason is that sadly
most mainstream politicians
have an inadequate
understanding of the role of
management in modern
organisations and the crudest
of theories of motivation and
execution.
This is not surprising given the
backgrounds and experience
of the political class, but can be
disastrous when married to
their “heroic” model of
leadership – that is, their own.
Public services in the UK have
become increasingly good at
incremental change – particularly
when their consumers have been
empowered by choice and as
providers they were challenged by
new private and voluntary
competition.Today, what is
needed is transformational
change.
Powerful public service
leadership, at senior and middle
management levels, will be
essential, as will a high degree
of operational skill. We need a
new language to recognise and
reward genuine achievement in
public service management.
At the same time we need
tougher and swifter action to
remove bad managers. Not
only will they fail to deliver the
transformative change that we
need to see in services, they
demotivate staff, reducing
productivity and quality of
service.
At ICAEW, we believe that
encouraging greater fiscal
responsibility in government
will only be possible through
informed public debate and a
spirit of collaboration across
government, the public sector
and society at large. Crucially,
this dialogue requires a clear
understanding of both the costs
and the value of public services
ICAEW members – over
4,000 of whom work in the
public sector – have a key role
to play in advising and
encouraging this public debate.
We recently asked for their
views on what scope there is to
deliver better value for
taxpayers’ money. The results
suggest that there is room for
manoeuvre. Over 80 per cent
of public sector members
interviewed believe that further
efficiency savings could be
made in their organisation
without affecting the current
level of service they provide.
The scale of possible savings
is significant: 34 per cent of
respondents believe that
between 2.5–5 per cent of
discretionary budget could be
saved; 24 per cent cite possible
savings of between 6–10 per
cent; 7 per cent cite possible
savings of over 11 per cent.
Improved use of IT and
reduced staff headcount costs
are viewed as the major
opportunities for efficiency
savings.
The overall message is that
there is scope to spend public
money better. The Government
has an opportunity move beyond
simple salami-slicing of public
expenditure to take forward cost
reduction in a strategic manner
that best delivers value for
taxpayers’ money.
The expertise of public sector
finance professionals will be
critical in order to achieve this.
John McTernan, former Political
Secretary to Tony Blair
www.reform.co.uk
111
Public sector productivity / Reform
Ahead of the Comprehensive
Spending Review, the ICAEW
is calling for greater civic and
parliamentary accountability
of public expenditure and for
spending decisions to be based
on clear, transparent statements
of costs and objectives. We
suggest that all legislation and
major spending programmes
should be accompanied by clear
business cases, linking proposed
costs to statements of what it is
that the government hopes to
achieve. At an early stage of
development, major
departmental spending
programmes could be referred
to respective select committees,
encouraging Ministers to justify
the relevant expenditure on the
basis of the business case.
Parliamentarians, in any case,
should have access to the
financial expertise and
resources they need to provide
effective scrutiny.
We hope that the
accountancy profession can
play its role in helping build
understanding about the
current state of public spending.
Only through a shared
awareness of the financial
difficulty we face, and of the
opportunity for meaningful
reform, will we be able to take
the necessary steps to restore
our public finances in the
long-term and create a culture
of genuine fiscal responsibility
in the UK.
Michael D M Izza, Chief
Executive, ICAEW
Tony McGuirk
QFSM
An approach for
the future
It has been clear for some time
that the legacy of rescuing the
banks from collapse has been an
unprecedented level of
government borrowing. To
112
www.reform.co.uk
repay the debt, the national and
local government will have to
find savings and make cuts on a
scale that is unparalleled. And
now a new coalition
Government is established, the
“phoney war”
of an election is over.
Many observers are having
a field day as they wave their
cloaks of doom and compete to
guess how savage and farreaching the cuts will be,
without beginning to offer a
practical solution.
This type of doom-laden
posturing in an attempt to avoid
change and modernisation is an
anathema to the leadership of
Merseyside Fire and Rescue
Service (FRS) where we have
determinedly stayed fixed on
radically developing the scope
of the Service through very
difficult financial times and not
succumbing to self-pity when
times get hard.
With that experience, we
believe it is a perfectly
reasonable expectation of
government that leaders in the
public sector should be looking
to work with government to face
this challenge and still deliver
great services to the community,
particularly those most in need.
The leadership experience in
Merseyside could be of
significant use to this emerging
coalition. In the last eight years
we have finally tackled deepseated structural and cultural
problems within the fire service
that had defied change mainly,
ironically enough, as everything
before had been measured in
terms of the numbers of
firefighters employed.
Over the last eight years we
have enjoyed our most
successful period ever with
some of the largest reductions in
fires, fire injuries and fire deaths
of any FRS in the UK and we
find ourselves in the unusual
and slightly unsettling position
of being nationally and
internationally recognised as a
leading FRS.
All this has been achieved
whilst reducing the number of
firefighters by nearly 40 per cent
from over 1,500 to less than 900.
Tony McGuirk QFSM, Chief
Fire Officer, Merseyside Fire and
Rescue Service
Public sector productivity / Reform
Julie Spence
Performance
standards
Who should decide the
performance standards that
public services work towards?
That’s easy: the public, of course.
But do the public really know
enough to set the standards and
is it feasible to deliver what they
want or will it result in
inequalities for those less able to
make their case? The pragmatic
middle ground is for a
partnership between the public
and the professionals – where
the professionals give advice
and leadership on possibilities
and consequences and help the
public to set informed
standards.
So yes, the new political
landscape of local accountability
would seem to hit the spot. That
said, can “X-shire” sit in
splendid isolation? If there is to
be a culture of continuous
improvement, a benchmark for
services based on their cost and
results must be set.
Consequently real public value
needs local services to be set
within a national framework – or
do they?
A key consideration for all
mangers is the prevention of
perverse behaviours and
outcomes in which public sector
staff are more concerned about
chasing any targets or achieving
the public or government
standard. The motivator is
getting approval from
politicians, the media and
leaders rather than delivering
better services the public value
The challenge is to enshrine
public service in its truest,
sleekest, most efficient form. In
this time of deep cuts this is
even more important as difficult
decisions will be needed and
taken about what services can
be delivered and to what level.
All public sectors are currently
considering what exactly will we
be left to performance manage?
Will standards need to flex? Will
we stop doing some things? For
example, can we really stop the
police service being a 24/7 social
service? Particularly as the
consequences of cuts biting in
other sectors will manifest
themselves on the streets.
The time has come to review
the necessity of legislation such
as data protection, freedom of
information, health and safety
and so on, that create industries
in all public sectors and ask if
the value and safeguards given
are commensurate with the cost
of compliance. We need a
rethink on how to achieve the
safeguards without the
bureaucracy. I would suggest
that life has risks but we are
over-engineering the risk
reduction. Removing these costs
will enable public services to
concentrate on their core
businesses and allow for a wider
range of services to be
performance managed.
Ultimately those that pay for
public services must decide
what they want from their
services. But professionals must
play their part, by explaining the
“art of the possible” and the
available choices, risks and
consequences.
Julie Spence OBE QPM, Chief
Constable, Cambridge
Constabulary
A new era: the rights
and responsibilities
of individuals and the
government
In the UK, we want to have it all. In the
surveys done in the run up to and following
the General Election, when asked if we
need to tackle the deficit with spending
cuts, members of the public have
answered yes. But when they are then
asked if that means cuts in the health
budget, they say no. Less spending on
schools? Of course not. A smaller welfare
system? Absolutely not. This is not
surprising. The huge increases in public
spending over the last decade have not
been matched with a similar rise in taxes.
People have seemingly come to believe
that ever increasing benefits and public
services can be made available to them at
little or no extra cost. The result is a soaring
level of debt and what will be a period of
real pain as the country adjusts.
The new era of balanced budgets will
require a shift in people’s expectations of
the services and benefits that government
provides, and the costs associated with
them. Individuals will need to take more
responsibility for things like their health
and their post-retirement income.
Politicians will need to provide leadership,
explaining the tough choices ahead.
Lucy Parsons, Senior
Economics Researcher,
Reform
The Hon Sir
Roger Douglas MP
Reform New
Zealand Style
New Zealand’s experience
provides an important insight
into the nature of political
consensus. The fact of the
matter is that the interests of the
various groups who will be
affected are complex and
diverse. None of them welcome
the idea that their privileges may
be removed.
Consensus in these
circumstances for quality
decisions does not arise before
they are made and
implemented. It develops
progressively after they are
taken, as they deliver
satisfactory outcomes to the
public.
Important lessons from New
Zealand include:
• Only quality reform delivers
the results that a country needs.
• Do not try to advance one
step at a time – quantum leaps
will be required where you
remove privileges of various
groups all at one time. It is
simply harder for them to
complain this way.
• Speed is essential.
• It is uncertainty, not speed,
that endangers the success of
any reform programme.
• Let the dog see the rabbit.
People cannot cooperate with
the reform process unless they
know where it is heading.
• Never underestimate the
public ability to buy into a well
developed programme.
• Take the public along with you.
Tell them:
• What the problem is and how
it arose.
• What damage it is doing to
their personal interests.
• What your own objectives are
in tackling it.
• How you intend to achieve
those objectives.
• What the costs and the
benefits of that action will be.
• Why your approach will
work better than other
options.
• Don’t blink, public confidence
rests on your composure.
• Incremental policies are useless
when you have a fundamental
structural problem.
• Politicians need to keep clearly
in front of people what reform
policy is designed to achieve
for them.
The Hon Sir Roger Douglas MP,
New Zealand Finance Minister
1984-88
www.reform.co.uk
113
Public sector productivity / Reform
Colm Reilly
Creating a thinking
economy
It is a critical time for the UK
economy and for our public
services, and the Government’s
main focus has, understandably,
been on tackling the deficit.
Clearly that is a vital and
necessary task, but we also
should take this opportunity to
look beyond the narrow
question of whether we invest or
spend more. We know we need
to spend less, but we should be
looking at how we build a
different kind of economy and,
with it, a different model of
public service delivery.
This process could be
described as creating a
“thinking economy”, in which
we assess the real levers of
change within our society.
These are unlikely to be grand
programmes of change but
will be focused policy changes
that help people to take
ownership and accountability
for service provision at a local
level. The “Big Society”
concept outlined by the
current Government can
perhaps, be seen as an initial
attempt to address this issue.
However, more clarity is now
needed on the specific levers
that can be deployed to create
that kind of society and to
reform the way public services
are delivered.
Driven partly by the
pressures on government
spending, there is now a real
clamour for transformation,
reform and even revolution in
the way government operates.
The default position is that the
whole of government needs
overhauling immediately.Yet
this is too simplistic a starting
point. Government is a large
organisation with varying levels
of capability and this kind of
generalised drive for reform is
likely to be unachievable and
counter-productive.
What we need to do is to
reframe the debate so that
reform is focused across
government departments and
not just within them. Equally,
there should be a recognition
that successful reform in
government is achieved
incrementally, when small
steps are taken and where,
over time, all these changes
consistently build on one
another.
This should be accompanied
by the development of a real
understanding of where services
need to be centralised and
where localisation is a viable
option. This would result in a
balanced government where
these options are seen as
complementary, not
contradictory – not total
centralisation and not total
localisation but a balanced,
co-ordinated approach that
recognises when government
must be central and when it has
to be local.
There are five key areas
where this process could start
“While there is a broad consensus that the budget deficit
needs to be reined in, there are plenty of influential
commentators who argue that spending cuts at this time
would endanger the recovery, hurt Britain’s long-term fiscal
and economic prospects, send unemployment soaring again
and hit the poor disproportionately. I’m not convinced by any
of these claims: it seems that the opposite is true and that the
UK can no longer afford to live beyond its means, with the
state borrowing vast amounts of money to finance a badly
managed and oversized public sector. It is not moral or
progressive to borrow as if there were no tomorrow,
shackling unborn generations with massive bills and risking
a continental-style sovereign debt crisis.”
City A.M., 22 June 2010
Allister Heath, Editor, City A.M.
114
www.reform.co.uk
Public sector productivity / Reform
and where real benefits could
be achieved. The first is in
combining centralised
procurement and localised
purchasing. This would see
government centralising
sourcing and procurement
(contracts and catalogues)
whilst putting purchasing in the
hands of local organisations.
This combination approach
could apply across all of
government and could yield
savings of billions without
impacting front line services.
The second area of focus is
on improved performance
management. The previous
government had a very clear
focus on particular targets and
that approach is now being
reassessed, but whatever the
new policy framework, those
delivering it will need a
performance management
framework. A clear objective
process and giving people clear
goals can be a very effective
driver of change.
The next area to address is
government spending on
Information and
Communications Technologies
(ICT). It is currently too high
and is not delivering the
outcomes it should in the
current demanding climate. It
is vital that the role of ICT in
public service provision is
reassessed dispassionately
without the distortion of the
self-interested view of
suppliers, who all too often
capture public sector
procurers. The confusion in
ICT projects is the most visible
manifestation of lack of clarity
in the specific government
objectives and plans.
A broader challenge lies in
the need to tackle public sector
pensions. Government has
recognised the problem but a
radical approach is needed
which builds a new social
covenant. In this, workers and
taxpayers are gaining a new
understanding of their roles
and responsibilities.
Addressing this issue will
reduce direct costs but it will
also help to involve more
private sector companies in the
government supply chain
(including front line services).
Finally, the government
needs to look at creating a new
“enterprise” infrastructure that
will support the development of
all types of enterprise, ranging
from entrepreneurs to large
companies and rebuild our
attractiveness as a location for
real foreign investment – not
simply investment that acquires
assets but investments that
develop and sustain
employment and value added
within the economy. This will be
essential if we are to meet the
requirements for economic
growth, which will be as
important as cost reduction in
cutting the deficit.
In times of crisis, it is hard to
create the space to think radically
but now, more than ever, we
need to take the time to think
about the reforms we need to put
in place to create an economy
and a public sector which truly
meets our future needs.
Colm Reilly, Head of Government
Practice, PA Consulting
Government as
commissioner
not provider?
As the physicist Ernest Rutherford once said, the money has run
out so we have to think. Government will have to do less; and what
it does do it will have to do better and at a lower cost. Yet our public
services suffer from major structural issues that prevent them from
delivering value for money. Many services are still provided as
state-run monopolies, which means that the incentives are all
wrong. Consequently the increases in spending over recent years
have not been reflected in a proportionate improvement in
outcomes. The right kind of reform will address the structural
causes of inefficiency. Government should more often limit its role
to funding public services, rather than both funding and providing
them. This would mean opening up the supply of services. It would
also mean putting money back in the hands of consumers and
giving them incentives to save money when they purchase
government services. This will give us what we need: better quality
at a lower cost.
programmes in the city. We take
a neighbourhood-focused
approach to delivery and use a
consortia of social enterprises
who have the local know-how
and expertise to understand the
complex needs of our clients
and help them back into work.
In the future, we have
ambitions to expand this model
to oversee all statutory as well
as discretionary spend.
To make this work in more
service areas, and in more
councils, there are development
implications for local authorities.
The traditional bureaucratic
approach to procurement will be
a significant barrier to a thriving,
local social enterprise market. An
element of risk will always be
present in relinquishing direct
control over public services, but
there is much that local
authorities could learn from the
private sector.
Colin Barrow CBE, Leader,
Westminster Council
Paul Pindar
The Spending
Review – an
opportunity to
unleash enterprise
in public services
Nick Seddon,
Deputy Director, Reform
Cllr Colin Barrow CBE
Big ambitions in
Westminster
Too often in the past local
government has chased
government grants, trialling
initiatives here and there as long
as there is a pot of money up for
grabs. This approach doesn’t
take a strategic view of local
need, nor does it consider what
forms of service provision will
deliver local outcomes. Often,
a trial finishes and the money
goes, but the service continues
because it’s now deemed to be
essential. The result is that local
government gets bigger and
bigger.
Westminster City Council
recognised some time ago that
the public services of the future
had to change and would not
necessarily need to be delivered
by local councils. In October
2009, we re-organised ourselves,
creating a commissioning
council to analyse and understand
the overall needs of the city and
commission the services
required to meet these needs.
In order to maximise the
public funding available, we
mapped the totality of public
spending in the city.We now
know how much is spent on
public services in Westminster
and what the money is spent on.
We also know what demand there
is for particular public services.
This confirmed the need for a
joint commissioning approach.
One successful area in
practice is our efforts to tackle
worklessness. Our Westminster
Works Board brings together
all the key public sector
commissioners with an interest
in reducing worklessness,
including representatives from
the local authority, the NHS
and Jobcentre Plus. The
commissioners jointly agree
the areas of greatest need and
oversee the discretionary spend
on employment and skills
From the Coalition’s first few
weeks in office, it is evident that
the pendulum has swung from
an era of “investment led” to
“cost reduction led” public
sector reform. During my 23
years at Capita, this is only the
second time that I have
witnessed such a change and
tried to predict how Westminster
and Whitehall will implement
reform across the various public
sector bodies. While many
senior officials will not have had
first hand experience of leading
an organisation through a
sustained period of cost
reduction, there are relevant
examples from other sectors of
www.reform.co.uk
115
Public sector productivity / Reform
116
www.reform.co.uk
and service quality can be
delivered. This can be achieved
either by discontinuing activity
or by openly competing service
delivery to gauge other
prospective providers’ capacity
to deliver savings and service
level improvement.When all
public, private and voluntary
sector enterprises are being
challenged to deliver more for
less, now is the time for the most
enterprising ones to step up to
the mark.
Paul Pindar, Chief Executive,
The Capita Group Plc
John Fingleton
Competition and
choice
hospitals, even if they are
performing badly. Where exit is
impossible, the government
should seek ways to allow new
entrants, or existing market
participants with a strong track
record, to take over the
management of these services.
A number of public service
markets already contain
competing providers and yet
the market does not work as
well as it could. Where public
services have only recently
been opened up to choice some
users may not be aware that
choice exists, or may not be in a
position to choose effectively.
This can make the role of
intermediaries in advising
individuals very important.
There is also an issue
around ensuring competitive
neutrality in markets which
contain public and private
sector players.
Value for money could be
better achieved by introducing
a level playing field into this
equation. Barriers to
competitive neutrality include
differences in tax and
regulation, and incumbency
advantages enjoyed by existing
firms irrespective of whether
they are delivered by private or
public agencies.
Both user choice and
competition between providers
need to function effectively in
order to secure overall benefits
for users. Enabling choice is
important, but on its own is not
enough. At the same time,
potential competition between
providers will not be effective
unless users can effectively
exercise that choice.
Competitive pressure
provides enormous incentives
for efficiency and improving
customer service. Properly
executed, competition could
help improve the quality and
efficiency of UK public services.
John Fingleton, Chief
Executive, Office of Fair Trading
Commenting on the second televised leaders’ debate:
The UK Government public
finances are precarious and
reducing the public expenditure
share of GDP is imperative. For
the next decade the most urgent
public policy question will be
how can public services
continue to meet people’s needs
while costing less?
Research recently
commissioned by the Office of
Fair Trading highlighted that
choice and competition, when
they well, can increase efficiency,
improve the quality and range
of services on offer and create a
better allocation of resources. In
the long-term it can also lead to
greater innovation. However,
the unique character of public
service markets means the
benefits of choice and competition
are by no means guaranteed. In
some cases, these mechanisms
will simply not be appropriate;
in others, careful design will be
needed to deliver the beneficial
incentives of competition.
For public service markets
to work well, the decline and
even exit of less efficient
suppliers is critical. But it can
be very difficult, practically and
politically, to run down or close
down individual public service
suppliers such as schools and
“It was a case of ask not what you can do for your country;
ask what the government can do for you. We live in a culture
where most of the public wants to extract as many goodies
as they can for themselves, rather than accepting the need
for serious belt-tightening.”
City A.M., 23 April 2010
Allister Heath, Editor, City A.M.
Budget 2010
Taking the tough
choices
“A specimen Budget to be
published tomorrow by the
exciting and intelligent think
tank, Reform… Reform
outlines cuts that will spark a
reflex of horror in most
politicians. However, they also
observe economic realities.”
Simon Heffer, The Daily
Telegraph
REFORM
the economy where savings
have been delivered whilst also
improving front line services.
One relevant sector that has
experienced huge cost and
competitive pressures over the
last decade is the life and
pensions industry. Some long
established and respected
businesses have disappeared in
mergers that have aggressively
sought to reduce administration
costs and boost returns for their
policy and shareholders alike.
At the same time, these policy
holding customers have seen
quantitative and qualitative
improvements in the service
received, benefiting from the
convenience of checking the
value of their policies and
having queries answered online.
Customers are either served
immediately or in timescales
that were unimaginable under
the bureaucratic and paper
laden processes of a decade ago.
Firms like ours have worked
collaboratively with clients to
deliver these improvements,
whilst also being able to reduce
the annual cost of administering
a policy from £30 to £13 over
eight years.
So how can public sector
bodies with large scale
operations drive similar value for
money? It has to start with clear
and decisive leadership, coupled
with a keen commercial sense of
how savings can best be
delivered and by whom. A clear
and consistent appreciation of
the inherent and respective
strengths and weaknesses of
public, private and voluntary
sector bodies’ delivery capability
is crucial.
Of course, there are areas of
public services that must
continue to be delivered by the
state. There is no rationale for
armed service personnel, police
officers and those charged with
safeguarding the vulnerable not
to be on a payroll other than a
state one. Policy making and
commissioning or contracting
activities, for example on tax,
welfare and the environment,
should always be “core
business” for the Civil Service.
For those Civil Service
activities that fall outside of these
“core” functions, October’s
Spending Review needs to use a
clinical lens to assess how savings
Public sector productivity / Reform
Budget 2010
Taking the
tough choices
Dale Bassett
Thomas Cawston
Andrew Haldenby
Dr Patrick Nolan
Lucy Parsons
Nick Seddon
Kimberley Trewhitt
June 2010
“Charging patients a ‘token’ £10 could save the NHS
£1.6billion by 2014, the centre-right group Reform
said in a controversial report published today ahead
of next week’s Budget.”
Daily Mail
“Experts cited by Reform, the think tank, say £20 billion
could be cut [from the NHS budget] without harming
patient services”
Editorial, The Sunday Times
Transcript
Andrew Haldenby:
Good morning everyone and welcome to this major
Reform conference on reducing the deficit and
improving public services. My name is Andrew
Haldenby and I am the Director of Reform, which is an
independent, non-party think tank whose mission is to
find a better way to deliver public services and
economic prosperity in the UK. Please do not be
fooled by the rather prosaic title for this event – I admit
that the creative juices were not flowing in the Reform
office when we came up with this one.
Underneath this prosaic title is the most sexy
subject for this Parliament because the job isn’t just to
reduce the deficit. Although that is essential, it would be
just as big a mistake to treat the symptoms of the
problem rather than the cause. A public sector pay
freeze, a freeze in Child Benefit – these measures may
cut the government budget, but they don’t address the
structural reasons for inefficiency in the public sector,
and in Reform’s mind those include weak accountability
to the users of public services, an aversion to strong
management, an aversion to the private sector and a
kind of obsession, which is actually a kind of peculiarly
British thing, that the government mustn’t just fund
services – it must also provide them.
Our idea behind this event today is that by
changing the structural problems, we can not only
reduce the deficit but also transform the performance
of public services whilst keeping their costs sustainable
over the long-term. These fundamental structural
questions are what we are going to discuss today, so
let’s quickly go through the programme which is in
your brochure.
Clearly I am absolutely thrilled that Francis
Maude is able to give the keynote speech and I will
introduce him shortly. The first panel session will ask
how the public sector should respond to the deficit in
the public finances.
Underneath this prosaic
The second will ask
what needs to change
title is the most sexy
support the
subject for this Parliament to
outstanding managers
in the public sector who are already achieving more for
less. The third session will ask how policy makers can
define and limit the role of government in the public
sector. Lastly, the final session will ask how
government can change its role from being the funder
and manager of services to being the funder alone.
If you look at that programme, I am very proud
of the speakers that we have assembled today, and I am
delighted as well that such a strong audience wanted to
come and participate in this discussion – thank you
very much for that. We are going to write up this event,
transcribe it and send it to the Treasury as part of our
submission to the Spending Review so what we will
discuss today will feed in to this submission, and you
will all get that document.
Because this event has very generous sponsors,
we have been able to do it properly for a big attendance
and, more importantly than that, we will benefit from
their intellectual capital. Aidan Connelly for Sodexo will
speak on the challenge of the deficit; Michael Izza for
the Institute of Chartered Accountants in England and
Wales will speak on the improvement of management;
Colm Reilly for PA Consulting will speak on the new
limits of government; and Paul Pindar of Capita Group
will speak on government as commissioner not
provider. I am extremely grateful for your support and
also for the support of the London Stock Exchange,
who have given us this facility today, and who do a huge
amount to encourage the public policy debate. This is
really very, very generous, so thank you.
Before introducing Francis, I want to ask
Michael Izza, the Chief Executive of ICAEW to give
his opening thoughts. Reform has a long partnership
with the ICAEW which is a huge benefit to us because
Michael’s members are amongst the country’s leading
experts, not just on the reform of taxation but also in
the delivery of value in the public sector. Michael, can
I just ask you to set the scene as you see it.
Michael Izza:
Thank you, Andrew. Minister, ladies and gentlemen,
good morning. Andrew, I don’t think you need to
apologise for the title of today’s meeting because I
think it is effectively going to be the defining event of
this Parliament, and it is probably going to affect
everyone’s lives in this country. I am very pleased that
the ICAEW has been able to support this event today
to enable Reform, and indeed all of you, to get exposure
to their thinking and for you to give some feedback.
Together with our partners, the Chartered
Institute of Public Finance and Accountancy, CIPFA,
the ICAEW campaigns for transparency, accountability
and good governance in the public sector. We do this
not just because we think it is the right thing to do, but
also to support the effective delivery of public services
and to get value for taxpayers money.
Let me start by saying that we do support the
Government’s aim to reduce the deficit. The
Chancellor laid out in his Budget statement in June
that unprotected departments will face average real
cuts of around 25 per cent over the next four years –
very tough numbers. The reality of these cuts is going
to be spelled out in a comprehensive Spending
Review on Wednesday 20th October, but ladies and
gentlemen, this is the time now for candour.
After a sustained period of increased public
expenditure, these budget reductions are going to
cause major challenges for service delivery. Difficult
and painful decisions will have to be made on the cost
and value of public services. In the light of these
challenges, I believe that all government departments
must now be subject to a rigorous reassessment of
their spending priorities. For its size, the NHS budget
must also be subject to assessment. The evaluation of
NHS programmes is necessary. Even if overall
spending on healthcare is to be maintained, we
should not allow any notion of ring-fencing to be a
euphemism for continuing inefficiency.
These are the difficult challenges that the public
sector now faces. I don’t underestimate how difficult
this will be, but I do believe it’s possible. Not only
possible – I believe that properly focused and efficiently
www.reform.co.uk
117
Public sector productivity / Reform
managed public services will survive and improve. I am
convinced from listening to our members who work in
the public services, that savings can be made and front
line services protected, so there is hope in these difficult
times. We have the opportunity to lay the foundations
for a secure and sustainable future for the public sector
and public spending.
To achieve this, the ICAEW believes that
meaningful reform must be carried out on three fronts:
on transparency, on accountability and on governance.
On the first of those – transparency – if public
services are to be improved while the deficit is cut then
Ministers, public sector managers, Parliamentarians
and the public must know how much is being spent and
how well it is spent. This
is currently not the case.
It seems to me that in the
centre of any big complex ICAEW is a strong
of the
dispersed organisation there supporter
Treasury’s clear line of
are some things that have sight alignment and
to be rigorously controlled whole of government
and they are pretty damned account projects, which
aim to make public
obvious really
accounts more
transparent and
accessible. We are soon going to be producing a piece of
research which also incorporates the liabilities over and
above the headline sector debt already published by the
Office for National Statistics. Only by establishing the
full financial picture can Ministers and Civil Servants
propose the complete remediation package.
On the second of those topics, accountability, the
current environment provide an opportunity to establish
more effective public and Parliamentary mechanisms to
scrutinise public spending so we welcome the increased
scrutiny being planned by Ministers in the so-called star
chamber of departmental expenditure. However, we
believe this accountability needs to go further. We
suggest that all legislation and major spending
programmes should be accompanied by clear business
cases linking proposed costs to statements of what the
government hopes to achieve. At an early stage of
preparation, departmental spending programmes could
be referred to the relevant select committees. After all,
scrutiny when the money has been spent is a little late.
The final topic – governance. At the highest levels
of Whitehall departments, fresh thinking and
fundamental reform is needed; this is a specialist subject
from our keynote speaker today. This is the only way to
achieve more with a lot less. Departmental boards
should be given a clear sense of strategic purpose. They
should be responsive to the organisational needs and the
priorities that they deliver to departments. I would say
this wouldn’t I? But chief financial officers should also
be key members of the leadership team, as they would
be in the private sector. This is not the case currently in
all government departments.
Now, we all recognise improving public services
while cutting the deficit will not be easy, but what is
clear is that we need fundamental reform on how we
manage, account for and justify every pound of public
money that’s spent. Francis, I am very much looking
forward to your thoughts on this matter. Ladies and
gentlemen this is a conversation that doesn’t end when
you leave the room today. It must continue, and we for
our part intend to be very active and rigorous
participants in it. Thank you.
118
www.reform.co.uk
Public sector productivity / Reform
Keynote speech by Rt Hon Francis
Maude MP
Andrew Haldenby:
Let me introduce Francis Maude, the Minister for the
Cabinet Office and the Paymaster General, having
held that position in opposition since 2007. I’m not
going to go through all of Francis’s CV because it will
be well known to people here. Suffice to say Francis,
you have thought about the challenge of increasing
productivity at the highest level not only in politics
including as Shadow Chancellor, but also in business.
Now you are on the front line of this Government’s
efforts, so I think we are all absolutely thrilled that you
are able to be here today and we are very excited to
hear what you have to say.
Francis Maude:
Andrew, thank you very much indeed. I am going to
rattle through some thoughts and I’m happy to respond
to any questions at the end.You apologised for the
prosaic title given to this conference, well I always bear
in mind what Governor Mario Quimo once said, he said
“politicians, you campaign in poetry and govern in
prose”. What I do is about the most prosaic end of
government and it is really important.
What’s going to be the governing theme of this
Government? It is the necessity for fiscal retrenchment.
We have inherited a situation where the government is
spending £4 for every £3 in revenue just to keep the
lights on, the pensions paid, teachers in schools.You
can’t carry on like that; the money will run out and it is
literally unsustainable. So there has to be change.
The reality is that what necessity forces upon us
goes with the brain of what social need requires. There
has been much talk of our vision of the Big Society and
I just want to say a word about that. The era of big
government has come to an end, not just because the
money has run out and the scope for just solving
problems by throwing money at them has been
exhausted because the money isn’t there, but also
because it has been shown to have failed. The idea that
for every problem there is a state solution has shown
not to be the case and indeed in many cases the
insistence that there is a state solution has itself
exacerbated the problem.
If I may venture a partisan thought, there was,
during the last Government, some sort of sense that
everything could be controlled from the centre. That
somehow if you sat in the centre of Whitehall and
pulled enough levers with enough vigour and twiddled
the dials with enough subtlety and pressed the buttons
frequently enough, then things would change, that all of
these controls were magically connected to complex
machinery, not just within the rest of government but
within the wider public sector and eventually out into
society itself.
So if you have a problem, if you can see the social
problem, what do you do? Well, you set up a website,
you invest money – it’s always investment, it’s never
spending – in an advertising campaign. No one bothers
to measure what the results are of spending this money
because in a way you are justifying it by what you are
doing.You remember Sir Humprey’s politicians’
syllogism? It runs like this: something must be done, this
is something, therefore we must do it. The something
which came most readily to anyone’s hand in the centre
of government was public money, until recently because
now we know there isn’t any public money available. It’s
easy to do, and actually finding solutions which do not
rely on those easy somethings which come to hand is
tougher. These are the tougher options, but they are the
options which are both forced on us but are also likely to
lead to a better society as well as a stronger and more
vigorous economy.
I want to say a little bit about what our
approach will be. We do not believe that you can sit at
the centre of government, pull levers and change
everything. We want to be rigorously realistic about
what you can do in the centre of government. I’m
concerned with what central government does, what
lies within the ambit of central government,
government departments, executive agencies and
quangos that are within that part of government
which is accountable to Parliament. There is a much
wider public sector beyond that. There are schools,
there is an NHS – increasingly a variegated NHS,
with multiple providers providing services to NHS
patients, whether they are provided by NHS
Foundation Trusts, conventional NHS Trusts, third
sector providers, private sector providers, and we
should increasingly be blind to the status of those
providers. We should be concerned with their quality
and the price but not with their status.
Local government: should we be concerned with
local government? Well yes, we should be concerned
with it, but we should be repressing the conditioning
which has existed in local government which impels or
has impelled local government to be constantly asking
questions of Whitehall rather than of their electors.
I was struck some time before the election when a
council leader asked me, “Francis, if you form a
government after the election what do you want us to
do?” To which my response was, I want you stop
asking us what to do and I want you start asking your
electors what to do and then do it in the best way and
have an honest dialogue with your electors, and that’s
what I came to say to you. That may not be very
comfortable, because
Our view is that you should actually a dependence
on the centre is a
put responsibility for the
blanket. It is a
delivery of public services comfort
comfort zone, and
as near to the people who none of us can be in a
use the services as you
comfort zone any
more, so we are going
can possibly get
to be pretty rigorously
concerned with what central government does because
that lies within our power to change, it is our obligation
to change it, we are accountable for what central
government does and we’ll take that responsibility
seriously.
In the role that I have as Minister for the Cabinet
Office, I am concerned that we have clarity about what
the centre of central government does, and this is what
I call the “loose-tight” balance. It is not an original
concept; management consultants use the phrase, very
expensively, a lot. I have nothing against management
consultants, some of my best friends etc. But it is
important for there to be clarity about what should be
done at the centre, and it seems to me that in the centre
of any big complex dispersed organisation there are
some things that have to be rigorously controlled and
they are pretty damned obvious really.
Strategy, strategic direction, has to be controlled
from the centre. In our system that’s the Prime Minister
and the Cabinet, and actually acting collectively to a
greater extent. One of the uncovenanted benefits of a
coalition is that it automatically recreates cabinet
government, so strategic direction, strategic
communications and cash are pretty important,
organising property so that one part of government
doesn’t embark on a real estate reconfiguration that suits
their desire and ambitions but militates against the
overall interests of the government. Headcount,
controlling headcount, which is pretty serious. ICT, a
basic ICT infrastructure, not having 17 different gauge
railways effectively running across the country, the big
projects that carry reputational, financial and operational
risk. Procurement of those things which are common
across government, using the scale of government to
force down costs. Some things to do with human
resources, civil service management in our cases and I’ll
have a little to say about that.
These are things which have to be controlled
from the centre, but everything else should be pushed
away from the centre and it seems to me that the last
government had this almost diametrically the wrong
way round. They didn’t control a lot of those things
which fall into my “tight” category. They didn’t control
them well at all, and yet there were constant attempts
to micro-manage delivery from the centre with a
plethora of targets and public service agreements and
monitoring and auditing and man marketing and
regulation and guidance so that everyone here at the
front line, you felt that you were, instead of being
accountable to the people you were closest to and
meant to be there to serve, the citizenry you were there
to serve, you felt actually accountable to an
enormously complicated set of relationships to the
centre. This is wrong and doomed to fail because those
dials and buttons and levers in the centre of
government aren’t connected in reality to the
machinery, or only so indirectly that you have no
ability effectively to influence it.
So our view of the “loose” part of the “loosetight” balance is that you should put responsibility for
the delivery of public services as near to the people who
use the services as you can possibly get and, as the NHS
should be blind to the status of the deliverers, to the
providers of those NHS services, we should be blind as
to the nature of the deliverers of public services at the
front line. One of the things that we want to see happen
is the creation of mutuals, co-operatives, formed from
groups of public sector workers who deliver public
services, who can operate – and many will – in joint
ventures with providers from outside. This will be a way
of liberating them, empowering and liberating front line
public sector workers to put into effect, influence very
directly, the experience they have and the frustrations
they have about how the services can be delivered, and
then benefit themselves from doing it better.
The taxpayer benefits from it being done cheaper,
as I suspect it will be. The citizens benefit from it being
done better. The staff benefit from having a more
rewarding life and job. People do have views on the
front line about how things can be done better. We
issued a spending challenge three weeks ago to public
sector workers asking for ideas on how to spend money
better, how to cut costs. At the last count, there were
well over 30,000 responses, and really good ones,
www.reform.co.uk
119
Public sector productivity / Reform
dauntingly good quality. I’m required to go through
them seriously and implement the serious ones of which
there are very, very many. People didn’t think this was a
gimmick, as some of the more cynical newspapers
suspected. They thought that this was serious – and it is
– and they took it seriously and they put in to us lots of
really good ideas as to how things can be done better.
You felt there were a lot of people with a lot to get off
their chests, and they have done so in our direction,
which is good.
So the “loose” part of the agenda. We think part of
Cabinet government is that the departments become
more autonomous. Secretaries of State will be held
accountable for what their departments do and they will
enhance the government by having stronger boards,
chaired by Secretaries of State, with a strong group of
non-executives, mostly from the private sector, who will
have access through Lord Browne, the Government’s
lead non-executive for the Prime Minister. That group
will have the ability in extremis if they believe a
permanent secretary is an obstacle to effective delivery,
to recommend to the Prime Minister and the Head of
the Civil Service that that permanent secretary should
be removed. This has got not to be window dressing, not
paying lip service, this has to be real improved
government.
Finance directors as well – we said that these
should be the second most senior official in the
department, and that they should have a strategic role.
They should not be, as a finance director was quoted
anonymously in the Institute for Government’s report
earlier this year, a score keeper rather than a player, and
the private sector finance directors should have a
strategic role. In Whitehall, they are not even
automatically involved in spending decisions, which is
kind of insane. Elevating the role and the prestige and
the authority of finance directors and the finance
function in government is really, really important.
So, what else can be done in encouraging the
delivery? Well, departments and organisations can be
flatter than they are. We still have a very, very
hierarchical Civil Service, and these organisations can
be flatter, which will not only be cheaper to run but will
improve decision taking. Now decisions go up through
endless layers and it treacles things up and slows them
down, and we can tighten that. We can empower people,
departments can empower people more at the front line,
empower them to innovate and to do the sensible
working level risk taking that we know is essential to
progress being made.
Our approach to risk is exactly the wrong way
round; we take massive macro risks, piling reorganisation on total policy reversal casually, and yet at
the micro level, at the working level where innovation,
trial and error and finding new ways of doing things is
the motor of progress, that is not encouraged at all. In
fact, no one ever lost their job or had their career suffer
from presiding over an inefficient status quo, and yet
people who have tried to do something different which
hasn’t worked – and most of the things that you try
don’t work – but as long as you have got the right
culture which encourages people to try and when it
doesn’t work call it a day, you have the best kind of
organisations.
We can disencumber organisations within central
government from some of the burdens of compliance,
which I think we have already heard a bit about. I was
120
www.reform.co.uk
Public sector productivity / Reform
just hearing yesterday from the Chief Executive of
English Heritage that the entirely laudable, in principle,
requirement that public sector bodies should report on
energy requirements means that they have to issue a
report on the energy usage of a long barrow, whose
energy usage is nil, and kind of obviously nil.Yet still
somebody had to be employed to fill in that form and
submit it to the centre. We can disencumber
organisations. So, the “loose” part of it is actually about
us enabling the organisations that deliver services to do
it better, getting out of their hair and encouraging
innovation and empowerment.
A quick word about the “tight” part of the
agenda and again, this is not glamorous, but it is
important. Controlling cash is really important, and
the Treasury does that by and large pretty well. We’ve
said that no leases should be signed or resigned
anywhere in central government without my personal
approval, and again this is not my favourite bedtime
reading, but it is kind of important and it imposes
discipline. People will think twice before asking to sign
a new lease, and it gives us at the centre the chance to
say “well actually you don’t take that but you move in
with these people here”, and we’ll save some money
overall and have a better outcome overall.
Head count – I was always surprised in opposition
when I asked the question, at Prime Minister’s
Questions, about the size of the Civil Service. The
question got referred to the Office for National
Statistics, as if this was a mildly interesting external
phenomenon which the government sought to track out
of politeness, but the idea that this was an essential
management tool had apparently alluded them. One of
the first things we did was to do a sweep and ask every
organisation in central government what their head
count was, not just the formal headcount on the payroll
but temporary staff, agency staff, consultancy staff,
embedded contractors. So we actually got a sense of
what the headcount was, and the astonishing thing was
how many organisations didn’t know. But they do know
now, and we will continue to take an interest in that and
indeed publish it, not as a statistical exercise, but as
management information. Because of our concern with
transparency and our desire for transparency, which is a
large part of my responsibilities, we will make that
information available to the public.
ICT – again, boring stuff, but really important
and a lot of money in it. We will exert much more
central control so that you do not have every part of
government thinking it has got to have its own data
centre. The over-provision in data centres around
government is massive, the usage is definitely in single
digits and quite small single digits in terms of
percentage. This is incredibly wasteful of energy and
incredibly expensive, so we will start to get a grip on
that. The basic infrastructure as well has to be, over
time, unified. Big, complex organisations do not allow
every part of their organisation to set up their own
telephone system and email system. A bit of common
sense there will help to save money and make things
work better.
The big projects. We are not saying that all big
projects should be run from the centre, but there has
got to be an ability for the centre to call in big projects
where the department or agency that’s owning those
projects has never done it before. I am all for on-thejob learning, but not at the taxpayer’s expense when
there are huge risks and there is such a record of these
big projects going badly wrong, costing too much
and failing.
Commodity procurement.Yes, paper clips and
photocopier paper and travel and energy and all of
those other things that the government spends. Central
government alone spends £60 billion a year on goods
and services from third party suppliers. Not much of
that at the moment is aggregated and yet if you do
aggregate it, you have the absurdity of discovering two
government departments were bidding against each
other for energy. This doesn’t make any sense, and so we
will have a central mandate for procuring these things
– not all done from the centre because there is plenty of
serious expertise around Whitehall that is good at doing
this, but it will be done on behalf of the whole
government with a central mandate.
Suppliers. For the first time we will be managing
the relationships with the biggest suppliers to
government on a central basis so we will aggregate
what the big suppliers do right across government and
tomorrow I have got a meeting with the chief
executives of the 20 biggest suppliers to launch a
process whereby we will be renegotiating with them
across everything that they do for government to get
the costs down. This is the experience they have had
with their private sector customers during the
recession and it will be no surprise to them. Part of
that will be, yes we will want to have something off
your margins, but part of it will be we will expect you
to tell us how we can pay you less, some of which will
be for doing less. Over specified contracts, many of
them can be done for much less. The concept of the
80/20 rule is a relatively new one in some parts of
government but it will become more familiar as time
goes on.
Finally, the Civil Service. I am a big fan of the
Civil Service. I spent seven years in government
previously and I have a huge regard for our system of
politically impartial, permanent civil servants.
Advancement on merit, and the public service ethos
which underpins it is really important and I really
respect it. I do worship at the shrine of NorthcoteTrevelyan and I am delighted that at last this year the
Civil Service, in a slightly different form than was
originally presaged in the Northcote-Trevelyan Report
and 155 years late maybe, but hey, has got on the statute
book and that’s good. But not everything is right in Civil
Service at the moment and I sense that too often in
recent years, civil servants have felt marginalised, partly
because particularly in the early days special advisors
interposed themselves to too great an extent between
official advisors and Ministers, and partly because there
was an over use of consultants. With anything difficult,
no one could criticise you if you had a reputable firm of
consultants in to do the work, but actually a lot of that
work can be done by civil servants. They are really
bright, capable people who like being stretched and who
can actually pick up capability from doing these things.
We will not only save a lot of money by the consultancy
constraints we’ve put in place but we will also empower
and encourage and re-motivate mainstream civil
servants by doing this.
We have to do some other things with the Civil
Service as well and I announced yesterday that I have
asked Sir Gus O’Donnell to look at the way we recruit
into the fast stream, which is a very popular and good,
strong graduate recruitment stream, but it is still seen to
be too much about being a very clever policy analyst
and advisor, developing policy. That is important, we
need really good people, clever people to do that, but
you also need to have, of at least equal importance,
really first class management capability in the civil
service, people who understand operational delivery.
I have asked Gus to look at how we can widen the way
in which the fast stream recruitment and development
process is seen and its reality by giving at least equal
prominence to those values and those skill sets.
The other thing we announced yesterday was
reforms to the Civil Service Compensation Scheme,
because you cannot really have a sustainable system
where in some cases civil servants who are made
redundant are entitled to six and two thirds times their
annual salary as a payment. This is out of kilter with
anything else even in the public sector, let alone the
private sector, besides which the statutory redundancy
scheme looks absolute primeval, so this will not be
popular with trade unions. But I think that the wider
public will see that this is actually about rebalancing,
about creating fairness out of the Civil Service and out
of the private sector, and we will hope to start
negotiations very quickly with the unions about some
additional protection for lower paid workers in the Civil
Service. It is sometimes ignored, that 50 per cent of civil
servants earn £21,000 or less. This is not a uniformly fat
cat environment at all and lower paid civil servants do
deserve additional protection and they will have it.
I think I have overrun my time and I am under
time pressure to disappear fairly quickly, but thank you
very much, Andrew, for inviting me to be here. It is very
good to have the chance to unburden myself of some
thoughts to this distinguished audience and I think we
may have time to do a tiny Q&A, one or two questions
but that will be about it. Thank you very much.
Andrew Haldenby:
What I might do is just take three or four comments as it
were, and if you want to pick up on one or two that you
think are the most important that would be great. So
just some very short comments please.
Audience Member:
Can you give us a very, very quick update on the new
Efficiency and Reform Group?
Audience Member:
I am very interested in the doing end of this, the balance
between application and efficiency and local autonomy,
particularly given the restraints in the public sector.
Iain Anderson:
Iain Anderson, Cicero Consultants. Francis, on the
“loose-tight” balance, where do you think that balance
lies right now given the need to achieve fiscal retraction
that has already been set out?
Francis Maude:
One of the Ministers who was very effective was
Michael Heseltine. He was then in the Department of
the Environment and he said no vacancies are to be
filled without my personal approval. I’ve done the same
in the Cabinet Office. One thing, you get to know a hell
of a lot about what’s going on in the Department and it
is a very salutary discipline. Of course those sorts of
www.reform.co.uk
121
Public sector productivity / Reform
disciplines repress demand because people don’t
necessarily want to expose what vacancies they are
trying to fill.
You asked about the Efficiency and Reform
Group. What we’ve done is brought together all of these
functions – property, procurement, projects, all of this
stuff – into one place
with a board chaired
In really serious times like
these, and these are really jointly by Danny
the Chief
serious times, you have to Alexander,
Secretary, and myself,
tighten the vice more, by
with me kind of being
hands on, I feel a bit like
having things like freezes
which you wouldn’t expect an Executive Chairman
of it, probably
to have permanently
uncomfortably
executive but there you
go. And so the Office of Government Commerce, for
example, which is a big part of this, and was part of the
Treasury, we have now brought this together because
there is a certain amount of overlap between some of
these functions, and some of what we’re doing is simply
trying to put dams across the river. So, a freeze on
marketing and advertising spend, for example – all
exceptions again come to me, and it will repress
demand. We are not saying there can be no spend; that
would be absurd, but it represses demand and it makes
people think much more about what they are spending
money on.
The recruitment freeze, as I said, is coming
through much more at the department level, a freeze on
consultants, again at department level, all of these things
where we require departments to exercise the controls,
all have to be notified to the centre and we will publish.
Again, the transparency is really important in focusing
attention on all of this.
I think I went through what are the things where
we expect to have tight control and there should always
be tight control over those things. It is just that in really
serious times like these, and these are really serious
times, you have to tighten the vice more, by having
things like freezes, which you wouldn’t expect to have
permanently, but you do expect to have controls which
are pretty fierce at this stage and that will remain for the
foreseeable future.
Tim’s point about commissioning capability –
well, we need to get better at commissioning and giving
the centre of government the power in respect of central
government and not in the wider public sector, to call in
big projects where there may not be sufficient expertise
in the owning department or agency. We hope to have a
greater proper centre of excellence in procurement,
commissioning and project management.
I can see my team are getting more and more
agitated here so I think I probably need to pack my bags
and go at this stage.
Andrew Haldenby:
Well Francis, thank you so much for taking those
questions and getting a feel of the room. On all of our
behalf that was absolutely fascinating to get a sense of
the intellectual framework that you are bringing to this
and the “tight-loose” balance gives us a lot to think
about for the rest of the day. Again, on all of our behalf,
as you say these are extraordinary times and you are in
the hot seat and I think you have all of our best wishes,
so thank you.
122
www.reform.co.uk
Public sector productivity / Reform
Improving public sector
productivity
Andrew Haldenby:
Let’s get into some of the meat of this and this session,
Improving Public Sector Productivity, is really about
the deficit. The UK faces an unprecedented deficit and
how should the public sector respond? We have people
here who know deeply and personally the answers to
this question and I’m thrilled they will be able to give
us five or six or seven minutes each and then we can
open it up.
We have Bernard Jenkin, the new Chair of the
Public Administration Select Committee which he has
been for …
Bernard Jenkin:
I’ve not actually been appointed yet. Chair Elect.
Andrew Haldenby:
Chair Elect for a number of days but particularly
someone during the time in opposition has kept a close
eye on many of the key spending departments.
Aidan Connolly is Chief Executive of Sodexo in
the UK and Ireland and he has been doing that since
March 2009. Sodexo obviously delivers value across
huge parts of the public sector and previously Aidan
was CEO of a number of public and private companies
both in the UK and overseas.
Colm McCarthy, and here is a title which is even
as prosaic as the title of this event, Chair of the Irish
Special Group on Public Service Numbers and
Expenditure Programmes which is also known in
Ireland as The Group, and you can see why. This was
the group set up by Brian Lenehan in Ireland in 2008 to
undertake a six month fundamental review of public
spending in Ireland, which led to this remarkable
programme of activity which is now widely seen to have
restored the Irish public finances and also restore their
economy to growth so, Colm, we are thrilled that you
are able to join us.
Alan Downey is the Partner and Head of UK
Public Sector at KPMG where he has worked since
1989 and held a number of senior roles and before that
was a fast-track civil servant. So, Bernard, can I ask you
to give us your thoughts.
Bernard Jenkin:
Thank you very much indeed and thank you Andrew,
it is a great privilege to be on a platform under your
direction and I congratulate you on the progress that
Reform makes, it is having a big impact, particularly on
the new government.
Perhaps I should say a bit more about my
background. I was shadow this and that, transport,
defence, energy, regions, and I have watched various
government departments and what one could describe
as their skid marks as they try and make policy and
make decisions. I spent a lot of time on the defence
committee subsequently and messed with defence
procurement, one of the most complex fields of policy
I have really ever encountered, and I find myself now as
Chair Elect of the Public Administration Select
Committee. I guess I’m the guy who is chairing the
committee which is going to assess Francis Maude’s
performance because the Select Committee shadows
the Cabinet Office; we’re the Select Committee for
good government and we run the Ombudsman and the
Charity Commission and one or two other things,
extraneous things, but basically we’re interested in good
government, good administration, good practice. We’re
the management and people bit and the Public
Accounts Committee do the numbers. Of course, there
is quite a lot of overlap between what we do, we do cross
governmental stuff.
The situation we’re faced with, between 1997-8
and 2008-9 public spending increased in real terms by
an average of 3.2 per
cent a year, which was
Innovation will be even
more than double the
more important than
under previous
inefficiencies in improving increase
administrations
productivity
1979-97. The
productivity in the
public sector was declining during that period on
average by 0.3 per cent a year. The task facing the
coalition government is to reverse these trends so that in
a time of reductions in departmental spending
productivity across the public sector rises. The adage of
the day of course is doing more with less.
Some think improving public sector productivity
is impossible and, indeed, you are going to hear a great
deal from a reinvigorated Labour party, which really
loves being in opposition rather than making decisions,
and the Unite union, describing productivity as a smoke
screen for the acceleration of the privatisation of schools
and health services. Before the election, however, PAC
did hear evidence from witnesses that there remains
plenty of fat still to cut from the public sector; you won’t
be surprised, but the more fat you cut the more you run
into the problem of diminishing returns.
The government needs to root out existing
inefficiencies but it also needs to rethink the way it
expects the public sector to operate and I was quite
intrigued to listen to Francis because he is doing far
more orthodox and practical and obvious things than
the Coalition has been talking about in opposition.
I don’t think he talked about centralising purchasing
when in opposition and I am very glad to hear he is
talking about it now but we shouldn’t lose sight of the
need to root out real inefficiencies.
Innovation will be even more important than
inefficiencies in improving productivity, it becomes less
a factor in more with less and more about doing less
with less and when you are looking at 40 per cent
possible reductions for some departments, that’s clearly
got to be the objective. PAC will be scrutinising how the
cuts are made – I am looking forward to perhaps doing
a whole inquiry – how does a government department
actually prepare options for cuts in a department? We
have all seen the sketches where the first thing that goes
is the private office of the Secretary of State!
There are three areas where real reforms are
necessary and which could bring about tangible results
and they are structures which need decentralisation.
We’ve heard a bit about that already; training and pay
and public sector ethos. Let’s just start with ethos
because there has been much in the public sector debate
over the last 20 years on how to make the public sector
more like the private sector. Sadly I think the public
sector has imported quite a lot of the attractive private
sector practices like private sector pay and bonuses but
we haven’t really imported the entrepreneurialism of the
private sector. In fact if I say the words “public sector
entrepreneur” it sounds like an oxymoron and we need
to think about what really motivates people to come in
to the public sector because I’ve got more words than I
can deliver here, but the approach is that most people
come in to the public sector because they feel that that’s
what they want to do, it’s a vocation.
A good head teacher or a good hospital manager
wants to be able to deliver a good school or a good
hospital and, actually, pay is of secondary importance
otherwise they would be doing something else. If they
were any good they’d be doing something else, yet we
so often drive the best people out of the public sector,
not because we don’t pay them enough, not because
they don’t have a good enough pension but we drive
them mad with the bureaucracy and interference and
central control. The Guardian reported recently that it
is increasingly difficult to recruit head teachers despite
the average salary being £74,000 a year and scores of
posts are being offered over £100,000 a year. More
than a third of primary headships had to be readvertised in 2008-9 where it was just under 20 per
cent in 1993 and the percentage of secondary posts
being re-advertised had virtually doubled from the
1993 levels to 27 per cent.
The Department responded with mystification
saying parent training is now better than ever before, we
have brought in ground-breaking measures to cut
workloads and leadership teams have never been
stronger in supporting heads. Well the Department of
Children, Schools and Families idea of a leadership
team specified, regulated, tick boxed, vetted – anybody
who has sat on a school governing body knows exactly
what I am talking about. In the private sector, school
governing bodies act as non executive directors and
they make sure they are around to fire the head teacher
when something goes wrong. In the public sector you
have curriculum groups, working groups and you get
training and it is a sort of mechanism of indoctrination
into public sector practice rather than a genuine
involvement of what parents can contribute.
I think the Department has failed to appreciate
that targets, initiatives, mountains of paper from
LEAs and central government, extra money with no
discretion attached to it, dictats on an over
prescriptive curriculum with less and less relevance
to the needs of the child – all this is added to cost and
creates frustrated head teachers. Every MP will have
encountered a head teacher who will have put the pile
of stuff they received
There are just six layers
from the LEA and the
of management between Department on their
desk and said that’s
Sir Terry Leahy and the
what I received just
Tesco checkout cashier. this term. There was a
How many layers of
pile that high the last
time I went into the
management are there
smallest school in my
in the National Health
constituency. I think
Service?
they had 80 pupils in
this village, and she
said, “I just don’t read it because I have to teach and
actually that’s why I came in to teaching but I’m
going to retire, I’m fed up with it, I can’t take the
stress any more”.
So freedom and responsibility in the public
sector for managers is absolutely vital and this is what
Francis is driving at when he says to flatter
www.reform.co.uk
123
Public sector productivity / Reform
management structures and the jargon you are going
to hear about is the post-bureaucratic age. Why is it
that IBM in the 1960s had 23 layers of management
and today it has six? There are just six layers of
management between Sir Terry Leahy and the Tesco
checkout cashier. How many layers of management
are there in the National Health Service? How many
layers of management are there in the defence and
support organisation at the Ministry of Defence? We
need to listen to people like Bernard Grey who pointed
out that we have got 25,000 people working in defence
support, doing a not very effective job when what we
actually need are 5,000 much better trained people
pushing far fewer bits of paper around, doing a much
better job. That will be much more efficient and much
cheaper.
All this will mean that we not only need to
de-layer in the public sector but we need to change the
processes because if the processes in the public sector
stay the same, then the problems will stay the same. We
need to change process and that’s what PAC tries to
look at. It will make significant changes in the way the
civil service operates, perhaps less resistant to external
recruitment but more corporately confident, that’s what
I’m hoping to see.
The problem is not lack of talent as far as the
Civil Service, which still attracts many of the brightest
and the best, but it does need more training so they are
taught how to deliver. The disease of the previous
government, and this is not a political point but I think
it’s an easy thing for a government to do, is do the
initiatives and once you’ve done the press release you
feel you’ve delivered the policy. The follow-through
has been absolutely lousy and it is all those long pieces
of elastic where nothing happens at the other end
when you pull it, which is the bane of the present
Whitehall structure.
So in the face of departmental spending cuts,
increasing public sector productivity has moved from
a luxury talked about at conferences such as these to
become an absolute necessity and we hope to play our
role in exposing how this is done. Thank you very
much indeed.
Aidan Connolly:
Morning, it is a real pleasure to be here. When I checked
my diary I expected the room to be full of people with
hangovers celebrating England’s win last night,
including my own, but sadly not.
Bernard and his colleagues, Francis, the new
Chancellor, have all told us that we have a gaping hole
of 150 odd billion, a number so large probably nobody
can count, and it won’t get filled by burying our heads.
I don’t think it will get filled either by doing more of the
same. It is very encouraging to hear the Minister talk
about how they plan to change things. From my own
experience, my last role in a public company was in My
Travel where I was one of the senior management team.
We had the equivalent financial crisis that the
government has and we took some very swift action and
made some very unpalatable choices, getting rid of one
in ten of our workforce, which was brutal. But, I think if
you are going to make cuts you should make them
quickly and deeper than you think because, in the long
run, if you have to go back and do it again it is incredibly
damaging, has a serious effect on morale and in a public
company of course it destroys the share price.
124
www.reform.co.uk
Public sector productivity / Reform
I believe we can overcome the challenges we face
as a country, I think we can achieve more for less,
although perhaps I would put as doing less for less and
achieving rather better outcomes. Maybe that means a
radically different approach and I want to outline a little
bit of what I think Sodexo can bring to the debate. We
have some 25 PFIs; half my business is with the
government. Let me
If you are going to make
point out a few road
blocks which are having
cuts you should make
rather more practical
them quickly and deeper
effects on what happens
than you think
after the Minister
makes the statement
and who live with the negotiating teams in the field,
rather than in a smoky basement office somewhere in
the City.
Some of you won’t know who Sodexo is. We’re a
French company founded in Marseilles around 50
years ago and we are in the top 25 employers in the
world, we have just under 400,000 staff and 33,000 of
those in the UK. We do all sorts of things, many of you
will think of us as a contract caterer but in fact we
calibrate instruments, we manage office moves, we
issue guns and ammunition to our armed forces and
we rehabilitate offenders. I am reliably assured by my
management team that we don’t do them all at the
same time or indeed at the same place. So I think we
have an interesting view on how the public sector
operates and, indeed, its interface with the private
sector and how we might work together to join the dots
on a rather better basis.
There are two big issues I want to talk about
today. One is the government’s cultural inertia. A new
government has come in with fresh ideas, though the
government machine operates in an extremely
convoluted way. The chain of command is unlike that
in the private sector and indeed for those of us who
buy services from the government and who sell
services to the government, it almost seems guaranteed
to deliver failure of outcomes. Because people are
trying to protect their careers, there is a system that is
enshrined around it ticking boxes to ensure that
everybody is covered should a decision go wrong.
Although there are many, many bright people in the
civil service and indeed some of them are a real joy to
work with, one of the frustrations we have as a private
sector operator is that, should the Department choose
to outsource, it often decides that it has the monopoly
on all the good ideas. It is usually ultra cautious and,
although the Minister and the press releases are all the
saying it will be an outcomes based contract, when we
have finished negotiating it it will be very much a risk
avoidance contract and it will be huge. We worked with
some of Bernard’s colleagues before the election to try
and flesh out what they meant by transparency and
I think one or two of them were surprised to know that
a PFI contract would fill about a quarter of a room this
size if it was all printed out. I’m not entirely sure what
transparency would mean if we put it into the public
sector but it would probably crash one of the
government’s IT systems.
I think one of the other issues in knowing what’s
best for themselves is that they homogenise the
competing providers’ services. It makes comparisons a
lot easier but I think as a taxpayer I see it drive quality
out of the door and it drives the price to rock bottom.
Too often, when the Treasury talk about value for
money what it means is procuring the least for the
lowest and I’m not sure that that should be our
approach to public services; we should be producing
something we’re proud of, something we’re willing to
pay for. I don’t think maximising the taxpayer pound
necessarily means driving quality out of the window.
So it’s a pity that this happens. I think we all
understand career protection, the Civil Service at the
moment is quivering behind its desks and everybody is
wondering is they are part of the 25 per cent, indeed
the 40 per cent or whatever number The Daily Mail
prints this week. The irony of all the good intentions is
that it often produces the worst outcomes and I’m not
sure it really needs to be like that. We have a couple of
experiences with the Department where we’re seeing
something different. The MOD, which is ridiculed
routinely by the Treasury and, indeed, is very embattled
at the moment, and Bernard Grey’s report is indeed
sad to read as it has many truths in it, but we are
working with them on a defence training college down
in Saint Athan, and we have some quite enlightened
clients who are actually trying to achieve something
that’s different, trying to achieve less for less but trying
to achieve a great deal more in the outcome. Although
this is a large process and will undoubtedly get called in
by Ministers, it is £12 billion over 30 years, I think we
both feel it is good value for money; it is operational
expenditure and I’m sure that over the 30 years the
£12 billion will turn into £11 billion. The impact on
the economy of doing it is huge and I think the impact
on the military covenant at a time when each day brings
new need to actually deliver on the military covenant in
Afghanistan, it will bring the military covenant back in
to people’s eyes, giving people a better training
environment, have better trained soldiers with
transportable skills who at some point will come out
into the economy and of course it will release more
troops for the front line as well. From our point of view,
as a service provider, it also lowered the cost of
government building programmes which provide
much better value for money for the infrastructure.
The innovation in that contract comes in many
forms. It comes from training the three services together
for the first time on the same curricula. They all have
diesel engines, why is there a diesel engine course for
each service? It makes absolutely no sense and in
industry we wouldn’t tolerate it. The new training
techniques will not simply be delivered in a classroom to
a bunch of people, they will be delivered all over the
country electronically: we will start training people to
deal with the digital battleground. The training
environment when they
encounter it when Saint
I don’t think maximising
Athan is built, a chalk
the taxpayer pound
cheese
necessarily means driving and
environment to
quality out of the window
anything they have ever
experienced in their
careers before and it should also help the military retain
those skills for longer, retain people who are more
highly trained and motivated and deliver a better
outcome in the field.
So when the benefits of outsourcing can be so
obvious and in the UK, which has a pretty mature
outsourcing market, it can be widely accepted as a way
of driving improvements, it is something of a mystery
why some public sector institutions don’t embrace it.
As Bernard mentioned, the inconsistency in
procurement skills, which as a business manager of
course leaves me smacking my lips at the profit, but as
a taxpayer makes me cry with frustration. The concept
of negotiating a PFI with the MOD where all the major
procurement officers are on a two year rotation and
the project has already been done for eight years will
lead you to understand some of the background
inefficiency which surely must be sitting on their side
of the table. I often feel that I’m operating with my
hands tied behind my back. We know we could do so
much better by sitting on both sides of the table and
actually doing something in the public interest but of
course procurement rules prevent you doing that.
The other thing that really frustrates us is the
inability to spread best practice across departments.
We see a gulf in performance between certain
departments and indeed between certain individuals.
We see individuals rotated out of the role that they are
absolute naturals for and indeed would be part of my
team if I had the foresight to employ them. I just worry
that that will change. It is encouraging to hear
Ministers talking about some form of tight control
over procurement and maybe aggregating some of it,
but unless this is done we may well find that
procurement retains huge inconsistency.
We have I think a good record as an industry and
I speak now for all the public sector businesses which
supply services to government and I guess you’d expect
me to say that but I think there are also times when the
private sector probably isn’t the right answer and some
services [inaudible] … mature approach to
commissioning and a real understanding of the
outcomes that people are trying to achieve. The private
sector is the most likely provider of those services.
I think the state will have to redraw the line. I think
to achieve the scale and breadth necessary to deliver the
transformational changes that are being talked about in
the context of such a budget deficit, the government
needs to really work out how it commissions and how it
provides and it needs to work out then how to deliver
across the two.
We are very encouraged, and I speak not just for
Sodexo but again for the private sector, by the idea that
outcomes will become higher up the agenda. We think
payment by results is an excellent methodology for
public services but it very rarely occurs in practice. We
are working on an outcome-based model at the moment
in our prison in Peterborough, one of the PFI prisons
that we run. We administer a social impact bond, I think
the first of its kind – it is very small, a pilot, £5 million,
where private investors are backing our prison regime
with the result to rehabilitate offenders and are
rewarded, the return for their investment is determined
by the scale or lack of reoffending by the inmates.
70 per cent of the prisoners who go to jail for less
than six months re-offend within two years and when
you look at the under 21s, that figure goes up to 90 per
cent. It is a real problem that we face and we have seen
Ken Clarke making some interesting comments about
the prison regime in the new DoJ, but the social impact
bond and payment by results ought to be hugely
attractive to the government. It doesn’t pay if no
outcome is achieved, we’re taking the risk on that. The
third sector who we always work for in these
circumstances gets the resources to fund its activities,
www.reform.co.uk
125
Public sector productivity / Reform
again transferring some of those care in the community
activities back in to the community and taking them off
the government payroll. The bond and the bond
holders, the investors and ourselves, we take the
financial risk, which the government doesn’t hold for
itself in its usual very cautious approach.
We think it’s a neat model, we think there will be a
lot of interest in it, if it’s successful I think it could
provide an interesting way for a government to achieve
less cost, less risk and much higher outcome. We don’t
think it would be rocket science either for businesses like
ours to actually put all the money up for the social
bonds ourselves in return for backing our own
judgement, we think it would be hugely attractive. It
seems to us very much like a win-win.
So I conclude by saying that in order to achieve
this ambition of delivering more for less I think we need
to think radically differently. Given the levels of waste
that we see in the public sector and the relatively low
level of outsourcing, we think more can be done, we
think more is eminently achievable with the right drive
but we think overcoming social inertia may well be one
of those things that will be much tougher to achieve
than people think. If I’m honest, I think that pace is the
big issue. It is difficult to see government responding at
the right speed. We hope that this new coalition
government will have the urgency to drive down the
deficit and therefore drive pace through its organisation.
Thank you very much.
Colm McCarthy:
Thanks very much Andrew, in your introductory
remarks you were talking a little bit about fiscal
consolidation in Ireland as if it had already achieved its
objectives and as if it was reasonable to start to think of
it as a success. It is in the very early stages. What is
different is that it commenced back in 2008 and I want
to try and explain why. The reason is that there was a
realisation then that we’d got into a pretty serious mess.
We also didn’t have an impending election which you
did and the former Prime Minister quit as you know in
April or May 2008 so we had a new Prime Minister and
there was a lot of alarm all over the place. What had
happened was that the budget was more or less in
balance to 2007, it collapsed to a 12 per cent deficit in
2009 and then there was a banking collapse.You had
both of those but we had those two things in spades and
there hadn’t been a fiscal crisis like it since the 1980s.
There was a bad public finance crisis in Ireland in
the 1980s and we got out of it, we got out of it
reasonably successfully. This one is worse though. The
banking system hadn’t collapsed in the 1980s, the
economy wasn’t uncompetitive and it is now, the
international economy wasn’t as bad and you didn’t
have the dysfunctional stock and credit markets that we
now have but one feature which the Irish situation
shares with what happened here in Britain is that there
has been very rapid growth in public spending over the
last decade. In real terms growth in public spending in
Ireland never rose by less than 4 per cent in the entire
decade and in one year the real volume of current
spending worldwide was 11 per cent so you can imagine
what the increases were and they have been virtually
under all headings.
This chart shows the Exchequer spend
exclusive of debt service, so this is gross central
government spending on current and capital as a
126
www.reform.co.uk
Public sector productivity / Reform
percentage of GNP and it goes back to 1983 and
current and capital spending as a percentage of GNP
fell partly because GNP was rising so quickly but it’s
interesting that these numbers began to flow [moves
away from microphone] … as a percentage of GNP.
There was a period of really extraordinary loosening
in expenditure control. I think most people would
agree that that happened in Britain too although to
nothing like the same degree. This shows how the
budget deficit got out of debt. You can see that the red
line is standard, the blue line is government revenue
and these are Euro GDP definitions and you can see
that the budget was more or less in balance right up
until 2007 and then the revenue collapsed and
spending kept trundling along.
I’ll show you another track in a moment on the
same theme but it is kind of hard to understand how can
you have a budget deficit of in or around zero in one
year and then within three years it has suddenly
[inaudible] from GDP, how can that happen? Well, there
are several ways that it happens. Once you start
borrowing, if the interest rate moves against you, the
debt burden starts cutting up and it is not just on fresh
borrowing, it’s on whatever borrowing you have to roll
over every year. The
average duration of
You have got to run
government might be
pretty quickly to stand in
eight, nine, ten years,
the same place
even higher in the UK
where it is 12 or 13
years, something like that but in most countries it is
eight, nine years. If interest rates move against you as
they have here, that shoves the red line up a bit. Plus it
puts more people out of work so government spending
develops some extra upward momentum and
government revenue tends to collapse and that’s what
happened to us.
Revenue under all headings – direct taxes, social
insurance contributions and so on, savings ratio has
gone up because the private sector has got nervous, the
corporate sector has got nervous – that’s happened all
over the place really and the private sector financial
services – Mark [inaudible] was going on about that
today in the FT, it has happened all over and of course it
hits consumption. A specific thing that has happened in
Ireland is because there was a credit fuelled property
bubble, the government was cashing in big-time. There
was VAT on new house sales, there was capital gains tax
on non-residential properties and there was stamp duty
which is an infernal medieval tax which should be
abolished and has no place in a modern system at all.
You have it too and it is always either a feast or a famine
with stamp duties. What tends to happen is the volume
of transactions dry up at the bottom of the cycle and the
price at which transactions are conducted also fall so
you get double trouble. The presence of stamp duty on
the scale that we have and still do is just imparting a
degree of gratuitous volatility.
So these three things happened and I think you
had something a little bit similar here with property
taxes and the financial sector and because corporation
tax has lost [inaudible] you will probably find – and I
haven’t looked at the details but you are probably going
to have very poor corporation receipts so that is another
reliance of [inaudible]. The other thing that’s happened,
and the Chancellor I think welcomed this in his budget
speech on 27th June, is the debt servicing burden starts
shooting up, and once you start borrowing to pay that,
that’s an issue here in the UK. The Chancellor rattled on
about that quite a bit and those numbers, the blue line in
particular, shows debt interest as a percentage of tax
revenue. Okay, tax revenue has been falling but in
Ireland in 2007 that service was cut from 4 per cent of
tax revenue and in 2010 it’s going to be 14 per cent so
that means out of every 100 bucks that the government
were getting in revenue in 2007, they had 96 left to
spend on something or other, they have now got 86 left
to spend on something or other on a volume of tax
revenue that hasn’t certainly [inaudible] and I think
those who keep preaching the case for a more gradual
fiscal correction, they don’t always pay quite enough
attention to the issue of debt servicing.
The other point I want to make, and again I
haven’t had time to look at the UK figures, but it takes
time to stop expenditure flow. What the Irish
government has done is increased taxes and there is a
substantial tax component in the correction to date
and they have tried to cut spending on the various
headings but it is hard to actually cut the overall
spending burden when you have got this upward
momentum there from social transfers and from debt
service so you have got to run pretty quickly to stand
in the same place and it is hard to get government
revenue up as a share of GDP anyway in a downturn
because there’s no buoyancy out there. I think that
chart is salutary and that chart is the bottom line after
a pretty big fiscal effort and the details are there. They
started in July 2008, there was a budget brought
forward to 2008 which I thought didn’t go terribly
well. It was meant to be in December and they
thought, “to show how serious we are we’d bring it
forward by two months”, and some of the measures
weren’t thought through or weren’t road tested and
some were withdrawn afterwards under pressure and
all that stuff. Then there was a supplementary budget
in April and finally the budget in December 2009. This
was after the spending review that Andrew referred to
earlier on which was a very wide ranging spending
review and kind of road tested all the measures. I think
at that level anyway, at the public communications
level, I think it was a very worthwhile exercise and the
budget in December 2009 went through much more
smoothly than some of the earlier ones. Overall, on a
full year basis, the achievement of adjustment is 9 per
cent of GDP but of course it hasn’t actually cut the
deficit at all, it has just prevented the deficit from
getting horrendously worse. A lot of the measures that
have been taken will have impacts that will spread out
two or three years.
There are a couple of other points in Ireland.
There is a debt overhang, most of the budget debt
structure as it is here, I don’t know what figures people
have in the UK but certainly in Ireland we think at least
two third of that structure, maybe even three-quarters.
There is a need generally to [inaudible] in the economy,
I think that’s true here too and the government in a way
in borrowing has been supporting the private economy
through the accumulation of public debt but that’s a
temporary expedient and can’t go on forever.
I just want to say a few things about efficiency
and improvements. What we’ve found is that
politicians are very conscious of how much public
support they actually have and with five years to go
you have lots, particularly on a change of government.
In Ireland there wasn’t a change of government, there
was a change of personnel but not a change of
government so a change of government in a different
ideological direction does make things easier but the
immediate priority in a situation like this is to make
savings, is to actually make big decisions that have a
big impact, like cut public service pay or embargo
public service recruitment or cut social [inaudible]
payments and social transfers and we have done all of
those, or increase taxes, which we did. On the 22nd
June the big decision here was to increase VAT to 20
per cent and that’s serious, that generates [inaudible]
and it needs to be justified and serious politicians quite
rightly are going to be [inaudible].
The trouble with efficiency improvements is that
they do not yield quick cash savings and I think a lot of
commentary has been too glib about saying never waste
a good crisis, it is a good chance to make changes to the
system, we’ve got to get better value for money and do
more with less. I believe in all those things but in the
early stages anyway it is unrealistic to expect politicians
to spend capital on saving a million here and two million
there when they are trying to save £2 billion or more on
some big issues. The Group Bill I chaired last year, I
can’t even remember the name of it now, it was dreamed
up by Sir Humphrey. Lots of agencies have Gaelic
names but the newspapers decided to call it One Broad
Snip which fits into a headline a lot easier but we
recommended a lot of the things that have just been
discussed including better procurement, outsourcing,
scrapping a whole load of quangos, mergers and so on
and each of these things would save some money, so
there was a spring cleaning exercise during the public
expenditure splurge but very little progress has been
made on this stuff because politicians, when push
comes to shove, they know they have knocked so many
billions out of the system. Now they will devote their
energy to that rather than fight a thousand different
quangos and a thousand different trade unions and a
thousand systems and local authorities and all that, so I
think the value for money stuff suffers from that and the
kind of things that our politicians have proven willing to
do, they’ve cut Child Benefit, they have actually cut the
rates of payment, they have cut public service pay rates
twice, so they haven’t shown a shortage of bottle but
they have rationed out their bottle very carefully and
they haven’t wasted their lock, stock and bother on
fighting an awful lot of skirmishes and entrenched
bureaucracy in trade unions and so on.
I might just finish with a couple of comments
about the UK fiscal consolidation to date. I think it has
been well executed to date and I think the change of
government will try and
The trouble with efficiency get as much of the bad
improvements is that they news out of the way up
front as it can. The two
do not yield quick cash
aspects to it that
savings and I think a lot
interested me, the first
was the red lining of
of commentary has been
too glib about saying never health and in all of
European welfare
waste a good crisis
states, health, education
and welfare account for
two thirds or three quarters of government spending
and these are the big ones. If you red line any one of
them you are trying a much bigger burden if it does not
[inaudible]. It also is implausible that there is no scope
www.reform.co.uk
127
Public sector productivity / Reform
for economy in such a big operation as health and we
didn’t do that. The government asked us to go off and
find economies everywhere, which has the advantage
that you are proofed against accusations that you are
picking on people then because we could honestly say
that we were picking on everybody. But, a few years
down the road, if the education budget gets hammered
and the health budget doesn’t, that’s difficult to sustain.
The other thing on which I’ll finish, the British
government has said it is also going to go easy on the
foreign aid budget and the Irish government wanted to
cut it because of the size of it actually and we had a look
at this, and I suspect sometimes that the Treasury are
ahead of me on this, but we discovered there are lots of
people in the foreign aid business including the Army
and the Army told us they have 500 guys in Chad which
requires another 500 guys at home because they get a
lot of leave when they come back, they are on six month
tours getting shot at and I suppose if you spent six
months in Chad you’d need a break when you got back
too, plus they have a lot of training before they go out
there. So the Army guys told us that to keep 500 guys
abroad ties up 1000 guys and suddenly you are talking
serious money because the UN does not pay enough.
I think every country in the world gets a flat rate
payment which means for European countries it is very
tough when other countries pay their soldiers $10 a
week and make a profit on it apparently. So we did a few
sums and we found out the spending was far bigger
than we thought it was, and I would be astonished if the
same wasn’t true in the UK and this isn’t defence. Well
it’s not defence, not that Chad harbours ambitions to
invade some small European country that the Chadians
couldn’t find on a map, so it isn’t defence and if it isn’t
foreign aid we shouldn’t be doing it. Think of the British
Army’s intervention in Sierra Leone, if that wasn’t
foreign aid then it shouldn’t have been done. So I
suspect that there are all sorts … we also discovered that
the police were involved in foreign aid, they had some
chaps in Kosovo and that, so those are just two random
comments. Anyway, thank you very much.
Andrew Haldenby:
Fantastic. We started ten minutes late and I haven’t
wanted to interrupt the speakers so Alan Downey and
this session will go on to quarter to eleven.
Alan Downey:
Just recently I have begun to think I’ve taken on the role
of the lead character in Ashes to Ashes. Those of you
have never seen it, the lead character is shot, which I’m
glad to say hasn’t happened to me yet, then inexplicably
regains consciousness in 1981. I started my career as a
civil servant in 1981 and those were the days when
opposition politicians were accusing the government of
making heartless and unnecessary cuts. The trade
unions were threatening strikes, senior public sector
managers were insistent that they had already cut to the
bone and couldn’t possibly cut any further and the
government’s justification was it was taking unavoidable
measures because of the legacy left to it by the previous
administration.
I do think we run a risk if we simply find
ourselves replaying the rhetoric of the 1980s that we
will fail to take the steps that we desperately need to
take in order to tackle the problems that we face. We
should not be focusing our attention on the need to cut
128
www.reform.co.uk
Public sector productivity / Reform
because I think that should be at least common
ground. We do need a discussion on where we cut and
if we have ring-fencing
Just recently I have begun of health and so on,
which merely increases
to think I’ve taken on the
the pressure elsewhere,
role of the lead character
but there is another
in Ashes to Ashes. Those important issue and
of you have never seen it, that is how we cut. I do
the lead character is shot, take your point, Colm,
the efficiency
which I’m glad to say hasn’t that
agenda doesn’t deliver
happened to me yet, then quick wins, but it is a
very important agenda
inexplicably regains
nevertheless and the
consciousness in 1981.
risk is that we will
I started my career as a
reduce the size of the
civil servant in 1981 and
public sector without
those were the days when tackling the obvious
opposition politicians were and ingrained
of the
accusing the government inefficiency
current arrangements.
of making heartless and
The result of that is the
problems we are facing
unnecessary cuts
today will simply recur
again and again in the future.
When I refer to obvious ingrained inefficiency
I am not seeking to be gratuitously offensive although
I know that librarians, due to something that I said
recently, believe that gratuitous offensiveness is my
stock in trade. Indeed I think I am echoing the
comments of many people who work on the front line in
the public sector and for the avoidance of that I would
like to echo the comments that have been made today
about the quality of public services that are delivered in
this country and the professionalism and the high
ethical standards with which they are delivered. I work
with colleagues in many other parts of the world who
would be delighted to have some of the problems that
we have in our public sector. They actually face much
more intractable problems to do with corruption,
nepotism and bribery and I am talking about countries
which are not very far away from the UK in some cases.
Why do I talk about ingrained inefficiency? It is for
a number of reasons which I think are well understood
and I won’t list them all because I don’t have the time but
I will just focus on just a couple. I think it is absolutely
clear that the additional money that we poured in to the
public sector last decade has not resulted in an increase in
productivity and has not given us good value for money.
That is not to say that nothing has been achieved but we
haven’t got the results that we should have got from the
money that we spent. For example the ambition to get
NHS funding up to the OECD norm has had relatively
little impact on the outcomes that we want to deliver and
that matter and, as has already been said, the obsession
with targets, and performance management, and top
down efficiency programmes, have resulted in a massive
increase in bureaucracy and relatively little benefit.When
I talk to front line deliverers of services, such as teachers
or police officers or clinicians, the one consistent
complaint that I hear is about the unnecessary and
unhelpful regime, targets, assessments, tests and reports
and inspections. More than that, when I go around
Whitehall departments and NDPB offices and strategic
health authorities and local health authorities, I am always
struck by the huge amount of time and effort that is spent
on not delivering any public service but on overseeing
and monitoring and advising and inspecting.
We have heard reference from Francis Maude
this morning that the phenomenon of levers that comes
into that and that reminds me of a story that is probably
not true but if it’s not it should be. It is about the Beach
Boys. Brian Wilson was the guy doing the music behind
the Beach Boys but the Wilson boys had a domineering
father, Murray Wilson, and early in their career he was
not only their manager but he also wanted to have
control of their musical output and they solved this
problem by having two mixing consoles, one that Brian
Wilson operated so he was producing all of these
fabulous harmonies and the other was Murray’s but it
wasn’t connected in to anywhere!
Another analogy or another example is that
relatively early in his time as Permanent Secretary at the
Home Office, I had a conversation with David
Normington and he was saying how pleased he was that
his department was meeting its crime reduction and
community safety PSA targets and I made the mistake
of saying to him, “if you closed down your crime
reduction and community safety group, you would still
be meeting those targets because there is no connection
between what they do and reducing crime”. I haven’t
worked in the Home Office since then.
We have already had references to the ONS
statistic that productivity in the public sector has
declined over the period of 1997 to 2007 by something
like 3 per cent. During
the same time,
The way that we all
interact with businesses, productivity in the
service sector, the
with travel companies,
private sector, has
with high street banks,
increased by 20 per
cent and you don’t have
with retailers, with the
to think very hard to
music industry, has
know why that is. The
changed dramatically
way that we all interact
over the last ten years
with businesses, with
travel companies, with
and the way that we
interact within the justice high street banks, with
with the music
system, community health retailers,
industry, has changed
services, has changed
dramatically over the
last ten years and the
relatively little.
way that we interact
within the justice system, community health services,
has changed relatively little.
We also know from the statistics that there are
substantial and unjustifiable differences in efficiency
across the public sector so if you added a public
service provider who was as efficient to this top
quartile there would be a saving of between 20-30 per
cent across the board.
My final point in terms of diagnosis is one which
has been touched on but I think not addressed
explicitly so far this morning and that is to do with the
interests of public service providers. It is absolutely
true and it has been said that people by and large go in
to public sector jobs because they have a sense of
public service, because they want to do something
valuable and help their fellow citizens but that public
service ethos is in real danger of being drowned out by
provider self interest. We are in fact at risk of losing
sight of why we deliver public services in the first place
and we should not do it for the benefit of those who
provide the services, although of course they should be
treated respectfully and remunerated properly. Nor, I
hasten to add, should we be providing public services
for the benefit of organisations like KPMG and
Sodexo who sell commercial services to the public
sector, we have to get back to the real reason why we
are in this business in the first place and those of us
who provide services to the public sector have had a
real wake up call from this incoming government who
have to realise that if we don’t change the way that we
operate, we will go out of business.
But to get back to the public sector providers of
services, I think we also have to get away from this
notion that public sector jobs are somehow valuable in
and of themselves and that any reduction in the public
sector workforce is a bad thing. So I think it’s good that
we need to make some fundamental changes, the old
top-down Whitehall driven big state approach simply
hasn’t worked, and we need to take some bold radical
steps. I don’t think it is really about putting finance
directors on the boards of government departments,
sensible though that is. Nor do I really think it is about
the tight part of Francis Maude’s tight loose way of
looking things, it is the loose bit that really matters.
So a few brief suggestions. The first is, and it has
been said already, we have to get away from pay for
activity, which is what we have done for as long as I can
remember in the public sector and instead we have got
to start paying for results. That means of course that we
should pay more for better results and less or nothing at
all for results that are not forthcoming. The second step
is that we have to devolve accountability, for the delivery
of public services to the lowest practical level and in
some cases that will mean devolving projects to
individuals and in others it will mean devolving
responsibility and accountability to local communities.
Next we need to give the accountable providers
of services the freedom to decide how best to respond
to the needs of customers and citizens and how best to
deliver services efficiently within a much tighter set of
financial constraints than they have been used to. That
means that Whitehall and also local government and
the NHS will have to disband their armies of planners
and supervisors and inspectors and performance
managers. Finally we need to give the providers of
public services the opportunity to experiment, to
innovate, to acquire and to expand and that means an
active programme of investment. I don’t use the word
outsourcing because I think what we are talking about
is making public sector staff more independent and
turning them into independent providers of services
who can then take control of their own investment and
their own futures. Thank you.
Andrew Haldenby:
Fantastic. There was a huge amount there but I was
very struck by something that Aidan said which is
what we want to be achieving is less for less but better
outcomes, we are going to spend less, we’re going to
have lower inputs and less bureaucracy and better
outcomes. Then Colm McCarthy saying don’t be too
hard on politicians who do things like cut public
sector pay, that’s what you have to do at the
beginning but then you should look for your value for
money after that. Let me take any comments that
people want to make and I’ll put them to individual
members of the panel.
www.reform.co.uk
129
Public sector productivity / Reform
Allister Rammage:
Allister Rammage. I think there were two really
quite scary myths here and one is about is about
[inaudible] and the other is citizen choice. If we are
honest about citizen choice, does it benefit the less
than 1 per cent who are typically not well informed
users and … I think we need to really challenge
ourselves in the understanding of which public
services … This idea about real data regarding
HMRC and …
Andrew Haldenby:
So the fundamental question is, are we going to get
more value in the public services by evolving and by
looking for competition and by driving out what we
think is a range of performance, the core
performance, or perhaps a bit like Francis, you want
to have more of a strong central grip. I don’t know if
each of us would like to just give a short comment
on that.
Colm McCarthy:
I wouldn’t dispute that if you could get for example
areas like procurement and outsourcing and just
streamlining organisational structures, I don’t doubt
that you could do more with less or the same with less
and save a lot of money. It tends not to happen in
public service organisations though. People had
discussions like this thirty years ago, I remember.
Politicians talk a good game about better efficiencies
and stuff, Margaret Thatcher rattled on about it
endlessly, but the figures showed that it didn’t happen
and I think we need to think very deeply about what it
is in the broader political culture that inhibits the
attainment of the style of efficiency gains and
flexibility and rapid decision making that we all praise
in the private sector, what is it that inhibits that in
public service. I don’t know if you get it here in the
UK but we get it here in Ireland, why don’t we get
Michael O’Leary of Ryanair to run the government?
We recommended the abolition – I’ll disguise this but
rubbish like the Rhubarb Advisory Board and the
Parsnip Promotional
Council and stuff like
If we extrapolate our reoffending rates across the that – and they didn’t
do it because it is way
entire prison estate we’d
down the bottom of
take 6p off income tax - but the agenda, there is a
there are no votes in getting certain amount of grief
in doing these things
prisoners rehabilitated
and so on. Somebody
asked Michael in a television programme, what would
you do about it? He said ‘Well I’d abolish the whole
Department of Agriculture’. But you can’t do things
like that if you are accountable and you have to get
elected and of course if you asked him to go off and
do it, he’d come back in a week and say I didn’t realise
what the Department of Agriculture actually does
and you can’t do things like that. So we can all be too
glib about trying to recreate private sector efficiencies
in the public sector but it’s not that simple.
Aidan Connolly:
I think what is interesting is that there is definitely a
political dimension. If I look at prisons where we are
delivering much lower reoffending rates, that is not
simply [inaudible] … and the idea that if we
130
www.reform.co.uk
Public sector productivity / Reform
extrapolate our re-offending rates across the entire
prison estate we’d take 6p off income tax but there are
no votes in getting prisoners rehabilitated, votes have
been for throwing away the key and that is the political
dimension that makes the difference.
Bernard Jenkin:
I think the government, the new government, really has
come in prepared to try and be brave. The strange
thing about Francis’s presentation, it was about the
tight bit when in opposition he talked a lot about the
loose bit and the loose bit is much more difficult. What
I would say to the gentleman who works in the delivery
unit, the delivery unit is clearly the wrong model
because you can’t have a delivery unit in a Cabinet
Office or in Whitehall that is trying to get policemen or
a nurse or a teacher to deliver a better service, it’s just
daft.You would never do that in the private sector
would you, so I think that is obviously the wrong type.
The real challenge is around the world of innovation
and it is how we can get people right down the food
chain to be innovators. For that you have got to
devolve, you have got to allow difference because if
you don’t allow different head teachers or different
chief constables or different prison governors to do
things differently, you won’t get any experimentation.
This is what the private sector does extremely well, the
only difficulty is that very many of the outcomes that
we actually want are not measurable in the public
sector and I don’t know what the answer to that is
except ripping it from the centre is not the answer.
Andrew Haldenby:
Thank you. There is an example of poor management
here, or poor chairmanship, and I’m sorry about that. I
didn’t want to finish the presentations and we’ve gone
over time, let’s reconvene at eleven and please join me in
thanking our panel.
Public sector management
Andrew Haldenby:
We will start now with our panel on Public Sector
Management which will be chaired by Greg Rosen, a
consultant director of Reform and he will do a better job
than me in keeping to time and it is ten past eleven so
Greg, can we go on to 12.05, is that all right?
Greg Rosen:
Thank you Andrew, thank you all. We have a very
distinguished panel sitting next to me, far more
distinguished than I. I will be brief because we do have
to try and keep to time. I know some of the panel need
to get away promptly. On my immediate left, John
McTernan has been special advisor to Cabinet
Ministers in several departments including the Scottish
Office, the Ministry of Defence and what is now the
Department of Work and Pensions, also political
secretary to the Prime Minister and has worked in a
whole range of areas and will be giving us the benefit of
his thoughts. Michael Izza from the Institute of
Chartered Accountants in England and Wales, will also
be outlining his perspective. From the frontline, Tony
McGuirk, Chief Executive and Chief Fire Office of
Merseyside Fire and Rescue who not only has worked
on Merseyside but has recently graduated from the
Harvard Business School and Julie Spence, Chief
Constable of Cambridge Constabulary, who has
worked in the police service for many years. Someone
has already mentioned Ashes to Ashes; I will not
mention Life on Mars but Julie will give us a far more
accurate picture of the insights that can be gained. John,
do you want to kick us off?
John McTernan:
Thank you for inviting me here to Reform. To the
question, can you cut spending and improve services?
Yes, of course you can. It’s not difficult; I suppose it
comes under the category of what Ronald Reagan used
to say: it’s not easy but it’s simple.You can take money
out and improve services and by and large quality costs
far less. It costs less to provide quality services than it
does to provide bad services.
I want to make three or four observations in
different areas of public sector management just to set
a few questions and ideas out there and then have a
proper to and fro. The first thing is a modest defence
of management. I think managers in the health service
are one of the best things that we’ve got over the period
from Thatcher’s reforms through to Milburn and Reid.
The Griffiths Report famously said if Florence
Nightingale was
wandering through the
There is a kind of heroic
wards of the British
management model that
NHS in the 1980s she
operates in the Civil Service, would be desperately
anybody can do anything looking for someone in
charge. I do think we
for two years and once
do need some people in
they have learnt to do it
charge and that
they should be moved
doctors, consultants,
somewhere else
surgeons, clinicians are
very good at taking on
board medical advances and medical innovations.
They are very bad at taking on customer facing service
innovations. Without a market there driving change
and without managers responding to and managing
that market I think the health service could be in a
much worse state now than it is. It still needs much
more radical reform but I want to defend the role of
managers in there.
In the Civil Service, I think the time has come to
abandon the management model that the Civil Service
operates under. There is a kind of heroic management
model that operates in the Civil Service which is that it
can work in two senses, anybody can do anything for
two years and once they have learnt to do it they
should be moved somewhere else and systematically
there has been professionalisation. Labour was noted
for its obsession with spin, it was actually a sense of
trying to get your message across and one of the things
that bedevilled Labour and the press office and
bedevils the current government is that if you move
people in from a policy specialism or another area to
do press for two years and then move them out, it takes
a long time to learn to do it. Press is a specialism,
policy is a specialism, IT is a specialism, and finance is
a specialism, So let’s actually be honest about that and
let people do jobs for more than two years.
Secondly, there is a dishonesty in the system now
that says there is no transparent requirement to have
the best people in positions but it ignores the fact that
people don’t deliver functions in the Civil Service,
teams do. So you appoint a senior manager and bitch
and moan at the fact that they then reassemble their
own team around them and bend the entire system
which forces that to happen. Why not have a more
honest competition for the front teams to do tasks and
then reward those teams for what they achieve?
Thirdly, in local government, can we have some
honesty about local government? The political
involvement and intervention in management in local
government is outrageous and I accept it should not go
on. It is accepted in local government that if there is a
change of party rule in a local area, they will sack senior
officers, chief executives, and chief executive directors.
Imagine if on a change of government in the UK, the
permanent secretaries were all sacked by the Cabinet
Secretary. The amount of political manipulation that is
allowed at the level of important service delivery is a
scandal and it should stop.
Finally, there is one big, big area that people
always run away from which we have got two
representatives from here which is the police and the
fire service. Why does London still have broadly the
same number of fire stations that it used to have in the
1950s? Because no politicians are willing to grapple
with reorganisation. Why should there be
reorganisation? Well in the 1950s a lot of people still had
coal fires and houses were poorly wired, so there were
far more domestic fires in the 1950s. The number of
pumps we have, the number of stations we have, and the
number of personnel we have, broadly reflects in
London – I don’t know about outside London – a
situation responding to fire risk in the 1950s but you
can’t touch the fire service. And who has ever, as a
politician, raised reasonably the question of efficiency
and good public spending and value for money in the
police service? It is not going to work to simply say, well
we’ll elect some police commissioners and then they’ll
do it. We’ll get reform if we take it from the Home Office
and pass it to some other mug and then when there’s a
problem where will the Home Office be? They will say,
go to your people and try and sort it out.
The police service and the fire service are areas
where there will need to be a huge political commitment
to reform. There are huge amounts of money there but
there are huge conflicts to be had. In a range of different
areas in public services there are a range of different
management challenges all of which can be dealt with if
there is sufficient political will to do it and the
willingness to constantly reiterate that even if we remove
the amount of money that we’re looking at in terms of
public services over the next four years, we are
returning spending to the level of 2004/5. How bad was
it in 2004/5? It wasn’t that bad was it?
Greg Rosen:
Thank you, as provocative as ever!
Michael Izza:
Thank you Greg and ladies and gentlemen, I’m now
getting a second bite of the cherry so I’m going to be
fairly brief and concise. I just want to focus on finance
management in the context of public sector
management overall. If you have actually got a culture
of poor performance management, that actually creates
barriers to managers who want to bring about change.
Financial management is exactly the same. Managers
need to be supported if they are going to cut costs and
improve efficiency and frontline services are going to be
improved with limited resources.
www.reform.co.uk
131
Public sector productivity / Reform
Now we have over 4000 of our members who
work in the public sector, most of them are senior
finance managers and they have a key role to play in
identifying where savings can be made to services. If
you contrast this with what the public sector looked
like ten years ago, most major government
departments didn’t have a qualified financial
professional heading up their finance function. That
is just stunning. By 2008 the last one was appointed
so over that period a great deal of change came about,
but we now have to empower those people to make
some decisions on our behalf.
The good news is that these members believe
that cuts can be made in spending while protecting
front line services. We recently commissioned some
research jointly with Reform that were looking at public
sector finances and we called it TheView from the
Inside. Now as part of that exercise we asked our
members for their views on whether or not there was
scope to deliver better value for taxpayers money and
over 80 per cent of the people who responded to the
research believed that further efficiency savings could
be made in their organisations without affecting the
current levels of services that they provide. There is
probably no surprise there.
What may surprise you though is the scale of the
savings. When they were asked to identify what the
scale of these potential savings might be and they were
in discretionary budgets they estimated around
£20 billion could be saved. Now we are starting to talk
the right sort of numbers and many examples of their
willingness to do this have already been put into effect.
Now I thought as we had a chief constable on the
panel this morning I would actually cite a police force
as an example of good practice and we’ve been talking
to Kent police force about what they’ve been trying to
do to improve their efficiencies.
Up until fairly recently Kent did very little with
any neighbouring police authorities, they are now
sharing across a range of procurement. They are sharing
back office HR payroll functions, they are sharing boats
that are patrolling the Thames river along the Estuary
and they are sharing helicopters with Essex as well.
These are things that I suspect those of us who come
from the private sector would probably have
experienced many years ago, they weren’t but they are
now and I think that is a pretty positive step.
The research also identified the changes our
members felt were needed in the public sector to support
savings and efficiencies and they actually said the single
most important change that they felt was needed was
political support and specifically they felt that needed to
come from ministers. What we heard from Francis
Maude this morning in his keynote speech I think was
very encouraging in many respects but Ministers do
need to have confidence in the leadership of government
departments and they must allow the financial
assessment to take place to guide strategy and outcomes.
Finance cannot be relegated to a subsidiary function or
even in some departments, ignored.
The other key factor they cited as a barrier to
change within departments was a working culture
which failed to encourage financial awareness with
departments. By this they meant that some managers
wear it as a badge of honour that they are financially
illiterate.You wouldn’t be allowed to do that in the private
sector; I don’t think you should within the government.
132
www.reform.co.uk
Public sector productivity / Reform
The final point that they raised was that
notwithstanding the resources I mentioned that had
gone into departments for finance in the last ten
years, there is still a lack of resource in the finance
function. Those of us in the private sector that have
made changes will know that sometimes you have to
invest to make savings. The overall message from the
survey, The View from
the Inside if you’d like
Some managers wear it
as a badge of honour that to see it, is that there is
to spend public
they are financially illiterate. scope
money better and that
You wouldn’t be allowed to the government has a
do that in the private sector; significant opportunity
now to move beyond
I don’t think you should
the simple slicing of
within the government
public budgets and
instead look at this
area in a strategic manner and recognise and
re-engineer the business in a way that gives value for
money. But if any of this is going to be achieved
within our public sector organisations, we do need
this political support and it is not going to be easy.
I thought I’d just spend one minute telling you
what we’ve done at the ICAEW because you must see
people who stand before you on platforms and tell
you the right way to do things and they probably
never have to do it themselves. In 2007 we realised we
were going to start having a problem with our
income. That’s when the rest of the UK started to
react. Since that time we have made in excess of a 10
per cent reduction in our head count, a large amount
of that has been achieved actually just by freezing
recruitment and as Francis Maude said this morning,
when you have to come to the Chief Executive to
sign-off on a new hire, people think very carefully
about whether or not they are going to do that. We
had salary freezes all last year, that started with the
Chief Executive downwards and it saved a substantial
amount of money. People didn’t like it but
understood that if the option is redundancies, they’d
take it. We re-engineered our business process. Now
that might be something that you think people should
be doing all the time anyway but when you have a
particular imperative that says we’ve got less money,
we’ve got to do the same thing, how are we going to
do it better, it really does focus the mind. I suspect
that’s what may be behind some of the comments that
you are hearing about how some cuts have got to be
as significant as 40 per cent. Because when you start
talking about 40 per cent you don’t make those
savings in budgets through efficiencies, you have got
to re-engineer what you do.
I said this morning that I believe there is hope and
I really do believe there’s hope. I think if you are in the
public sector this isn’t all doom and gloom. We can have
coming out of this, public sector services that deliver
better outcomes for the public at large and that are
better places to work but it won’t be easy but I think
with everyone’s encouragement we can get there. Thank
you, those are my thoughts.
Tony McGuirk:
Good morning everybody, thank you very much for the
opportunity to speak with you this morning at this
conference. When Andrew asked me to speak I did feel a
bit of a phoney and I wasn’t quite sure why I had been
asked to speak at such a highbrow intellectual
conference, those descriptions could never be applied to
me in any way, shape or form!
I think John’s observations have been very useful
set in context. He talked about the need to deliver
changes and if we are going to take this stuff on in the
police and fire service, you are going to have to get to
grips with it, he is absolutely right. We unashamedly
turn politicians inside out, usually because they lack the
moral fibre and courage to take us on. We don’t and that
is why, and it is cross country, New Zealand, a fantastic
article about the New Zealand government, absolutely
right, fundamental change but they went nowhere near
the fire service. Absolutely stayed a mile away because
the public love us.
So the need for change in our service wasn’t
driven by any political imperative. I have been asked to
say hi from some of our fire fighters, they were waiting
this morning to celebrate our World Cup victory.
Unfortunately they are sitting there disappointed but
they asked me to say hi. Steven Gerrard, bless him,
these are the sorts of lengths he is having to go through
to get his hands on a trophy nowadays, come on
Scouser, you can come up with a better story than that.
We are talking about reality. Why aren’t we
delivering locally? Why is there this tension about the
ability to translate some of those very worthy ideals?
And Colm talked about pace of change at the local
level, why isn’t it happening? I am going to use this to
illustrate the political gap in terms of political
confidence. This is Nick Clegg before he was a needy
celebrity and Deputy Prime Minister, speaking at last
year’s Liberal Democrat conference. Now those are
Liberal Democrat councillors and at the risk of being
stereotypical, would I put those in charge of
delivering fundamental change in our future? John hit
the nail on the head. That is reality; those are the
people to deliver our future. I guess the point I’m
making is like John said, let’s get some reality. Our
reality. What was it like ten years ago? Wake up, we’re
going on strike. Private Eye magazine, Green
Goddesses on the street, absolutely appalling, in a G8
country the military were having to protect our
community from fires, absolutely disgraceful. Cuts
cost lives, a chant you’ll hear whenever anyone
suggests making cuts in the fire service.
We didn’t meet our performance targets, we
knew what we disagreed on but we had no ideas in our
organisation that we agreed on. Management lacked
credibility. Why? Because we weren’t credible. They
didn’t make decisions, there were too many of them
and they had no backing from politicians to deal with
performance issues. They had a very strong union, still
have but when you put the fire service against weak
management it is a recipe for disaster. Misplaced
loyalties, low morale and no pride, the best service in
the world in my opinion, the best service in the world
and we’d lost our pride in our job.Yet despite that we
were the highest spending public service in the
country. Nobody spent more per head on the
population on fire cover than in Merseyside. The
highest fire deaths, 26 people a year dying in fires, it is
absolutely outrageous. The most significant fire
deprivation in all of the western world, you couldn’t
find anywhere in the western world that was less safe
even though we had more fire fighters per head than
any other part of the western world.
Fire injuries, 400 a year. Typically a serious fire
injury will cost the NHS about £750,000 in care, 400
a year. Three fires a day, three fires a day. We had an
incredibly expensive cost per head, poor working
practices, poor reputation, and huge industrial
relations issues. The first strike in Merseyside was in
1909 by the fire service and they have been very proud
of that ever since.
So why am I here? Well this flood of money in the
public sector passed us by in Merseyside. We must be
sat on the highest hill in the country because we haven’t
seen a penny of it. We’ve had massive budget cuts so
we’ve gone from being the highest cost per head ten
years ago, that green line down there, from the highest
cost to the lowest cost fire service in ten years and that’s
in a period of very challenging budgets. How have we
done it? Well in 1991, we had 1550 fire fighters. Look at
2008, now 900 fire fighters. We are now down to 850
fire fighters, so that’s 1550 down to 850. There is no
need to close a fire station, we haven’t touched a single
fire station. There’s no need to touch a fire engine, we
haven’t touched a single fire engine. Frontline is fire
engines and fire stations, not fire fighters. We provide a
far better service with those 850, more with less.
How do we do it? Here’s one of the things we did,
get a grip of sickness. It is epidemic in the public sector,
sickness, get a grip of it. It involves two things – this
muscle, sack some people. We’ve got some bone idle
people in the public sector – there I said it. I said it, bone
idle people and we’ve
We’ve got some bone idle got some wonderful
people in the public sector people and the
wonderful people
– there I said it. I said it,
hugely, hugely
bone idle people and we’ve outnumber the poor
got some wonderful people performers. When you
and the wonderful people bring an employee to a
board to sack
hugely, hugely outnumber political
them for being sick,
the poor performers
they lose their battle at a
local level. They lose
their nerve, they are got at by the trade union. Lots of
things come into practice and what that promotes is an
epidemic of a failure to deal with poor attendance. But
we also have a fantastic incentive scheme, so the first to
hit 19 shifts [inaudible].You smile at that, it’s ridiculous,
I agree.
The reason is nothing to do with officers, it’s the
politicians. The failure of politicians to tackle these
problems, to support managers and I would suggest if
you did that in the NHS you’ve not got a problem, in
fact they would have more money than they’ve got now,
if you did that in the NHS. Incentivise great attendance
and fantastic performance, celebrate the wonderful
people that we have in public service. What I mean by
that is real incentives. Up until then someone said to me
we’ve got a carrot and stick approach. Well I must have
missed the carrot because the only carrot I can see is
that they wouldn’t give you the stick. There was no real
carrot. Now once every year we have a car draw,
anybody who hasn’t had any absence can go in a draw
for a car, you can win a car. Is it popular? Of course it
isn’t. Why? Because it makes the front page of the
Sunday Times, they don’t like it. It’s not my job to be
popular, it’s to deliver, to deliver, that’s what you do in
the business world.You do what needs to be done to
deliver and you can’t have your cake and eat it.
www.reform.co.uk
133
Public sector productivity / Reform
Someone said it was an inversion of private
practice, they are absolutely right, you take it all on
board and that means sometimes you have to do
things a bit differently. I think it is in Roger’s article,
he talks about public confidence, don’t blink, public
confidence rests on your composure. It is the job of
the leader to be in the public domain explaining
yourself and don’t sit on the fence. Are we going to
cut staff? Yes. What is the union going to say? Cuts
costs lives, lives will be put at risk, they are going to
say it and the idea that they’re not is just ridiculous
and naïve in the extreme.
We lost a £900 budget cut in one year in 2006,
the union said we’re going to go on strike against it and
I had to persuade the fire fighters to walk through
picket lines and we had to stay there until the strike
was over. The longest occupation we had in a fire
station was 29 days. Every single day there was a picket
line outside that fire station and public confidence and
competence had to be maintained. The front page of
the Liverpool Echo. When you say that on day one of
the strike, you have to be pretty confident that your
people are there with you, that’s why leadership is
crucial. I don’t think a politician would ever say that, I
wouldn’t want them to. That is not their job, that is my
job as the professional leader with the service. Is it
popular? No, it isn’t, there are some headlines here –
that is a rip off of the Carlsberg logo, it says McGuirk
in the middle – probably the worst chief in the world.
Another occasion there were 2000 people walking
through Liverpool wearing shirts saying on the back ‘I
Hate McGuirk’ and when your family have to watch
that it’s not a great day for them. At the end of the day
this is what reality is all about and it’s what’s going to
come to the public sector.
What we have to do is look at our hiring criteria
and what is the job that the public want us to do? That
is what we fundamentally have to look at to change
some of those figures. We no longer respond to fires,
our job is to prevent the fire, that’s our job, our number
one priority – prevent fire. Someone has talked about
the difficulty of performance measures in the fire
service, or in public service in general – they’re right.
Our measure is how we [inaudible] and it is
measurable, I think that’s what the public want us to
do. The public can’t articulate that, I wouldn’t want
them to, they’re not professionals; I don’t expect them
to. We don’t ask their permission to take the service in a
different direction because innovation by definition
has never been done before so how can the public
possibly have a view that could be supportive, they’re
frightened of change. There has been that much gloom
fired at them, they’re frightened of everything. They
are not going to vote yes to anything and speed is
essential. We have got to get on and deliver it and use
this fantastic resource for so many other things.
From tomorrow we will change. We will visit
every single home and knock on the door and walk in,
we will fit smoke alarms and we will prevent fire, from
tomorrow. We will use our brand in a different way, we
are providing a resource for the community and our fire
stations are community zones that are open to the
public. Our gyms are open to the public, we have got
gardens in fire stations, we have got youth groups, older
people groups, and disability groups. There is a whole
health resource for the community that doesn’t have to
pay more.
134
www.reform.co.uk
Public sector productivity / Reform
We use a lot of things to achieve that, using time,
stealing ideas, all those things but meet the highest
criteria. First and foremost understand what you have
been hired to do by the public and meet the criteria,
whatever it takes. Improve performance managing.
Quick hands up. Anyone see the massive big arrow in
that logo? One. The big white arrow, it was designed to
be like that, it goes into your subconscious. Now all
you will ever see is the big white arrow because your
eyes have been opened to looking at something a little
bit difficult. The road wasn’t changed, it is just a smart
way of presenting a brand and I think that’s the
challenge we face and certainly what the fire and
rescue service faces.
We have got a fantastic workforce, we have got
successful partnerships, we have fantastic innovation,
we’ve got efficiency savings, and we’ve got awards
coming out of our ears. What have we learned? Clear
leadership, clear
People in the public sector leadership.You will
aren’t there for the money never notice there’s a
strike. I think I was
pretty clear, I think everybody is pretty clear about
what we were saying and they didn’t, they didn’t. Clear
decisions, we are going to do that and we’re going to
stop doing that from tomorrow, no ambiguity. We
cannot get people to sign up to decisions if they are not
clear what they are being asked to sign up to. Manage
performance, reward good performance, develop
people with poor performance or ultimately sack them.
If they are not doing their job you have to get rid of
some people. Very rare, in the public sector actually,
very rare. I think we have some fantastic people. Focus
on how we are going to do rather than what we are
going to do. The value of an organisation is how we are
going to deliver, not just what we are going to deliver
but how. We’ve got a public sector ethos, that’s crucial
It is very difficult in summary to talk about the
output, language is a fantastic reward. People in the
public sector aren’t there for the money. They’re not
there for the money. The language of reward is that we
have to train our managers in how to say well done and
thank you in a whole variety of ways. Change is never
going to be popular, it is going to be tough and I think
we have got some real challenges ahead. But what I am
trying to ensure is that having taken 40 odd per cent
staff out of our system with not one compulsory
redundancy, we have achieved it all through natural
wastage, we have gone from the highest spending to
the lowest spending and our fire deaths have dropped
by 60 per cent, our fire injuries have dropped by 70
per cent. We now get one fire every three days, not
three fires every day. We are part of the Olympics, we
have the spire mark that is the brand of the fire fighter
and the fundamental delivery platform for leadership
in the community.
So I sprinted you through a whole range of
stuff there, thank you very much for the opportunity
of speaking with you this morning and thank you
very much.
Julie Spence:
How do you follow that? I haven’t got a tap dance and I
haven’t got a slide show but I’m going to try and give
you a little bit more information around policing
because I am actually two months to retirement. I am
being honest! But I have spent the last five years trying
to put the public service ethos back into policing, very
much because I think when I took over as chief and
when I looked around nationally, what I could see is that
the public wanted this. The police were there and they
weren’t on the same page and in fact the police service
was arrogant and aloof and had forgotten who paid
their wages. So yes, that’s what I’ve spent the last five
years trying to do and why I got a little bit irritated with
the Home Secretary last week when she said your job is
to cut crime, nothing more, nothing less. It’s more than
that and I’ll come on to that in a minute.
A bit of reality. Like Merseyside who are now the
lowest spending, we are the lowest spending and there is
something about the cuts because there are some
important choices. But the government is going to have
to ask itself, if they are already low spending and
delivering should they be cut at the same level as those
who are high spending? But I’ll come on to that in a
minute. I am very pleased to hear earlier speakers go for
more with less to what I think it is going to be in the
future and it is going to be less with less. Hopefully it
will be better outcomes but actually it could be just very
different outcomes and we have to understand what that
is and we have to be able to manage it as leaders of the
service as well as leaders of the country.
There will be some really, really difficult choices.
Tomorrow I go back to a seminar of senior managers
just really looking at where we are going to make cuts.
Yes, we can do some and it is about challenging
ourselves to say how can we do things differently and
my deputy has been holding star chambers. If you look
at the definition it is about how people go into things
and come out without their ears or their hands and
different elements. I understand in history but we are
not quite as brutal as that. Nearly but not quite.
You have to challenge them and say no, you are
not going to recruit for that post, think about how you
are going to shape your service differently but there
was a flaw. I don’t know where it is and cracks will
appear but we need to be alive and alert to where those
cracks are going to be coming. But we have been asked
by government to do some scenario planning on real
terms cuts of 17.6 per cent, 20 per cent and 25 per
cent. In essence 25 per cent is the more global figure
you heard in the weekend press and up to 40 per cent.
That is going to have outcomes and again government
can deal with issues around the regulations that
support the pay structure. It could mean that within
Cambridgeshire we have 900 at 17.6 per cent to 1100
less staff at 40 per cent, and that means my service
would be almost
I think it’s a false economy halved, from 2400 to
1300 or 1500 so with
definitely from the public
there has to be
purse’s perspective to be that
some choices that are
handing over that budget actually made. But
until we have squeezed
because 83 per cent of
everything out that we can our budget is people
and unfortunately we
are not having a pay freeze, our pay freeze starts in a
year which means it is going to be a pay [inaudible] in
the budget and that’s where we are. But there will be
pay freezes coming along later. There are pay and
conditions but they do need to be looked at in relation
to overtime allowances and why there need to be rates
of overtime. Why when the working day today is seven
until ten o’clock at night seven days a week, so it needs
to be modernised and we need to actually look at how
we work on the pay because either you cut horizontally
and take money out of the pay budget and more people
keep their jobs which a lot of my staff would much
rather have or you end up with the same pay structure
and the only way you can survive is to cut numbers,
which will have an impact later on down the line on
service delivery. So there are some choices to be made.
I want to disabuse some people, because some
of my colleagues have got into amalgamation,
amalgamation, amalgamation to save money. It
doesn’t. My belief is that it doesn’t because if you
look at some of the biggest forces in the country, they
spend more per head of the population on the service
they deliver than we do at the bottom end. I think it is
actually looking at some of these smaller forces to
actually have a look at how they are delivering the
service and seeing if there are any lessons for the
bigger ones. That’s not to say all the big ones because
on the bottom you have ourselves at fifth lowest, you
have Suffolk on £155 per head, I think they are about
the lowest and you have Essex in there as well at
£169. So you have us at one end, you have at the
other end much bigger forces – I won’t tell you who
they are but you can go and do the research. You can
probably guess, you are not very far away from one of
them £265 per head. If they actually had that 25 per
cent to 40 per cent cut they actually still end up with
more money than we do so that’s why there has to be
some looking and some real challenging. Not just
from within the service and what we are doing within
our domains but actually outside to some of the
bigger organisations.
Somebody said at the very beginning, an
aversion to the private sector. Now I am not averse to
the private sector but I am wary because I look at one
of those forces towards the top end and they are about
to outsource all their back office. They are outsourcing
at current costs of 10 per cent I understand, I cannot
– if there are members of the press here, I don’t exactly
know that’s right but that’s what I’ve been told – but
my view is, you are about to give all those profits to the
private sector and you will not be doing that if you
can’t actually make a profit for your organisation so
that organisation is handing over what should be
public sector benefits back to the private sector. I think
when we have squeezed out as much as we can and
then say to the private sector can you do better? If you
can do better, right, you can take it on? But I think it’s
a false economy definitely from the public purse’s
perspective to be handing over that budget until we
have squeezed everything out that we can. This is
where government has to look at comparability and
challenge some of these big finance decisions that are
made which is in essence what Francis Maude is doing
from the government perspective.
Collaboration, which we talked about, does have
benefits. We are going to be doing national collaboration
and we are going to do regional collaboration on other
issues that make sense, there are some things where it
doesn’t make sense to have your locus in the middle of
East Anglia and it is far better to be in Cambridgeshire.
The reason this session was titled about performance
framework is it is about what performance framework
actually works. We have come from top down, centrally
driven and a lot of people are now saying bad. I have to
say when I took over Cambridgeshire we’d been
www.reform.co.uk
135
Public sector productivity / Reform
deemed by the previous administrator to be a failing
organisation. It was the best thing to do, give us a kick
up the pants and we used it, we used it to identify where
we needed to go but also used it to embed public sector
ethos. Look at where you are spending your money.
Looking at what you are trying to deliver and
remembering actually what you are delivering is about
public principles as well. So it was about hitting all those
targets but there were, I have to say, far, far too many
targets. There were, as somebody mentioned, I
remember listening to a senior Home Office official
who actually said they met their performance objectives
by us meeting our common reduction. I thought why
should you get a performance payment by riding us and
riding us inappropriately? So there is some micro
management that has to go and I think when civil
servants quite properly get back their advisory role it
will be a much better place.
We have also ended up with a perversity of
failing by improving and that was because we didn’t
meet our stretched targets so it was again, as somebody
else mentioned, front page news – particularly local
news – when actually we have improved. But it wasn’t
against this stretching target our politicians actually set
us and that we set ourselves. So I think that was
important. We coined a phrase towards the end of the
era, which did have its good points, we got into a realm
of “hitting the targets but missing the point,” and I
know that can also be said in relation to the health
service. Because it was about some people losing their
objective, and people tried hard to curry favour with
political and
bureaucratic masters
We got into a realm of
and were forgetting the
‘hitting the targets but
value added or not in
missing the point’
relation to public
service, so you ended
up with some perversities with some areas of the
country being high in violent crime. Well they weren’t,
it was just actually penalties for civil disorder were
handed out like confetti so it made violent crime look
high, it wasn’t the reality. Then the next consequence
was the public don’t believe the stats so actually
perversely it undermines the confidence of
the British public. So I think there is some real
learning, we don’t want to go back down that pathway
but we want to understand the risk benefits need to
be removed.
We then went one down to get a deal, we keep
getting deals, one top down target single measure
public confidence and we are going to be measured on
somebody’s perception and I got a letter from one of
our regulators saying we think you’re going to miss
your trajectory for 2012 because we have just gone
down by point two of a percent in public perception.
What it did encourage us to do is understand what are
the things to tick and cross what the public feel. That is
good because it allows us to better focus on customer
service which I know people don’t like customer
service because they don’t feel they’re our customers,
but you can talk a lot about what you can do but
ultimately in the private sector it is about making sure
that people who have your services have confidence in
you, feel good about you. Not because they want to
come back to you but that same sort of ethos.
So from my perspective there was some
perversity that came from that but the good managers
136
www.reform.co.uk
Public sector productivity / Reform
realised that you couldn’t just have one single top
down measure, you actually did have to have a whole
range of measures to [inaudible]. It is also about
preserving and improving access and freedoms so
there is a big wider debate and some of this is about
rights and freedoms but it is also about elimination of
risk and by that I’m talking about things like health and
safety, data protection, freedom of information, and
vetting. They have all been brought in for very good
reasons but they all create with them a very costly
bureaucracy on all the public sector put heaps of
money into trying to protect. We have to decide, I think
they are over-regulated, over-engineered and costly
but the public debate clearly has to be about what is
the right level that we have in this regulation that
actually gives us the benefits that the public need and
deserve? And how do we cut the rest out and I will say
this is a debate that we need to have.
We have to help people understand the risk and
the reality of that risk ever happening and sometimes I
think the reality is overblown for the risk that is actually
there. If we can remove the cost and improve the
balance that would help. We also do have to get rid of the
raft of all this inspection. I think last year almost every
day we were being audited or inspected on something
and that sounds easy, if you just let people come in and
have a look, absolutely fine but you have to prepare for
it, you have to answer questions, you have to fill in
questionnaires beforehand – it is quite patently daft. But
we do need to have a level of accountability. The devil is
in the detail about what the elected individual/mayor is
actually going to look like but they are going to have to
have something that will hold us to account but that also
isn’t bureaucratic in its nature.
Just to reach a conclusion, I think the new model
with the central accountability does have some, as long
as the detail is right, does and may well have some real
benefits but there needs to be in my view a national
framework. As much as I live in Cambridgeshire I want
to know if the public services in Cambridgeshire are as
cost-effective as the ones in Shropshire, as in Norfolk. I
want some comparison if I am going to be able to hold
my local officials to account so I think there is going to
need to be not just local, I think there needs to be a
national framework and that is for government with the
regulator to design what that should be. Non
bureaucratic but really something that allows us
properly, all of us as
The devil is in the detail
citizens, to hold the
public sector to
about what the elected
account. And I will
individual/mayor is
watch for that first
actually going to look like major incident, where
but they are going to have the government having
given away all the
to have something that
try to pull them
will hold us to account but leaders,
all to get it back in and I
that also isn’t bureaucratic think that’s the real
in its nature
danger, although I have
to say from police
perspective we were really, really pleased with the way
they managed the serious shootings in Cumbria. I think
if that’s able to be carried forward is a really good model
for how you manage the extraordinary if very difficult,
well for the community there catastrophic, and
something that will actually live with people for a very
long time.
Two other very small issues. One, we need to
have a cross organisational model. I’m currently
working with other public sector services in
Cambridgeshire to see how we can deliver better
locally and I think that is a real issue going forward. If
we can hold some accountability across all public
services, I think we can deliver better for the money we
get. I will absolutely endorse what the guy was saying
about Peterborough Prison because I’ve been at it
from the other side in relation to the Social Impact
Bond and in fact when I retire I am going to do some
voluntary work, if I’m allowed, to make sure that
properly does get embedded. It is a new way of
funding public services, it is a new way of funding
social outcomes and it has I think got real legs and
needs to be looked at and evaluated because it could be
the way of the future.
Ultimately I think we need to have politicians who
understand the evidence base. I was at a meeting
yesterday, a conference at Cambridge University and
there is lots of evidence that we have it, we understand it
and we had a politician, an ex-politician there who said
the evidence base only works if it fits with the agenda.
Well we have to make the agenda fit the evidence base
and I think that’s the challenge for public services going
forward but it has to be a dialogue between politicians,
professionals and the public.
Greg Rosen:
Now I am conscious that we have run slightly over time.
Do we have time for some questions? Okay, can I take
them in rounds of three if you want to stick up your
hands. We have no questions? We have one.
[Question inaudible due to not being close enough to
the microphone.]
John McTernan:
In my experience the right sort of political support is
clarity and consistency. So if you know where you’re
going, you’ve got a direction and if you know there’ll
not be any variation I think that, I’m sure everybody
who has been in this situation with difficult change,
with political leadership, it goes both ways which is
that if the politician is not going to wobble, then the
service has to not wobble either. This is something
where people are bound together in a joint enterprise
and I think that’s like any other piece of work where if
you are joined together then you get better and better
at trusting each other. The easiest thing to do in any
of these situations is to blame the people who are not
in the room; it is very easy to be rude about people
who are not with you. When people are with you, you
understand their situation, their context. Politicians
do have to get re-elected, that is not ignoble because
they re-elect on a platform which includes taxation
and taxation is compulsory confiscation of people’s
wages to pay for public services. So you do
understand it is not just the job of being a mediator or
spokesperson, the leadership demands are multiple
just as they are on leadership in public services. So it
comes back to what’s the pleasure? The pleasure is
having that rush and that sense that things which you
know should be done or could be done are going to
be done and things that you didn’t really dare to think
were going to happen are done and that works on
both sides – the politicians, the advisors and for the
public servants.
Tony McGuirk:
I think John is absolutely right and I have got a lot of
regard, I haven’t got to be elected so in a way it’s easy
for me, I haven’t got to be popular so in a sense that
makes life very easy. I am just presented with a set of
problems to which I have got to find a solution and I’ve
got the luxury of being able to be logical and all those
things that politicians, local or national, have not got
that luxury.
My experience has been why would a politician
make an unpopular decision which by it’s very nature,
they’re there to represent the popular view so why would
they do that unless they had to? My challenge was to
convince the political leadership that this is the way the
service should go because it is the right thing to do.
Unfortunately, and we were able to get ahead of the game
in one sense, we’re not in that game now.Whether it is the
right thing to do, it is the economic reality so in a way
local politicians will not
have the choice. The
The easiest thing to do
choice is being removed
in any of these situations
and on one level that’s a
is to blame the people
good thing but on
who are not in the room
another level it is going
to be quite a complex
issue. It is a real dilemma because you will have national
government saying get on with it, sort of thing, which is
very easy to do, cut 25 per cent or whatever the figure
might be, yet the same national politicians will be on to
their local fire station or whatever saying “It’s outrageous
you are closing this fire station.” That is the reality of what
you’ll get and I think local politicians are going to be in a
really difficult position and I don’t envy them.
I think we are very fortunate in this country, in the
main we have some committed and passionate local
politicians whose heart is very much in the right place.
They have a different job to do than I do as their
professional advisor.
Audience Member:
On the slide it showed how the councillors would be on
boards to discuss sacking somebody and the unions
would get at them and they would be nervous and
wouldn’t want to go ahead with sacking them but you
managed to overcome that obviously. Was there some
structural change or did you just through your strength
of personality persuade the politicians?
Tony McGuirk:
Two things. There was a major political change. Going
back, Derek Hatton used to be the chair and that might
explain some of the resistance and as the leader he was
also a fire fighter as was his father. He put in place
procedures which required a political level for a final
dismissal so unlike most organisations, the final say
over dismissal was with the political board rather than
a board of professionals. There was a national strike of
the fire service in 2002/3, government I think really
stood up to that issue very strongly and very firmly
and put in place a completely new set of frameworks
and legislation around the fire service. And it allowed
us to change those procedures and really take
politicians – because they don’t want to be there and it
isn’t fair to them. They’re not trained in HR issues, it’s
not fair to them, so they were quite happy and content
to make it a professional issue. The appeal would go to
www.reform.co.uk
137
Public sector productivity / Reform
an industrial tribunal like every other employer so it
was a combination of political change and structural
change through the national legislation.
Greg Rosen:
If there are no more …
Julie Spence:
Can I have a quick comment? One of things was around
legislation, health and safety, freedom of information,
etc, etc because you don’t want to end up costing the
public purse more because of legal actions that have
been taken out against different individuals or
organisations than you would save by taking out the
bureaucracy that currently supports it. So it is time to
work out, keep the benefits, but you have to have a very
lean process for managing it. But that has to be done
with discussion and it isn’t about always protecting your
back which I have to say the public service or public
sector is very wary of and wants to do because it doesn’t
want to either have itself blamed or to cost the public
purse a lot of money. So that is why it is not something
we can do unilaterally, it has to be done with politicians
because it is a big issue.
Greg Rosen:
Thank you, thank you all. I think that has been a
fascinating session and has given us all food for thought.
There has been an element of consensus I think on the
panel for the need for effective, financially literate and
empowered management teams and some wonderful
imagery, not least of some of the Liverpool players but
also the concept of the hiring criteria for public services
and the importance, and John you also mentioned
taxation as being the compulsory confiscation of wages
to pay for public services, the importance of
remembering what it’s all there for. A great deal of food
for thought there for everyone, thank you.
A new era: the rights and
responsibilities of individuals and
the Government
Lucy Parsons:
We might actually finish before time because
unfortunately Colm Reilly has not been able to join us
so hopefully we will finish on time and you will be
pleased to hear that this session is the last one before
lunch, I’m sure you’re all starving. In this session we are
going to be looking at how, in this age of austerity, policy
makers can define and limit the role of government in
the public sector and what that means for individuals’
expectations of what the state will provide for them.
We have an excellent panel of speakers here. The
Right Honourable Margaret Hodge, MP for Barking
and the new chair of the Public Accounts Select
Committee, Margaret has the incredibly important job
of scrutinising value for money in government
spending. Margaret has previously held a number of
Ministerial posts including at the Department of Work
and Pensions and most recently at the Department of
Culture, Media and Sport.
We are really delighted to have all the way from
New Zealand the Honourable Sir Roger Douglas who
after an 18 year break in politics has returned to the
back benches as an MP for New Zealand’s ACT party.
138
www.reform.co.uk
Public sector productivity / Reform
Roger was New Zealand’s Finance Minister in 1984-88
during which time he reduced a fiscal deficit of 9 per
cent of GDP down to 2 per cent so hopefully he can
give our policy makers over here a few tips.
Last but not least, we have Allister Heath, the
editor of the excellent City A.M. I have seen that in
today’s Editor’s Letter, Allister has written that this is
a square root shaped recovery and as an accountant I
have been trying to wrack my brains this morning as
to what that means and whether it is a good thing or
not! But perhaps Allister will enlighten us, but firstly
over to Margaret.
Margaret Hodge:
Thank you very much indeed for that.This is actually my
first encounter with people after becoming the first ever
elected chair of the Public Accounts Committee, we’ve
never had that before, elected by all my peers across all
the political parties so I am really only in a position to
make some general observations about our role.
The fact that I am elected, that we are all elected,
I think does give us a new and very different and I
think probably an
We are there to drive
enhanced authority to
do the job of holding
improvements in public
to account.
services so that when the government
This is particularly
cuts are made, what
important I think at a
emerges is a public sector time when parliament
that is sustainable over the is trying to rehabilitate
itself by demonstrating
longer term
real added value both
in the way that we legislate and in the way that we
scrutinise expenditure on behalf of voters, on behalf of
citizens and on behalf of tax payers.
I think the PAC in particular is charged with a
particularly important role in this particular
parliament because it will be dominated by the cuts in
public expenditure and public services so during that
period ensuring real value for money, getting more for
less, which I’m sure you heard about this morning,
getting greater efficiency and effectiveness becomes
utterly crucial.
We are not there as the PAC, I am the Labour
chair, to engage in what is an ideological debate about
shrinking stake, although I’ve got my views on that,
although we are there to monitor and support the
government in reforming the public services so that
they may become more efficient. We are not there really
to engage in the debate about should be go this quickly
and should we go so deeply, again an issue on which I
have personal views, but we are there to judge whether
or not the actions of government achieve their stated
aims and objectives. So for example are the cuts fair in
that they don’t harm disadvantaged groups
disproportionately and finally we are not there to advise
government on what to cut but we are there to drive
improvements in public services so that when the cuts
are made, what emerges is a public sector that is
sustainable over the longer term.
Now these are early days, we haven’t yet met as a
committee because all this voting seems to be beyond
the House of Commons but we are finally getting it
sorted out! So I don’t want to pre-judge really how we
are going to contribute to the task with early
pronouncements which will then regret later on but I do
know that the PAC is in a unique position in relation to
other select committees and there are two things. Firstly,
we enjoy the capacity of the Comptroller and Auditor
General and the National Audit Office where my early
observations are that they really do, do a good job in
clearly reporting the facts and in honestly coming to
judgements about the quality and the value of public
expenditure praising the good services as well as
exposing the poor.
So that’s the first thing, we have got a big capacity
and the second thing is that our remit is very wide. We
can wander right across the whole of government
expenditure so we can really escape from the very rigid
silos of individual departments which is hugely
important as it is often departmental jealousies and the
desire to establish department empires that mitigate
against real good value for money being obtained.
Indeed I am very keen to explore how we can work with
some of the departmental select committees in
parliament on some cost cutting issues and that is work
I’ve done before when I was in local government, at
Pricewaterhouse and as a Minister.
Finally, because we were told not to talk for too
long, a few observations and challenges that I think
we are all going to face as we seek to reduce the
deficit. I think it is one thing to talk about a smaller
state and changing public expectations and I think it
really is another thing to realise it and I think I’ve still
got a question mark over that, especially in
circumstances where there are changes in society
which may demand increases in expenditure and the
obvious example there is the ageing society and that’s
not just an issue about pensions which we are
grasping but also an issue about whether health and
social care expenditure goes with a changed
demography. So that’s the first observation.
The second observation would be that it would be
a mistake for the government to jump into what I call
rash cuts and rash decisions for a quick and populist
headlines so for example I’ve got a big question mark on
ring fencing health expenditure, £120 billion that we
are not going to look at to see if whether or not we can
seek value for money and I think probably all of us as
consumers of health would find that a bit odd in our
experience of the health service. Or, to perhaps take
another example, when the Housing Minister suddenly
declared that the Tenants Services Authority, which is
the regulatory body for social housing was, I think he
said toast, it got him a good headline but the next day he
was overruled by the Treasury for the simple reason that
lenders to social housing require a decent regulatory
framework if they are going to have the confidence to
lend. Again that sort of brash statement I think just
damages and undermines confidence in the Tenants
Services Authority and goodness knows whether it led
to some redundancy papers going out before they
needed to. That’s the second thing.
The third thing is to guard against unintended
consequences of decisions which are taken, where cuts in
one area may lead to increased expenditure in another
and perhaps an obvious example there would be a cut in
the Department for Education on youth services which
may or may not lead to increased expenditure in the
criminal justice system so I think we would be looking for
that and the next thing is governments have to measure
the impact of their spending decisions to assess best
value.There has been a great trumpeting of getting rid of
targets which I think probably did have their day. I think
they played a useful role in the early days of 10-15 years
ago when we were trying to redirect public services, they
then became overly rigid and had their own unintended
consequences but if they are going to go then we need to
find new measures of accountability and ways of
ensuring that we really get value and I look forward to
seeing how the government does propose in the new
world to measure performance.
The next thing I’d say is the government has to act
consistently across government if it wishes to maintain
credibility and there I pull out two examples which are
very, very minor but then you start thinking ‘are they
turning the tanker in the same direction?’ So for example
we had an issue where all websites were going to be cut
and then we get a new one put on for members of the
public to put forward their ideas of the best cuts to be
made. Or we are going to have a cull of NDPBs which I
don’t think is a bad thing but then we get the
establishment probably of a really good one but which is
a new one for budgetary expenditure, so we need some
real consistency of messages. It is an enormous tanker,
the public sector; if you are going to turn it round you
can’t have those sorts of things happening.
The other thing I’d say is we mustn’t just cut.We
really must seek efficiency measures. So I think there is a
lot of work to be done and these are just my very early
thoughts.We have a lot of very complex, over complex
programmes in government.When I was a minister at the
DTI I had the task of overseeing a reduction in business
support programmes, there were over a thousand that we
tried to reduce under thirty headings. It was very difficult
to do because every department jealously guarded its
own programmes; every minister jealously guarded his or
her own initiatives but nevertheless, these over complex
programmes need to be brought down.
There is more work to be done on overheads and
administrative costs. I think one of the horrors I’ve seen
in one of the National Audit Office reports that I’ve
been reading is the Rural Payments Agency which is a
payments scheme of £1.6 billion, spends £350 million
on a new IT infrastructure and then finds it is
fantastically complex and difficult to maintain and will
require a lot of revenue expenditure to keep it going and
it is probably redundant before it’s in. So there are those
endless examples across government which we need to
get a hold of.
The other thing I would say is sharing best
practice. We’re not really good enough at that and again
an example from an NAO report would be the
Highways Agency
where that very simple
Public spending doesn’t
job of resurfacing our
of itself guarantee public
roads across the
well-being but equally
country is with very
shrinking government does different contracts, very
different costs and very
not of itself guarantee a
different services and if
better society
we could only go with
the best it would save us a lot of money.
The other thing I would say is to ensure that
revenue is sufficiently collected. It is unacceptable for
example that the latest estimate on tax debt is that there
is £28 billion of uncollected tax around the system or
tax credits, which are a very complex way of supporting
poorer people in work. Out of the £8.4 billion of over
payments, probably just under half will never be
reclaimed so we have to get much, much better at that.
www.reform.co.uk
139
Public sector productivity / Reform
The final thing is radical reform of public
services. Now there can be arguments that the last
government lost its way on that I think in the final years
but there were some good programmes which I think
led to some considerable savings and indeed the DVLA,
which we all do now online 24/7 and we get our tax
discs and everything online, very efficiently, for much
less. Thinking of a scheme I was involved with, the
DWP Payments Modernisation, you used to pay at post
offices, it cost £1 a payment, now do it through direct
debit and it is down to 1p a payment. It was difficult to
push through. There was some resistance but a great
saving. The other thing that I was involved in was the
Electric Incorporation Service at Companies House
which was again difficult to establish, scary because we
thought the IT would go wrong but actually now means
there is a much quicker incorporation service that can
be done online.
So in conclusion, I think there are some who
may think that our committee, the Public Accounts
Committee, has less of a role with this new
government because they have established their
Efficiency and Reform Group. They brought in John
Browne and other luminaries to advise on cuts and
savings. They have established these really interesting
boards in each department so executive, non
executive and ministers… but in my view it makes
our role all the more vital because not only have we
got the capacity and breadth of vision to ask the
awkward questions – is this cabinet office working
effectively with Number Ten and with Treasury? Not
only can we look across the whole of Whitehall and
gather evidence of the effectiveness of new structures
that the government established but we are I think in
a unique position to ensure that we really fulfil what I
see as the key issues. That public spending doesn’t of
itself guarantee public well-being but equally
shrinking government does not of itself guarantee a
better society.
So what is our agenda? We’ve got to look at
effective spending, we’ve got to look at scrutiny in the
public interest and we will be there to represent the
interests of the tax payer in squeezing every last bit of
value out of public spending and the interests of the
citizens in maintaining the quality of the core services
that any civilised society in the 21st century should
have. Thank you.
Lucy Parsons:
Thank you very much Margaret. Over to you, Sir Roger
Douglas.
Roger Douglas:
Thank you. Lucy mentioned that I had been out of
politics for 18 years and had gone back in but really the
story there in that is about incentives really. I started
going shopping with my wife and she told me to get the
hell out of there so I ended up back in politics!
I think it’s fair to say when you are faced with a
massive structural deficit, as you are in the United
Kingdom, that it is vital in my view that politicians ask
the right questions. Too often I think politicians on a
world wide basis ask the question, what can I sell to the
public? What policy can I put in place that the public
might accept? It is the wrong question because
inevitably it will bring about the wrong result and it
won’t satisfy the public in the end. The right question
140
www.reform.co.uk
Public sector productivity / Reform
to ask is what should we do in the interests of the
nation in respect to this particular area and then, and
only then, should you ask the second question which is
very important: how do I market that policy which I
have decided upon which is in the interests of the
nation to the public? You might have to modify a little
bit the policies but you would be surprised that often
that is not necessary.
While in my view it is okay to have across the
board cuts as are being proposed here, they tend to in
my view at least to be one off in nature and might not
necessarily [break in recording] … that when you are
faced with a huge deficit you have to ask a number of
questions. The first question is a very fundamental and
simple one, should the department exist at all? The
second one, if you give it actually a tick and say yes, it
should exist, then the second question is what
functions does this department carry out? Having
asked that, you ask the question again, which of these
functions if any should continue? Could any of these
functions be carried out in the interests of the public in
a better way? Can they
be contracted out? Can
I think if you are going to
they be done more
accept structural change
Only when
it is important that you do efficiently?
you have asked that
not try to advance a step
series of questions, I
suggest, should you
at a time, quantum leaps
really do a line by line
will be required
examination.
I think New Zealand’s experience probably
provides a reasonable insight into the nature of
political consensus and my experience was that
consensus for quality decisions does not arise until
they are made and implemented, so you have got to do
it and trust yourself. It develops progressively after
they are taken as they deliver a satisfactory outcome to
the public. Only quality reforms deliver the results that
the country need and when I look back at the 80s and
90s in New Zealand and I look at the changes that we
made, wherever we made a quality decision, those
decisions still exist. Wherever we went half measured,
we got trouble and there is still major political debate
and those are in the obvious areas like health,
education and welfare.
I think if you are going to accept structural
change it is important that you do not try to advance a
step at a time, quantum leaps will be required. When
you remove privileges of various groups at one time it is
simply harder to complain that you’ve lost yours. If you
do it one at a time, you’ve got real problems. To give you
a feeling for some of the changes we made, in my first
budget we removed all border protection, we removed
industry assistance, we slashed farmers subsidies from
$1 in $3 of their income to virtually nothing, we got rid
of manufacturing and export incentives, we got rid of
import control, we got rid of special depreciation – you
name it, we got rid of it.
We had infrastructure reform, transport, we
increased road user charge in one hit by 48 per cent.
We did that because we wanted to take away all the
privileges of the railway to be the only one able to
transport various things. We had reform of telecom,
electricity, we introduced a uniform VAT and slashed
the top rate of personal tax at the same time from 66c
to 33c. We introduced monetary policy where the
reserve bank aim was to have inflation between 0 and 2
per cent. The interesting thing about that passage and I
met with [inaudible], were the moans from the road
users. They thought 48 per cent was really a little too
much and the other interest groups actually calmed
them down so there is something to be said about
having collective pain.
The three C’s are important.You have to be
consistent because if you are consistent that will lead
to confidence among the community and in turn
confidence leads to a level of credibility. As some
people have already said, and I agree, it is absolutely
vital not to [inaudible].
A little bit about public sector reform. I think
we were the first country in the world to introduce
accrual accounting, profit and loss and balance sheet
with all the contingent liabilities there. It scared the
heck out of everyone because our liabilities exceeded
our assets by a considerable margin. Now the assets
are well over one billion more although this year they
are going down. We had a public service employment
structure which had tight input control, salary
security, overspending was the norm, we had public
servants who were in fact administrators not
managers so we had major reform there. We now have
yearly contracts for output with Ministers, the
Minister signs off the contract with the Chief
Executive of the particular department whether it be
the Treasury or the Health Department etc. The
Minister and Chief Executive appear before a select
committee of the House and we then give the
manager the freedom to manage. We got rid of the
centralised employment [inaudible], the manager
appoints his own staff, he hires and fires them, and he
actually sets their pay so the personal assistant to the
Treasurer, the Head of Treasury, could [inaudible].
They have performance pay, they get bonuses.
It wasn’t unknown for people to get reductions in
pay as well. They are on fixed term contracts for all
senior staff. The maximum contract is five years.
The result of that was no one overspent – the
reason? They wouldn’t get their bonus. I thought I
might touch on one thing I dealt with which has
been in the news since I’ve been here and that is the
issue of public servants super. We paid subs for that
in 1988/89, what we did was say no new entrants.
You can have super but you negotiate it and put it in
your package with your Chief Executive, so you go
to the Treasury and if you wanted super in your
package you had it
there and it was fully
You cannot have equity
without efficiency and if you funded, no question,
no contingent liability
were able to increase the
and then we said to all
productivity by 60 per cent the people who were
in it – they were
in health, then you would
allowed to stay of
start to get to real equity
course, we weren’t
going to break that contract – we bought them out.
We gave them an offer and said you can take your
money if you want to or you can stay in it and we’ll
honour the commitment. If you want to take your
money and run and get the interest – and it was
amazing, a lot did and it cost a lot of money up front
– but it solved the problem.
I think it is important that you have a good
communications policy, you have got to trust the
public and you have got to actually set out your
objectives and once having spelled out your
objectives, you can sell your programme against that
programme. In undertaking that programme – we
were a Labour party – there was a certain anxiety
and I guess a quarter of our caucuses weren’t very
happy with some of the things that I was doing so we
ran weekly seminars and it was very interesting. I
didn’t go to any of them, Treasury went along or I
got outside people and in the end I think we had five
or six. Many of those who started off amongst those
13 or 14 who were opposed, became advocates.
I don’t personally believe you can leave an area
like health out. I think it doesn’t make any sense.
Some of our state owned enterprises that we
reformed, the turnaround was simply amazing. You
said something about how efficient they were before
but railways we used to run with 18,000 staff, we got
down to 5,000 and we carried more freight. In
forestry it went from 8,200 to 2,800 of which 1000
owned their own business, we did that in one day
and the department that had cost me $189 million
gave me a cheque 18 months later for $129 million.
It was as a corporation. All I am saying is there is
absolutely no reason to believe that the health sector
could not have the same sort of performances if you
gave the staff both the authority and the initiative
and the incentives to do that. And it is wrong – I am
no longer there but my old colleagues in the Labour
party, we tend to talk about the many rather than
concentration on the objective and it may be if you
did that to health you might actually lose some staff
from within health but you cannot say – we talk
about equity but my own view is you cannot have
equity without efficiency and if you were able to
increase the productivity as we did in the ports by
60 per cent, if you were able to do that in health then
you would start to get to real equity because a whole
lot of people who are on the waiting lists unable to
get operations would start to get them and to me,
you can’t have equity without efficiency. Thank you.
Lucy Parsons:
Thank you very much Roger. Allister.
Allister Heath:
Thank you. Basically I think the first thing we need to
understand when it comes to our budgetary problems
in this country is that there has been a massive
expansion in spending and share of GDP and a small
expansion, a much smaller expansion, in the share of
taxation and government revenue as a share of GDP. It
is a very simple proposition but it is at the heart of the
problem. So if you look at the OECDs internationally
comparable figures published every six months in the
Economic Outlook, you will see that public spending as
a share of GDP in the UK troughed at about 37 per
cent, 37.5 per cent as a share of GDP on these OECD
figures in 1999, after two years of the Labour
government when they followed the previous
government’s spending plans and then increased
gradually and often at an accelerated rate to about 45
per cent of GDP by about 2007, before the recession.
So during the boom years there was a massive increase
in public spending as a share of GDP by
seven or eight percentage points of GDP. That was at
the time the fastest increase of any OECD country as a
share of GDP.
www.reform.co.uk
141
Public sector productivity / Reform
Then the recession came along and GDP
suddenly shrank by about 6 per cent or so and we
suddenly realised that a lot of the GDP we were
producing shouldn’t be there and suddenly public
spending as a share of GDP, according to the OECD
numbers, went over 50 per cent either last year or this
year, and obviously these figures are being revised all
the time and so on but according to the OECD
something like 51 per cent, 52 per cent of GDP is the
forecast for this year. So from 37 per cent of GDP to
52 per cent of GDP, a massive, massive increase and
it took the UK from one of the low spending
countries in the OECD to one of the very highest
public spending countries in the OECD, much higher
than Germany. In 1997 Germany had a much bigger
public spending share than the UK, it took about six
or seven years for that to be overturned and then we
are now, according to the OECD, very close to
French levels which were about 54 per cent of GDP
and some of the Scandinavian countries, 55-56 per
cent of GDP. Nevertheless we are in the top fifth of
countries when it comes to public spending and share
of GDP.
So two things therefore: first a general structural
change by the previous government and second, the
recession which further fuelled that. So we have this
massive increase in public spending yet the tax stake
has only crept up, even though a lot of taxes have gone
up so that’s basically where we stand. So some of this
increase in public spending obviously is cyclical so you
would expect a little bit of decline to the share but
nevertheless you have got this massive gargantuan gap
between the two numbers and it is basically a
completely unbridgeable gap. Either you put up taxes
massively. I mean massively and we’re not talking
about a 2, 3, 4, 5 per cent increase in VAT, that’s a joke
almost, you would have to put VAT up to 23 per cent
on everything and even there is still a massive gap.You
would have to actually assume that the UK economy is
capable of generating that amount of tax revenues yet
historically it hasn’t, it is not possible to extract more
than a certain percentage of GDP in tax revenue.
To be honest, any decent study would say there
were now at the very least at the maximum capacity
when they come to mark up tax rates on everything,
especially on income but probably on other things too
so in other words, the more you put up modular tax
rates you either get nothing and you could even get less
in some cases. So what do we do?
Clearly we have got to cut public spending as a
share of GDP and there are two ways of doing that.The
first is across the board cuts, arbitrary cuts. The second is
restructuring the whole situation and deciding that
certain things that are currently entirely publicly financed
need to be moved into private sector or they need to start
paying for certain goods and services and so on. So it
seems that the current government is trying to impose a
whole range of cuts to try and squeeze things but without
really restructuring the public services with the possible
exception of education and not at all telling consumers
they are going to have to pay more from their own
pockets, in other words creating more revenues for these
services but creating these revenues privately. That I think
is where the problem really lies.
It is quite important to see what the government is
actually doing. Every single year of the next five or six
years, nominal spending is going to be going up but
142
www.reform.co.uk
Public sector productivity / Reform
going up only by a few billion pounds a year therefore
over a five or six year period, nominal spending goes up
by about 10 per cent compared to spending in the last
full year of the Labour government but obviously that is
much less than inflation is going to be hence you get the
real terms public spending cuts. Because interest
payments go up, the money left over for the department
goes down even more in real terms and because some
departments are ring fenced as we know, such as the
NHS and so on, the real term cuts over time for the
remaining departments are going to be much higher,
hence all this talk of 25 per cent, of even 40 per cent.
However the whole conversation, all the headlines, all
the discussions become quite warped. The way you hear
about it or read about it, there is going to be a 40 per
cent cash cut next year when that is not ever going to
happen. For some strange reason the government is
playing up the extent of the cuts they are pushing
through. It is working okay at the moment, probably
because they are in their honeymoon period but over
time it is strangely counter productive I think.
So clearly you do need cuts but it is also clear
that there is endemic waste in the public sector and
that public services are not managed very well. That,
I believe, to be a completely irrefutable fact. However
just simply cutting spending without restructuring
incentives within the public sector and without
changing things radically is going to have certain
perverse effects. The first is the management of the
public sector is going to naturally to try to find the
easiest possible way to make the cuts rather than
necessarily the most rational way of making the cuts.
So if you are a private company and you are the
CEO, your incentive is to maximise profits and to
maximise profits one of the things you need to do is
to maximise revenues and your selling directly to
consumers. So during the recession a lot of private
companies made
significant cost cuts. In
The only real outcome is
to introduce some form of many cases they
discovered new ways
co-payment and to start
in a desperate need to
tapping the private sector survive and to not go
bust. Something
and consumers to start
paying bits of these services triggered a whole
bunch of reforms
which often increased productivity. Companies
suddenly realised they could produce similar services
to consumers but with fewer staff or found new ways
of doing it or changed offices or introduced new
technology or whatever it was, a lot of people are
doing this.
It is unclear to me how this can be translated into
the public sector hence we are going to hear a lot of
stories about cutting nurses and doctors and police
officers and so on and so forth and I think that’s a big
mistake. The biggest mistake of all is to think that the
government can constrain by dictat the share of GDP
spent on things like education and even, to be honest, on
healthcare even though the NHS budget has been ring
fenced and therefore will rise probably very slightly in
real terms, what the government is basically saying is
over the next five years they are going to make sure the
share of national income spent on health isn’t going to
go up too much.
The problem is, people actually want to spend
more money on healthcare. If you have got a free
society with a completely private healthcare system,
people probably spend more of the share of GDP on
healthcare than they do under the NHS and if you go
to America where people spend a lot of their own
money on a much more private system or at least a
mixed economy, people want to spend more on
healthcare, they want to buy more scanners, they want
to do that and people will eventually want to spend 20
per cent of their income on healthcare, maybe even 25
per cent and as the society gets older people will want
to take decisions for
themselves. That’s not
Up until now we have
if you are a
talked a lot about the rights irrational
central planner
of people in public services, allocating resources
we have not talked a lot
where you are rationing
but that’s what
about responsibilities
individuals would like
to do because even though there is one chance in a
thousand that it helps them, they feel better about it
and they want to do it.
So you have got this huge pressure to spend
more on some of these public services yet we’ve come
to the limit, we are way past the limit, when it comes
to what the government can actually spend, can
actually conceivably tax from the economy and spend
if it is the one doing all the spending as it is currently
the case. So even if we were to achieve some
efficiency savings and to re-engineer the public sector
which at the moment I don’t really see happening, we
would still come to this problem in a few years time.
In a few years time everybody will be wanting to
spend more but won’t be able to because of this big
squeeze and because these services are being limited
by the ability to raise taxation and this ability to raise
taxation, well we are at the end of that. So the only
real outcome is to introduce some form of copayment and to start tapping the private sector and
consumers to start paying bits of these services, for
example, on pensions, for example, on healthcare.
The only area we are seeing at the moment is top up
fees in education, for example, and clearly these types
of reforms are the way forward.
We cannot have the government limiting to a
certain percentage of GDP expenditure in all these
really important areas. Over time the pressure
increases on expenditure will be so immense that the
only way forward will be to tap new financing forms so
it seems to me that the coalition, I really like the
coalition’s policies where they are clearly going to cut
public spending and share of GDP by about eight
percentage points on their figures over five years if
they actually deliver what they are saying, which
obviously at the moment is just a spreadsheet and
series of numbers, but if they do it there will be a
substantial change and that’s good. The budget will
become sensible again, the public finances will no
longer be spiralling out of control, the national debt
will start to stabilise and fall as a share of GDP but
they are not really solving the long term problems, they
are not really reforming the efficiency of the public
sector and they are not redrawing the boundary
between what’s paid by the government and the tax
payer and what’s paid by individuals. That is a massive
missed opportunity and eventually it will come and
bite them in the face because they are trying to squeeze
an unmanageable and unworkable system.
Lucy Parsons:
Thank you very much Allister. We might take five
minutes to take one or two questions if people have
got them.
Audience Member:
… talking about in the earlier session in terms of the
main objectives but I wonder if this also applies with
the minutiae a bit in terms of, well certainly the
government are doing a lot on transparency aren’t
they, spending transparency which I think will mean
not just payments to suppliers but the data, the cost
codes, so we can see in a really detailed and intelligible
way how – it is something over £600 billion isn’t it that
we’re spending – and where it all goes and Boris
Johnson has done this already for City Hall, not for the
whole GLA but for the little bit that City Hall is
spending itself, about £100 million. There is a really
detailed breakdown on his website where that goes. It
occurs to me that if that was replicated for the whole
£600 billion that could put Margaret Hodge and the
Public Accounts select committee out of business
because for your committee – without in any way
wishing to insult you – to try and get stuck in, in any
detail, to that £600 billion is an impossible task. So
isn’t this transparency agenda of getting all the
information out there and we can all get stuck into the
bits we are interested in, isn’t that a far more effective
way forward than having your committee?
Lucy Parsons:
If we can perhaps take another two questions and then
answer them all together. The gentleman behind.
Audience Member:
[Question inaudible, too far from microphone]
Julie Spence:
Allister, I really liked your idea of co-payment and up
until now we have talked a lot about the rights of
people in public services, we have not talked a lot
about responsibilities. I think there is something
around the dialogue, and it is interesting to hear what
happened in New Zealand, around people’s own
responsibility, if they actually want to have the public
services because irresponsibility costs. I mean we
frequently get blamed because somebody has left their
laptop in the well of their vehicle and then they wonder
why the police haven’t stopped it being stolen.
Similarly on a Saturday night, somebody who has gone
and had large amounts to drink, they may well avoid
my officers but they end up in A&E because they
actually sliced their head open because they have fallen
down the steps. So we have got to cut demand in
public services and there is something about public
responsibility, I’d just like to get your views on that.
Lucy Parsons:
Margaret, I’ll ask you first, are you going to be out of a
job with the new era of transparency?
Margaret Hodge:
I think they are complementary. Of course transparency
is a good thing but there is judgement and assessment
which I think comes into it, so it’s a dual purpose really.
I have some concerns about what the government are
doing. We’ll see how it goes. I am really keen on
www.reform.co.uk
143
Public sector productivity / Reform
transparency but I think if every local authority puts
everything it spends over £500 on a website and the
government puts everything over £25K on a website
may end up confusing, it requires an understanding of
why the money is going where it’s going. So
transparency has its role, I think judgement has too and I
think we’ll bring the judgement on measuring and
looking at expenditure across departments or across the
country or whatever. I just think it is not one or the other.
Lucy Parsons:
Allister, can I turn to you on the second question of the
labour market and strikes and also on Julie’s point about
co-payment and individual responsibility?
Allister Heath:
There probably would be strikes in the public sector
and whether that would be sufficient to get government
to change the laws on unions and so on remains to be
seen, I’m not sure that it would.You have also got all the
European Union legislation there on all those matters so
therefore again nothing too much would come of that.
Could the general strike threatened on Monday by
some of the unions
Ultimately we have reached actually stop this? I
can’t see how it can
the limit to what the
really because the
government can provide
options are either
through taxation, that’s
finances spiralling out
what I think the facts show of control and some
kind of disaster or
and so we need to find
strong reforms are put
new ways of doing this
through. There’s no
choice any more, that’s the thing. It’s not a political
choice, if you have got a budget deficit of £150 billion a
year, even if it’s falling by a bit because of cyclical
reasons it is way too high and the government knows
this, it has to tighten fiscal policy so I’d say that.
On the co-payments and responsibility, I think
that’s very, very important. I think basically the outcome
needs to be a massive transfer of responsibility for
looking after people to people themselves. So for
example pensions is an obvious one, people need to save
much more for their pensions or for a rainy day in
general so you need a revolution in the culture there.
Personally I don’t really like pensions, I think they are an
antiquated concept but I think you need to have lifetime
retirement and people need to build up assets over their
lifetime that they can use in one way or another.
You could have a similar process when it comes to
health so if you do drink too much and hurt yourself
then for 90 per cent of the population, maybe they
should pay for that themselves. So you could have a
health account and say the first £2000 a year in health
fees come from that account for example and the rest
could be from insurance, you could have that sort of
system. Obviously the key has to be that if someone has
a serious problem and they can’t afford to pay for it,
then the government should pay for it but that would be
a major revolution. If you start by introducing some
responsibility here.
Maybe one idea, and I’m not sure what outcome
it would have, would be whenever anybody uses the
NHS, they are given the bill but a paid for bill, so a fake
bill saying this service costs £10,822 or the time you
spent in A&E cost £422 and people would be shocked
because they don’t realise the extreme costs of
144
www.reform.co.uk
Public sector productivity / Reform
everything. Maybe that would cost money to do but
sometimes gimmicks work and in this case putting a
price, publishing a price for all public services maybe,
would have a cultural effect that may actually transform
our relationship. Obviously it might have a perverse
effect and people might start seeking out the most
expensive treatments possible and so on but I think all
this sort of stuff is needed. Ultimately we have reached
the limit to what the government can provide through
taxation, that’s what I think the facts show and so we
need to find new ways of doing this. We also have a
system where individuals aren’t sufficiently responsible
for things and again that needs to change so we need a
cultural revolution here.
Lucy Parsons:
So maybe a different kind of transparency there. Roger,
do you have any comments?
Roger Douglas:
We didn’t worry about item by item expenditure, we
went to a process where we entered into a contract with
the Chief Executive of a department to deliver certain
outputs which we had agreed and we left that Chief
Executive with the ability to manage, so long as he
didn’t make big forward commitments he could decide
on the number of staff, what he paid the staff, the trade
off between capital etc. So the really important thing is
to sit down and work out what you actually want out of
the department. If you took say the Treasury, I used to
sit down with the key people in Treasury and we’d list all
the items in the first column, there are issues that other
departments would raise or that we wanted to raise, we
would then put down what our attitude was to those
issues and in the interest of the country, we put down
how much time it was going to take Treasury officers to
do it, if we got our approach through what it was worth
to the country and then I’d sit down and work out
priorities – this is our number one priority within that
section, da-di-da.
You then had a measure as to how effective the
Treasury had been. For example one year we made cuts
and we said what chance have we got of success? I think
we put down there was a 15 per cent chance of getting it
through but the pay-back was huge, like one or two
percent of GDP, that we decided to have a go and we
got about 95 per cent of that and part of that was how
do we sell it to a colleague, how do we sell it to the public
but it is the same in terms of health. The day you let
people manage the total and concentrate on the output
and the output should be that people should be able to
get a health service when they need it and that’s what
you measure against. We got huge improvements in
productivity in health in the 90s through the simple
concept – we gave one group of people the money to
spend and they purchased from the hospital so the
hospital did the deliver or produced the products and
they were paid for by a health authority which
purchased on behalf of the consumer.
There was a separation of the purchasing from
the supply and the productivity gains were quite
staggering and in 2000 unfortunately a new Labour
government came along and wiped it all so we have
gone back to the old ways and the result of that was
drops in productivity for six years between 2001 and
2007, it went down by 15 per cent. Nurses’
productivity went down by 11 per cent, overall
productivity went down by 8 per cent.You can say
doctors 15, nurses 11, why did it only go down by 8?
Well they contracted out the provision of cleaning and
supply of food to private sector and there were gains in
productivity so overall it only went down 8.You have
got to focus on who you are trying to help. Sometimes
we get locked up in the me, somehow public education
or government delivered education or government
delivered healthcare is what becomes the objective, I
think actually quality of education where kids actually
learn is what it’s all about.
Margaret Hodge:
I just want to come back a bit on what Allister was
saying and firstly I think the assertion that we have
reached the height of taxation possibilities I think is
just contentious and needs to be challenged. The
balance between how you cut public spending and
where and how you tax is open to debate. On
co-payments, co-payment is an agenda for the future
and I agree that we need a cultural shift on what
expectations are on public servants but it is a really
tough agenda and I think it is a slightly simplistic
view of it because there are things that individuals
want and need as rights in society, so a child’s right to
an education of high quality or the individual who
does bang their head, are we going to say that
individual doesn’t have
The balance between how the right to have it
stitched up at the local
you cut public spending
and where does
and where and how you tax A&E
that take you on a
is open to debate
co-payment situation?
There are other things
that society will want to reflect on what it wishes to
tolerate or otherwise so for example if we go down
the road too much of co-payments, the already
unacceptable division, unacceptable gap between the
wealthiest and the least well off is likely to grow, the
ability of society to ensure we grow the skills in our
population will maybe diminish, the ability of
ensuring actually that we don’t have troubles on our
streets, homeless people going back to living in boxes
or drunks around the place, that’s not the quality of
life that we want.
So I just don’t think it’s an easy agenda. There are
all things that we think that maybe the public sector has
to withdraw from and that individuals have to buy into
but I think this idea that co-payment works for all
individuals in all circumstances and gives society the
outcomes that it wants needs to be questioned. The final
thing, I think transparency particularly in health is more
important for those who work in health than those who
consume it, actually ironically. I wonder how many of
our doctors and consultants recognise the cost of their
actions. Probably they are quick to judge whether a
particular drug or particular procedure adds value.
Lucy Parsons:
Thank you very much to all our speakers, Margaret, Sir
Roger and Allister.
Government as commissioner
not provider
Andrew Haldenby:
Good afternoon ladies and gentlemen, we will now have
our final panel session for today’s conference,
Government as Commissioner Not Provider? I am
going to ask Nick Seddon, the Deputy Director of
Reform, to chair this session.
Nick Seddon:
Thank you Andrew. Thank you very much to those
who have returned and who have made it past the
dangerous lunch and now we move into this, and part
of what we’ll talk about after a great morning of
discussions I’m sure will be the question of not the
tight fit that Francis Maude described but the loose fit
of how do you get competition and how do you get the
commissioning right.
I suppose we have talked all morning about is
not just if government is doing the right things but is
it doing the right things in the right way? Roger
Douglas described how the first question is do we
need a department? And then if we agree that we do
need a department then is the department doing the
right things and what do we want that department to
do? So what we are looking at in this session is not
just the government, to rethink the idea of the
government as the provider of services and get other
people to deliver those services in a way that delivers
value, so better quality at a lower cost.
We have got a fantastic panel of speakers here, all
of whom in different ways are complete experts and so
we have Colin Barrow who is the leader of Westminster
Council and has been since 2008, Paul Pindar who is
the Chief Executive of Capita and thank you very, very
much indeed for your support for this event, we are
enormously grateful. Paul joined Capita in 1987 so you
have been there for a good stretch.
Paul Pindar:
Yes, I’m looking forward to my gold watch!
Nick Seddon:
We have Amyas Morse who has the amazing title of
Comptroller and Auditor General at the National
Audit Office.
Amyas Morse:
I am still amazed by it!
Nick Seddon:
And you have been doing that for just over a year,
before that you were at PWC and also the MOD.
Then we have John Fingleton who is the Chief
Executive of the Office of Fair Trading and has been
since 2005. John, through both an academic career
and through the Irish Competition Authority, you
have proved over many years that you are a very good
believer in competition.
So the last thing I will say here is that I have been
amused recently by the quote by Ernest Rutherford
who said “We haven’t the money so we’ll have to
think” and these people on the panel today have all
done a great deal of thinking about this and I look
forward to hearing what they have to say so Colin,
would you like to start us off.
Colin Barrow:
Sure. I first came to the City of London in 1974 as a
junior stockbroker and at that time the Stock Exchange
was rather close to the Bank of England so that’s where I
www.reform.co.uk
145
Public sector productivity / Reform
went. It isn’t any more so I had to walk along Cheapside
so that was your first parable of the day which it is rather
important to work out what it is you are trying to
achieve before you actually set out on the journey to get
there. But in walking down Cheapside I was quite struck
by this pulsating community of unbridled greed that
surrounds it and there it was, all being held up by
roadworks.You can’t drive down Cheapside any more
because there are roadworks there. It’s one o’clock in the
afternoon, it’s Wednesday, you would have thought they
would have been at work, there was no particularly good
reason why they wouldn’t be but they weren’t, there was
nobody doing anything at all. I could understand if it
was half past five or Sunday morning but not at one
o’clock in the afternoon.
From that I derived a central theme of what I
want to say and it is that you have to work out how
much you are prepared to pay for what outcome if you
are going to commission the right services. So if you
don’t want Cheapside blocked for six months, you
might want to bear in mind that you could pay the
contractor a little bit more and have him work on
Saturdays and upset all your residents, but that’s the
angle from which I am coming in to this debate. It is
indeed the graveyard shift, directly after lunch. I’ll try to
keep you awake for at least the first five minutes, for my
colleagues I cannot speak.
I am a politician. I do not pretend to know
anything about anything in terms of the wiring of the
council. However I do believe there are some things that
politicians need to allocate to themselves. In the local
government context that means the local development
framework, boring maybe but that is what regulates
your planning decisions. What sort of city do you want?
That is a political
decision. That is why we
In [Westminster] City we
are elected and that is
spent £200 million; the
something we must do
public sector in
ourselves, you can’t
Westminster spends
delegate that to an
£2 billion, and I am the only outsourced contractor.
one who is elected locally Schools performance,
of course you have to
delegate that to schools and so on and so forth. But
holding schools to account, that has to be done by
politicians. There are some of us who think that is better
done locally, there are others who think it is better done
nationally, that’s not important in this context, what is
important is that you decide what outcome you want
and go and get it. We have quite specifically done that in
Westminster by saying we want 75 per cent of our kids
to get five GCSEs including English and Maths rather
than 50 per cent and we have put money behind it. We
have done what the heads have told us and now we will
see if they are the professionals that they tell us that they
are and in two years time we’ll know. We won’t have
spent very much money but we might have changed the
lives of quite a lot of children and that just seems to me
to be an inalienable right and duty of the politician.
We however are doing that through an education
department which is quite small. There are 33 education
departments in London and we have got quite a small
one because we have got quite a small cohort of schools,
quite a lot of which belong to somebody else like the
church or academies and so on. So we decided
yesterday finally to merge our education authority with
that of Hammersmith and Fulham. So in the context of
146
www.reform.co.uk
Public sector productivity / Reform
commissioning, let me break that down. We politicians
stay doing what politicians do, we have a group of
officers who are called commissioners who specify and
agree with us and then commission the services that are
required. Then we have a delivery unit which is for
schools and school improvement programmes, special
needs programmes and special needs transport – which
is offered by a merged department which is
Hammersmith and Fulham’s and ours together.
Well that’s in a sense the first part of the equation.
The second part of the equation is much more
complicated. Merging departments brings savings, we
think it will save us 20 per cent, that’s fine, but you have
to specify what you want to do because we have to take
account of the fact that Hammersmith, God forbid, may
change control or indeed Westminster may change
control and if that’s the case, the central delivery unit is
going to be marching to two different political masters
at the same time. Does it matter? Will Special Needs
transport change because it is run by Labour rather
than Conservative? No, not at all. So that can be safely
put in a delivery unit and commissioned in. Deciding on
how many and which type of schools you have, that’s a
political decision and that’s done by commissioners, so
separating the world into those things that belong to
politicians and those things that don’t is an important
and central component of the exercise of
commissioning.
Commissioning isn’t something you send to the
commissioning department any more than working out
the roadworks is what you send to the highways
department, you don’t. The politician must not let go of
the decision about whether the Highways Department
works on Sundays because that is a central part of the
sort of city you want to manage. Now in the City we
spent £200 million, well actually we spent a lot more
that but a lot of it is in with the wash really so net we
spent about £200 million, the public sector in
Westminster spends £2 billion and I am the only one
who is elected locally, all the rest of them are elected
nationally and they march to the beat of a national
drummer yet is there anything much more local than a
road, a school, a child with disabilities, social problems
like policing, drugs or alcohol? These are very local
issues and yet they are commissioned in or provided
into Westminster by Whitehall. I don’t think they should
do that, I think they should give £2 billion to me and I
will tell them how that is best deployed in Westminster
because frankly I do know better, I and my colleagues
and my team rather, because that which is done closer
to the client is normally not only more attuned to the
clients needs but also more efficient.You know this
because if you were to give your child a fiver, your child
would know very well
That which is done closer how to spend that and
get the maximum out of
to the client is normally
it because they would
not only more attuned to
know if the Oyster card
the client’s needs but also works on Sundays and
more efficient
when it costs £1 on the
railway, he knows all
that because he is used to spending a fiver. There is no
way local government knows how to spend a fiver, they
know how to spend £35 million but they don’t know
how to spend a fiver because they are not used to doing
things very close to the point of doing it and the same
parable applies to Whitehall.
That is my message. There is nothing better
than management, there is nothing better than
localism, there’s nothing better than knowing where
you want to go before you go there and taking the
hand of a politician to guide you on the way. Thank
you very much.
Paul Pindar:
Good afternoon everybody, I’m Paul Pindar, Chief
Exec of Capita. I am just going to give you a brief
introduction and share some experiences from my 23
years at Capita and
what we’ve learnt
In the olden days I think
during that time. Just by
there used to be an
of background,
expression “spend to save”. way
Capita is the UK
I think it is fair to say
market leader at
providing white collar
within the current
environment there will be administrative services
both into the public and
no spending to save
private sector so what
that means in practice is that we go in to client
organisations, whether they are central government,
local government or within the financial services, and
we look at a whole array of back office operations that
they have and we look at how we can work with our
clients and with the people within those clients really
primarily to achieve three objectives.
To the first and foremost of those, I know we are
living in austere times and everyone is actually focused
on cost reduction. But the way that we often look at
things is the first and foremost objective that we have is
to provide a measurable improvement in service quality
and the key word there is measurable. If you look at a lot
of the things that happen within a lot of those client
organisations, when we inherit them frequently they
haven’t been measured and therefore the quality of what
is being delivered to the end user and its community has
not really been that specific so what we are looking to do
is to provide objective improvements in how that
delivery can be achieved.
The second thing that we look to do is to provide
contractual certainty regarding cost reduction. In the
olden days I think there used to be an expression
“spend to save”, I think it is fair to say within the
current environment there will be no spending to save
and that the findings will be required immediately so
we would typically go into client organisations and
look at what we can do even in the current financial
year to take 10, 20, 30, 40 per cent outside of their
budgets. What they would also do is transfer that risk
from themselves to Capita, so to give you an example,
we might walk in to a central government department
that are spending £50 million a year on a back office
activity and we would contract with them to do the
same thing but better for perhaps £35 million a year,
so in that example a 30 per cent saving. That is a very
typical amount. It sounds like a big number when I put
it like that but actually we have got years and years of
experience and a whole range of different options that
are open to us that will allow us to do that.
The third thing that we look to do when we go in
to organisations which is a slightly more subtle point but
it is actually looking at how we can run those services
that create a wider economic benefit beyond simply
savings so as an example one of the things that we do,
which you won’t thank me for and I probably won’t get
out of the building alive, but I collect your TV licence
for you. When we went on to take on that service, aside
from a not particularly efficient service and a pretty
de-motivated workforce, what we also found were high
levels of fraud and evasion so our offering to the BBC
was yes, we will actually do this 30 per cent cheaper and
to put that in numeric terms that might mean a £25
million or £30 million a year saving but actually the
thing that was much more important to us was to have
the right systems and processes and controls. That said
we are going to drive down the level of fraud and
evasion so actually the prize to the BBC was a far larger
one than simply the amount of savings that we created.
So whether it is processing health and benefit claim
forms, whether it is managing an incapacity benefit
service, all those things where you can create a wider
benefit above and beyond driving up service quality and
reducing costs, is very much what we are about.
You won’t see that much in the papers because
the papers really only like writing about all the things
that go wrong but actually outsourcing in the last 25
years in the UK has been a great success and there is
case study after case study of it working where private
and public sector parties are working together in
partnership and have delivered a great end result and I’ll
give you just one example. The reason why I give it is
that it is quite a long standing one within Capita, it has
stood the test of time but we were one of the first
organisations in the UK to take on a central government
department lock stock and barrel, an organisation up in
Darlington called the Teachers’ Pensions Agency. That
body was responsible for processing 1.2 million
pensions for existing teachers, past teachers and indeed
retirees. A very simple equation that was created was
one, we gave an immediate 25 per cent saving to central
government, secondly over time we took eight miles of
paper based files, turned them into an electronic format
and gave a far, far higher level of customer service. If
you had been a pensioner, previously it was taking two
or three weeks to get a response to a query, through us
95 per cent of those enquiries were resolved in 10, 20
seconds over the telephone.
The third thing, which again is very interesting
and important I think because I think we’ve got a lot of
fear sitting within the public sector at the moment, was
we genuinely enriched the careers of the people that
transferred over to us. We had 430 civil servants that
came in to Capita, today that same service is actually
run by 200 people so in terms of productivity we have
half the number of people running that activity but the
reality is that we have made virtually no redundancies
because what we’ve done is built a far wider business to
the point that today Capita is the largest pensions
administrator anywhere in the world and that contract
was one of the foundations to it so those employees have
had the opportunity to reskill, develop their careers in a
way that wouldn’t have been possible in the civil service.
So one of the messages that we want to get across
through this process – I presented this morning at Civil
Service Reform and it was quite clear that in that
audience at the moment there is a huge culture of fear
and anxiety running through the civil service and I think
what we need to do, we need to actually alleviate some
of that and we need to educate people about some of the
benefits that can come to try and move things forward
in a more positive way.
There are lots of things that need to change to
www.reform.co.uk
147
Public sector productivity / Reform
make these things happen. We talked about culture
which is fundamentally important, there needs to be
some significant changes also to the way that
procurement is undertaken. To be frank some of the
procurements that we see are taking two years, that’s a
nonsense, the thing needs to be driven through with
much more pace, much more intensity and also a
greater propensity and attitude to take risk. There is too
much fear of making mistakes and that needs to go.
In summary, the government has set down some
pretty stringent challenges in terms of the 25 per cent
cost reductions that they are looking for and we at
Capita are pretty optimistic they are achievable. We are
optimistic it’s achievable without decimating front line
service and there just needs to be the will and intensity
to make it happen.
Amyas Morse:
I think it might be useful to just give you some of the
findings of a report we did recently where we provided
most of the survey work or rather a report by the Health
Select Committee where we provided most of the
survey work and I am going to be a little bit detailed
about this because I think it is quite relevant.
It is speaking of commissioning by the PCTs
and let’s bear in mind that in the health context we are
talking about £80 billion of commissioning by
Primary Care Trusts so this is a quite significant set of
numbers. Some of the
findings were that
If we are going to have a
commissioners are not
lot more contracting, we
on an equal footing
have got to make sure
with providers and
that the terms are right,
don’t manage the
that the framework is right, relationships well but
that there really are levers the relationship
between providers and
and controls
commissioners remains
unbalanced because they don’t have enough
commercial leverage or incentives for commissioners
to control providers, in other words they don’t pay by
results for the most part. Weaknesses between direct
commissioning and planning, failure to ensure that the
[inaudible] is managed effectively including processes
between relationships, commissioning leading to a loss
of economies of scale, lack of knowledge and evidence,
decisions to commission not being based on hard
evidence, lack of data and analysis, failure to make the
best use of data that already exists or obtaining data
that is needed, lack of quality management, that is to
say commissioners not being sufficiently professional
and also the difficulty of [inaudible], re-commissioning
of services from providers who have a record of
under delivering. And that is just one report but it is
not unrepresentative.
I think therefore really what I want to say to you is
I think that, and at the NAO we are very positive about
commissioning as the way ahead but you have to bear in
mind that if you are not equipped with the tools to do
commissioning properly as a customer, as a
commissioner, you are going to be in a world of
difficulties so we have got to address that. If we are
going to have a lot more contracting, we have got to
make sure that the terms are right, that the framework is
right, that there really are levers and controls and in the
last year, having gone from being the Chief Commercial
Officer of the MOD to spending a year looking across
148
www.reform.co.uk
Public sector productivity / Reform
the public sector in the NAO, I have been struck by the
lack of what I call tough commercial thinking when it
comes to contracts.
If you are making a long term contract it is worth
a great deal of money, normally in the private sector if
you do a contract like that you expect sustained
efficiencies year on year and you have got a very clear
ability to get that. If you have clauses in contracts
entitling you to something, you enforce them.You
don’t give up on your rights under a contract because
of a bit of a hard luck story or something of that sort. If
you transfer risk and you are paying a contractor to
transfer risk, you have to be sure that you can really
transfer that risk and that it doesn’t come back to you
again when the bad day comes and we have seen, in
the last year I have seen quite a lot of examples that
when something goes badly wrong, the contractor is
placed in a position of saying either we’ll have a failure
or you will need to help me out here and very often the
public sector steps forward and helps out.
I just think we have got to be realistic about
putting skills where we can, making sure the skills we
use are really capable and if the skills aren’t capable,
then creating tough enough frameworks so that they can
substitute for those skills. So I am very happy that we do
more commissioning but we have really got to toughen
up if we are going to be able to do so in a way which
gives a good account of spending public money.
I just want to make those points. Not at all
negative, I think a lot of things that Capita is talking
about are good practice and capable of being done but
what we are looking for in our job of holding to account
the good spending of public money, we want to know
that what the public sector or what the tax payers funds
are being spent on genuinely represents the best that
could be reasonably expected to be achieved with that
money and that the people who are transacting
business, whether it is commissioning business or direct
provision business on behalf of the public, that is to say
the public sector, are doing so with some real skill,
rigour and good information. Without those basic bits of
equipment, no matter what format you use, you’ll find
that value leaks away, so we need a strong rigorous
approach from whatever model we adopt. Thank you.
Nick Seddon:
I am guessing this means that you don’t want to give
£80 billion of PCTs money to a bunch of GPs.
Amyas Morse:
I can’t prevent speculation!
John Fingleton:
Thank you very much. Well this issue of how to reduce
the deficit and improve public services is essentially an
exercise in trying to de-monopolise the public sector.
We know from outcomes in the private sector, that
when one removes monopolies not just prices go down
but costs go down so it is really about driving
efficiency but also driving alignment with the
customer and I think seeing that quality and efficiency
are best achieved by aligning the incentives of the
provider with the incentives of the customer, I think
Colin talked very nicely about some examples of that
within the public sector.
The issue not really making the case for that, the
case is easily made because of the big effect on
productivity growth that will occur, the effect on
reducing the level of public expenditure and the
improvement in quality of services. So there is a big
price to be gained but the question is how to do it in
practice. That’s what often eludes people and I want to
address four points, four lessons in thinking about doing
this in practice.
Point one is that private sector monopolies are
not necessarily better than public sector monopolies,
this is a lesson from the early privatisations that we
have learned. There is going to be a trade off between
outcomes, competition and efficiency on the one hand
and revenue from privatisation on the other hand and
even ensuring that the right choice is made on that.
Amyas’s point about making sure that when things are
commissioned, that you don’t build the monopoly
rents into the contract is how the OFT would look at
that, basically saying we are going to build those
monopoly profits back into the contract, so we must be
wise to the fact that the other side could be bargaining
over a monopoly position, just replacing the public
sector monopoly that was there before. A bit more
transparent perhaps but not enough benefit.
The second lesson is that we need to think about
exit if we are going to get entry to work. We know that
in private sector markets the biggest innovation; the
biggest improvement is driven by new entry. That can
be start up companies but it can also be successful
companies in one market moving across into another
market. We need to think about all of those models of
entry but entry only works if the inefficient players
who are currently in the market have a threat of exit. It
doesn’t mean that they do exit. The threat of exit itself
can be enough to make them shape up.
A really nice example of that in aviation was the
state owned airlines in Europe. We introduced
competition for a long time but as long as governments
kept giving state aid to those airlines they never got
more efficient, they just used the taxpayers money to
compete against the private sector airlines. It was only
when Sabena went bankrupt after 9/11, that the
commissioner let someone go bankrupt that suddenly
the airlines began to reduce costs and British Airways,
Aer Lingus, Iberia and so on all got their costs down by
20 per cent to 30 per cent within a year or two when
they saw the threat of exit.
Politically that means that if we want to drive
efficiency and help education in other areas, then
inefficient suppliers will have to go out of business
and that is going to be a political call but it is the only
way you are going to allow efficient players to take
over that business and simply the threat of that can
often be enough but sometimes you are going to have
to see somebody going to the wall for others to get to
the programme.
The third lesson I think is about consumer choice.
I think consumer choice can play a really important role
in ensuring that the market delivers what the customer
wants in driving competition but we do need to be
cautious in doing that in not just assuming that choice
will work. So for example choice in healthcare is not
fully embedded yet. In 2008 only half of the patients
surveyed were aware they could exercise choice over
hospitals, of those that were aware only 5 per cent used
the NHS Choices website so that’s only 2.5 per cent of
the total and the rest relied on their GP for advice. So
we need to recognise that consumers have transaction
costs, there are information disadvantages but insight
into behavioural economics is not all negative, it can be
used very positively.
For example when the government introduced
employment zones in 2000 they allowed people who
were looking for jobs, the long term unemployed, to
choose their provider and they found that increased
attendance levels of engagement and reduced
resentment, so those are the psychological effects
around choice and can actually operate in a very
positive direction if they are correctly managed. We
published a detailed paper on the role of choice and
the practicalities of using choice to deliver things, it
can be a really powerful instrument but one has to
recognise that getting consumers to make informed
choices in new areas requires a lot of very careful
design of the market.
My fourth point is about the level playing field.
We are in an environment now where we have both
public organisations entering in services in
competition with the private sector and private sector
organisations competing to provide public services
and we do not always have a level playing field in this
regard. OFT has published today a report on
competitive neutrality and dealing with some of these
issues but to give you a specific example, we did a
report on the commercial use of public information
three years ago and this was looking at the way in
which the owners of public information do not make
that available to private sector competitors in the
markets in which we compete and we particularly
turned our fire on Ordinance Survey and the whole
issue of competition in the delivery of intelligent
mapping and other things, which is a big marketplace
which we did not think was being allowed to operate
freely. That’s just one tiny example of the kinds of
problems we’ve had with lack of competitive neutrality
and if we don’t have competitive neutrality it is going
to be very difficult for new entrants, sufficient entrants,
and whether they are public sector or private sector
shouldn’t be the issue,
If companies feel they are to actually drive that
efficiency and that goes
protected by some
to the airline
unlevelness in the playing back
example. If as the
field, they are not going to airlines were, if
feel threatened by
companies feel they are
competition and they’re not protected by some
in the
going to get more efficient unlevelness
playing field, they are
not going to feel threatened by competition and they’re
not going to get more efficient and you are going to fail
to deliver the programme.
So the four lessons are don’t replace private
monopolies with public monopolies, including when
you are commissioning; make sure exit works as well as
entry and in that context of commissioning do not give
incumbents too much of an advantage when you are
re-commissioning. It may all work well the first time
round but then they are going to have an incumbent’s
advantage the second round. Think about choice
carefully, it can be a very powerful tool but don’t
grandly assume it will do everything for you and try to
get the level playing field right. Thank you.
Nick Seddon:
Thank you all very much, that was some absolutely
fantastic material there for us to talk through as a group
www.reform.co.uk
149
Public sector productivity / Reform
and I hope we’ll have some questions or comments
from everybody. I will take away the importance of
competition that brings granularity at the local level and
the way that better commissioning, the message from
different speakers about the responsiveness that better
commissioning leaves us with in terms of the services
that we’re getting. I left feeling quite optimistic as well
about how to get commissioning more effective and
we’re not in a world of difficulty that Amyas described.
So to questions.
[Questions are inaudible due to being too far from the
microphone]
Nick Seddon:
Fantastic, thank you. So we have got a question about
what is fair reward, a question about what else can be
outsourced, what else can be commissioned out and a
question about level playing fields. Then we have one
about pensions and then one about the private sector
and voluntary sector. I wonder if Colin, I can ask you to
reflect on the voluntary and private question.
[not clear enough to transcribe accurately]
Colin Barrow:
[Inaudible] … to engage appropriately with
stakeholders. I mean there is quite a lot of money
involved in that and for an institution to get together
five gangs of GPs … it is quite a big ask to do it. So
there is some work to be done there but again political
control has transformed … Family recovery is a
process that we use to wrap around a troubled family
to deal with alcohol, drugs, prostitution, petty crime,
offender management, mental health and housing all
in one go, focusing absolutely on the problems of that
family.. So instead of saying get out of my office you
say get in to my office, I want to give you a gold card,
you are my best customer. We approach it that way and
the savings that generates are not … We have a few
savings like that. So I would like to get access to some
of that money but if I did, I wouldn’t want them to …
I have another job, I am also the chairman of a
voluntary committee, the National Autistic Society
which is not a voluntary organisation. Of course it’s a
charity but it is a … and 85 per cent to 90 per cent of
its activity is providing services under contract to
local authorities. I don’t think that the National
Autistic Society is in the same category as the local
knitting circle or the local community … It is entirely
staffed by volunteers with one organiser having a few
… We are very good at dealing with grown up
businesses and we have got to get better at that if we
are going to deal with the Big Society.
Paul Pindar:
If you have a proper competitive process which is well
managed then fair reward is economically the most
attractive solution and whether that then culminates in
a margin of three, five or 20 per cent you could argue
is irrelevant. So I just think well controlled and fair
competition would be a starting point in terms of an
economic downturn. I often think there is more heat
than common sense around this whole margin issue
and one of the reasons I say that is it is one of the
comments that gets made about Capita. Amongst the
outsourcing industry our margins are some of the
highest. Now that doesn’t mean to say we are
expensive, it could actually be because we are very
150
www.reform.co.uk
Public sector productivity / Reform
efficient so if anybody wants to come and have a look
at my office, as plenty of clients have done, they
describe it as reassuringly grubby! I say that half in
jest but we deliberately run our business as cheaply as
we possibly can as that makes us competitive and
therefore there is a cost saving we can then pass on to
our clients. If other people want offices made of glass
and chrome that’s up to them but I don’t think that
should be a driver on what’s a fair risk in exchange, if
you like, for services being provided.
Having said all of those things, we have a very
simple tenet when we are entering into a long-term
contract. We want to make a profit, that’s our reward
for having a substantial transfer of risk and also for
making a substantial amount for them. We do not want
to profiteer. We genuinely don’t want to profiteer and
the reason for that is because we want a relationship to
last 20, 30, 40 years and not just the first term of the
contract. We have been very good at that so therefore if
we think there is a risk over time as we drive out more
and more efficiencies that we are going to profiteer
there are two very good protections that we give the
client, even if they haven’t asked for it.
The first one is to give open book accounting. I
can never understand why a contractor is not
prepared to share all their accounts with their
customer. They should be unless they have got
something to hide. The second thing is actually to
offer profit share. So say to the client, actually when
we put our prices together, we understood what the
task was, we understood what the risk was and we
expect to make a margin of 12 per cent. But if
through further efficiencies we will share it with you
and what we immediately do in those circumstances
is we turn the relationship from a client-customer
relationship into one where everyone is sitting around
the same table with the common objective that says
thank you for the service, now what can we do to
make it more efficient for both parties? Again it is
more than just theoretical, we do pay out profit share
to our customers so the mechanism is getting
everyone on the same side of the table and it works.
That’s my answer that that.
Nick Seddon:
Could you consider a time when Capita runs a police
force?
Paul Pindar:
I am a great believer in process and understanding what
you do well and what you don’t do so well and one of
the things that we really understand is what I’ve talked
about and the areas Capita are involved in around
efficient management of large white collar workforces.
We’re about removing where possible paper, they are
around eliminating unnecessary processes and
streamlining where necessary so with the best will in the
world, I wouldn’t have the first idea of how to manage a
police force.
Other parts of government, I mean one of the
things that I think is exciting about the current
government and what they are trying to do, I just think
the range of opportunities is very, very wide. There are
a huge number of reputable parties that are going
online across central government and a lot of them
could be streamlined, some of the operations for the
DWP have got nearly 100,000 people and a lot of
those are replicable tasks where you could get much
stronger disciplines around them and make them more
customer focused.
I’ve got just one comment on the voluntary
sector question. I am in a similar but not identical
place and that is I think we need to look very closely
at what the nature is of
You can’t have everything, the voluntary
you can’t say we’re going organisation that
to help because
to do it with a bang on the wants
we at Capita have used
head or a slap round the
voluntary
ear and by the way we want organisations as sub
contractors. When
it doing twice as quickly
Cameron spoke
as you did before, you have David
many months ago
got to think that through a about engaging with
little bit. That’s just basic
the voluntary sector
much more widely on
psychology
some of these I said we
need to be careful for two reasons. I also chair a
charity and we work very, very hard raising money
from the public to apply to those charitable
objectives. Running a business is risky and we don’t
always get it right and sometimes you lose money.
I don’t mind, well I do mind but I mind less losing
shareholders money. I think if you are in a position
where you are going to lose donors money on a
commercial enterprise, that’s a very, very difficult
place to be.
The second thing is, and it is absolutely right, if
you have a contract you have to be prepared to enforce
it and there are things in our 25 year history we have
got wrong where the customer has said, frightfully
sorry chum, you have screwed up and we want half a
million pounds. We are a five billion pound public
company, I don’t like it very much but every now and
then we have to write out a cheque and you have to be
very careful of the implications with a third party what
the sanction is for failure because you could put that
charity out of business and I’m not sure that is
something that anyone would really want to do so I
think the voluntary sector has a role but you have to be
really, really cautious about how you engage with it.
Amyas Morse:
I think they were all good comments and I quite
agree, you go in a way to the point about risk transfer.
It’s crazy for government to pay to transfer a risk
which isn’t really being transferred. In other words
you are not going to put a charity or a company at
risk and if you are halfway through building a
prestige project and you can’t afford to admit it was a
failure then even if the contractors have fouled up,
you are not going to penalise them, you are going to
let them off or support them. You have got to be
honest about that and price accordingly. Everything
that you are describing, I have just come from
speaking at Civil Service Live and I was talking …
what I was talking about was cost reduction and what
I was saying to them is you need to flatten out your
organisation, you need to take paper out of your
processes, you need to start using information to
manage but please at the end of all this a lot of public
sector is going to be public sector. We would like
them to reform the way they run themselves to be
more efficient and to actually learn to run in a more
modern organisational structure and we really need
that to happen. It is not saying we don’t need
outsourcing but it is not the answer to everything.
We are not going to be running departments by
outsourcing the whole thing. It may well happen one
day but not any day soon and to be equally frank, if
you have an unreformed cost structure and you hand
it to somebody to outsource and they do the things
you should have done, you are going to pay for that
because they’ve done it, you haven’t and therefore
they have realised the benefits.You’ll get a share of
them but you won’t get all of them which you should
have got if you had actually tackled it yourselves. So
please let’s not … I love what you say and again in
terms of sharing gain, in terms of having break clauses
and performance clauses and all that, it’s great if
Capita offers that to the public sector and I admire
and respect you for doing it but really what should be
happening is the guys and women in the public sector
who put those contracts in place shouldn’t be willing
to lift their pen unless those terms are in the contract.
So it is great if you are doing it out of the goodness of
your heart but I think you need people who are hard
nosed enough to make sure it happens every time.
These are things that can be done which will
contribute to getting down costs in the public sector
and they are just good business practice.
The problem about it, if I may, is you have got
the describing things which are not uncommon in
private sector organisations, your problem is instilling
that into public sector at the same time as you are
making massive changes in the headcount, getting a
lot of messages about terms and conditions and you
can wish for all these things but we have got to wish
for them in a joined up way. You can’t have
everything, you can’t say we’re going to do it with a
bang on the head or a slap round the ear and by the
way we want it doing twice as quickly as you did
before, you have got to think that through a little bit.
That’s just basic psychology.
John Fingleton:
I’ll just start where Amyas left off and say we shouldn’t
ignore those parts of the public sector that will always
be monopolies and making them efficient is really
challenging. One of the big difficulties there is in how
you are allowing the incentives. There’s a lot of
punishment potentially for not doing it but not an
awful lot of upside if you get it right and that’s a
challenge I think for government to think about, giving
rewards, courageous decision making in those areas.
On the point on pensions and more generally
on the level playing field, we need to be forward
looking about it. We need to get away from the
stranded cost arguments. It may be necessary to
compensate for stranded costs but competition is
always going to be about forward looking incentives.
We need to be thinking about investment based on
future return not on the basis of past handovers or
legacies and therefore we must look forward and
[grandfather] quite a lot of the past in these areas and
think how do we create a level playing field from this
point on rather than try to undo the areas of history
as it were and live with some of those.
We see lots of examples where if you have to
resolve the past in order to resolve the future. You
never resolve the future and I think that’s a lesson to
www.reform.co.uk
151
Public sector productivity / Reform
make that link in doing that. These incentives will
ultimately be driven by those and that touches on the
voluntary sector. I think it is really important in terms
of level playing field that we are blind to the business
model. Different business models will do well or less
well at different parts in time, I like to think that parts
of OFT are more efficient than some of the private
sector firms we deal with. We are certainly a lot
cheaper and I’d like to think if I was in the OFT in the
private sector I could certainly compete with some of
them quite effectively. So where is the public sector,
where is the voluntary sector and where is the
private sector?
I do have a concern that government doesn’t
allow itself to become hostage to a very concentrated
outsourcing market. I mean two small examples have
been of concern recently in the current environment.
The government is not
There is a big mistake of
allowed to buy in
the government cutting off consultancy services
its nose to spite its face to but some of the larger
players have been
concentrate only on a small offering to do that for
number of large players in free and if they do that
supplying those services. for free they get a
toehold and then when
it comes to awarding a contract that does have money
going with it, they will have incumbency advantage.
We already have enough concerns for example with
audit services; we have just looked at insolvency for
example. In the private sector there is a big mistake of
the government cutting off its nose to spite its face to
concentrate only on a small number of large players
in supplying those services. That means it shouldn’t
all be about economies of scale and a small number of
big players. We must think about how we keep
medium and small enterprises on the other side of the
equation otherwise I think we run the risk of maybe
gaining some efficiency gains up front because you
can get the scale economies but then actually losing
the dynamic efficiency that comes with the fact that
you need smaller companies to be challenging those
big companies. A small market of four firms
competing for what the government is doing would
not be in my view enough competition and certainly
it is very bad when the government is creating those
sorts of examples.
On the fair reward point, it is exactly the same
point about risk but I do think the government needs
to think about introducing extra unnecessary
uncertainty at a time when people are bidding. We
have something called Consumer Direct, a really
excellent line for consumers and delivers around a ten
to one return. We have taken 20 per cent out of the
costs, we are going out to tender at the moment to look
at taking another 30 per cent out of the cost but in the
middle of the bidding process the Department raised a
whole lot of really big questions about where it would
sit and you think, what’s this got to do with the cost?
So we had to get a letter from the Treasury just
dampening all that down so that the cost of the service
didn’t go through the roof. So I think government
needs to be joined up about adding unnecessary
uncertainty in the middle of bidding processes.
Also with the private sector, I mean I am
concerned if suddenly you stop awarding contracts,
you have to think about the cost that the private
152
www.reform.co.uk
Public sector productivity / Reform
sector puts in to bidding. If you make it very
expensive to your bidders, and we have just done this
big construction case and one of the things that we
were very keen to do was to make sure the public
sector didn’t delist these people because that would
be cutting off your nose to spite your face. Saying
okay, they have harmed in the past therefore we are
not going to use them again so there will be even
fewer competitors. I think we need to be very careful
about not making the cost of running these
competitive markets, the sort of thing that
government do when they are creating a quasi
market of which it can control the entry costs of the
various bidders and they need to think about not
raising the entry costs for the bidders and not
introducing additional uncertainty into the process.
Nick Seddon:
Thank you very much. We are out of time and I know
that Andrew is going to say some rounding up words
but I wanted to say thank you so much to each of our
panellists for a very interesting debate. What I didn’t
mention at the start and what I should have said is
that we are writing up and getting a transcription of
all of the discussion we have had today as part of our
submission for the spending review so all of this is
really, really important so thank you.
Closing remarks
Andrew Haldenby:
Thank you Nick. If I can just make some very brief
closing remarks and try and sum up the day. What I
thought we had was a real debate. We talked about
whether the deficit reduction should be, if you like, a
tactical one based on emergency cuts like public
sector pay freezes and so on and Colm McCarthy
said look, in reality that is really what’s going to
happen but against that Roger Douglas and I think
also Tony McGuirk
said no, come on, it’s
You can deliver radical
structural change that
change and you can
really need to go
deliver cost reduction even you
for and as Roger said,
if it does take some time
in the end quality
reform is what lasts..
to do it
I thought Tony
McGuirk was actually very persuasive, you can
deliver radical change and you can deliver cost
reduction even if it does take some time to do it.
Then we had a debate about, as Francis Maude
would say, do you have a tight grip from the centre to
do this or do you devolve and Adrian Rammage was
suggesting that there are costs to devolving but
against that people like Bernard Jenkin were saying,
no, come on, devolve because that’s how you get your
innovation and Ken was saying we need competition
and that is a key driver of improvement and obviously
we heard that from John in this session.
Then most politically Margaret Hodge said
these cuts may benefit the political class if you like but
there will be real social impact and you do this at your
peril is where she ended but then on the other side you
had Roger Douglas, another Labour politician of
course, who said you can’t have equity without
efficiency, the more money you save enables you to
treat more people in the health service and so on.
So those were the big things and then there was
a huge amount of tactical stuff as well about getting
it right so Aidan was saying yes, of course you
commission but you have to get it right and at the
moment we’re not, John said we have got to have
choice but we have got to get it right and at the
moment we’re not always and Judy said we can
outsource but that has to be got right in the initial
stages. So that gave a sense of the kind of tool kit for
reformers which is absolutely valuable.
In a sense this is what we do at Reform, this is
our core business and the reason I think everybody
has wanted to come today in such quality and great
numbers is because this is the subject now the
government has to grapple with and we will keep
working on this. In my view the spending review is
going to happen quite soon, it is not very far away,
but nevertheless we will feed in, we will send the
proceedings of today, we will hold a series of further
events between now and 20th October including the
party conferences and you will all be invited to all of
those so do please keep coming and we won’t stop
after 20th October and I hope this will continue to be
one of the centres of thinking on all this throughout
this parliament and it is because of your support and
giving your time to come today so I am incredibly
grateful to you.
I am particularly grateful of course to our
sponsors whose commitment is considerable so
thank you so much because it means we can do it in a
proper way so thank you very much to our sponsors
and to the Stock Exchange. And my other thanks,
and this is important for me, to my team at Reform so
thank you very much.
www.reform.co.uk
153
Health / Reform
Delivering a new health agenda / Reform
Programme
Delivering
a new health
agenda
NHS: new health services
Managing the budget
Healthy competition
08.30 – 09.00
Registration and coffee
09.00 – 09.20
Welcome and
introduction
Andrew Haldenby, Director, Reform
Andrew Manning, Chief Executive, Bevan Brittan
09.20 – 10.15
NHS: new health
services
There is a growing recognition that some services will need to change from their current form.
Hospitals, in particular, are increasingly unable to meet the needs of a modern healthcare system.
This session will discuss how the reconfiguration of services can reduce costs and improve the
quality of care. This session will also discuss what can be done to ensure greater integration of
care and maximise clinical leadership.
A panel debate chaired by Dr Patrick Nolan, Chief Economist, Reform
Dr Phillip Lee MP, Member of Parliament for Bracknell
Sophia Christie, Chief Executive, Birmingham East and North Primary Care Trust
Cynthia Bower, Chief Executive, Care Quality Commission
Sam Lister, Health Editor, The Times
10.15 – 10.45
Keynote speech by
Simon Burns MP
10.45 – 11.15
Coffee
11.15 – 12.10
Managing the budget
www.reform.co.uk
The NHS needs to deliver value for money. Patient expectations, more expensive treatments and an
ageing population will put the budget under pressure. Controlling costs will be vital. This session will
discuss what can be done to make savings and how better commissioning, management and
innovation can reduce waste without undermining the quality of care.
A panel debate chaired by Andrew Haldenby, Director, Reform
Rt Hon Stephen Dorrell MP, Chair, House of Commons Health Select Committee
Roger Taylor, Director of Public Affairs, Dr Foster Intelligence
Dr Nicolaus Henke, Director and Head of Healthcare Practice, McKinsey & Co
Professor Alan Maynard, Professor of Health Policy, University of York
12.10 – 13.05
Healthy competition
With Simon Burns MP, Rt Hon Stephen Dorrell MP, Dr Phillip Lee MP,
Rt Hon Lord Warner of Brockley, Cynthia Bower, Steve Bundred,
Sophia Christie, Adrian Fawcett, Dr Nicolaus Henke, Sam Lister,
Andrew Manning, Professor Alan Maynard, Mark Pearson and Roger Taylor
154
A keynote speech by Simon Burns MP, Minister of State for Health, on the new health agenda.
Healthy competition can drive innovation on the front line of health services and lead to better health
outcomes. However, competition is held back by barriers to entry and it is uncertain how proposed
commissioning arrangements will encourage competition. This session will discuss possible
benefits from expanding patient choice and encouraging the emergence of new business models
for healthcare, and the barriers to these changes taking place.
A panel debate chaired by Nick Seddon, Deputy Director, Reform
Rt Hon Lord Warner of Brockley, Former Health Minister 2003 to 2006
Adrian Fawcett, Chief Executive Officer, General Healthcare Group
Mark Pearson, Head of Health Division, Organisation for Economic Co-operation and
Development
Steve Bundred, Chair, Monitor
13.05 – 13.10
Closing remarks
13.10 – 13.40
Lunch
Reform will sum up and close the conference
www.reform.co.uk
155
Delivering a new health agenda / Reform
Delivering a new health agenda / Reform
The Reform team –
setting the agenda
Andrew Haldenby,
Director, Reform
Nick Seddon,
Deputy Director,
Reform
Healthcare is an expensive
business and is set to
become even more so.
Derek Wanless’s
projections demonstrated
that health costs will
increase to £137 billion,
or 10.6 per cent of GDP, in
2017. The challenge for
health reform is not only
to save money in the next
few years, but to make the
health service affordable
for the 21st century.
Dr Patrick Nolan,
Chief Economist,
Reform
Thomas Cawston,
Researcher, Reform
Over the last decade the approach has
been to avoid dealing with challenges by
throwing more money at the NHS. As is
well known the budget for the NHS
doubled in real terms between 1999 and
2009 and accounted for 40 per cent of
the total increase in spending in public
services between 1997 and 2007. Yet
rather than delivering proportionate
improvements in health outcomes, too
much of this increase in spending was
simply eaten up by higher wage bills and
over-investment in hospital buildings.
The Government has set out a plan to
radically reorganise the NHS. Current
administrative structures will be torn
down and GPs will be put in charge of
around £80 billion of the budget. The jury
is out on whether this will shake up
the NHS so it better suits patients or
whether this will be another radical
“redisorganisation”, to use Alan
Maynard’s coinage, without long-term
progress. What is clear, however, is that,
given the poor state of the public and
NHS finances, this is a high risk gamble.
The parlous state of the public finances
means that this approach of “spending
not reform” cannot be sustained. This is
a serious constraint – as the rising cost
of treatments, growing patient
expectations and an ageing population
will put pressure on the health budget
and mean that the service needs to make
savings of £15 billion to £20 billion over
the course of this Parliament.
What is also clear is that, by choosing to
reorganise the service rather than grasp
the nettle on how health services are
financed, the Coalition has missed the
real opportunity for NHS reform. An
honest debate is needed on how health
services are funded. Other international
countries have faced the need to
consider the greater use of co-payments
and user charges, to define a core set of
services that the public system provides
and to encourage the greater role of
insurance. It is time to catch up with
these international debates.
Achieving efficiencies on this scale from
a total annual budget of £105 billion
should be possible. Indeed, the size of
the NHS budget means that no other
departmental budget can offer the same
scope for savings. There are, however,
good and bad ways of saving money.
Simply trimming budgets would lead to
the disruption of services, more ad hoc
rationing of care, rising waiting times and
breakdown of specialist care. Top-down
exercises to drive innovation and service
redesign lead to local people feeling
disenfranchised from the management of
local health services. To address waste in
the system and ensure that the NHS
delivers value for money a new approach
is needed.
156
www.reform.co.uk
Professor Nick
Bosanquet, Consultant
Director, Reform
NHS:
new health
services
The National Health Service is the sacred cow of British politics.
Party leaders proclaim their lifelong love of it and MPs vow to
fight for their local hospitals, but few dare spell out the difficult
realities it faces – not least, unprecedented pressure on funding
in the next few years.
Nothing in politics is harder than closing a hospital. Yet
redesigning services is the right thing to do. It is the right thing to
do in the face of the funding pressures and, more importantly, it is
the right thing for the health of the population.
The key challenge of a modern healthcare system is to improve
the quality of life for people with long term conditions. This
means the NHS needs new innovative ways to deliver treatment.
Advances in clinical skill and new treatments have enabled more
patients to be treated at home and outside hospitals. However
the NHS continues to focus its resources on hospital care.
Clinicians and NHS managers have tried to introduce new ways to
provide care for patients and integrate services but too often blind
opposition to change has bedevilled this modernisation. Changes
to services will be most effective if they are local initiatives carried
out by locally accountable managers, but Ministers and MPs often
find the short term political gain from blocking closures too hard to
resist. Let us hope that in the new Parliament, instead of protests
blocking change, we see local people marching to reform their
local hospitals and shift more care into the home.
Dr Phillip Lee MP
Fewer hospitals,
more clinics
With the rising costs of an
ageing and increasingly obese
population, the continual
demand for better health
services and the increasing
costs of new medical
technologies and drugs, it is no
surprise to those of us who
work on the “front line” of
healthcare that the manner in
which we deliver and receive
healthcare requires much
debate and consequent reform.
To my mind, the way in which
we configure healthcare
services in this country must be
based upon true clinical need
and the best clinical outcomes.
My decade long professional
experience of the NHS in the
Thames Valley has proved to
me that the structure of
healthcare services can impact
negatively upon both morbidity
and mortality statistics.
Drawing upon this local
experience, I will suggest that a
future with fewer, better
located, acute hospital sites and
more community-based clinics
could lead to better health
outcomes for all.
It is, however, not just about
the supply of healthcare. The
realities of the political cycle
have led to the implementation
of policies by previous
governments to attract
“positive” media coverage,
often with little regard to any
actual benefits to this country’s
long-term healthcare provision.
Clearly, it is politically easier to
address perceived supply
problems than deal with the
population’s ever increasing
demands. I would argue that
unless policies address this
inexorable increase in the
demand for services, the future
of the NHS in its present state
remains bleak. It is my belief
that an honest and open
discussion about where the
www.reform.co.uk
157
Delivering a new health agenda / Reform
responsibilities for both an
individual’s health and local
healthcare provision should lie
is long overdue in this country.
Dr Phillip Lee MP, Member of
Parliament for Bracknell
Sophia Christie
The challenge for
the NHS
158
www.reform.co.uk
realise significant productivity
gains, which will realise the
promise of better quality
services, we shall need new
business models and new forms
of delivery.
In the 21st century, in
constrained economic
circumstances, we may want to
start with thinking about the
home as the hub of healthcare,
the patient as most likely to be
elderly, with multiple conditions,
and a user of a range of public
services, and our core response
to the broader population being
the application of marketing
and nudge psychology, to
support wise choices both in
staying well and in seeking help
when ill. This implies a very
different infrastructure for both
delivery and the pattern of
investment, and an ongoing
attempt to develop this without
fundamental review of the
distribution of the essential
acute infrastructure will just
increase costs and promote
unresponsive, unfair care.
Sophia Christie, Chief Executive,
Birmingham East and North
Primary Care Trust
Cynthia Bower
Integrated care
– challenges and
opportunities
Care Quality Commission is the
regulator of England’s healthcare
and social care services. It is
our job to make sure they meet
essential standards of quality and
safety, and give people a positive
experience. As the first regulator
to look across the NHS, social
care and the private and
voluntary sectors, we can give
a complete picture of care in
England.
So how important is
integrated care? A Nuffield Trust
study from 2005-08 showed
that 90 per cent of people who
used social care also received
secondary healthcare over a
three-year period. The
Government expects that
1.7 million more adults will need
care and support within 20 years.
Growing demand and shrinking
resources mean there is a real
need for more, and better, joined
up care to deliver good quality
and safe outcomes for patients.
At the heart of better care is
effective service configuration
and hospitals play a vital role in
the care pathway. So many
points of the hospital journey
have an impact – admission,
length of stay, discharge,
information sharing with other
parts of the system, and links
with local social care services.
When these are poorly managed
they can have a major cost, both
personal and financial.
Many leaders in health and
social care services are aware of
this. Real change has taken
place in policy and in practice to
try to improve integration. In
the most recent CQC State of
Care report, we found that
148,000 people in England had
access to services that helped
them avoid emergency hospital
admissions, compared to
80,000 five years ago. Delayed
discharges from hospital fell
from 3,600 a week in 2003-04
to 2,200 a week in 2008-09.
This is steady progress, and
it is the right direction of travel
in terms of outcomes and cost.
CQC’s analysis suggests that
reducing emergency stays for
people aged over 75 in line with
the best performing hospitals
would result in 8 million fewer
days in hospital per year. This
would provide a saving of
£2 billion a year.
Joined up care is a challenge
for both sectors, but the benefits
to the care services and people
who rely on them could be
significant. It needs dedicated
teamwork across agencies and
disciplines. It takes innovative
thinking, a willingness to develop
new ways of working, strong
leadership and commitment.
Services need to be configured
in a way that leads to the best
care outcomes, and not in a way
that protects budgets in existing
silos. In the current economic
climate, this will be no mean feat.
Cynthia Bower, Chief Executive,
Care Quality Commission
Sam Lister
A radical blueprint
As a message of intent, last
week’s NHS White Paper
looked every bit the work of a
Health Secretary-in-waiting.
Six years sitting on the shadow
frontbench, watching a
succession of Labour ministers
pass in and out of Richmond
House, has given Andrew
Lansley the time to build a
strong, coherent vision for the
health service. It has made for a
mission statement packed with
energetic initiatives – from the
NHS Commissioning Board
and GP consortia to the Public
Health Service and more
formal local authority
involvement – and laced with
the new Government’s
watchwords of reducing costs
and improving quality.
Few would deny that the
NHS, for all its productive
reforms in the New Labour
years, has become a behemoth
that happily consumes every
taxpayer pound pushed its way.
Efficiency and accountability
have fallen by the wayside, and
levers are needed urgently to
drive better value for money.
The Lansley vision, in its
simplest form, has a more
efficient NHS with GPs
holding most of the pursestrings, using their front line
knowledge to commission the
most effective forms of care.
His flabby fall-guys are the
service managers, who will be
subject to cost-saving cuts that
will chop down the complex
Primary Care Trust and
Strategic Health Authority
hierarchies.
The extent of the
reorganisation will be
enormous – far greater than
anyone would have thought
from the Conservative or
Liberal Democrat manifestos
and campaign speeches a few
months back. Bland statements
of a more personal NHS and
improved integration between
primary care and hospitals
have been translated into a
radical blueprint that brings a
more open market for
healthcare providers and
“quality standards” and
outcome assessments that make
the patient less passive
recipient and more arbiter and
architect of care.
The energy is refreshing
– coming after a period of
stagnation for health policies
– and some of the restructuring
may work. The problem is that
such sweeping change cannot
avoid being costly, and will
require several years of
rigorous Westminster policing,
starkly at odds with the Lansley
mission to devolve NHS power.
It also offers a model of
reconfiguration that tiptoes
around the elephant in the
room. Bringing personalised
care ever closer to people could
make some hospital
departments, and even entire
hospitals, an unnecessary
indulgence – offering services
that do not cater for enough
patients to make them
economically viable, or safe.
The idea of merging costly,
semi-redundant District
General Hospitals is far too
emotive to be included in the
Lansley script. It is, however, a
reconfiguration endpoint that
cannot be avoided.
Sam Lister, Health Editor,
The Times
Stephen Hughes
Realigning
relationships
Bevan Brittan is delighted to be
hosting this critical and timely
event in the week following the
Coalition Government’s
publication of a blueprint for
the future of the NHS in the
White Paper Equity and
excellence: liberating the NHS.
The changes proposed in the
White Paper go further than any
other reform since the inception
of the NHS. At the heart of the
proposals lies a fundamental
realignment of relationships
throughout the health service;
placing much greater emphasis
on individual patients to exercise
greater involvement and control
over their care. Alongside this
significant empowerment for
patients there is a wide range of
issues affecting clinicians; most
notably for GPs with their role
in GP commissioning and more
widely on employee engagement
at its highest level through to
employee controlled social
enterprises. This is intended to
drive a continuing revolution in
quality of services.
To further support that
revolution a complex range of
new relationships will be
required between independently
commissioning GP practices,
NHS Trusts (Acute and Mental
Health) and a range of public
and private sector stakeholders
in the NHS. At the heart of these
relationships lies a statutory and
contractual framework within
which the NHS operates –
changing these frameworks and
the legal parameters on which
they are based is one of the many
immediate challenges required to
deliver the reform.
At the most simple level, the
immediate legal issues include
GP contracts, contracts between
healthcare providers (GPs,
Acutes, Mental Health Trusts,
and Local Authorities) and GP
accountability. But at a more
complex level, legal questions
that must be addressed concern
the future ownership and
replenishment of the significant
NHS asset base, to new
relationships with social care
providers and local authorities
and the challenge of achieving
major change and reducing
costs simultaneously.
We look forward to
participating in the ongoing
discussion about implementation
of the Coalition Government’s
vision for the NHS and Bevan
Brittan, with a range of other key
advisors to the NHS, will continue
to act as critical friends in
identifying and resolving the many
issues of detail still outstanding.
Stephen Hughes, Partner,
Head of Health, Bevan Brittan
Fewer hospitals, more competition
“The taboo has been broken. There is now debate about closing
hospitals as an essential step towards improving UK healthcare.”
Richard Vize, Health Service Journal
“Today the centre-right think-tank Reform
attempts to puncture the prevailing complacency
with a radical programme of cuts to shift more NHS
care into the community, obtain more bang and
save extra bucks.”
Jeremy Laurence, The Independent
“Could a quarter of hospital beds be abolished?
A new report says ‘yes’.”
Stephen Pollard, Daily Express
REFORM
The first decade of the 21st
century has been characterised
by the realisation of the digital
opportunity. Like many other
fields, medicine has been
revolutionised by modern
technology. Medical imaging
and minimal interventions have
emerged as an alternative to
major surgery, while new
pharmaceuticals have allowed
greater management of disease.
The increasing role of genetics
has not only allowed greater
understanding of family risk,
but also targeted interventions
in the treatment of cancer.
Public expectations have more
than kept pace with these
changes, with baby boomers
reaching an age where they
become common recipients of
health services. Significant
improvements in access have
fed the belief that local and
immediate is always best, while
the constant reporting of petri
dish findings as “golden bullets”
have driven the perception that
every death is a service failure as
opposed to a natural event.
These major developments
have largely been adopted
within a structure which has
stayed remarkably static since
1948 when the nationalisation
of hospitals placed them at the
core of the NHS, and has locked
us into a largely 19th century
model of care.
Hospitals originally emerged
as a response to a situation of
few doctors and huge demand,
where illness tended to be
infectious and acute and with
limited treatments available
other than rest under
observation. They also provided
a useful concentration of
patients as a basis for teaching
and research. However, we now
manage most illness through
pharmaceuticals, with the
potential for chemotherapy and
other sophisticated treatments
to be delivered outside hospital.
Access to diagnostic and
interventional technology
means that even invasive
procedures can be carried out
with minimal collateral damage
and risk of infection and early
rehabilitation. For example, the
George Eliot hospital now safely
undertakes 24-hour hip
replacement, to the significant
benefit of elderly recipients at
particular risk of infection,
pressure ulcers and confusion
from a prolonged stay in
hospital. Hospitals remain a key
element of the system, but
within an increasingly
sophisticated network of care,
which no longer sees the “bed”
as a technology in its own right.
The nature of the “problem”
facing the NHS has shifted
from acute intervention in
infectious disease to the
long-term management of
chronic conditions. The greatest
potential benefit is increasingly
to be realised through prevention
and delay of the onset of disease,
rather than radical new
treatments in acute phases.
Much of the government activity
of the last term was focused on
addressing years of underinvestment through improvement
within the traditional model of
delivery. Access, payment by
results and infection control
was all about improvements to
institutions within the current
model (at considerable expense).
Relatively little attention and less
money was given to personalising
care around the patient by
making best use of telephone,
email, community support
and crucially challenging poor
practice in addition to
incentivising the good. In his
recent book The Innovator’s
Prescription, Clayton Christensen
notes that it is rarely those who
have dominated a mature
market who successfully deliver
innovation, as their business
model will be predicated on
traditional delivery. If we are to
Delivering a new health agenda / Reform
Fewer hospitals,
more competition
Professor Nick Bosanquet
Thomas Cawston
Andrew Haldenby
Dr Patrick Nolan
Nick Seddon
March 2010
www.reform.co.uk
159
Delivering a new health agenda / Reform
Delivering a new health agenda / Reform
Managing
the budget
The state of the public finances is perhaps
best summed up by the words of Liam
Byrne in his letter to his successor at the
Treasury: “Dear Chief Secretary, I’m afraid
to tell you that there’s no money left.” The
Government has committed to accelerating
the elimination of the deficit, with an
emphasis more on reduced spending than
tax rises. Oddly, though, it has promised
to increase spending on the NHS.
It is perverse to commit to protecting an
area of public spending where so much
waste has been identified. Real terms
health spending has doubled since 1999,
yet over the same period, according to the
Office for National Statistics, productivity
fell by 0.3 per cent on average each year.
What is needed is structural reform – not
just of the delivery, but also the purchasing.
This is about putting money – and power –
in patients’ hands. The best way to do this
is to increase private contributions to health
costs, in line with other developed countries.
As the OECD recently found, countries
with private insurance models score better
than the UK on both quality and equality.
As demand rises in the future, the challenge
will be to meet consumers’ demands
without increasing the burden on the state.
Sadly, ringfencing public spending on the
NHS is not the solution. It is a Pyrrhic
victory that will do nothing to save the NHS;
instead, the NHS, which the Government
has worked so hard to neutralise, will be
the great flashpoint of this Parliament.
160
www.reform.co.uk
Thomas Cawston
Paying for
tomorrow’s health
system
Probably the biggest mistake
that the Coalition has made
has been to ring-fence the
health budget. Health is not
only the largest departmental
budget but has also been the
main beneficiary of the
increase in spending over the
last decade. Real terms health
spending has doubled since
1999, reaching around £105
billion in 2009. Over the same
period productivity fell each
year by 0.3 per cent on
average. Despite this the
Coalition has refused to
reduce the NHS budget, which
means that other departments
have been asked to find savings
of up to 40 per cent.
But even protecting health
from the spending cuts that are
needed to restore the public
finances will not satisfy the
NHS’s insatiable appetite for
taxpayers’ money.The ever
increasing cost of new treatments
and the rising demand for
healthcare fuelled by patient
expectations and an ageing
population will mean the NHS
could face a funding gap of as
much as £41 billion by 2017.
For many, this funding gap
means the NHS budget should
be sacrosanct. But whether the
budget is cut or not, the NHS
will need to deliver value for
money on an unprecedented
scale. If the budget is ringfenced, the NHS will need to
deliver annual efficiency savings
of at least 3 per cent to fund
rising demand. This is not
impossible. Over the last decade
the NHS has over-invested in
the wrong buildings and
over-invested in the wrong staff.
Too much care is still delivered
in hospitals and more than
half the NHS budget is spent
on staff.
But this transformation of
the NHS into a more costeffective and productive
healthcare system will be harder
now the NHS has been taken
off the table during the
spending review. Insulating the
NHS budget from a wider drive
to deliver value for money could
be the very thing that destroys
the service – by encouraging
front line managers to believe
that they can avoid taking the
hard choices facing managers
elsewhere in government and
develop new ways of delivering
services.
The reality of the public
finances means there is no
alternative but to reform the
system. This requires not only
reducing waste but also
releasing the potential of
“disruptive innovation” that can
come when new entrants
develop and introduce new
models of health delivery. This
requires a stable investment
environment, all providers to be
treated evenly, and barriers to
entry and exit to be reduced.
But even if every lever is
used to obtain efficiency in the
health service, healthcare will
continue to become more and
more expensive. The fiscal
crisis has only hastened the
financial crisis facing the NHS.
A taxpayer funded system is
not only inefficient, it is now
unsustainable and unable to
meet the growing healthcare
needs of the UK. The
healthcare budget can be cut
and should be cut, not only by
cutting the waste in the system
but accepting the need for
greater private financing.
In 2000 the then Prime
Minister Tony Blair set a target
to increase UK health spending
to the European average.
The UK now needs a new
target: to increase private health
spending to the OECD average.
Defining the package of care
provided by the state, extending
the user charges, top-ups and
supplementary insurance would
allow public health spending to
be cut. Only by doing this can
we both obtain value for money
and fund a health system fit for
the 21st century.
Thomas Cawston, Researcher,
Reform
Roger Taylor
Health and
technology
The NHS is embarking on the
toughest financial squeeze in its
history. To implement the
necessary changes it is relying
on a commissioning system
which almost all commentators
agree lacks the skills necessary
for the task.
There is much debate over
the relative merits of different
structures for deciding how
budgets are spent but no real
evidence that one approach
works better than another.
Overall, attempts to get more
for less out of healthcare
systems have a very chequered
history – spending on
commissioning often costs as
much as it saves.
If we look beyond the issue
of organisational structure
however, there is strong evidence
that particular strategies can
drive up quality and get more for
every pound spent. We know
that defining standards and
auditing their implementation
can be a very effective way to get
more for less. We also know that
comparative outcomes data
helps to raise quality. In England,
we have seen top down targets
achieve great success in
addressing issues of major public
concern such as long waiting
times and infection rates.
These approaches are all
about better use of information
– measuring performance and
setting standards. But they have
been applied consistently to
relatively few areas of
healthcare.
Disagreements about
access to data, reliability of
information and approaches to
measurement have hindered
the broader application of these
approaches. And while it needs
to be acknowledged that the
NHS’s history with
information technology is, if
anything, worse than its history
of structural reform and
commissioning, it is also true
that tackling the information
problem could yield greater
benefits than changes to
commissioning structures.
How can this be done?
Firstly, make better use of the
existing data resources available
to the NHS and stop new
national initiatives that are very
high cost and which create
conflicting and overlapping
sources of information.
Second, make it clear,
through engaging the public,
how the NHS uses patient
information to ensure quality
of service. Too often, the
NHS holds back from using
data in this way because it is
unsure of what is appropriate.
The public is, in general,
supportive of the use of data
for quality improvement so
long as they know how the
data is being handled.
Third, open up access to the
data to improve data quality.
Most importantly, this must
include letting the public see
their own data.
Lastly, use the central control
that a national health service
offers to impose strict data
standards, but do not attempt to
impose national IT solutions or
national approaches to how data
is used.
Roger Taylor, Director of Public
Affairs, Dr Foster Intelligence
Dr Nicolaus Henke
Managing the
budget: five themes
For political leaders, health
ministers, finance ministers, or,
indeed, Prime Ministers or
Presidents, healthcare is a
juggling act. The challenge is to
boost economic competitiveness
and maintain a grip on fiscal
expenditure, whilst trying to
achieve superior health
outcomes and access for
patients. When it comes to
healthcare, the public are fickle
consumers – they rarely give
credit for improvement but
rapidly articulate dissatisfaction.
The challenge is here to stay.
Healthcare is, perhaps, the
greatest success story of the last
century: in the developed world,
life expectancy has doubled,
and quality of life has been
vastly improved. As a sector,
healthcare has continuously
expanded its share of national
wealth: in OECD countries for
each of the last 60 years health
spending has grown by GDP
growth plus 2 percentage
points. Why? Technology,
ageing, and poor lifestyle
choices (drinking, smoking,
obesity) are part of the answer
– but the most significant factor
has been rising expectations. In
short, as societies become
wealthier, they devote more
resources to healthcare.
If the next century looks like
the last, then more than half of
GDP would be dedicated to
health by the year 2100, and the
United States (the outlier in
terms of rapid spending growth)
would see 98 per cent of GDP
absorbed by the healthcare
sector. This is clearly as absurd as
it is impossible. So, what needs to
change? The only solution will be
dramatic productivity growth in
health systems. Health systems
face a fundamental choice:
double or triple productivity, or
ration access to care.
Here are five themes for
maintaining the budget:
• Maintain strong
accountability. As a general
rule, systems with cash-limited
budgets (e.g., Scandinavia,
Australia, Canada, Spain) spend
less than comparable systems
which define the benefit bundle
without constraining expenditure
(e.g., Germany, Switzerland,
US).The fundamental difference
is the power to say “no” to an
intervention so that financial
control is maintained. GP
commissioning could be a
particularly successful example of
this for well documented reasons.
• Harness incentives and
information. While various
closed systems, such as Kaiser
Permanente, have achieved a lot
through combining powerful
and real time patient
information with appropriate
incentives, most open regional
or national systems struggle
with encouraging patients to use
information and become “fully
engaged”. An interesting
exception is Singapore, which
spends less than 4 per cent of
GDP for European level
outcomes – which through
co-payments incents patients
to use services responsibly.
Another example is Valencia,
where 21 sub-regions serve a
population of five million in a
free choice model.
• Seize the opportunity of
payment shifts. Many
systems which have experienced
challenging budget periods have
used shifts of payment system
to apply quite significant
improvements to productivity.
For example, various states in
www.reform.co.uk
161
Delivering a new health agenda / Reform
Australia reduced hospital
tariffs between 1 per cent and
10 per cent upon the
introduction of Diagnosis
Related Groups. There are
various changes in allocation
and pricing regime in store in
England, and all may have
potential in this area.
• Drive provider
productivity. Many of the
levers above help to constrain
the overall budget growth and
reduce demand, but driving
provider productivity remains
key. At the McKinsey Hospital
Institute we observe that
provider organisations show
inexplicable variance across
multiple metrics – including
annual productivity growth. The
question is how to make the rest
as good as the best.
• Let innovation flourish.
This is a time to embrace
disruptive change, to sacrifice
dogma, and be as bold as we are
open to new approaches. Our
recent research in partnership
with the World Economic
Forum has shown that stepchange improvements in
productivity are possible –
delivering high quality
maternity care for one-sixth the
cost, for example – and that
those who succeed share a set of
common practices. Many
models and solutions exist – the
challenge is for health systems
to allow these models to enter
and to flourish.
Dr Nicolaus Henke, Director and
Head of Healthcare Practice,
McKinsey & Co
Professor Alan
Maynard
Doctors are the
problem! Doctors
are the solution!
Despite large differences in
culture, politics and the
162
www.reform.co.uk
structure of public and private
healthcare systems, their
problems are similar: much of
healthcare lacks an evidence
base of clinical let alone cost
effectiveness; there are large
variations in clinical practice
and “what works” is often not
delivered to patients; medical
errors are excessive; and there
are no measures of success or
whether healthcare makes
“patients better”.
These ubiquitous problems
have been well evidenced for
decades and ignored by policy
makers, public and private. For
instance the 1845 Lunacy Act
sought to get hospitals to
measure whether patients were
“dead, recovered, relieved or
unrelieved” and Semmelweis
was advocating rigorous hand
hygiene in hospitals in 1848.
Sadly healthcare today has not
implemented the policies of
150 years ago!
Why is this? Professions
were described as a
“conspiracy against the laity”
by George Bernard Shaw and
Milton Friedman in Capitalism
and Freedom concluded that
“occupational licensure” has
reduced both the quality and
quantity of healthcare. In
principle the objective of
medieval guilds and professions
was to provide consumer
protection. In practice they
inhibit it.
A patient entering a hospital
might expect benchmarking of
potential errors such as wrong
drug/wrong dose, wrong site
surgery, pressure sores, central
line infections in intensive care,
catheter induced urinary tract
infections, patient falls and
other “adverse events.” In
practice benchmarking is often
absent as is managing these
rates down to protect the
patients.
A patient might also expect
that their surgeons were part of
national audits and efforts by
peers to identify outliers and
continually improve practice.
Often audits are voluntary and
incomplete. Patient protection is
absent and this is compounded
by the failure of Colleges and
the General Medical Council to
oblige practitioners to
benchmark and audit as a
condition of re-accreditation.
Delivering a new health agenda / Reform
Whether or not government
reorganises the structure of the
NHS, the challenge is to ensure
that “physicians heal
themselves” by acting in a
transparent and accountable
fashion. The techniques of
production engineering (e.g.,
“Six Sigma”) need to be used to
ensure continuous quality
improvement by applying
existing activity data (i.e.,
hospital episode statistics) and
emerging patient level cost data
and patient reported outcomes
information (PROMs).
Doctors determine how
resources are allocated and it is
they who should be obliged to
manage each other efficiently
and thereby protect patient and
taxpayers’ interests.
Professor Alan Maynard,
Professor of Health Policy,
University ofYork
Professor Nick
Bosanquet
GP commissioning:
realism on
implementation
GP commissioning is a good
aim with great longer term
promise but could be ruined by
the manner of implementation.
To succeed it needs a realistic
implementation plan – which
will need the whole five years of
the Coalition.
At present the start of GP
commissioning will coincide
with the epicentre of the
financial hurricane of 2011.
The immediate impact will be
greatest on NHS Trusts – the
Operating Framework will shift
deficits from Primary Care
Trusts to NHS Trusts. By
November 2011 it is highly
likely that between 35 and 40
NHS Trusts will find that they
do not have funding to cover
their pay bills for the rest of the
year. They will then put great
pressure on commissioners for
an emergency bailout. The
NHS has to have the capability
to manage the cost increases
which are heading its way.
In practical terms, there is no
way that 500 GP
commissioning groups can have
accurate budgets by April 2012.
Each group would have around
60 GPs covering a population
of 100,000 patients with a
budget of £115 million. In
practice the funding would have
to be distributed by a formula,
given the lack of any accurate
local information about
spending for local populations.
For 2011-13 there would be
great insecurity about the
possible appearance of deficits.
Nor are the new groups
equipped to drive forward
initiatives to find £15 billion to
£20 billion of essential savings.
A more realistic approach
would be to abolish Strategic
Health Authorities but keep
Primary Care Trusts to manage
the introduction of GP
commissioning. The presence of
the Strategic Health Authorities
blurs responsibility and the
Government is right to abolish
them. Some leading Primary
Care Trusts should be given
responsibility for developing
balance sheets for business units
– and informatics for increasing
GP and patient choice.
They should also mentor the
groups – we need to find a new
generation of GPs leaders.
The fund holders are long gone.
After some years Primary Care
Trusts could be reduced in role
and number – back to the 60
unitary authorities of the first
Kenneth Robinson Green
Paper of 1967: but now is not
the time for another top down
reorganisation cut off from the
realities on the ground.
GP commissioning could
work but at present it is an
aspiration. The Coalition has
five years to develop a workable
system for local responsibility.
Professor Nick Bosanquet,
Professor of Health Economics,
Imperial College and Consultant
Director, Reform
Rt Hon Lord Warner
of Brockley
More choice needs
more competition
Healthy
competition
As Albert Einstein wrote “if you always do what you always did,
you’ll always get what you always got.” This is true of healthcare.
New ways of delivering and funding health services are needed if
the UK is to improve value for money of health services and do
the right thing for patients.
Some people mistakenly see innovation as being just about
science. However, as well as the science behind new treatments
and technologies, innovation requires changes in ways in which
services are funded and delivered. This innovation in business
models occurs when, for example, providers enter markets and
discover new ways of delivering services that are closer to the
home, more convenient for patients, deliver better clinical
outcomes and cost less.
Research shows that competition, especially from the threat of
new entrants, can be a key factor in encouraging more innovative
health systems. This is why, if done in the right way, greater
competition can lead to improvements in clinical quality, such as
faster reductions in mortality from acute myocardial infarction, a
more business-like culture and higher levels of patient satisfaction.
However, competition is not a silver bullet. If the policy context is
not right then competition can fail to deliver desired outcomes.
Healthy competition requires a stable investment environment,
government treating different providers fairly (rather than
emphasising preferred providers), few barriers to entry to the
market (such as differences in pension provisions) and patients to
have the information on which to base effective choices.
Over the past decade a stuttering
approach to NHS reform has
been adopted with bursts of
activity on competition and
choice followed by lengthy lulls.
Not surprisingly many in the
NHS are confused and some
take great comfort from the lulls.
Most PCT commissioners are
still weak controllers of money
and demand, with 47 per cent
rated “fair” or “weak” by the
Care Quality Commission for
financial management in
2009-10. Acute hospitals are
allowed to overtrade and create
supplier-induced demand. They
have scooped up too much of
the huge increase in investment
in the NHS under Labour.
Access to services has been
improved, waiting times
reduced and many lives saved
from killer diseases. But most of
these improvements have been
produced by centrally-driven
targets rather than by
competition, choice and
commissioning.
The shift of services from
acute hospitals to the community
proposed in the 2006 White
Paper Our health, Our care,
Our say has not been delivered.
Too many acute hospitals are
unsustainable in their present
form and some would fall over
financially if services were indeed
relocated. Nearly 50 per cent of
Acute Trusts have not achieved
Foundation Trust status seven
years after the legislation was
passed. About 40 NHS Trusts
still have historic deficits, some
very large. Community health
services are still attached to the
far too many Primary Care Trust
commissioners so there is no
proper purchaser/provider split.
There are few performance
metrics for these Primary Care
Trust service provider arms
which makes market-testing more
www.reform.co.uk
163
Delivering a new health agenda / Reform
Rt Hon Lord Warner of Brockley,
Former Health Minister 2003
to 2006
164
www.reform.co.uk
Steve Bundred
The potential of
competition
attack admissions.
Although successive
governments have introduced
market-based reforms since the
early 1990s, competition in the
healthcare market in England is
still a relatively new concept and
does not work as effectively as it
could. Barriers to market entry
and exit, difficulties in adjusting
supply to match demand, and
an inability of providers to
respond to fluctuating demand
by amending prices, all raise
The NHS is grateful for the
questions about how far these
degree of protection from
reforms can go.
spending cuts it has been
The answer is “a lot further
promised by Ministers, but it is
than they have gone so far.” The
nevertheless feeling the pinch.
The combination of rising costs Coalition Government believes
the issues, real though they are,
and increased demand is such
can be addressed and is rightly
that even before the election it
committed to a more patienthad been warned of a need to
focused, outcome-driven
deliver savings of £15 billion to
£20 billion. Now it is being told healthcare system, characterised
by greater devolution and more
that even that might not be
diversity of providers.
enough. At the same time, the
Of course, competition
OECD reported earlier this
month that our health outcomes, alone cannot deliver everything
that the public and the taxpayer
including in areas such as
demand of the healthcare
avoidable deaths, lag behind
system. But we should not
those of other western
ignore the potential of
economies.
competition to drive innovation,
So the challenge to deliver
quality and efficiency.
more with less is as real in the
NHS as in other public services.
Steve Bundred, Chair, Monitor
And there is increasing
discussion among policy-makers
about the role that competition
could or should play in meeting Mark Pearson
this challenge.
Healthy dose of
In other sectors, competition
competition
has helped deliver benefits in
terms of responsiveness,
cost-reduction, quality and
innovation. But can it do the
same in healthcare?
Two studies published in
June provide evidence that it
can. LSE researchers looked at
elective hip replacements and
found that hospitals exposed to
competition after a wave of
No-one who has spent much
market-based reforms took steps time looking at health services
to shorten the time patients were can be in any doubt that they
in the hospital prior to their
are riddled with inefficiency.
surgery. This resulted in a
Services are over-used,
decrease in the overall length of
under-used and misused all the
stay without compromising
time. It seems a matter of
patient outcomes. And a study
common-sense that a healthy
led by Carol Propper of Imperial dose of competition could do
College London and the
wonders to sort out the more
University of Bristol showed that extreme cases of inefficiency.
greater competition results in
But health systems have a habit
better management, which in
of kicking apparently sensible
turn leads to improved clinical
reformers in the teeth, with
outcomes such as better survival common-sense leading to
rates from emergency heart
perverse outcomes.
International evidence is that
realising benefits from
competition in health systems is
immensely complicated.
In most markets we would
assume that price competition
would be a main driver of
efficiency. But in the vast
majority of OECD countries,
healthcare services are free
of charge for patients or
have uniform prices (and
copayments) set at the national
level. Only a few countries allow
physicians and hospitals to
charge patients prices above
reimbursement levels and
“statutory copayments.” and
most often only in some
circumstances (e.g., Australia,
France and Ireland).
Competition could be on the
basis of quality, rather than
price. Giving users of health
services the freedom to choose
providers would lead them to
choose the best providers, even
if they have no financial
incentive. This sort of choice
was common in most insurance
based health systems, but
countries have often not
provided the information
necessary for it to influence
quality. Only five (of 31) OECD
countries indicate that
information on quality is made
available for physician services,
while seventeen report
information on quality for
hospitals (on process, outcomes
and/or patient experience).
However, information on
quality is seldom used by
consumers. Patients value
choice very much, but most
often choose to be treated by
local providers and seldom use
information on quality. Worse,
extended user choice of
providers and high density of
physicians favours induced
demand, leading to physicians
becoming more responsive to
medically unjustified demands
from patients (who can shop
around until they find the
provider responding to their
wishes). Perhaps it is not
surprising to find health
insurance companies trying to
steer patient choice, providing
patients with incentives to
register with a primary doctor
acting as a gate-keeper (e.g., in
Belgium, France, Germany, and
Switzerland).
None of this means that the
common-sense view of health
services is wrong; rather it tells us
not to apply competition
indiscriminately, nor to expect it
to achieve miracles. Using
payment systems to encourage
efficiency; being open to private
(both for-profit and otherwise)
providers; developing
information on quality: none of
these will dramatically transform
the fiscal landscape and free up
vast amounts of resources. But
they do have the potential to
improve the quality, flexibility,
and satisfaction that patients will
get from the health system.
Mark Pearson, Head of Health
Division, Organisation for
Economic Co-operation and
Development
Adrian Fawcett
Time for an
intelligent
partnership
At General Healthcare Group
(GHG), we believe that key to
improving healthcare in the UK
is not only about empowering
people to take more control of
their medical decisions, but also
incentivising them to do so.
This can be achieved through
not only better education and
awareness of the many care
pathways available in the private
sector but also by offering tax
breaks and co-pay for those who
choose to utilise these options. By
encouraging those who are
financially able to do so to use
private hospital facilities and
services, we will help to effectively
relieve some of the great burden
on NHS resources, freeing up
more time and capacity for those
who are in most need of
publicly-funded care.
The healthcare debate has
historically positioned the
private healthcare sector as a
“fail safe” – for example, in
helping the NHS reduce waiting
lists. But, now the time is right
for the private healthcare sector
to have a proper seat at the
planning table – we have
expertise and capacity that can
make a real difference in
delivering timely healthcare in a
clean, efficient manner which
benefits everyone.
GHG is looking for an
“intelligent partnership” between
the NHS and the independent
sector. The creation of a more
predictable environment for the
independent sector will lead to
increased investment, innovation,
efficiency and most importantly
improved outcomes for all
patients – whether treated in the
private sector or the NHS.
GHG is also seeking a level
playing field which requires all
providers to meet the same level
of compliance and adhere to the
same level of scrutiny and
regulation.
In the next few months,
GHG will come forward with
solutions to enhance the sector
and to ensure that independent
healthcare makes a significant
contribution to the health of the
nation.
Ultimately, GHG is judged
on the quality of our services
and the quality of our patient
outcomes. It is these simple
tenets that in the end will shape
GHG’s continuing success and
partnership with the NHS.
Adrian Fawcett, Chief Executive
Officer, General Healthcare Group
Dr Paul Charlson
Ten Years Younger
Practice based commissioning
(PBC) was last year
characterised as “a corpse not
for resuscitating” by the English
National Clinical Director for
Primary Care, Dr David
Colin-Thomé. Now one year on
we have a patient who is going
to be resuscitated but hopefully
will look like the result of a Ten
Budget 2010
Taking the tough choices
“A specimen Budget to be published tomorrow by the
exciting and intelligent think tank, Reform… Reform outlines
cuts that will spark a reflex of horror in most politicians.
However, they also observe economic realities.”
Simon Heffer, The Daily Telegraph
“Charging patients a ‘token’
£10 could save the NHS £1.6
billion by 2014, the centre-right
group Reform said in a
controversial report published
today ahead of next week’s
Budget.”
Daily Mail
“Experts cited by Reform, the
think tank, say £20 billion could
be cut [from the NHS budget]
without harming patient
services.”
Editorial, The Sunday Times
YearsYounger makeover.
The NHS budget will be
squeezed, requiring efficient
ways to limit costs but still
deliver high quality care. It is
generally accepted that some
secondary care functions could
be delivered in primary care at
reduced cost. Patients also favour
more localised care.
It is for these reasons that PBC
in the form of GP commissioning
is worth resuscitating and maybe
given a full makeover.
Why did earlier efforts for
PBC fail? GPs had scant
incentives for the time required
to devote to the project. Primary
Care Trusts were unwilling to
allow GPs the freedom to
innovate as they feared a loss of
financial control due to the lack
of accountability of PBC groups.
The data available was poor,
which makes commissioning
decisions difficult. Added to this
there was a conflict of interest for
GPs who could be both
providers and commissioners.To
top this, the last Labour
Government and GPs did not
have the best of relationships. It is
little wonder initiatives have failed
and the “corpse” was moribund.
The new Coalition
Government has rightly
recognised that GPs are well
placed to be in the driving seat
of reforms and patients, given
the right information, can direct
REFORM
difficult; but the information that
is available suggests they have
scope for approaching 20 per cent
efficiency savings. There is now
a danger that weak community
service providers and failing acute
hospitals will seek to save
themselves by vertical integration,
thereby reducing competition
further.
NHS regulation has improved
and exposed shortcomings in
NHS Trusts but there is no
effective economic regulator who
can drive competition, particularly
where there is persistent failure.
Those who overspend have been
bailed out repeatedly and given
many chances to improve. There
is a reluctance, across the political
spectrum, to grasp the nettle of
service reconfiguration when
changing circumstances make a
hospital unsustainable in its
present form in case politicians
get “Kidderminstered.”
The scope for competition was
diminished by a political
intervention in 2009 to say that
the NHS was the preferred
service provider, which hardly
encouraged new providers to
come forward.
The default setting of the
NHS is local public monopoly
with little challenge until the four
to five years at the end of the
Blair government. As the NHS
moves from feast to famine the
competition engines need a
further revving up. This is
particularly the case in failing
specialist hospital services,
community health services,
NHS pathology and primary
care in deprived areas. To do this
requires replacing most existing
PCT commissioners with a
more robust system involving
effective GPs, a more
commercially-aware contracting
process and a few larger agencies
all overseen by a regulatory
framework to prevent abuse.
There is a growing appetite
by the public to exercise choice
but this is being frustrated by
inadequate information and
insufficient diversity of
providers. More choice needs
more competition and more
speedy replacement of failing
and unsustainable providers.
Delivering a new health agenda / Reform
Budget 2010
Taking the
tough choices
Dale Bassett
Thomas Cawston
Andrew Haldenby
Dr Patrick Nolan
Lucy Parsons
Nick Seddon
Kimberley Trewhitt
June 2010
their care to suit them. There are
of course inherent risks in the
idea. The inexperience of GPs
as commissioners, the potential
for conflict between local
clinicians and the reluctance of
some to take part in what will be
a compulsory scheme are some
major issues. How to deal with
failed GP consortia and
risk-reward dynamics will also
need to be worked out.
However, this is a potentially
exciting change for the NHS
provided GPs are prepared to
grasp the opportunity. In my
view there needs to be a
fundamental change in the role
of GPs who should no longer be
seeing patients with mild
self-limiting illness, in order to
release time to manage complex
illness and develop their
commissioning role. Perhaps at
last with the new changes this
can happen.
For patients this too represents
a valuable opportunity, but they
too must change by taking more
responsibility for their healthcare.
Empowerment and education
through better information is a
vital part of this process.
I am hopeful with the right
care the “corpse” can not only be
rehabilitated but can look ten
years younger.
Dr Paul Charlson, GP and Chair,
Conservative Medical Society
www.reform.co.uk
165
Delivering a new health agenda / Reform
Delivering a new health agenda / Reform
Transcript
Andrew Haldenby:
Welcome to our conference on Delivering a new health
agenda. My name is Andrew Haldenby and I am the
Director of Reform which is an independent non-party
think tank whose mission is to find a better way to
deliver public services and economic prosperity in the
UK. This is the fourth in a series of conferences that
we’ve held after the election in each of the big public
spending areas. We were wanting to hold them because
the challenge for this Parliament and indeed for this
Government is so great. The challenge of reducing the
deficit, the challenge of eliminating the deficit while still
seeing public services improve, that challenge is such a
great one that we wanted to bring together the people
that matter from Ministers to practitioners, public
sector, third sector,
Health is the big one
private sector, policy
makers and journalists.
isn’t it?
We wanted to bring them
all together under one roof to talk it through and I have
to say we have succeeded in our previous conferences
and we have succeeded again today. This is another
excellent group of people who have given up their time
to come this morning so thank you very much indeed.
Specifically on the subject of today’s conference, I
mean health is the big one isn’t it? Health is the biggest
budget, the biggest public service, the biggest employer
not just in this country but in many, many European
countries. It is clearly the biggest political challenge
given the sensitivity of health services and with the
recent White Paper, it is the most ambitious part of the
Government’s public service reform agenda that it has
so far revealed so I would say this is a particularly
important discussion today.
Clearly I am thrilled that we have a range of
speakers who have the seniority to take us through these
various aspects of this crucially important subject.
Firstly, would people mind not only putting their
phones on silent but if you can turn them off please as
that will not affect the recording equipment at all. But
just to go through the programme, we will start with
service redesign which our Reform research indicates is
absolutely essential in the new circumstances and
clearly given the White Paper I think we have to discuss
whether the new ideas around GP commissioning
consortia will help to drive service redesign. Then we
will have our keynote speech by the Minister of State for
the Health Service, Simon Burns, and I will introduce
him in due course. Then the second panel session will
give us the ideas of what we need to take out – 20 per
cent, 25 per cent or 40 per cent or whatever the number
is – that we need off the budget, whilst at the same time
improving patient care. Again we need to decide
whether the new GP consortia will have the incentives
to do that and then lastly we will talk about competition
and its role in increasing innovation and driving value
through the system. We have to note that yesterday in
the FT the British Medical Association said that they
thought the new GP consortia would actually be a block
on competition because GPs tend not to refer,
particularly to the third and fourth of the sector so we
must talk about that.
166
www.reform.co.uk
So with all these developments I think we are doing this
just at the right moment and I am very pleased that we
are doing it today. Just so you know, we are recording
this conference as we have done for all of these
conferences, we will transcribe it and then send them in
to the Treasury as part of our submission to the
Spending Review. So if there is something that you want
to get off your chest for George Osborne to read or
Danny Alexander then just make sure you say it in the
questions and they will see it directly. Because this event
has some extremely generous sponsors we have been
able to produce it properly for a big senior attendance
and most importantly we are going to benefit from their
intellectual capital. Roger Taylor of Dr Foster
Intelligence, one of our sponsors, will speak on
managing budgets; Adrian Fawcett of the General
Healthcare Group will speak on healthy competition
and our other sponsor who is hosting this today, Bevan
Brittan. Andrew thank you so much for hosting us with
such great hospitality today. I’m sure you all know that
Bevan Brittan is a successful law firm that has three
specialties; one of those is healthcare and has become
one of the centres of thinking on the development of
health policy in this country.
So Andrew, can I kindly ask you to give your
opening thoughts. I’ll give you this mike to put on your
tie and then you’ll be properly recorded.
Andrew Manning:
Thank you Andrew, I would just like to echo his
welcome to a distinguished group of speakers and
guests. We have got a very full programme today and
we’re trying to keep things moving and I think we have
got about 100 people in a room designed for 80 so we’re
doing our best to keep it cool.
We are particularly delighted to host this. Bevan
Brittan and its predecessor firms have advised the NHS
since its inception on matters of governance,
procurement, people, property, you name it, issues
relating to the law, we’ve advised on it. So I think we are
very well positioned to
advise and support the
What can the health
development of health
market learn from other
policy, and the change
industries that are going
and challenges that the
through lots of change?
health market is going to
go through, that will be
discussed today. As part of our commitment we have
actually, earlier this week, offered Steve Hughes our
Head of Health on a free secondment to the Minister so
we do put our money where our mouth is to support the
sector.
We are also producing a range of legal briefings
on issues relating to the sector and if any of you would
like to get those, if you would leave your business card in
reception while we get coffee we can arrange for those
to be sent through to you. Now I guess I am a bit of the
warm-up man and I thought what can I contribute
today? Because I need to be honest with you, I’m not a
health specialist. I have run several businesses that
provide services to the health market. I am also not a
lawyer but what I have done is spent about the last 15
years managing service businesses of various kinds
going through change. What struck me reading today’s
themes. things about changing demographics in the
market, about changing customer needs and
expectations, about development of new services [break
in recording for a few seconds] … and managing a
budget, budgetary pressure, are themes that lots of
markets are going through and that lots of organisations
are having to face at the moment. So one point I think is
worth making is what can the health market learn from
other industries that are going through lots of change?
I also want to share with you an experience I had
in the health service last year. I had kidney stones about
nine, ten months ago and ended up going into the A&E
department of three hospitals within a two week period.
At the end of one I was given a customer satisfaction
form to fill in and it said, how well did we do? I suddenly
realised I was in a pretty unique position of having
experienced three hospitals in a short period of time so I
could actually comment and compare the different
hospitals. There is lots of best practice but my
experience was different in every single hospital, bits
were good and bits were not so good in each of them, so
there is a big opportunity to learn there.
Finally I would just like to talk about the whole
theme of change. That is somewhere where I have got
some experience and we need to think about people’s
desire and ability to change and that’s going to depend
on the attractiveness and the ability of the status quo
compared to the
Monetary cost and
attractiveness of the new
psychological cost, is it
model. Then people will
worth the pain of change think, well what is the
cost of getting there?
to get where we want to
Monetary cost and
go? Have we got a map
psychological cost, is it
to get there and have we worth the pain of change
to get where we want to
got leaders we want to
go? Have we got a map to
follow together?
get there and have we got
leaders we want to follow together? If we don’t think of
those things as well it won’t happen so again I put it to
you. We are going to have a lot of vibrant debates today
about medical solutions, about service solutions, there
are legal issues, there are practical issues, there is
ideological debate. Please don’t forget the issues of
change, because if we forget that and don’t have a
programme for change, all the good things you think of
won’t happen and won’t be delivered. So with that, I’d
like to thank you for all coming to today’s conference,
hopefully you will enjoy the experience of the day and
our hospitality here.
NHS: new health services
Patrick Nolan:
The challenges posed by the poor state of the public
finances are well known and so there’s no need to repeat
those here, but there’s also the challenges that the White
Paper have thrown out to us all, particularly with the
need to develop and think about the GP consortia. So
certainly change is going to happen, it’s just a question
of thinking about how we make it work and getting the
best out of it. We couldn’t have a better panel; we’ve got
Sam Lister from The Times, who’s been with that
newspaper since about 2000, and he’s done a lot of
work on the NHS as it’s gone through its good times
and its bad times. He has also focused a lot on the
potential of new technologies, which is very, very central
for change. We’ve got Sophia Christie, who’s the Chief
Executive of BEN PCT, that’s Birmingham East and
North PCT, who kindly invited me up to see an event
that they have been running over the last few days and
how that whole community is getting together and
talking about the need for change. There are some very
exciting things that are being done up there. We’ve also
got Dr Phillip Lee, who’s a relatively new MP, the MP
for Bracknell, so congratulations Phillip. Phillip also
brings a wealth of experience as a practicing GP, so it’s
so important to be able to cross both those worlds. And
we’ve got Cynthia Bower, who I’m pleased to hear has a
Birmingham connection, having both worked there in
health roles but also having graduated from the
university there, but for the last few years has been the
Chief Executive of the Care Quality Commission. So,
an excellent panel, but I’ll hand straight over to Phillip,
who will provide five minutes, so we’ll have five minutes
from each of the speakers. I’ll be relatively ruthless in
my timekeeping, and then after that we’ll go to
questions from the audience.
Phillip Lee:
Five minutes for me to talk about the National Health
Service, where can I start? Well let’s just start with who I
am. I’m a new Member of Parliament for Bracknell in
Berkshire and I’m also a practicing GP. By chance I
happen to practice in the same PCT region as my
constituency, which I think causes challenges for local
health providers because I don’t always accept the first
thing that’s said to me by the PCT or indeed the Chief
Executive of the NHS Trust, because I’ve already
experienced the reality. It’s interesting that you said it’s
important that I’m here today as a politician and as a
doctor. It’s also terribly difficult to straddle both
professions, because I think if I could redesign
healthcare, one thing I would do is de-politicise the
provision of healthcare. I know that’s not actually
possible, but it would be nice if we could take the
politics out of healthcare because I suspect the
healthcare that would be provided would be different if
politicians were not involved, but we are where we are.
Now I think its time, I’ve got a few minutes, let’s
set the scene here. Where are we now in 2010? Well
diabetes is getting more prevalent, 25 per cent by 2025
of the entire NHS budget. We have significant costs on
ischemic heart disease and things like vascular disease.
We have about three quarters of a million people with
dementia in the country, and they’re the ones we know
about, and its going to get worse. And we have about
20 to 25 per cent of our population, both men and
women, who have a BMI of 30 or more. So all those
things drive costs, and that’s before we’ve even started
talking about new drugs, personalisation of care, the
concept of, say, a drug that would work on my cancer
but not on Andrew’s. It’s quite a challenging future for
any healthcare system, let alone ours, to try and deliver
care that people are going to be happy and satisfied
with. I think the issue about change is quite key
actually because it’s an emotive subject healthcare. We
go through our lives and we don’t do anything and we
don’t have any interaction, particularly us men who
don’t tend to see a doctor from about 15 to 50, and
suddenly we need it. At that point it suddenly becomes
that much more important, and I think that is also a
www.reform.co.uk
167
Delivering a new health agenda / Reform
difficult thing to manage, because obviously people
view where their hospital is as being their blanket, their
safety blanket, it’s where they think they’re going to be
looked after the best, and the reality is that isn’t the
case always.
So just a brief summary of what we’re supposed
to be talking about in this session is the reconfiguration
of services – a great integration of services – and a
maximising of clinical leadership, with the impossible
hope of reducing costs and then increasing the quality
of care. Pretty challenging. All I would say in terms of
reconfiguring of services in hospitals, the direction of
travel for provision of care, costs are going up. Staffing
hospitals becomes ever more challenging. I suspect we
need fewer hospital sites but big centres of excellence at
points of easy access on the transport network. I think in
tandem with that one needs a community hospital
network, or a clinic, or a Darzi Clinic, or whatever you
want to call it. A provision of chronic care management
within communities closer to people. So outpatient
clinics, rehabilitation services after stroke, etc. I think if
we can get on that path and take people with us, and this
is where I don my politician’s hat, then we will get better
outcomes, better clinical outcomes.
Let me go to my local area. Bracknell doesn’t have
a hospital. My constituency doesn’t have a hospital
within its boundaries. Its been promised a hospital ever
since it was decided to be a new town in the 50s, and its
never going to have one because you need about
600-700,000 people now
to justify having a new
People view where their
hospital. So I had to sort
hospital is as being their
of campaign on the basis
blanket, their safety
of saying ‘No, you’re not
blanket, it’s where they
having a hospital’. Now
you’d think that that
think they’re going to be
looked after the best, and would have lost votes, but
fact my majority went
the reality is that isn’t the in
up 50 per cent on a
case always
notional basis. What I’m
trying to say is that a bit
of honesty can get you somewhere. The problem I have
is that I have a hospital trust serving my constituency
that doesn’t provide all of the services I think it should
provide, and I’m not alone in that. I’m not saying my
hospital is different to any other, but that is a problem
for me, because as a medical professional I want the
very best care for my constituents, but also I live in the
political reality of finite budgets and austerity etc.
However I draw upon that local knowledge and
provision of services and network of community
hospitals and clinics etc., and it’s upon that that I’ve
come to the conclusion that we need fewer hospitals but
in better locations.
And finally, because I know my time’s run out, the
White Paper, the idea of pushing money down to GPs
to commission services, is what we’re going to talk about
at length today. It’s a significant sum of money, about
£80 billion being put in the hands of GPs. Now the
conversations I’ve had with GPs so far have gone along
the lines that people are quite interested in doing it. Not
all practices are, that’s for sure. But those that have a
history of managerial excellence, of taking advantage of
opportunities in the primary care sector, are relishing
the opportunity. I think, to my mind, anything that
pushes money towards patients, as close to patients as
possible, gets my vote, gets my support. So in broad
168
www.reform.co.uk
Delivering a new health agenda / Reform
terms I’m in support of the Government’s direction on
this. I can see teething problems with practices that
don’t want to take part in it, and I think that has to be
thought through, and I passed on those views to relevant
people. But in broad terms it is a good idea. The reason
I think that it is, and it is the final thing I will say, is that
GPs are plugged in to what is needed in their area. And
you can travel. I’ve worked in 50 practices throughout
Thames Valley; you don’t have to go very far to go from
one population to another where there are completely
different needs. I work in Slough, and when you go
through Slough to Windsor it’s just like changing
country in terms of healthcare provision. I think that
you need that local knowledge in order to be able to
commission the appropriate services to serve your
patient population. So I think it’s the right thing to do to
push it down towards as low a level as possible, because
then you get more appropriate services.
Anyway, I could go on and on and on, and I
think its best I stop. I look forward to your questions.
Thanks a lot.
Patrick Nolan:
So now we’ve got Sophia Christie.
Sophia Christie:
I’ve been an NHS manager for about 23 years. Since
about 1993 I’ve been involved in GP commissioning,
working at the interface with GPs. First in the North
East and then across local government and the health
authority and primary care in Sandwell, which is a
disadvantaged community just to the west of
Birmingham, and then in Birmingham. I’ve always
worked primarily with disadvantaged communities, so
my perspective on commissioning is coloured by that.
It’s a different experience from what primary care and
health services might be like in Witney or Cumbria,
which I understand are the two models for how things
go forward, so bear in mind that perspective.
I’m not going to repeat what Phillip said, other
than to say we’ve got an NHS that became the NHS it is
at the point of transfer of voluntary hospitals in 1948
into a national system. We essentially nationalised the
hospital infrastructure. We left primary care as
independent contractors, private businesses. It put
hospitals and acute care absolutely at the heart of the
NHS, and that has deeply coloured all of our
understanding and conceptualisation of health services.
Our default position is that the NHS is the hospitals. Of
course, the reality that we all experience and that our
families experience is actually the majority of activity is
not in the hospital. Most of our experience of health
services is what happens in GP practices, buying
medication over the counter in the pharmacy, and
support from District Nurses, health visitors, and
physiotherapists in community settings. One in five
people are using a hospital at any point when all five of
them are using health services.
There are some real issues I think that are most
immediate, that are actually about how do we begin to
change our conceptualisation of health services in order
to be able to realise the benefits of what we can now do
and can do more efficiently and more effectively than
the infrastructure was designed to deliver? So that’s
about much more responsive services. Why do I have to
travel up to a hospital, either taking two or three buses
or struggling to find car parking in order to have a 15
minute interaction to tell me that I’m okay, when I could
get some bloods taken in the community? The results
can be posted on a secure site on the internet for my
doctor to check; when
my doctor could pick up
Why do I have to travel
the phone and have a five
up to a hospital, either
conversation with
taking two or three buses minute
the renal specialist about
or struggling to find car
what’s happening with
my creatine without me
parking in order to have
needing to go anywhere
a 15 minute interaction
at all. When I could have
to tell me that I’m okay,
my chemotherapy
when I could get some
administered at home by
a specialist nurse with an
bloods taken in the
excellent track record in
community?
safety. Instead I have to
go and sit with 20 other people in a slightly grotty
environment feeling very anxious, which isn’t going to
help my health outcomes and recovery. If we move to
that sort of responsive service then we do not need the
number of hospital beds, hospital outpatient clinics and
therefore the hospital infrastructure that we have at the
moment. We’ve got that interesting tension where we
have the public and patients that say what they want is
more responsive, more appropriate services, but are
genuinely afraid that means they then won’t have the
acute care available when they need it. And Phillip has
made the point already; the reality is that the sort of
acute care that does now operate in hospitals and is
needed really requires a much higher level of
infrastructure. It needs to be much more intensely
specialist and requires much more investment in
significant infrastructure.You know, keeping up-to-date
on the Limax, keeping up-to-date on the latest
radiographic imaging is very, very expensive and to get
the most out of it we need to concentrate it into
particular areas. We need doctors that are doing lots and
lots and lots of the same operation, seeing lots of people
with the same rare diseases in order to be able to treat
most effectively and appropriately.
So I think the case is made for change. The
challenge is how do we have that different conversation
with the public and with ourselves? Because within the
NHS we have got massive vested interest in maintaining
the historical infrastructure. That is the way to find a
consultant; I attract research money, I attract pharma
interest, I get to be flown business class to South Africa,
that is the way, if I’m a hospital manager, that I increase
my salary. Well I’ve got a really big budget and I’ve got
lots and lots of beds, but the whole way in which the
system is currently set up incentivises 1948, not 2008,
and that’s a real challenge for us.
I think that raises some very significant questions
about the environment we’re now going into. If that’s
the scale of the challenge, is that best done by
fragmenting commissioning? Can we really expect GP
consortia to be able to collaborate at a scale that will
allow them to take out swathes of infrastructure? My
experience of working with GPs has been some
fantastically innovative and creative people who
absolutely want to do interesting things. But they tend
to want to do interesting things for about 300 people at
a time and that does not allow the local hospital to
make changes.You can’t close wards, shut down
outpatient clinics, close entire sites on the back of
practices or even groups of practices making marginal
changes. Actually all that does is make the system more
inefficient. Part of the reason the NHS was so bloody
cheap is because we largely restrict the numbers of
contracts and the numbers of transactions in the
system through commissioning through larger bodies.
The moment we go back to the sort of activity we had
in fundholding, the administrative costs go up
significantly because you just need a whole load of
administrators to churn through the contracts. Now
that’s why the American system is 20 per cent
overhead, whereas we’re more like 8 per cent.
There are some real issues around this. Are we
going to be able to achieve scale in innovation that will
allow us to change infrastructure? Will GP consortia
engage in market shaping and alternatives to medical
intervention in the way that PCTs have been
experimenting with? Our experiences of innovation,
telephone based care delivered by competent or trained
nurses, consultant trained physiotherapists who are able
to do orthopaedic, triage conversion rate of seven out of
ten going through to surgery whereas GP conversion
rate is one out of ten, have been massively resisted by
the majority of our GPs, for very understandable
reasons. They believe that they, as medics, know best,
and have been quite concerned about the idea of
understanding the talent, skills and capacity of other
elements of the healthcare system. Hospital colleagues
are significantly resistant to chemotherapy at home.
One of them actually said to a commissioning manager,
‘Well I need my private practice, what I do is I offer my
private patients chemotherapy at home, what am I going
to do if you start doing it and if they can get it on the
NHS?’ There are some real issues around the embedded
interest in the system and how we might collectively rise
above that.
I think there’s some challenges in this as well as
some opportunities, and the opportunities are real in
terms of engaging that professional creativity and
imagination. But there are challenges around how do we
begin to do that at scale, how do we do it in a way that
really takes costs out of the system, and how do we use
the professional credibility of our medical colleagues to
lead that different conversation with the public? Just at
the point we potentially compromise that credibility by
associating them with budgets and with financial
decisions I think is going to be a very real challenge for
us all. Thank you.
Patrick Nolan:
Cynthia, okay?
Cynthia Bower:
Thank you very much. I couldn’t work out whether my
microphone was working or not.
Patrick Nolan:
Would you mind? Just because we’re recording.
Cynthia Bower:
Just talk amongst yourselves. Well I hope that works,
people generally don’t have problems hearing what
I say.
Well thank you very much for inviting me. I’ve
probably used up my five minutes now so I can sit
down. Thank you very much for inviting me, my name’s
Cynthia and I’m the Chief Executive of the Care
Quality Commission, which is the regulator for health
www.reform.co.uk
169
Delivering a new health agenda / Reform
and social care for England. I think the Birmingham
connection should be working well, because I think I’m
going to try and pick up actually where Sophia left off, if
that’s ever possible. The thing that I started to think
about, to think about what I was going to say this
morning is, well the
The opportunities for
opportunities for
redesign have been there redesign have been there
for a very long time, just
for a very long time…
in the way that Sophia’s
so why is it that we’re
described, so why is it
not making use of them
that we’re not making use
in the way that we can?
of them in the way that
we can? Rather like
Sophia, my background is in the health services, in
working with primary care and with GP commissioners,
and I am a fan of GP commissioning and I do think it is
going to make a difference, albeit I accept some of the
challenges it’s going to have to face. I want to say four
things; first of all that we need to strengthen the position
of the patient and their carers in the system. We all know
that the experience of being ill is a disempowering
experience, and there’s some evidence, and you would
imagine it intuitively anyway, but the more ill you are
the less you feel like taking control. So people, for
example, with a cancer diagnosis don’t necessarily rush
to the internet and start looking at the doctors that
they’ve been sent to, to see how competent they are.
One of the things that we’ve been focusing on as
the regulator is how we can, and this is the only plug I’m
going to give for CQC, both address the service user or
the patient, because of course we work in social care as
well. The patient is the main audience of information
about quality of care. How effectively we can get
information from them as a source of information about
quality of services that they’re receiving? From the
beginning of next year, we will publish, as much as we
can, live information about the quality of services,
starting with 400 NHS Trusts, so that the public will see
the information that we have, which is hundreds and
hundreds of data sources for the NHS. The information
that we have that makes a judgement about whether or
not the services that they’re receiving are good enough,
but also we’re working both with patients as individuals
and with various user groups. Of course we’re going to
acquire HealthWatch through the White Paper, so that’s
a very exciting opportunity for us to understand what
information patients want to receive and what will be
useful for them to look at on the internet, for example
that will help them understand about the quality of the
care they’re getting.
The first challenge around redesign is to what
extent are we genuinely engaging patients at that
decision making, and to what extent can we empower
patients through the system to make more effective
changes based on their own part? The evidence is that
they will make other choices or they make a different
range of choices, particularly in the field of social care
for example. And that’s the second point that I wanted
to make, that the NHS has much to learn from social
care, about the use of advocacy to support people
making choices. If you meet people who hold
personalised budgets in social care, and I meet them all
the time, the ones who’ve done it effectively are the ones
who are supported through local government advocacy
schemes or voluntary organisations to help them make
decisions about the care that they should be receiving.
170
www.reform.co.uk
Delivering a new health agenda / Reform
They help them make decisions about quality and
choice, range of services that might be available to them,
and to therefore help them make more imaginative
choices about what’s available. That’s my second point,
that if we are going to encourage people to make their
own choices and use the patient power to drive change,
then we’ve got to think a lot more about advocacy and
support for people in doing that. Macmillan Cancer is a
good example of an organisation that employs expert
patients, Cancer Voices, to support, to give advice and
advocacy support to people with new diagnosis of
cancer. But local authorities have done an enormous
amount of work in this area. Of course, GPs themselves
constantly act as advocates for patients in this area, but
we’re not going to leverage the patient voice and choice
in the way we need to unless we can think about ways in
which people can be supported to make those choices in
often very difficult circumstances. Most people go into
the healthcare system assuming that it is safe, it is a good
experience, that the doctor sitting in front of them is the
best possible doctor, or the nurse sitting in front of them
is the best possible nurse, and we don’t automatically
think about how we can make choices and exercise
control in that area. So how we support people to do
that is going to be incredibly important.
Now the third point I wanted to make, leading on
from that, is that the more holistic approach you take to
people’s problems, then the more imaginative solutions
you tend to come up with. Social care, for example, and
of course if we are going to redesign services we have to
think about social care in the way that health services
are formed. I was at a social care conference, I think it
was the day after the White Paper was published, and I
was on a panel, I’m always on a panel, giving forth my
random views on things. I was asked what the greatest
challenge was for the social care system, and I said I
thought it was GP commissioning and social care
getting hold of the possibilities of GP commissioning.
Then in the debate that went on, which for an hour,
nobody raised it, nobody. Social care is no more
accustomed to thinking about healthcare than
healthcare automatically thinking about social care.
Social care isn’t comfortable with the notion of care
pathways. The NHS loves care pathways, we’re very
happy when we’ve got someone on a care pathway,
going somewhere. Social care don’t like that. They think
it’s too limiting in terms of thinking about people’s
problems, it’s not individualised enough, and as a
system we’ve got very little information about what
good integrated care looks like. Now I know Sir John
Oldham’s done some work on this in the Department of
Health in terms of what key performance indicators we
might look at that show whether integrated care
pathways are working well. But at the moment we’re too
used to measuring success in terms of institutions and
we don’t really understand what good integrated care
looks like, because of care pathways.
Now, sorry, this is another CQC plug, we are
committed to looking at patient outcomes as the main
measuring tool, as the way we focus as a regulator, is to
look at what outcomes the care is achieving. It’s not in
the processes, but look at whether or not the care
people are receiving is the right care. And increasingly
trying to get information from patients and service
users about the degree of satisfaction with their care,
and whether or not they think the system was on their
side and working for them. Badly configured care
delivers poor outcomes for people. We see that
constantly in the State of Care report that will be
published in the New Year. We have calculated that
about £2 billion could be saved by the NHS if the
whole NHS reproduced the best discharge
arrangements from the best hospitals, removing the
duplicated costs in terms of occupied bed days in
hospital. So we can publicise the good quality of
care issues.
The regulators have been given huge powers by
government. We can close services down that don’t
meet the requisite quality standards. We’ve got
enormous powers to operate if we’re given the right
information, and clinicians can support us in
understanding what that information is about and
what are acceptable levels of care. But we constantly
see that we don’t get even the basics right of integrated
care. In the State of Care report we said that 50 per
cent of GPs who are still sending don’t get adequate
discharge information
from hospitals. Well
Badly configured care
when we set up
delivers poor outcomes
fundholding, the big
for people
thing the fundholders
were saying was they
wanted to get proper discharge letters and they’re still
not getting proper discharge information. We did some
work with nursing homes recently and one in five of
them said that they didn’t get proper information
about healthcare associated infections. So people are
moving in and out of nursing home care with
infections. And they weren’t getting proper
communications. They said the notes, clinical notes
from the hospitals, they never saw them. We really
aren’t getting the basics of integration right, even after
all this time.
The fourth thing I wanted to say is that we
should never make too many assumptions about who
the biggest users of care are and who we need to focus
on. When I was in the West Midlands with Sophia we
did a piece of work with UnitedHealthcare on risk
stratification of the population to see who the most
needy users of the healthcare system were. What we
discovered, it wasn’t elderly people with complex
co-morbidities. It was alcoholics and drugs users who
were chaotic users of the health service. I think our
most needy user was an alcoholic from Dudley who
was 40 times more likely than anyone else to arrive in a
local A&E. We have to think of very imaginative
responses to people like that. There are heavy users of
health services who we’re not necessarily thinking
about systematically. I saw a great presentation the
other day from a PCT in North Lincolnshire, where
they worked with a group of young people who were
literally going to A&E every day, who were serial drug
and alcohol abusers, and they set up an alternative
system. But of course it requires support from the
local authority looking at other opportunities for
people, housing, training, counselling services. It
wasn’t simply around health service response. Never
make assumptions that your service redesign is going
to focus on particular groups, there’s whole hosts of
needy groups out there that we’re not necessarily
automatically thinking about.
Patrick Nolan:
Sam Lister.
Sam Lister:
Thank you very much. I’m coming to the platform to
speak from the outsiders’ viewpoint on reconfiguration,
having not been involved in the politics. I’ve had quite
an interesting experience over the last three weeks
which has made my outsider’s position even more
outside, because I’ve been stuck on jury service at the
Old Bailey just across the road. So when the White
Paper came along I wasn’t reporting on it, I was simply
watching. I was with a jury waiting pool who were pretty
much a cross section of the population. It was quite
interesting because there I was, and I think they all
looked at me slightly quizzically after, because we had
everything from Heat to The Economist in the jury room,
and I was sitting reading a White Paper. I think my
views were taken slightly less seriously from that point
on, but on one of the juries I was sitting on, there were
several of them, and if there was any message that did
come out is that concise speaking is a fine art. What did
very much come out was on one of them there was a
nurse, and she saw me reading the White Paper and she
sort of said ‘Oh you’re interested in the NHS?’ etc. We
had a chat, and her response, and this was about three
days after the White Paper got published, her response
was ‘Well we weren’t expecting that were we?’ I was like
‘Well you work in the system and we’ve had a few
outriders from the Tories in terms of where we knew the
direction of travel might be’, and she was like ‘Yes, but
we really weren’t expecting that, we weren’t expecting
anything so radical, so ambitious’. Andrew mentioned
the most ambitious part of the public sector reform
agenda, and there are big issues that come with that.
We need the reconfiguration. We know that a
much more integrated system, as the other panellists
have sketched out, is absolutely vital. The issue that
come with it is cost, it always is. And you can argue
that when there’s a crisis moment, a financial crisis
moment as some of the politicians view it, there’s no
time for a novice. No wonder GPs are slightly anxious
at the thought of taking on sort of semi-CEO roles as
they envisage it in the new format that is a daunting
prospect. If I was a GP, say, for instance, in Surrey,
where there was a substantial health deficit, would I
want to be taking on a project that might have £50
million, £100 million worth of deficit on its books as
effectively a CEO persona? Absolutely no way, I
wouldn’t want to touch it, I’d be very happy with how
things are. There’s going to be problems with
engagement on that front. The other issue is that with
that sort of change you do get centralisation, however
much the Coalition Government insists that we do
want to devolve things away from the centre. When
you’ve got a change programme that is this radical,
people are going to need their hands held, people are
going to be needed to be guided. It is going to take
years worth of quite close monitoring and channelling
to be able to get that through. So that would be one
point I’d make.
The other thing is, just very simply, I think
everybody is agreed as to where the direction of
travel needs to go, it’s the extent of the vision that I
think is possibly the thing that concerns people, and
it does. You know, the GPs, as the people in the front
line of this are without question concerned. The
other issue that I find slightly concerning, and again
sort of speaking with a lay hat, is its very refreshing
to hear Phillip talking about the absolute obvious
www.reform.co.uk
171
Delivering a new health agenda / Reform
need for hospital reconfiguration. We do not need as
many DGHs, and DGH in the sort of Tory lexicon
has been a pretty protected species up until now. So
it’s refreshing to hear a little bit of that viewpoint
represented. I found it depressing that Andrew
Lansley came out and had the run-in with Richard
Sykes over the NHS London reconfiguration. That
actually is a reasonably well thought through project
that has had a lot of time and energy in it, and you
don’t really want to alienate all the people that are
pretty vital to doing these sort of reconfigurations
straight out of the trap. So we will have another
flashpoint coming up soon, because we’ve got the
paediatric cardiac surgery reconfiguration, where
there we have 11 centres around the country, exactly
as the rest of the panellists have pointed out, too
many of them. They need to be pooled, they need to
be merged, they need to have larger groups of
doctors seeing a larger patient caseload and have a
greater pooling of expertise. What that will probably
mean is things like the John Radcliffe Unit in that
very vocal, very middle-class part of Tory middle –
England will probably have to close. The local
doctors are not going to like it, the local population is
not going to like it, it should probably go to
Birmingham…
[Yes.]
…it should probably be incorporated into the
Birmingham infrastructure. But the issue that you will
then run into is that on the Lansley formula there will
be a lot of dissenting voices for that, and how does that
get implemented? I think there’s a few bad precedents
being set in terms of how actually some of the
reconfiguration will be brutal and it will, by its very
nature, upset people, but it is necessary.
My final little point would be that the media,
myself and my colleagues, have a big role to play,
because it will be big, glaring hospital closure
headlines when units merge. When is a merging not a
merging but a closure? And if you’re talking about
paediatric cardiac in Leeds and Newcastle and they
all have to go to one or the other, that normally gets
translated into ‘Well services have been closed in
Newcastle, services have been closed in Leeds’, they
may have actually been pooled. So we’ve got to be
quite sophisticated in the way that narrative is
conveyed to the public and that it doesn’t appear that
is just the pips squeaking and everybody slashing
and burning, because it’s not going to be like that, it
needs to be a fairly sophisticated dialogue.
Patrick Nolan:
Thank you. Now we’ve got about 20 minutes for
questions, so what I’ll do is I’ll take a group of three at
a time. If people want to put up their hands and we’ve
got a roving mic for this. And if you could say who
you are and where you’re from, and also, please,
could they be questions and not statements.
Andy Cowper:
Andy Cowper from Health Policy Insight. The White
Paper is betting on the three Cs; choice, competition
and commissioning. What is the panel’s evidence of the
effect of the three Cs on integrating care?
Patrick Nolan:
I think three Cs, yes?
172
www.reform.co.uk
Delivering a new health agenda / Reform
Pippa Anderson:
Pippa Anderson, health economist from Swansea
University. The White Paper mentions world class
healthcare, so can you say what is world class? Is this a
benchmark, and actually do you really need world class
healthcare? Is really quite good, good enough?
another independent board. I am somewhat concerned
about that, because that’s actually what the last
Government did ad nauseum in terms of it keeps
pushing away difficult decisions to ministers because of
fear that it would have political ramifications. So that’s
all I’ll say on the NHS Board.
Malcolm Durham:
Malcolm Durham, FD Solutions. The question seems
to still hang in the air, how can we incentivise
anybody to make these changes, and I wonder if the
panel or others would like to consider the position of
ordinary trustees, who would be the people making
the final decisions? They’re in the position of having a
lot of risk and very little to gain. Could they be
absolved of that liability or could there be a specific
programme set up that makes a directors and officers
liability protection, which is a known scheme within
the employment sector?
Patrick Nolan:
Sam, given the reference to the importance of good
journalism and incentivising could you maybe pick up
on that, and your feeling on some of the others as well?
Patrick Nolan:
Well three very good questions. Maybe if I start with
Phillip, how do we incentivise people to make these
changes?
Phillip Lee:
By people, you mean doctors, yes? Incentivising
doctors, is that right? Well ultimately, GP practices,
there’s a balance here. The great majority of GP
practices are in existence to provide the very best care to
their patients. But they are businesses, and ultimately I
think that the way this has to work is that people need to
get paid more money for taking on more responsibility.
So I hope within that budget, I truly do hope that the
very best GP practices with the best GPs, both clinically
and managerially, are going to get rewarded for taking
on this responsibility. The reason I say that is because I
know from experience that they will not employ
managers unnecessarily.
PCTs have employed in
In terms of world class,
excess of 20 per cent of
bring it on
extra managers in the last
18 months. And I’d just say, just in reference to
journalism, I look forward to hearing responsible
journalism on healthcare. I don’t see much evidence of
it. My local newspaper reported the White Paper as
being bad for jobs, which maybe asks the question ‘Well
I thought the National Health Service was there to
provide care, not provide employment?’ So I think,
going back to your question about choice and
competition, I think yes, but it’s got to be incentivised,
and yes, that’s got to be by money. In terms of world
class healthcare, I’d love world class healthcare,
particularly if I was to be diagnosed with cancer or just
had a stroke. I’d love to be nearby to a 24 hour manned
stroke unit, because I don’t live near one, and I would
love to be next to an oncology unit that was able to
prescribe the very best drugs for me, I don’t live near
one of those. So in terms of world class, bring it on. And
in terms of the trustees, I’m not so sure I understand
this question, is this more trustees at this new NHS at
the top, is that what you’re referring to? I’m not sure.
I’m not so sure I know enough about this issue to
comment to be honest with you. I personally, having
called for de-politicisation of healthcare, I’m always a bit
suspicious of taking significant decisions away from
politicians when it comes to and pushing it out into
Sam Lister:
Sure. I would love there to be as much responsible
journalism as possible. There is also the problem that
makes the point of the politicisation of the health service
and health issues, which I fear will become the norm for
closures in the health
Choice is always
service. It won’t actually
problematic because you be that the journalists
do see time and again, all quite often are reflecting
views of the local MP,
the polling suggests and all the
in the local community
the vox popping suggests group, campaign group,
that actually people in the etc. So I worry slightly,
end want to be treated at and also I do feel that the
example of
their local hospital down worst
politicising in the health
the end of the road
service was the Tories
over social care and the
death tax before the General Election, which I think
even Andrew Lansley himself would admit was pretty
much the low ebb of the entire social care debate. So I
would hope we can, if we can remove the politics out of
some of those decision making processes, one would
hope that journalism would reflect in a more balanced
form the actual calculations and why it seems the best
for patient care.
I mean, on the issue of how do we ensure that this
choice and competition etc. make for a more integrated
system? Choice is always problematic because you do
see time and again, all the polling suggests and all the
vox popping suggests that actually people in the end
want to be treated at their local hospital down the end of
the road. And also that GPs will refer to that local
hospital that they know well, and even if that local
hospital is not the best hospital and it is not going to
provide the most comprehensive and integrated care.
So that is a concern I think does need to be addressed,
and we need to work out a way of making the general
public more alert to and more educated about the sort
of complexities of the health system, and
communication I think is absolutely vital.
One of the things, I think there are many things
that are interesting and positive about the White Paper,
there are many big blanks, and one of the biggest blanks
I think is how all this data is conveyed back to the
general public? How do they make these choices, how
do they work out where they want to go for their
healthcare, how we can work out where the competition
is and how we fuel all that? It’s very difficult for them,
and Cynthia’s organisation plays an absolutely vital role
in that, and that is a more clear-cut way, but you have
things like the quality standards that are going to be set
out by NICE. I’ve asked Andrew Lansley ‘Where are
those standards going to be published, how will we see
who’s meeting those standards and who isn’t?’ and he
said he thought it might be put out by the NHS
Information Centre. I was like ‘Well they’re a pretty
small outfit and we’re talking about a lot of organisations
and a lot, 150 standards over the next five years, do you
really think its the NHS Information Centre, or was this
something that occurred to you in the last 20 seconds?’,
which I fear it probably was. I mean, those are the sort
of blanks, that sort of communication element is
absolutely vital.
Patrick Nolan:
Okay, Sophia, if you could pick up on that because I
think its one of the interesting things about what you’ve
been doing in Birmingham, communicating that
engagement?
Sophia Christie:
I would like to pick up on that issue of choice and its
relation to the competition and commissioning, and also
the issue about world class services. I think one of the
issues about getting the information out there is we
measure what we thought was previously important,
and we measure where we have previously invested in
our infrastructure. So we have a lot of data, not
intelligence, but we have a lot of data about hospital
based activity, because we collectively at the NHS
invested in expensive patient administration systems
through the 80s and into the 90s in hospitals. We did not
invest in the proper patient information systems in
community services, and they do not exist, and it is very,
very difficult to understand what is happening in the
community. So all of the guff that’s been talked in the
last ten years about NHS productivity going down is a
reflection of the fact that the expenditure’s gone up but
the only thing we can measure is activity in hospitals,
and given we shifted a shed load of it out of hospitals, it
looks like its more expensive. And for anyone who
knows anything about the system knows that that is not
intelligence, that is just data that hasn’t been very well
processed and there’s big chunks of it missing.
Cynthia has already talked a bit about the lack
of information, that’s the increasingly important
information, so what actually happens as a result of
activity. You know, payment by results is possibly the
greatest misnomer we’ve ever had, you know, its got
nothing to do with results. We have no idea whether
the fact that someone was admitted three times in the
last six months of life made any difference other than
disruption and distress to that experience. We have
very little information in the system about whether
patients feel better, and the information we do have
when we’ve done audits actually suggests that for
many interventions they don’t, increasingly the
proportion of patients who are satisfied after a
cataract operation is
limited. We know that
Payment by results is
there’s all sorts of issues
possibly the greatest
surgery,
misnomer we’ve ever had around
prostatectomies, and the
extent to which men going for that surgery
understand what the possible downsides may be,
which are in many cases very likely, and then real
distress after surgery when they discover they’re
impotent or incontinent. So real issues about how are
we framing interventions for patients. Do they really
understand what they’re consenting to, have we got
information in the system that tells us that was really
www.reform.co.uk
173
Delivering a new health agenda / Reform
a good value intervention, and how do we begin to
gather that? Some of the attempts that have been
made in the last couple of years are very, very limited.
The National Patient Survey, I have to say, I don’t
think it’s worth the paper it’s written on. You send out
a 20 page document to semi-literate populations, of
which, I mean, I’ve had to fill in one of them and I
found it difficult, you know, I’ve got two degrees, yet
it’s a completely ridiculous way to try and seek
feedback and information from people.
We’ve been experimenting in partnership. We
have a partnership with Dr Foster Intelligence which
is called Prime, which is a programme for
relationships, intelligence, metrics and equality. It’s
targeted on tackling
inequalities, and we’ve
We have got to be very
been trying to look for
creative about how we
in which we can
engage with people, how ways
generate both more
we understand who our
intelligence locally
target audiences are, and which is meaningful,
which really tells us
how we frame the
we need to know
communications for those what
to make decisions.
different audiences
We’ve also tried to use it
as a way of thinking
about how we build a different relationship with our
public and patients, and I think that’s the area where
we really need to start thinking about choice, and
choosing off their menu of providers is largely
meaningless for most people who are using services.
We’re still talking about the majority of users being a
generation who do default to the local hospital,
absolutely in good faith, that they believe that every
doctor is exceptionally good and will work in their
best interest. It’s great they have such faith, but it is
not going to make them very informed consumers.
What they’re much more interested in and feel much
more capable is engaging in the conversation on is
the style of service, and how they want to receive it
and what it might mean for them, and I think that
links back to Cynthia’s comments about advocacy
and how we frame information. You know, we not
only have a local kind of average reading age of The
Sun, which is about age six, we also have innumeracy
levels at the same level. Most people don’t
understand what a percentage is, so there is no point
us giving information about percentages.Hospital
standardised mortality rates anyone? How
meaningful is that to most of the population?
If we’re serious about this, then we have got to
be very creative about how we engage with people,
how we understand who our target audiences are,
and how we frame the communications for those
different audiences. The conversation I would have
with one of the guys, I think he was probably about
18 years old, who’s already significantly dependent
on alcohol, needs to be a very different conversation
about health and health services than the
conversation that I had with the 80 year old who’s just
fractured a little femur. So thinking about who are
our populations and how do we engage with them, is
a real challenge going forward.
Patrick Nolan:
Cynthia, do you want to pick up, we’ve got a few
minutes if you want to pick up on the advocacy issues?
174
www.reform.co.uk
Delivering a new health agenda / Reform
Cynthia Bower:
I’d hate my remarks to go unrecorded in the case study.
I’d better have something interesting to say. Again, just
picking up from some of what Sophia said, I mean, I
think the issue about choice is terribly, terribly
important. I think we sort of trivialise it at our cost
really, but what’s important is the sorts of things that
people want to have choices about. I completely support
what Sophia was saying, what elements of choice do
people want to exercise, because often its not an
assumption that the doctor will be fine, its not that, its
about different elements of the treatment and what’s at
home and what are the professionals as part of multidisciplinary team that are working with you. So I think
aspects of choice are subtle things that we need to work
through and will mean different things to different
people and different generations and different
communities. I completely support Sophia on that, but I
also want to go back to this question about world class,
which someone made. I think the answer, of course we
want it, has to be ‘Yes, we absolutely want a world class
service’. When I get my cancer, as I undoubtedly will,
the last thing that I want
The great majority of
to hear is that the hospital
I’m going to is sort of
doctors are good
to some sort of
professional people doing staggered
regional average in terms
outstanding jobs and
of its ability to save my
not being paid enough to life or the one year
do it, working in the most survival rates, and
we’ve got
impossible circumstances, actually
fantastic data on cancer.
both in hospitals and
So yes, we absolutely
clearly in practice, and
should aspire to be world
class, and I think that is
I think everybody in this
what plays back into the
room should remember
choice question. What
that at all times
are the things that you
absolutely should be able
to take for granted about your service, the service that
you’re getting, and what things should you be able to
choose? I think the sort of playing off one doctor against
another isn’t, that’s not the decision we should expect
someone to have to make. And actually the system, just
sticking with cancer for a moment, the system knows an
enormous amount about cancer services and what does
and doesn’t represent acceptable care. So are we going
to be blind enough to say ‘Well actually…’ As I said, the
regulator’s got the power to shut down services more
rapidly than any other part of the system ever had, so
are we going to be blind enough to say ‘This level of
care is unacceptable. Its not the question of you making
a choice, the system will decide for you, but that hospital
can’t go on giving that sort of surgery or we can’t treat
that very rare cancer because its just not good enough
any more’, and that shouldn’t be a choice you make, that
should be an assumption that you can make that the
system is working for you, and that’s the bit that patients
have got to really understand.
Patrick Nolan:
And Phillip, I’ll give you one and a half to two minutes
for your final view, then we’ll be finishing on time.
Phillip Lee:
Well thank you for that. I didn’t go into politics to
defend my profession, I’ll just say that up front, but I do
feel, I’ve just detected a tone about medics, and it rather
does annoy me, I’ll be honest. The great majority of
doctors are good professional people doing outstanding
jobs and not being paid enough to do it, working in the
most impossible circumstances, both in hospitals and
clearly in practice, and I think everybody in this room
should remember that at all times.
The key here, and I think this is the key in the
medium to long-term, I’ve not heard it mentioned
here, is that we’re not talking about where demand is
coming from. My God, it would be so easy just to
keep talking about how many different systems one
can construct to get even more blood out of that
stone. The reality is, it’s about demand, which is why
I am encouraged by Andrew Lansley’s team talking
about public health, but can we also talk about
personal responsibility? We all have a responsibility in
this room and in the wider population to take
responsibility more for our care, and we should start
talking about that. It’s all a bit mad, listening to these
contributions, and I’m thinking ‘For crying out loud’.
Most people, the great majority of people that I treat
in Slough are in social classes four and five, are quite
capable of making decisions about their healthcare.
Let’s not worry about whether they understand
percentages or not, they understand what its like to
be sick and how they become sick. Let’s start trusting
people, trusting patients to make decisions on their
behalf, instead of just keeping people trapped in this
post-war sentiment utilitarian attitude towards the
provision of healthcare. Times have changed; times
are a changing as Bob Dylan said. You know, we
haven’t got a choice, costs are going up inexorably,
we’ve all got to start taking more responsibility for
our actions and for our lives, and if you treat people
like that they will behave appropriately, because they
do when I do as a doctor. Can we remember that
when we’re spending the rest of the day talking about
the National Health Service, patients can look after
themselves better than they’re given credit for.
Thank you.
Delivering a new health agenda
Andrew Haldenby:
As I said at the beginning, this is the fourth in a series
of conferences we are doing after the election to bring
people together. The first with Iain Duncan Smith on
welfare, then Nick Gibb on education, Francis
Maude on public sector productivity and now
yourself on healthcare. Clearly for a think tank it is
just wonderful that Ministers see the benefit of
coming to an audience like this. Not only, I’m sure, to
get over your message but also to hear from a very
informed group the questions that they may have and
the ideas that they may have, so we are extremely
grateful because I know how impossible your diary is.
For those of you who don’t know Simon Burns,
Simon has been a member of Parliament since 1987
but, much more importantly, he has been at the front
line of the political health debate for most of his
political career both, of course, formerly as Minister,
also as a member of the Health Committee, and as
Shadow Health Minister and now as Minister of State
for Health Services. Simon, as I say, we are delighted
you can give us this time so will you please give us
your thoughts and then we’ll have a short Q&A.
Simon Burns:
Thank you. Can I first of all say that I am delighted to
be here, particularly as it is the first time that the
Department of Health has had the confidence to let me
out of their office. [Laughter] I am also pleased to be
here to talk about one of, if not the most, radical
devolutions of power in the history of the National
Health Service, away from the state and down to
doctors and nurses on the front line and down to
patients in the consulting rooms.
This Government was elected on the principles of
freedom, fairness and responsibility. Last week’s White
Paper set out how we will bring these principles to life in
the National Health Service. The combination of the
Conservatives’ belief in the power of personal choice
and empowering patients, blended with the Liberal
Democrat belief in local democracy, will create an NHS
which focuses on quality, on patients and on value for
taxpayers money and an NHS which delivers outcomes
for patients which are amongst the best in the world.
Before I turn to the detail of how we will liberate
the NHS, I want to deal with one issue which casts its
shadow over everything and that is the economy. We set
ourselves the ambitious but desperately needed goal of
slashing the budget deficit so that by the end of this
Parliament debt is falling and not rising. The Prime
Minister and the Chancellor have set out clearly the
scale of the financial challenge. This year’s budget
deficit is projected to be £155 billion, about as much as
we spend on the NHS, defence and transport
combined. But think for a moment about our total debt,
if we include the money used to bail out the banks, the
UK’s net public debt is currently £903 billion or almost
two-thirds of the UK’s entire economic output. That’s
why we’ve got to act. If we delay we only store up
problems for the future. If we delay we only pay more,
up to £70 billion in annual debt interest alone, more
than the entire education budget in this country. But
most importantly, if we delay, it will not be us that are
left with the debt but our children and our
grandchildren. We have lived beyond our means for far
too long and the time has come to face up to our
responsibilities.
The budget has already set the direction and later
this year the Spending Review will provide the detail.
On average, government departments will need to make
savings of around 25 per cent, health however is
protected. Some may question the rationale behind this
but I passionately believe that protecting the NHS
budget is the right thing to do. To govern is to lead, and
in difficult times leadership means making difficult
decisions about the priorities of the nation. We place
health firmly at the top of that list of priorities.
Protecting patients is essential but protection for
patients is not protection
I passionately believe
from reform. We do not
equate health protected
that protecting the NHS
status with an attitude of
budget is the right thing
inaction; it’s not a case of
to do
seeing the difficult
decisions of how to save
money, how to do things more efficiently or not at all, as
being somehow not our problem. Nothing could be
further from the truth, as our White Paper
demonstrates.
The NHS is a demand-led service. If you’re sick
or need help the NHS will provide. Need, not the ability
www.reform.co.uk
175
Delivering a new health agenda / Reform
to pay, is one of the fundamental tenets of health
service, but the cost of providing this service is high and
rising. The price of new drugs, new treatments and the
latest technology on top of an ageing population means
that spending on health and social care has increased
faster than spending on other public services. Since its
birth, the National Health Service budget has risen by
over 4 per cent each year in real terms. Such increases
quite simply are no longer possible, this means that the
NHS even within the context of a protected real terms
budget, must find significant efficiencies simply to stand
still. Sir David Nicholson, the NHS Chief Executive,
estimates that without reform we could need up to an
additional £20 billion a year by 2013/14 simply to meet
expected demand to the
same standards as today.
We will not go down the
There is a practical
path of paying for
imperative for the NHS
healthcare or an insurance to become dramatically
system, with all the
more productive and
more efficient. As a
transaction costs and
inequalities of access that consequence, the way we
run the NHS is going to
that will result
change profoundly in the
coming years but one thing will remain the same – our
commitment to the values of the National Health
Service. Healthcare available for all, free at the point of
use and based on need and not the ability to pay; values
that have guided the NHS since its birth. We will not go
down the path of paying for healthcare or an insurance
system, with all the transaction costs and inequalities of
access that that will result. For over 60 years doctors and
nurses, scientists and technicians and civil servants have
breathed life into those values. All have worked hard to
deliver a National Health Service that we can all be
justifiably proud of. Their dedication and expertise is
recognised and respected the world over and this hard
work, coupled with the massive rise in investment, has
brought significant improvements. More doctors and
nurses, more and better equipped GP practices and
hospitals, but investment alone is not enough and the
increases we have seen in the last few years have not, I’m
afraid to say, been matched by a corresponding
improvement in productivity or in what is most
important of all, health outcomes.
While spending on healthcare has more or less
now reached the European average, the standard of
healthcare sadly has not. Despite everything that the
previous Government did, survival rates for cervical,
colorectal and breast cancer are amongst the worst in
the OECD. We are on the wrong side of the average
for premature mortality from lung cancer and heart
and respiratory diseases. And you are more than
twice as likely to die from a heart attack in the UK
than in France. Patients deserve better, the NHS can
be better and with the reforms that we have set out, it
will be better.
The White Paper, Equity and Excellence: Liberating
the NHS will create an NHS with a single clear-sighted
mission to lift health outcomes so they are amongst the
best in the world. It will achieve this through a radical
shift in power away from Westminster and Whitehall
down to patients and professionals. We need a resolute
focus of attention and resources on results, not on
measuring inputs or processes but a rigorous, consistent
and long term focus on improving clinical outcomes.
Far too often the philosophy of emphasising process
176
www.reform.co.uk
Delivering a new health agenda / Reform
and output targets has distorted the clinical judgements
of doctors. We will focus on what is really important:
clinical outcomes.
Of course processes are important to improve
outcomes but it must be the end result that we, on
behalf of patients, measure and reward, not the means
and mechanics of getting there. We will get rid of all
politically motivated process targets not backed by
clinical excellence, we will focus on the outcomes that
matter, and those that support clinical results not distort
them. In place of endless prescriptive top-down targets,
we will support high quality care and services, a range
of quality standards prepared through NICE and will
act both as a best practice guide for clinicians and as a
means of holding them to account. NICE has already
published the first three quality standards – for stroke,
dementia and thrombo-embolism – and it will produce
around 150 more over the next five years and these
quality standards will cover social care as well as health.
The care that will be rewarded will be the best
overall care for the patient, not simply the best care
provided by a particular speciality. The impact of these
quality standards will be felt throughout the NHS.
While services will be local, the quality standards mean
that the health service will remain national. They will
mean that patients can expect the same high standards
of care wherever they are in the country. They will be
used by commissioners when they plan and commission
services, they will feed into contracts with providers,
they will enable providers to be rewarded when the
quality of their care is excellent, penalised if it is poor.
But the change goes beyond a technocratic focus on
clinically agreed care pathways; the White Paper also
heralds a new era of patient power.
As all good professionals know, the outdated
paternalistic caricature of Dr Finlay’s ‘doctor knows
best’ attitude is out of keeping with the modern
provision of healthcare. The patient must be central to
all decisions taken about their care. To put it another
way there must be no decision about me without me.
This isn’t just a cosy sentiment, the evidence from
around the world shows that involving patients in their
treatment improves the effectiveness of that treatment,
increases the understanding of their condition and
boosts their satisfaction.
Patients will have more control over their own
records, with the support of their doctor they will be
able to choose their provider, their consultant-led team,
their GP practice, their treatment, where clinically
appropriate, and a host of other things. To help them
make these decisions and to help clinicians to respond
to their decisions, they will have access to a huge
amount of easy to understand data published online.
Over the next few years patients will experience an
information revolution and all the way the voice of
patients will help shape local services. LINKS, the local
involvement networks, will become HealthWatch, giving
patients a far stronger voice, funded by, and accountable
to, local authorities. They will make sure the views of the
public are heard when services are designed and
commissioned. They will help people, especially the
vulnerable, to make the most of the choices available to
them. HealthWatch will be a new local consumer
champion supported by HealthWatch England within
the Care Quality Commission. Both will, for the first
time, give patients and members of the public more
powers of scrutiny over local health services.
The title of the White Paper is, as I said earlier,
Liberating the NHS because that is how we will achieve
the real gains. We will liberate clinicians from top-down
targets and endless micro management from, well,
people like me! We will create an NHS run by
empowered professionals, free from the shackles of
central government. The NHS has received massive
investment but it is also drowning in bureaucracy, we
will cut the red tape and sweep it away, letting NHS
professionals organise themselves locally. The
responsibility of designing, commissioning and paying
for local services will be given to groups of GP
practices. This will ensure that the decisions are
clinically-led, involving all other healthcare
professionals, hospital consultants, nurses, social care
workers, to design services that put patients first and are
focused on improving clinical outcomes.
When GPs are commissioning services they
will be able to do so, where appropriate, from any
willing provider. This will introduce a new level of
competition, it will stimulate innovation and increase
productivity within what will become the largest
social market in the world. The way we pay those
providers will change. We are designing a new, more
transparent, comprehensive and substantial system of
payment, and one that incentivises quality, efficiency
and integration. Money will follow the patient,
creating a huge incentive for providers to constantly
improve the quality of care and, as a recent report,
Death by market forces: Reform, Competition and Patient
Outcomes in the NHS, concluded, the effect of
competition is to save lives.
Within this new environment, the role of
Monitor as an economic regulator will be vital. It will
act to ensure free and fair competition within the NHS
social market, regulating prices and investigating both
providers and commissioners who act in an anti
competitive way. Local government will also have a
greater role with local democratic accountability
introduced to health service decision making for the
first time in almost forty years. Local authorities will
help to join up the commissioning of local NHS, social
care and public health issues and services.
The changes set out in the White Paper will have
a profound impact on the way that healthcare is
organised and delivered
When GPs are
in England. To improve
commissioning services health outcomes we
they will be able to do so, must also instil a new
culture of value and
where appropriate, from
productivity within the
any willing provider.
NHS. These reforms are
This will introduce a new necessary in themselves,
level of competition, it will we would be making
whatever the
stimulate innovation and them
financial circumstances,
increase productivity
but the economic
backdrop will provide
within what will become
the largest social market added impetus to them.
We need to fashion a
in the world
vibrant, creative NHS
full of ideas about how
to improve quality and at the same time reduce costs.
The incentives in the system that I have already
mentioned, a massive increase in information and
patient choice, a move to any willing provider and
transparent payment system, will over time have a
significant impact on the NHS and on productivity but
in the nearer term we can do a great deal to cut
bureaucracy and increase efficiency.
Over the next four years we will reduce NHS
management costs by more than 45 per cent, cuts on
this scale don’t mean shaving off a bit here and a bit
there, it requires a whole new approach to NHS
management. PCTs along with their £1.5 billion a year
administrative costs will go with the arrival of GP
consortia, SHAs will be
Regrettably, this will mean abolished and the
Department of Health
unavoidable job losses
functions will be
but we are doing all we can NHS
radically scaled back.
to minimise their number Regrettably, this will
mean unavoidable job
losses but we are doing all we can to minimise their
number. The two year public sector pay freeze for
everyone earning over £21,000 while difficult for some,
will help us to save around 150,000 jobs, jobs that will
concentrate on the front line rather than in management
or in administration.
This White Paper focuses specifically on the
NHS but our ambition reaches far beyond it. By the end
of this year we will publish a public health White Paper
and next year a social care White Paper. They will set
out our plans to integrate the NHS and social care and
to create a Department of Public Health, changing the
very shape and definition of healthcare in this country.
Last week we set the goal, this week we have started the
work. We have now launched three consultations on
commissioning, the outcomes framework and local
democratic legitimacy. They will start the process of
filling in the detail of our proposals and signal the way in
which they take reform forward. Every step of the way
we will involve the public, NHS and social care staff,
local authorities and other interested groups to create an
NHS that is genuinely responsive to people’s needs and
properly grounded in the evidence of what works. As
leaders in your field, I would urge you, every one of you,
to grasp this opportunity to contribute and help shape
the NHS for a generation.
Let me be clear, reorganisation on this scale will
not be easy, it will not be painless, but neither the NHS
nor the patient, nor the taxpayer, can afford the costs of
the current bureaucracy. In the coming months, the
Secretary of State and I and other Ministers and clinical
leaders will travel the country seeking, first-hand,
people’s views about our plans. Like all other public
services, the NHS must re-examine every aspect of
everything it does, the only difference is that by
protecting the NHS budget and reinvesting any savings,
we will ensure it is not the sick who are asked to pay the
massive debts left by the last Government. Our
ambition remains undimmed despite the economic
climate and we need to keep our eyes on the prize. An
NHS led from the front, patients in charge of their own
care, every penny spent going to where it belongs on
front line patient care and most of all, healthcare as
good as or better than anywhere in the world. Thank
you very much.
Andrew Haldenby:
Simon, thank you very much indeed. A real tour de force
which gives us a sense of the scale of the challenge as
you see it and also your desire to generate new ideas.
This is the beginning of the journey of new ideas that
www.reform.co.uk
177
Delivering a new health agenda / Reform
are needed to see it through to the end, so thank you so
much. Let me take questions in threes. A forest of
hands, the first one went up at the back and then the
person with the laptop and there. And will you say who
you are and where you’re from.
Stephen Hughes:
Stephen Hughes from Bevan Brittan. One of the more
controversial parts of the White Paper is around the
creation of GP commissioners, I wonder if you could
try and paint a picture of what some of these
organisations might look like? I am particularly
interested in some ideas of the size and structure, do
you see these public or private organisations, what sort
of premiums or incentives these organisations might
receive, and the magnitude of what those premiums
are going to be. Lastly, could you make a comment
about how you think these organisations can manage
the performance in terms of GPs themselves unless
they have the ability to be able to exclude practices
from consortia?
Andrew Haldenby:
Thank you, the gentleman at the front typing away.
Andy Cowper:
Andy Cowper from Health Policy Insight. Minister, you
are aware from your long understanding of NHS issues
that the big issue that the NHS continues, and fails, to
face is variation in clinical outputs. Can you explain
where in the new system the monitoring and measuring
part of the outcomes will sit? Why will it be more
effective than all the mechanisms that haven’t worked so
far?
Andrew Haldenby:
And then just in the front row there.
Audience Member:
You talked about difference between policy and
competition; can you clarify how that works?
Andrew Haldenby:
Over to you Simon.
Simon Burns:
If I can take the first question first, obviously. Part of the
answer to the question, and I’m not ducking this, is that
there are five documents flowing from the White Paper,
three have been published already and we need to
conclude the consultations on the GP commissioning
document before we can give you some of the answers.
You said how big, how many? The answer as of now is,
‘I don’t know’. We will wait till we have concluded the
consultations and I suspect that it will evolve and it will
become apparent as it takes shape. We’re not going to
lay down a straight-jacket and say there have got to be X
numbers of doctors or doctors practices in each
consortium, it will flow and we will be established there.
Who will be working in these consortia? I assume
that what will happen generally is that the GPs will use
consortia to do the work for them through their
guidance and their needs, rather than GPs themselves
sitting there commissioning themselves, for very
obvious reasons.You asked who’s going to pay for it,
what money in effect are GPs going to get for it? Again
that is an area where there will be negotiations with the
178
www.reform.co.uk
Delivering a new health agenda / Reform
BMA and at this point it is far too premature to say
what the outcome will be of that. It is something to
discuss and that is the way forward.
Your last question, if I can read my appalling
handwriting, it begins with an M, the second word is P
and GPs, can you help me?
Stephen Hughes:
How will you control poor performance by individual
GPs?
Simon Burns:
Partly, I mean, there is a series, partly through the
consortia themselves because particularly if GPs are
joining together into, consortia then appointing
professionals to do the work for them. Partly through
that but also through the National Commissioning
Board and through the involvement of local authorities,
who will now for the first time have more of an
involvement and responsibility within health rather than
simply public health So there will be those three strands
and there will be pressures in other ways from patients
themselves as more and more patients become more
and more informed and more and more involved in
expressing their wishes and their direction of travel in
their own healthcare requirements.
How are we going to judge outcomes, which was
the second question. It will be done primarily through
the NICE standards which I spoke about. These will
differ from the existing targets in that the target culture
we have at the moment, too many of them are not
clinically based. They were taken on political grounds
for a situation 13 years ago when the incoming
Government made priorities. They identified priorities
of where they wanted to go as quickly as possible,
particularly in the area of waiting lists and waiting
times and they adopted
an approach that was in
One of the more
many cases not linked to
controversial parts of
justification but
the White Paper is around clinical
to a political agenda. In
the creation of GP
that respect I can see
commissioners, I wonder where they were coming
if you could try and paint from given where they
at the time. We
a picture of what some of were
reject the view that you
these organisations might should have targets that
were based on politics
look like?
rather than clinical
decisions. Certainly, from the experience of Andrew
Lansley and the Shadow Ministers during the time
that they were in Opposition and travelled round this
country, the message they got time and time again
from clinicians, GPs and nurses that they met in
hospitals and other heath service settings, was that the
targets were distorting clinical decisions and were
distorting the way in which the system should run. We
believe that clinicians should be freed from that
straight-jacket, from that interference from the
Department of Health and the NHS at a national level
and be able to reach their decisions on clinical
priorities and on what we believe are the best interests
of patients. That is why we are reviewing and at the
moment are adapting and relaxing some of the targets
and we are keeping others. Where there is a clinical
justification for a target, for example the two week
cancer rate target, we will keep that.
Now when the Commissioning Board is set up in
two years time that may be fine tuned, it may be
improved if the clinical evidence suggests it should be.
That will be a matter for the National Commissioning
Board, it won’t be a matter for me and my fellow
politicians in the Department of Health to interfere in
that; it will be done on a clinical basis by the National
Commissioning Board.
On the question of tariffs and the ceiling, the tariff
will remain as the price but there are possibilities that
once up and running in reality, the prices might through
competition be forced down and that is what I meant
when I was referring in my comments.
Andrew Haldenby:
I am just going to take two more because of time.
Simon Hill:
Simon Hill from Cerner. Minister, you talked about an
information revolution
Whose job is it to make
and clearly there is a raft
sense of that information? of information already
around, there is going to
be more information around. Whose job is it to make
sense of that information? Is it the government, is it the
private sector like Dr Foster or is it the patients and
the doctors?
Jerome Burn:
Jerome Burn of the Daily Mail. We heard earlier on talk
about how we have very poor information about
outcomes from one of the speakers in the first section,
information like what goes on in hospitals, to know what
patient outcomes are like, what they do about it, how
well they do or have done. I am just wondering how you
are going to make a judgement on outcomes rather than
on targets with this apparent lack of information which
even if we are going to start gathering this is going to
take quite a bit of time?
Simon Burns:
Can I answer the questions in reverse? There are patient
surveys and as I heard when I came in from one of the
speakers on the panel, some of the information asked
and the way it is asked is convoluted and is difficult. We
have to have information gathering, particularly amongst
patients, that is easily understandable, that is not like
filling in a benefit claim form that is 60 pages long where
people fall asleep half way through it.You have got to
engage people so that they are enthusiastic about sharing
their experiences, their views on the way they were
looked after across the whole range, not simply medical
decisions but also the environment of their stay, if it was
in hospital overnight or whatever.You can do that if you
make it simple and relatively short but not by cutting
corners so that you don’t actually get the relevant
information that is then of benefit to other patients, who
may want to look at it before reaching any decision when
they’re exercising choice, and also that the National
Commissioning Board in the future and the health
service itself knows. So that is my answer to that.
On the question of outcomes, as I said earlier, NICE
will be establishing standards across the range. They
have done three so far on dementia, stroke and TE, and
there will be about 150 more over the next five years
which will be a kind of benchmark that the analysis and
the judging of outcomes will flow from.
On the question of information, you are absolutely
right, there is going to be an information revolution
because, if you want to empower patients, and also
those organising and running the service, you have got
to have the available information to reach and take those
judgements and decisions. There is a significant amount
of information gathered already by the NHS, it will be
looked at to see what is relevant, what is there just for
the sake of collecting information that is irrelevant,
never used. We will then chop and change, get rid of that
sort of information gathering that isn’t relevant,
substitute information where we feel there is not
enough, to improve our knowledge and our ability to
take decisions. If we are going to publish it for patients,
in particular, notwithstanding the comments of the lady
talking on the panel that most people are at the level of a
Sun or Mirror reader, if that isn’t being unfair and
misquoting her. My experience as a constituency MP is
that people aren’t quite at their level, I am more
optimistic about people’s ability to assimilate and make
judgements, but it has got to be in simple, easily
understandable languages and tabulations so that they
can go to whatever is of their particular interest. So
whether a hospital has a good reputation for cleanliness,
the quality of the service, the waiting times, etc, etc.
That, I think, will build up a change of attitude and
culture that has begun up to a point with Choose and
Book but is still at its early stages and is to many a new
concept. At the moment, when they go to visit their GP
they place a considerable amount of reliance on the
information and guidance and advice that the GP gives
and that’s absolutely fine, that’s no criticism, but that is
because they are not used to the culture of reaching
their own decisions. Choose and Book has helped to
develop that to a point but we want to see it far more
widespread so it is an ingrained part of the culture and
the experience of interfacing with the NHS.
Andrew Haldenby:
Great, well we’re going to have some coffee now. I am
not going to keep you too long from your busy diary. So
Simon, if you can stay on your way out please do but if
you have to rush off, of course please do. On all of our
behalf, it is very exciting actually to listen to you set out
your position, the Government’s position at the
beginning of this remarkable period of change. I don’t
know if you were trying to get a headline with the phrase
‘The largest social market in the world’, that would be a
change for the NHS but that’s what you said you want.
You couldn’t be clearer that you want not just the help
of the people in this room but other people around the
health world to help you to respond to the consultations
that you described and not to stop there but to keep on,
so I hope Reform can do that and I’m sure everybody in
this room will help with that. I really do think the scale
of this challenge, the deficit challenge that you set out is
so great that as well as the expertise in this room, we do
need Ministers to come and engage and to lead the
debate and you have done that today, so thank you.
Managing the budget
Andrew Haldenby:
So let me very quickly introduce yet again an excellent
panel. Stephen Dorrell, the Chair of the House of
Commons Health Select Committee, will begin.
Stephen is a former Secretary of State for Health and
www.reform.co.uk
179
Delivering a new health agenda / Reform
someone who kept up to speed right at the heart of the
public services debate whilst in Opposition. I think he
has already signalled that he wants the Health Select
Committee under him to be a generator of ideas for
change. Roger Taylor is the Director of Public Affairs at
Dr Foster Intelligence and before that he was a
correspondent for the Financial Times both in the UK
and the US reporting on information technology.
Everyone here knows the huge amount of good that Dr
Foster does in the healthcare market. Nicolaus Henke is
the Director and Head of Healthcare Practice at
McKinsey and Co and he is responsible for McKinsey’s
work not only in Europe but also Middle East and
Africa and globally really! Of course, McKinsey has
written some seriously important reports on the NHS
over recent years, not least the one last year which has
just appeared on the Department of Health website
which explains how to take quite a lot of money out of
the budget. Last but absolutely not least, Alan Maynard,
Professor of Health Economics at the University of
York, someone who worked in the NHS for 27 years, as
an academic at the very highest level and consultant to
the World Bank, the WHO, the European Union, I
could go on.
So let us begin with Stephen Dorrell, if you want to
go to the lectern, Stephen.
Stephen Dorrell:
Andrew, thank you very much, thank you for the
invitation to come at what’s a very interesting juncture
for the National Health Service. Just listening to you
introduce the panel prompted the thought in my mind
that when I first became a Health Minister, Alan
Maynard only had seven years experience in the
National Health Service under his belt! [Laughter] It
tells you that both of us have long been involved in t