Author: johnredwood

Michael Gove’s lecture makes interesting reading. He says he wants a civil service which is better at delivering and places more emphasis on the implementation of agreed policy. Previous governments too have sought to make distinction between the civil service as policy advisers to Ministers, and the civil service administering large programmes of tax and grants, or managing public services and investment programmes. Tony Blair set up a Delivery unit in the Number 10, to reflect his frustrations that things he wanted done were delayed or diluted.

When I was Margaret Thatcher’s Policy Adviser I always regarded getting the policy worked out and agreed by Cabinet and Parliament as the start, not the end of the process. It then had to be turned into practical administration or spending. Margaret embarked on a substantial reform of the civil service, encouraged by Michael Heseltine who ran a Ministerial information system based on big data. Michael was right that Ministers often were not shown the key data any business person would expect at the top of a large company. The purpose of the reform was to separate the implementation or administration of various activities from the policy work and Cabinet level decisions over priorities and resources. A set of Next Steps Agencies were set up under professional public sector chief executives to run substantial services or programmes. The CEOs were set targets, offered bonuses for good performance, and were responsible for the day to day detail. Ministers remained responsible for the policy, the overall results and the financing.

A service like the NHS has long had professional and medical management running it. There is management at the national level, at the regional level, at the local level and in each hospital and surgery. They have large budgets and considerable devolved power. Ministers do not expect to be making decisions about which cleaning services to use or how much protective clothing to buy. Ministers are never involved in awarding huge contracts to suppliers. During the recent crisis responsibility moved upwards, and Ministers were drawn into procurement of ventilators and clothing, blurring the divisions between overall responsibility and the day to day judgements about how to spend budgets and provide for staff in each unit. Ministers had asked for plentiful supplies of PPE and tests and had offered the money to pay for them, but found they were pulled into how to do this at a time of world scarcity and rapidly changing views of how to defeat the virus

Under Labour some hospitals had scandals over high death rates or poor levels of care. Ministers had not ordered those to take place, and had not designed policies likely to produce such results. Once these issues became important national arguments, they of course had to step in, make decisions, and take some blame. It went to prove that in what can become a very centralised large service it is difficult to keep responsibility and remedial action at the local level, even though it was individual hospitals that created these problems.

It would be good to sharpen Whitehall’s focus on delivery again, and to learn from recent experiences in adapting a large public service to the hostile conditions of Covid 19. The call for better data is also a wise one. Often in the public sector the data is there but it it is not available to decision takers in a timely and accessible way, or it comes in data series where the basis of computation is not properly understood. The data at the regular press conferences on the pandemic kept changing with different definitions and different aggregates, which made good decision taking more difficult.

Yesterday we read of the forthcoming Prime Ministerial speech about the need to build new hospitals, transport systems and homes to help lift us out of the deep Covid 19 created recession we are living through. Investing in the future is a good idea. Better transport and some improvements to the health and schools estate are helpful.

There are many other things that are needed to get us out of the deep pandemic hole we and the rest of the world are in. The main  drivers of our future success and prosperity will come from the private sector, expanding the goods and services we make and supply at home, and in turn paying more tax to support better public services.

I have drawn attention to the way health activity actually fell sharply over the lock down, despite the huge efforts some NHS staff put into fighting the virus, which we all admire. The large reduction in  other NHS work to keep the hospitals clear for Covid 19 cases meant a big overall fall, which we now need to recover. We also need to get all the state schools back to work, either in classrooms or remotely, to regain that lost activity as well.

There is huge scope in  the private sector to do more and to invest more. We need substantial investment in additional energy capacity, to remove our growing dependence on imports . There is the opportunity under our new independent trade policy from January to recapture much of the market share in temperate foods that we lost during our CAP years. We can aim to replace many of our timber imports,  as the  UK has good growing conditions for softwoods compared to our Canadian and Scandinavian suppliers.  The UK has the liveliest and most promising tec sector in Europe, which needs more government contracts and full fast broadband rollout to assist it. The UK pharmaceutical industry has shown some of its strengths over the disease, and can achieve more.

Government can help by being an informed buyer, by setting a policy framework which advantages instead of disadvantaging UK based activity, by buying more UK sourced goods and services and by leading a movement to rely more on local output.

I would like our universities to be independent institutions dedicated to rigorous thinking, a tolerant exploration of a range of viewpoints, and fearless enquiry.

I favour more reliance on the Endowment model of funding. The more money universities can receive from legacies and donations, the more independence they can enjoy. Too many run on business models which depend on government grants, or on the goodwill of some categories of student who may also bring with them foreign government intervention.

Some Universities and Colleges have done a good job raising long term investment money, and some have done a good job investing it. Others can take more advantage of the very favourable tax status they enjoy. Gifts and legacies are tax free. Endowment funds pay no CGT, Income Tax or Stamp Duty. These are huge and valuable concessions.

Others have become very dependent on state grants. The danger of this is it can reinforce group think. The insiders from research faculties sit on Whitehall Committees to define the areas of interest and the people who will receive research funding. Fashionable preoccupations dominate at the expense of other sometimes more important questions to improve peoples lives. Solutions are often limited by conventional wisdom and can be distorted by professional jealousies. The whole system is open to the tyranny of the established.

At last Universities UK is talking about the dangers of Chinese influence. Chinese students have come in large numbers. They have a different relationship to their state and government to that of Western students.They wish to assist a large transfer of knowledge and IP to their country. Some universities need to be careful not to undersell our Knowledge and not to release or open up research with defence or strategic network implications through a casual disregard for what is going on.

Undergraduate programmes should be built around educating U.K. students. Post graduate research programmes can benefit from close exchanges with academics from like minded democracies. Second degree programmes may well be a good business line to establish links with students from anywhere in the world, where our educational excellence is something to share so they learn and we earn from the experience. These should not entail joint working on  pioneering areas with strategic implications for our defence or economy.

Mrs Merkel has said the UK does not want to submit any more to the ECJ, accept all the rule making powers of the single market or be in a joint fishery. It has taken a long time to get to this perception, but better late than never.

Anyone following UK politics would have grasped that the UK voters voted for Brexit to regain our independence. They voted for a pro Brexit Conservative government to confirm their wish to be independent after a difficult period of Parliament trying to oppose the will of the people. The aim was always to take back control of our laws, our borders, our  money and our fish. We did not vote to join some  EU Association  Agreement like Turkey, or to recreate UK membership of the single market from outside the EU with no vote over its laws.

It has long been clear we are becoming a separate country. We are willing to have a Free Trade Agreement if the EU wants one, otherwise we will be happy to extend the tariffs they make us impose on non EU countries to them as well on departure, if that is their preference. The UK government is planning anyway to remove a whole swathe of low and fiddly tariffs for all as we leave.

The UK along with  most other countries accepted WHO advice. They monitored  the virus as it built up to a certain level, trying to contain it by test and track of those with symptoms. When it got to a certain level it was then decided to require everyone apart from  key workers to isolate at home. People were encouraged to work, but only if they could do so without social contact.

The UK entered lock down a little later than Italy or Spain because the virus arrived in force later in the UK. Indeed, the UK virus infection probably was fanned by people holidaying in Italy and returning with it where it was worse earlier than here.

Most argue the lock down has been successful. New cases and the death rate has fallen from shortly after the lock down was imposed, as you would expect. Some query whether the virus started to wane for other unspecified reasons, and some have been critical about the timing of quarantine provisions for visitors from abroad. It should be easy to agree that if you  make people stay away from all physical contact with others, it should stop the spread of a contagious disease. As long ago as  the medieval period they used isolation hospitals for contagious diseases they could not otherwise cure or control, so it is not a new insight.

Today the issue is different. We know that whilst lock down can decelerate the virus, it will also do substantial damage to livelihoods and businesses. Whilst it is possible to borrow to pay for one lock down period and a business recovery from it, it would become very expensive to try to do so again from a second lock down. The damage would compound and more capacity and more jobs  lost for ever.

So from now on government has both to save lives and livelihoods. It both has to  bear down on the disease, and help economic recovery. The method has been laid out  by Ministers and their advisers. It requires two things. It requires a good test and trace system, which we are assured we now have. It requires the co-operation of the public, who need to submit for a test if they have symptoms, and share details of their contacts if they test positive.

As an enthusiast for getting back to more normal working, I just hope the new model for containing the disease gets the buy in it needs to succeed. We need it to do so to save both lives and livelihoods. I look forward to the NHS establishing isolation centres for residual virus treatment, so the rest of the service can return to normal to start tackling the backlog.

The IMF forecasts for world output and incomes this year makes predictably poor reading. They foresee a fall of 4.9% in the world economy. It is only that modest because they think the world’s second largest economy, China, will perform much better than most , reporting growth of 1% despite its lock down and pandemic damage.

The US with a fall of 8% does considerably better than most of the European countries. Spain and Italy with bad outbreaks suffer the worst, losing a massive 12.8 % of their incomes. France does badly too, at 12.5%. The UK manages minus 10.2%, considerably better than the other large Europeans despite also having a bad attack. Only Germany does better, at minus 7.8%, thanks to a much less severe case of Covid 19  and the high capacity of its mixed public and private heath system.

The forecasts for the following year show a struggle to get back to where we started. The IMF expects the world to lose 6% of GDP over the two years, representing two years of  missing growth allied to a slow recovery to get us back to where we started.

These figures seem to show that Brexit is not a negative, with the Uk better placed than most of the continent. The US usually outperforms, partly because of the excellence of its digital companies and their ambitious growth plans.  All now hinges on governments managing the two big problems together. They have to relax enough to restore most economic activity, without allowing a major flare up in the disease. I will return to that difficult balance in a future post.

Yesterday the Commons debated our planning system. At issue was the granting of permission to build new homes in Westferry, London, where they are much needed. Tower Hamlets Council failed to provide an answer on the planning application within the quite generous time limits laid down, so the decision fell to be made by the incoming new Secretary of State for the Environment. Opposition parties did not like the way he made it, and or did not like the decision.

Most people in the UK think there should be a planning system, but many disagree with whatever system is in place, particularly when it results in a decision they do not like. There are many people with land who would like to make a big profit by putting it forward for development, who find their land is not preferred. There are many others, often their neighbours, who think their local area has enough development and do not wish to see green fields built on or old buildings replaced by much larger developments . The tensions are understandable. The task for government trying to judge between the competing views is uncomfortable.

The aim of planning policy is to provide some intelligent framework for these decisions, setting out in advance through local plans where development is likely and where it is not. Years ago the system revolved around a fairly simply local map. The map would show through hatched markings which places were to be kept as green openspace and farmland, which remained as built up area and which parts could be used for new building. The built up areas could also gain special protections through area designation as a conservation area, or from individual building listings.

Over the years I have been watching planning it has got a lot more complicated, with local plans now going into huge detail and containing many subsidiary policies about permitted development. I am not sure this added complexity has produced better results or has been any better at allaying tensions over decisions. One of the worst features in my area has been from a landowner or developer gaming the system. They fail to build out the agreed permissions for new homes, whilst putting in for more permissions in close by locations,. It can be more profitable to trade planning permissions than to actually build and sell the homes. This undermines public confidence in the system. It can also lead to bad planning, with too many homes on floodplains or stretching local services too thinly.

Before the lockdowns there were some 5 million self employed people in this country. Most of them will continue as self employed but never take on a first employee and start the progress of building a bigger business. They are very valuable anyway, offering goods and services in flexible and attractive ways. They are a crucial part of the UK economy.

It is now an urgent task to tackle the unemployment the virus has already created and the possible job losses that could follow as the furlough scheme is wound down. Today I would like your help, by asking what changes to law, taxes and regulations should the government make to persuade more of the self employed to take on that first member of staff or that first apprentice to grow their business and to help bring down unemployment?

Some self employed I know used to run small businesses, but gave up on them and returned to working on their own for themselves. Going over the VAT threshold caused a lot of administration and worry. Choosing the wrong employee could land them in difficulties, without the resources a large company has to manage the odd difficult staff member. Conscious of the many duties of employers, they decided they would rather spend all their energy on serving clients and customers themselves, and limit their business size to their own work rate.

I have taken up the cause of the self employed in various ways. I have asked for the end of the threat to change IR35 and prevent some people from being self employed. I was one of those who asked for a self employed version of the furlough scheme for those banned from working. I think the VAT threshold could be raised to help. I want the public sector to turn to small business and the self employed for some of their work where the flexibility and price are helpful. So often public sector contracts are too large for small business, and the procurement process is biased in favour of the large companies.

Last week at the video Council of Ministers the EU began to consider the Commission proposal for a E750 bn Recovery fund. This had developed from a joint Franco German idea. The EU would borrow money, and spend it on grants and loans, with more emphasis on the deficit countries that took the worst hit from the pandemic.

In the hands of the Commission this has become a way of borrowing at EU level against the security of the revenues in the next 7 year cycle of annual budgets. The money would start to be borrowed next year,continuing over a three year period and gradually dispensed as a kind of addition to the budget. So it will not be a fast acting recovery fund which is needed this year and the first part of next. It also implies there will need to be some disbursements to the richer states as well as the most needy. The plan was to spend two thirds of it as grants and one third as loans.

So far the Netherlands, Austria, Sweden and Denmark have said No. It needs unanimity to pass. They disagree with the idea of grants and especially with the idea of pooled borrowing where they will be partly responsible for repaying these debts. So far their governments have decided to speak for the voters. According to polls there are large majorities against common borrowing in these countries.

The Council and Commission have decided to return to this in July, hoping there might then be some give in these positions . Federalists see Covid as an opportunity for a major breakthrough to a bigger budget and some transfers from rich to poor, as in a single country. The danger is if they push too far in this direction they may give more encouragement to populist forces in several countries.

It is also interesting to see at the same time member states who say they want more integration rapidly moving to more state aids and more national restrictions on commerce and movement. The single market the EU claims to love is under pressure to allow national champions, national resilience policies and more barriers at borders.