A progressive case for state reform

In this paper, co-authored by Labour Together’s chief policy adviser, Morgan Wild, and former adviser to Tony Blair and Keir Starmer, Peter Hyman, we argue that, for today’s times, a new type of state is needed.

Georgia Gould, MP for Queen’s Park and Maida Vale, and Minister of State at the Department for Education, writes the foreword.

Across the Western world, people are turning against lumbering bureaucracies that fail to deliver. The ‘drain the swamp’ impulse is real and powerful. People are used to having a smartphone in their hands with bewildering capacity. At the same time, they too often see the state finding even the simplest of tasks difficult to accomplish.

The failure of governments to ‘perform’ - a combination of broken promises, economic incompetence and glaring injustices - is perhaps the single biggest driver of disaffection with the political process. Stagnant wages, living standards flatlining, public services creaking and regional inequality growing all fuel a level of disillusionment that has reached dangerous levels. On top of this, in the UK, there have been scandals that shame the state and corrode trust: Hillsborough, infected blood, Grenfell, the Post Office, Windrush, to name a few.

For the left, the failings of the state are a particular threat. We believe in the state’s ability to deliver for working people, so if people’s confidence is lost, we are in trouble. 

But this also provides a real opportunity. If we are ambitious about the country and believe in long term change, not short term quick fixes, then we must be the bold reformers of the state to achieve it.

We must be the reformers because, without fundamental change, the state is incapable of doing the big progressive things that we believe in: growing the economy, reaching net zero, halving knife crime, tackling poverty, rebuilding the NHS, and reskilling the nation.

The moment is also urgent. Government is about choices. The choices this government faces are harder than they should be. If we reform the state well, we can blunt the edges of some of those difficult decisions.

As we pursue this question, we need to make the ideological faultlines clear.

Britain’s centre-right has always preached the case for a leaner state. That’s a reasonable ideology to argue for. But that’s exactly why the Conservatives deserve particular blame for our current position. They could have privatised major public services and put the responsibility for them onto the public’s shoulders. In reality, they didn’t want to try to win the argument for a smaller state with the British people. 

Instead, they salami-sliced, cutting investment in the vital infrastructure needed for future growth and believing they could make public services more efficient just by cutting them. They chose to freeze pay rather than pay fewer people. That led to many of the pathologies that Labour is now dealing with. It stripped out capacity - the public sector managers who actually could work out how to make things more efficient were gone; the state became dependent on low-value management consultants instead. And it incentivised the system to create more positions and overpromote people before they were ready to move up, as the only way of keeping them when their pay was stagnating. You could study it in an MBA programme as a case study of what not to do.

Today, the populist right is keen to take a chainsaw to the state, but has not thought through the implications. In most cases, it is a mixture of pandering to disaffection and ideological opposition to welfare or development spending. But there is little long term or strategic about it. And its randomness and unplanned nature - as is the case in the United States - can lead to vital services or safety measures being cut, putting lives at risk.

The centre-left’s goal is to build a state that can change the lives of the British people for the better. We have always believed in a balance between state, market and civic society. Our solutions adjust to the problems of the day.

While the last Labour government was ambitious and successful in reforming public services, it was less ambitious and less successful in reforming the incentives, structures and ways of working of the civil service and the central state. It preferred instead to create pockets of innovation, often by-passing outdated practices that more or less carried on as usual.

For today’s times, a new type of state is needed. One that has more energy and will to get things done rather than slow things down, one that recognises centrally planning the government is as bad as centrally planning the economy, and one which is designed to solve wicked problems rather than manage them. We might call this the dynamic state.

But a dynamic state is hard to achieve. It will require politicians to get a grip on the civil service. Many public servants within it and outside it are desperate to create what is needed. But many mandarins have built their careers maintaining the status quo and are disinterested in really seeing it change.