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The Blair and Brown years saw huge investments in public services, but left behind communities did not see significant transformation. 

The Prime Minister would do well to draw on the legacy of one of his predecessors, David Cameron, particularly in the early years. A bold programme of public service reform was proposed by the Conservatives between 2010 and 2015. Unfortunately, much of this programme was undermined because of the pressure to deliver spending cuts. With investment now flowing back into the public sector, the Government has a chance to properly deliver public services and avoid the mistakes of the noughties. 

So, what would an ambitious centre-right public service reform programme actually look like? 

The first pillar must be a reform to the way that the public sector spends our money. When we pay our taxes, we don’t earmark them for particular services. Yet once taxes are collected, this money is immediately fragmented into thousands of smaller budgets for different parts of the public sector. Operationally some fragmentation is unavoidable, but the varying strategies, priorities, and budgeting of different agencies can lead to poor decision making. 

The frustrating thing is that behaviour is perfectly rational for each individual agency, as I outlined in a previous paper Whither value?, published in 2015 for Charity Finance Group. This is why reform is essential. The solution is pooling resources into local place based budgets to achieve clear outcomes. 

Ernst and Young’s evaluation of community budgets in 2013 found that savings through such a joined-up community budget could reach £20 billion, and a House of Commons inquiry found community budgets had the potential to improve local growth. Reviving pooled community budgets with a clear set of local priorities is essential for levelling up. The Government should also introduce a new ‘public value’ duty, as recommended by Danny Kruger in his Levelling up communities report last year. This would ensure that all public sector bodies have to have regard to maximising impact for the local populations they are providing services to when making spending decisions, not just their own agency priorities. 

The second pillar is to reform the way we deliver services. If public services are the bedrock of national productivity, the expertise and energy of public sector workers are core ingredients. We need structures which empower staff to make the right decisions, to change underperforming services, and to improve outcomes as we saw through academy schools. Again, there is a tried and tested solution which was pioneered by Lord Maude through the Mutuals Taskforce. Public service mutuals are self-organising, staff-led social enterprises which put professionals in charge of decision making with clear goals around social impact and financial efficiency.

Mutuals have been successful across every part of the public sector including health, social care, children’s services, and culture. Research commissioned by DCMS in 2019 found that productivity in mutuals had increased by 3.7% per year since 2012, compared to just 0.3% in the rest of the public sector. Mutuals were also receiving higher ratings on average from Ofsted and the Care Quality Commission. The Government should revive the mutuals programme and create a stronger ‘Right to Provide’ legal pathway so that staff in any part of the public sector can come together to create a new public service mutual where there is a good business case. 

The final pillar is using the employment footprint of government more effectively. The public sector employs millions of people, but we need to target that employment where it is most needed. We face the prospect of significant youth unemployment, yet young people are only half as likely to work in the public sector as those over the age of 55. New figures on the Civil Service Fast Stream have shown that most candidates come from private schools and one in five came from just three universities: Oxford, Cambridge and Durham. More can be done to get public sector bodies to hire workers from left-behind communities. 

Changing the demographics of the public sector will require courage, and would likely see challenges from the unions, but the multiplier effect of better utilising the public sector workforce would be significant. 

Better structures, better delivery, and better hiring is critical to achieving levelling up. The good news is that the opportunities to level up significantly and quickly are all around. One of the biggest mistakes of the past decade was to abolish the ‘Delivery Unit’ successfully developed by Sir Michael Barber. 

Boris should quickly create his own ‘Levelling Up Unit’ to push this agenda, with a clear set of reforms to be implemented across the public sector, and rigorously monitor its progress. A central point is required to unblock the system and push through change. Large financial commitments will look good on election leaflets, but it is reform driving better outcomes which will ultimately determine electoral success.

Andrew O’Brien is an Associate Fellow of Bright Blue and the Director of External Affairs at Social Enterprise UK. This article first appeared in our Centre Write magazine The Great Levelling?. Views expressed in this article are those of the author, not necessarily those of Bright Blue. [Image: Loco Steve]