A 2020 Vision for Britain’s governance

Rt Hon Alan Milburn MP

St Chad’s College, University of Durham

Thursday 24th May 2007

Tonight I want to talk about the governance of our country. I will make an argument that whether it is turnout at elections, trust in politicians or frustration with public institutions the old relationship between politics and the public is under severe strain. I then want to go on to argue that this relationship between State and citizen can be rescued only if is radically reformed. And that doing so means power moving from the central state to local communities and individual citizens.

Forging this new relationship takes us well beyond the traditional debate about constitutional reform. It has had an excessive – almost obsessive – focus on what happens within a square mile of Westminster. It also suffers from an inbuilt – and in my view naïve – assumption that getting the central State apparatus right would automatically see a grateful citizenry reinvesting trust in politics and politicians. Of course, reforming the House of Lords or changing the machinery of government are necessary and important. But – in my view at least – they are insufficient. It is not just the institutions through which we govern that are behind the times. It is the very method by which we govern. Our form of democracy has become outdated. The balance needs to shift to a more participatory form of democracy.

In recent decades economic and social change has been in the fast lane. Political reform has been stuck in the slow lane. It needs to move up a gear. By way of illustration I will propose reforms to democratise the local NHS and I will draw lessons from the experience of the west end of Newcastle where I grew up as a teenager and where a decades-long failure by policy-makers to properly engage local people in regeneration efforts has resulted in more decline not less in that inner-city area.

But I start on a more optimistic note. In recent years there has been a growing recognition that top down approaches to change do not always work. In all three of the main political parties there is support for the concept of a new localism in which local councils and local communities are empowered to make change happen. I very much welcome for example recent statements from Gordon Brown indicating his belief in a different style of governance in which local communities and individual citizens share more actively in both power and responsibility. There are three principal reasons – at least from the point of view of progressive politics – for this upsurge of debate on governance reform.

The first is born of failure: the growing gap between politics and the public. In the UK membership of political parties has halved in the last twenty five years. But the UK is far from alone in witnessing record levels of cynicism and disengagement. Average turnout at national elections across the OECD has fallen by 10% in just twenty years. And yet in many respects public involvement in civil society is increasing not diminishing. The annual Home Office Citizenship Survey reveals that half of Britons volunteer regularly and the numbers are increasing year on year. Perhaps even more tellingly research undertaken for the recent Power Inquiry showed that over one third of people who didn’t vote at general elections did participate in a charity, community group or campaign. Alternative forms of political activity – whether boycotting goods or lobbying MPs – is rising, not falling. As the Make Poverty History Campaign demonstrates people are not choosing between consumerism and citizenship – and neither should we. Make Poverty History gives the lie to those who say that a culture of contentment or a post-communist concensus have killed political participation.

Public apathy is not an explanation. It is an excuse. The public is not so much turned off by politics, as the way politics is done. Or for that matter, the way public services are run. Too often we shut people out when we should be letting them in. In my view public disengagement is a symptom of disempowerment. For that Britain’s peculiarly centralised democracy is much to blame. It is to Tony Blair’s credit of course that devolution to Scotland, Wales and Northern Ireland have irreversibly shifted the balance but three-quarters of local government spending is still handed out nationally rather than being raised locally. Perhaps unsurprisingly many electors have voted with their feet having concluded that our local councils owe allegiance as much to central government as they do to the local community. Indeed no comparable country has such a large gap between national and local election turnouts as we experience here in Britain. And although few people would wish to import the French commune system to these islands it is striking that whereas England has about 80,000 elected councillors, France has 500,000. As Anthony Giddens argues in his most recent book, our democracy is in urgent need of democratisation.

Second, such a change is in keeping with the times in which we live. Ironically globalisation has whetted the public appetite for localisation. In a world of swirling uncertainty, faced with forces that feel beyond control, people are taking refuge in what they know: their families, their communities, their local identities. You can see that, as the Liberal MP Vince Cable, has convincingly argued, in the worldwide growth of regional autonomy movements. Politics, if it is to command legitimacy, has to be restructured to better reflect this desire for local control.

Massive structural shifts in the basic contours of the economy and society, largely brought by globalisation, are transforming the landscape, and the political system has not yet caught up. The days when there were ‘jobs for life’ have disappeared for men, so too has a life defined by housework for women. Families are smaller. Communities are weaker. Opportunities feel bigger, but as any working mum will tell you, pressures are greater. Deference is lower, expectations higher.

Beneath this tide of sweeping change we all too often fail to spot the biggest change of all. People have changed. The public is different. What in the USA Ted Halstead and Michael Lind have called the rise of the citizen as “free agent” – and what Andrei Cherny calls “the choice generation” – has come about because of greater prosperity and sophistication among ordinary people. Technological change is shifting the economy from one based on the production of standardised goods and services to one where the emphasis is on customisation to individual needs. Greater global competition is making the consumer more powerful. So too is the power vested in users by the internet. People are more informed and inquiring. As the phenomenal growth in trading on Ebay demonstrates, consumers are even able to create their own markets. Ordinary consumers a getting a taste for greater power and control over their own lives. The problem is that while people may have become more empowered as consumers, they do not yet feel empowered as citizens.

Ours is a ‘them and us’ political system. It was framed in an era of elitism. Rulers ruled – and the ruled were grateful. Economic advance and universal education have swept aside both deference and ignorance. Now the internet redistributes knowledge and offers us the chance of being active participants rather than passive by-standers. Representative democracy worked for the last century. It is a more participatory democracy that will work in this.

And third, equity demands that it should be so. Despite rises in living standards and falls in poverty in the last decade, a deep inequality gap still scars our country. We all pay the price. The taxpayers who pay the price of social failure. The decent hard-working families who live in fear of crime. The loss we all feel from a declining sense of shared community. I was lucky. I was part of the most socially mobile generation this country has ever seen. I came from a council estate and ended up in the Cabinet. I doubt such an outcome would be possible for a child growing up in one of Britain’s poorest estates today. And I also think it is a moral outrage that it should be so in a country as wealthy as our own. Over many decades birth not worth has become a bigger determinant of life chances. Social mobility has slowed down when it ought to have been speeding up. Tony Blair’s government has raised the glass ceiling, but we have not yet broken through it. In part that is because of labour market change and a growing gap between those with skills and those without. But it is also because addressing inequality requires an approach that goes beyond the economic arena alone. As Amartya Sen, the Nobel Prize winner for economics has noted, families and communities suffer not only economic disadvantage but social, educational and cultural disadvantage too. So we have to do more to shift the focus beyond the traditional welfare state solution of correcting the symptoms of inequality – such as low wages and family poverty – retrospectively towards an approach that pro-actively deals with the roots of disadvantage before they become entrenched. By giving more people a real stake in society. By enabling people, regardless of wealth or status, to take greater control over their lives. By recognising that it is power that needs to be more fairly shared in our society.

I know governance reform is sometimes viewed as slightly esoteric. What counts in politics, it is often said, are bread and butter issues: crime and jobs, health and education. But for progressives political reform should matter too. Disengagement from democracy fuels inequality as it impacts disproportionately on the poorest. One in three low-income citizens don’t vote; don’t urge others to vote; don’t present their views to councillors, MPs or the media; and don’t participate in political campaigns. The sense of hopelessness that clouds the poorest communities in our country grows out of disempowerment. Of course beating crime, creating jobs, rebuilding estates can help. But I have come to believe that this cloud of despondency can only be dispelled through a modern participatory politics which allows both local communities and individual citizens to more evenly and directly share in power.

I now want to take one example of what I mean. As a teenager I lived in Benwell in west Newcastle, slap bang in the middle of a decades-long failed experiment in urban regeneration. It’s not through lack of effort, whether from local councils, development agencies or national governments. It’s certainly not through lack of resources. According to Professor Fred Robinson here at Durham University in the last thirty years this four mile stretch of urban Britain has received a cool £500 million worth of regeneration monies, much of it from the public purse. It almost breaks my heart to see what has gone wrong. I’ve seen houses rebuilt and refurbished only to be knocked down. And then seen the process repeated in a bewildering array of projects and programmes – Urban Programme, Inner City Partnership, Entreprise Zones, an Urban Development Corporation, a City Action Team, the Newcastle Initiative, City Challenge, Single Regeneration Budget, New Deal for Communities, Neighbourhood Renewal Fund, Community Empowerment Fund, a Housing Market Renewal Pathfinder and a Local Strategic Partnership. Some scored success but overall they missed the mark. As the Audit Commission put it in a searing report on West Newcastle: “the area has been subject to numerous programmes of intervention in the past…but all have failed to halt the area’s decline.”

The 2001 census tells its own story. In Benwell one in four people live with a limiting long term illness, four in ten adults have no qualifications and one in two women are economically inactive. It is officially classified as amongst the most deprived communities in Britain. And it is shrinking. Driving from Benwell to Scotswood through the traffic calming shicanes of Armstrong Road is an eerie experience. As people moved out, the bulldozers moved in. Many homes have been demolished. Others are boarded up awaiting their fate. Past the shuttered shops, grassed-over spaces abound in what were once for me teeming childhood streets. It is poignant to see Scotswood and Benwell retrenching back to the villages they once were. Benwell’s population has fallen by 33% in twenty years. Neighbouring Scotswood’s by 40%.

There is no single reason why it all went wrong. Thatcherite recession broke the relationship between employment and housing that had conceived West Newcastle in the first place. As jobs left the area so did families, attracted by better schools and new homes springing up in more desirable parts of the city. And as the housing market slumped – at one time you could buy a flat in Benwell for £1 and a whole street in Scotswood if you had a few thousand – landlords moved in. They lived off the housing benefit system and cared little for who their tenants were or how they behaved. The reputational damage of the riots that took place in 1991 left the West End with a lasting stigma. Some residents complained that employers wouldn’t give them a job if they found out their postcode. More and more people simply gave up.

In my talks with local people, planners, politicians and policy-makers I think there are three lessons that emerge. First, consistency. Fred Robinson puts it well: “the West End has seen a lot of agencies, structures and partnerships come and go – a confusing and always changing policy landscape.” Second, co-ordination. Too often the battery of government initiatives focussed on bricks-and-mortar. Skills, schooling and support for families played second fiddle to rebuilding or refurbishing housing. Third – and in my view most importantly – community. Without community buy-in nothing can work. There were, of course, worthy attempts to involve local residents. The complaint is not so much lack of consultation – people complain of feeling consulted to death – as of ownership. The people who were supposed to benefit from these schemes were never fully involved either in their formulation or their implementation. It is striking that across the city in the east end of Newcastle an earlier housing development – the award-winning Byker Wall – avoided many of these pitfalls. Led by architect Ralph Erskine it was a revolutionary approach to rehousing people from the old terraced communities in Byker. Erskine set up office in an empty corner shop to listen to local people’s views about what they wanted and then reflected their ideas in his design. Today the Byker Wall has its fair share of problems but the disintegration seen in West Newcastle is largely absent.

None of this is to argue that urban policy has not evolved and learned some of these lessons. Whereas in the 1950s the priority was post-war reconstruction, in the 1960s and 1970s it was revitalisation and renewal of run-down areas and in the 1980s it was redevelopment through often grandiose out-of-town schemes, by the late 1990s regeneration became the watch-word based on finding more holistic solutions and engaging community involvement. But there is a difference between involvement and ownership. It might be a leap of faith to give local communities control over local institutions like parks, estates and childcare centres but the tragedy of West Newcastle makes me believe the old top-down agenda has run its course. It is time for a new bottom-up approach. I know that requires a new drive to grow people’s capacity to successfully participate. But never believe they do not want to participate. Research by the Young Foundation shows that while 61% of people do not believe they can influence decisions about their local area, 63% say they are prepared to do so. In our own country there has been an explosion in community-run credit unions, neighbourhood watch schemes, housing estates and social enterprises. Elsewhere in the world there has been an upsurge in finding new ways of successfully engaging people with decision-making. There is the referendum culture of Switzerland and America. There are the mutually-run housing, childcare, elderly and school services of Denmark and Sweden. And there is the experience of cities as diverse as Chicago in the United States, and Porto Alegre in Brazil where local people control local budgets and services. The results are impressive both for public engagement and service improvement. Tellingly in our own country where there have been ballots on housing transfer and elections to local regeneration boards, turnouts in some of our most disadvantaged communities have often been higher than in the corresponding local or general election. Why? Because people feel it matters and that their voice will be heard.

Of course it’s easy to romanticise an area like West Newcastle. Alongside its saints it has a goodly sprinkling of sinners. But I’ve never believed it is ability that is unevenly distributed in society. It is opportunity. And it is power. In the end doing things to people doesn’t work. It is doing things with them that is key, whether to improving health, fighting crime, protecting the environment or regenerating neighbourhoods.

And that means redefining the relationship between the State and the citizen. The problem is that while citizens have moved on the State has not. From the mid-nineteenth century the State took on more roles and responsibilities. In large part this accretion of power was necessary and it was right. State action was needed to guarantee clean water and safe streets. The expansion of a market economy relied on legal rights and clear rules which again only the State could uphold. And in the creation of the Welfare State – with its jewel in the crown the NHS – the State offered equity and security as an antidote to the deprivation and injustice of an era of economic upheaval and total war in a way that charitable endeavour and employer philanthropy could never hope to match. And yet by the last quarter of the twentieth century it was becoming clear that too much State could be as bad as too little. When Labour got on the wrong side of that argument we lost. The Berlin War was about to tumble and with it the ideological perversity of state-communism. In economic policy Western Governments had demonstrated a poor record of picking winners but losers had developed a consistent habit of picking governments. State regulation had come to stifle market innovation. So in the Thatcherite reforms of the 1980s – most notably the great privatisations – power was moved from the State to the market. And in the New Labour reforms of this new century – most notably the creation of new institutions like an independent Bank of England, NHS Foundation Hospitals, City Academies and now Trust Schools – power has been moved again from the State to new service providers. But what neither Thatcherism nor Blairism have successfully done is moved power from the State to the individual or to the community.

Too often governments – including New Labour – have fallen for the fallacy that once the commanding heights of the state have been seized, through periodic elections, progressive change automatically follows. In truth this works neither for citizens nor for governments. People are left confused and disempowered. Governments end up nationalising responsibility when things go wrong without necessarily having the levers to put them right. Progress in the future depends on sharing responsibility with citizens so that they become insiders not outsiders.

None of this is to suggest that the State has no role. Quite the reverse. We live in uncertain times. Fear is all pervasive – of job insecurity and terrorist attack, of global warming and of immigration. People want to know they are not alone. But they want also to control their own destiny. So the modern State has dual roles. It has to be strong where citizens individually are weak – providing collective security and opportunity – and weak where citizens individually are strong – exercising personal choice and responsibility.

Some make the strategic error in believing that modern times require less State when it seems to me what is needed is a different sort of State: one that empowers, not controls. So when it comes to the public services for example, as Sir Michael Barber argues in his compelling new account of life inside No 10, this would mean a new role for the centre in setting strategic direction and creating capacity for improvement. It would mean Whitehall not just being re-organised but being capped in its scale and scope as power and resources were moved from the centre to the local.

The new principle at the heart of our governance as the philosopher David Marquand has argued should be one of subsidiarity: where power is located at the lowest possible level consistent with the wider public good. So where individual citizens can exercise control – such as over health and education – that should be the norm. I have argued elsewhere that this should include giving parents new powers to choose schools and NHS patients to choose treatments. It would include families with disabled children or people in training controlling their own publicly-funded budgets so they could attune services to their individual circumstances. And where it is less easy for individual citizens to exercise such direct control – most people are hardly in a position to choose their own police officers for instance – power should be located at the next level: in the local community.

I now want to spend a few moments explaining what I believe this more collective form of control could look like. Firstly, it would mean placing new powers in the hands of local communities. The views of people using services would form a bigger part of performance league tables to shift the focus from measuring inputs and activity rates to outputs and user experiences. Where services are failing communities would have the legal right to have them replaced. And building on the Foundation Hospital model a new form of public ownership – community-run mutual organisations – could take over the running of local services like children’s centres, estates and parks. Both local police and health services could be made responsive by making them more directly accountable to local people through the ballot box as part of a wider process of democratisation that would include an elected House of Lords and a more proportional system of voting – perhaps through the alternative vote method – for both Houses of Parliament.

Next it would mean placing new powers in the hands of local government. Local councils that for decades have been denuded of freedoms and functions would be given new purpose and new power. They would be freed from much central government control as their system of financing moved from national taxes to local ones with local communities having the right through referenda to determine locally-decided tax rates. As in the USA, Canada, Australia and many other countries locally elected bodies should be able to borrow either from the markets or through local bond issues. The aim would be to get local services better attuned to the needs of local communities.

Public services are just that: they belong to the public and they should be properly accountable to the people they serve. These are services that might often be funded nationally but which are experienced locally. It is the quality of the local school and hospital, the local GP surgery and childcare centre that people care most about. Their masters should be local communities not Whitehall departments. Nor should the NHS be left out of this drive on democracy. Ever since Nye Bevan decided that the health service should be run separately from local government there has been a democratic deficit at its heart. Its accountability has been upwards to Whitehall not downwards to local communities. Little surprise then that the local NHS does not always meet the different needs of the very different communities it serves. The creation of primary care trusts and NHS Foundation Trusts has begun to shift that balance of power. But they cannot be the end of the journey towards a more democratic health service.

Right now we are in no man’s land between a nationally run system and a locally run one. It is time to decide. I do not believe that a service as complex or large – employing 1.4 million people – can be run from Whitehall which is why I believe proposals like that for an NHS Board should be rejected. If the NHS is to be sensitive to the very different needs of different communities and if it is to successfully tackle health inequalities the balance of power should be local rather than national. By this I do not mean there should be no role for national standards or national government. Both help to raise standards and guarantee equity.

Equally, a naïve localism which dreams of a new world of more money, few rules and an easy life is not what is needed. Freeing local services from centralised command and control cannot mean no accountability. To be responsive local services have to be accountable to the people they serve. In the NHS today there are different forms of indirect accountability in place such as the boards of NHS Foundation Trusts and the various patient and public forums that have been created in recent years. But the Government has fought shy of doing for health what we already do for education and leisure services: making the ballot box the way to hold the local NHS to account. I believe it is time to change that. No appointed local committees, citizens juries or public forums – now or in the future – can be a substitute for the public accountability that direct democracy brings. It isn’t perfect but as Winston Churchill once astutely observed “democracy is the worst form of government except all those other forms that have been tried from time to time.”

One idea is for primary care trusts, as the organisations in charge of deciding where health funding is spent locally, to be elected. It is a proposal that has much to commend it. Indeed I have personally advocated it. There is, however, another proposal which in the past I have opposed but which, on reflection, I have now come to support. That is to move responsibility for commissioning local health services from primary care trusts which are not elected to local councils which are. This would have the benefit of separating PCTs commissioning and providing functions with PCTs continuing to provide community and primary care services alongside private, voluntary and not-for-profit sectors. It would avoid the bureaucracy and complexity of holding separate elections for PCTs and local councils. And it would create a single local organisation in charge of guaranteeing integration between health, social, housing and other services. With an ageing population – by 2050 one quarter of Britons will be over 65 – such service integration will become ever critical in future.

The implications of such a change are enormous of course and will need to be worked through carefully. Indeed it could make sense to pilot the proposal. And in any case I believe that only those local authorities which are officially assessed as being the best performing – we could call them Foundation Councils – should be able to take on these new health responsibilities. The financial implications of local councils running health commissioning are particularly complex. There are separate funding streams for health and local government services and they are subject to very different legal requirements. As a rule, for example, health services cannot be charged for, while social services can. The new arrangements would need to safeguard NHS services so they remain free at the point of use. But the position I favour is that once a local council is in charge of commissioning health services it should be free to move cash between services to give it the maximum flexibility in attuning local service to local need.

For local government my proposal would reverse the trend of many decades of powers being taken from local level to national level. Giving the best local councils some health responsibilities could help rejuvenate local democracy. After all there is no public service which enjoys more popular support than the NHS. The purpose behind this reform, however, is not to shore up public support for local councils. It is instead, by making this great public service open – for the first time – to the voices of the public, to bring about better services. It is built on the recognition that more democracy can unlock the door to more responsive services. By fundamentally changing the accountability of the NHS from one that is top down to one that is bottom up it will help get local services focussed more sharply on the needs of local communities. I believe that is long overdue.

This change should be part of a larger constitutional settlement needed to guarantee that power and resources do, indeed, move from the central State to the local community and the individual citizen. Not just new policies. But I hope a new politics. And a new way of doing politics. With the one supporting the other. At its heart the new politics I want to see goes beyond structures and committees to policies that empower citizens and communities to take greater control over their lives. This takes us well beyond the narrow definition of constitutional reform so favoured by the political elite to a far more fundamental redistribution of power in society. Where there is a new contract between state and citizen with government opportunities and citizens striving to take them. Where the top down paternalistic statism of the last century gives way to a new bottom up agenda of empowerment that is in tune with the needs of this. This should be our explicit purpose. It should be the golden thread running through the whole of our new policy programme. If New Labour’s old agenda was driven by competence on the economy and change to the welfare state so the new agenda should have at its heart reforming the State and empowering the citizen.

This is the new political territory. Neither the Right nor the Left have in truth, yet come to terms with it. Whoever does so first I believe will win both ideologically and electorally. For Labour in particular adopting such an agenda would kill stone dead the inevitable charge from our opponents that we are the party of Whitehall knows best, of the central state not the individual citizen. More importantly it reaches into a rich labour movement heritage in which empowerment for individuals and communities is the great progressive cause. One hundred years ago the men and women who founded the Labour Party had a simple dream: a Britain run by the people, not an elite; one governed from the bottom up not the top down. As Labour’s first leader Keir Hardie himself once proclaimed “Socialism is not help from the outside in the form of state help. It is the people themselves acting through their organisations, regulating their own affairs.” This is the tradition of William Morris, Robert Owen, T H Green and R H Tawney. In this ethical, reformist tradition the state enables more and controls less. Of course there has been another tradition in the Labour Party: one of top down control where power and trust is put in the state rather than in the people. A decade ago the creation of New Labour was a recognition that the world had changed and that the role of government had to change too. In economic policy, the top down approach of the past, based on the policy of nationalisation, was abandoned. It is time for all aspects of policy to follow.

The empowerment of individuals and communities was a great progressive cause a century ago. The profound social and economic changes we have seen in recent decades make this a philosophy whose time has come. It really is time to make a reality of Nye Bevan’s famous dictum that the purpose of winning power is to give it away.