• Andrew O'Brien

The PM will need a plan for public service reform if he wants time to deliver levelling up

During the First World War, French General Charles Mangin quipped “[w]hatever you do, you a lose a lot of men.” The same adage could be deployed to Prime Ministers and their backbenchers. Whatever you do, you lose support. The only way to maintain support is to deliver results.

Electoral results are critical, of course. However, as the current Prime Minister knows parties also have their own principles and philosophies. We can debate whether those principles are right or wrong, but there is within the Conservative Party a clear preference for a smaller state and lower taxes. All throughout Conservative Party Conference, concerns were raised about the rising size of the state and tax burden. The Budget has seen all this all rise to the surface again, not only by Conservative politicians but by the Conservative-supporting media.

The problem for the Prime Minister is that he knows that this levelling up agenda is essential to his electoral success and his vision for the nation. To deliver that agenda he is going to have spend large amounts of money upfront, not just in one Budget but several. Johnson has time now to spend and invest, but the clock is ticking.

Public service reform needs to be put back on the table

The Prime Minister has got where he has now by demonstrating that important trait of successful leaders, the ability to be counter intuitive. Johnson has the intellectual confidence to be able to look at issues and do something unpredictable. After all the articles and speeches the Prime Minister made as a journalist (and even statements made during his own leadership race) everyone expected tax cuts. Yet the Prime Minister, has presided over a number of tax rises to pay for public services and investment. This is the right call.

Pressure for public spending will keep growing

His counter intuitiveness has served him well but getting the balance right is critical. The Prime Minister has shown that he isn’t the average Tory Leader. However, he does need to keep his party together.

Since the 1970s, a significant pillar of Conservative thinking has been dedicated to public sector reform. The private sector is constantly adapting to new markets, new challenges. Conservatives believe that the state must do so the same. Whereas Labour politicians are more focused on means (i.e., equal access, public ownership etc.), Conservatives are more focused on results. To get better results, changes need to be made.

Conservatives under David Cameron also recognised that to bring down the cost of the state, productivity had to be increased. Otherwise, the bill for services would keep rising as demand rose. The prescriptions of the right to cut down on entitlements, pare back services and cut wages are not only unwise but electoral suicide. The only way to meet the twin requirements of wide ranging and high-quality public services and a smaller state is through reform.

The problem for the Prime Minister is that since the Battle for Brexit (2014-2019), the Conservative Party has stopped thinking about public service reform. Changes in leadership, advisers moving on to pastures new and events have kept the party from delivering a series package of reforms. Moreover, as the public don’t care about public service reform and a significant minority of the public see efforts to reform as a bad thing, there has been no electoral pressure to think about reform.

The danger is No.10 falls into the trap of thinking that more money will solve the problem long term. This is an illusion.

Will the Prime Minister get the time he needs to level up?

With a large majority, you may think that all this doesn’t matter. But the Prime Minister should learn from his predecessor, David Cameron, that a stable majority does not mean that the party’s views cannot be ignored forever. Moreover, the Chancellor’s statement that he wants to pursue a tax cutting agenda means that every Budget, every Statement from now on will be a debate over these issues.

The challenge is that levelling up will take time. The under investment, for decades, in left-behind communities, in our economic infrastructure and in green technology, will take a decade to repair. Levelling up is not a project that can be completed overnight. It will require further spending and maybe even some further tax rises to bring in the revenues required. But once achieved, a more balanced economy and a clear pathway to Net Zero will leave the UK is an economically stronger position.

Unfortunately, many Conservatives will want to see their desire for tax cuts and a smaller state deliver immediately. They won’t want to wait for the results of levelling up to come through. It won’t be hard for them to persuade the Conservative-supporting media to back that call and the public are not going to be immune to demands for lower taxes, particularly if respected Conservatives and supportive think tanks start banging the drum for this.

Polling by Reform and Deloitte in October found that 54% of the public don’t want increased spending if it means higher taxes and government borrowing. A quarter (24%) believe that the UK should aim for lower taxes and less public borrowing, even if that means lower public spending. This is only going to rise in the coming years. We saw the same cycle between 1997 and 2010 when the public moved from welcoming investment after the relative austerity of the Major years, towards a growing displeasure at tax rates and public spending. The threat from the right, of a revived Reform Party or some other vehicle, making the case for lower taxes and a smaller state should also not be ignored. It would only have to rise to 7-10% in the polls to start causing serious problems for the Prime Minister and a majority which is based on a large number of quite marginal seats.

The only way to square the circle is for the Prime Minister to lay out a clear roadmap for public service reform. He needs to make clear that whilst reform will take time, it is the only way to make public spending sustainable and deliver the pathway to tax reform which is electorally successful. He needs to get ahead of the curve to keep the party happy and to show the public that the Conservatives can be both trusted on public services and the economy.

Not only is this politically imperative, but it is also what the policy environment demands. We have been down this road of public largesse followed by austerity too many times, the stop-start to public spending only leaves the country weaker with ever successive wave.

There are supportive backbenchers out there. For example, the group of 10 Conservative MPs which wrote Trusting the People calling for radical changes to public service delivery. They are not the only ones, but they need backing from the top to encourage them.

There are also reforming ministers in place such as Michael Gove and Sajid Javid who need to be given the permission to reform and the investment to do so. All this needs to be put into a narrative which can educate the party and buy time for change, led by the PM and the Chancellor who have the authority to bring the party together.

The Prime Minister is apparently an admirer of Tony Blair. He would do well to learn from Blair’s mistakes in the early 2000s. If you do not start reforming public services from a position of strength, by the time you realise you need to start, it is too late.

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