Reform events blog

By Kimberley Trewhitt

  “In Britain today, we have schools that are intolerant of failure, where ninety percent of pupils get five good GCSEs. Yes: private schools. You've heard me talk about social responsibility so let me say this. I want to see private schools start Academies, and sponsor Academies in the state system. Wellington College does it, Dulwich does it - others can too. The apartheid between our private and state schools is one of the biggest wasted opportunities in our country today. So let it be this party that helps tear it down.” – David Cameron, speech to Conservative Party Conference, October 2011

On Tuesday, Reform held a seminar under the Chatham House Rule with Dr Anthony Seldon, Master of Wellington College, which has established a sponsored academy, to discuss how the independent sector can help state-funded schools. In his opening comments, Dr Seldon argued that independent schools can have a transformative impact.  Given the downsides of investment risk and time, he suggested that there is a role for the four “peak” bodies in the sector - the Independent Schools Council (ISC), The Headmasters’ and Headmistresses’ Conference (HMC), the Girls’ Schools Association (GSA) and the Independent Association of Prep Schools (IAPS).  These bodies could help schools with setting up academies (providing support such as legal and financial advice) and should aim to rival the academy chains which are growing in number.

It was widely agreed that both independent and state schools have a lot to gain from working together.  However, there were some concerns over the policy focus.

Firstly, there was doubt about whether academies can solve to the main problem faced by our education system; namely the extent of poor achievement.  Academies have been praised for the additional freedoms they grant headteachers, yet the use of these freedoms has often been over-played.  Representatives from the independent sector were keen to highlight that the keystone of success in their sector is this independence.  It is unclear whether academy status, or even free school status, goes far enough in this respect.  For example, representatives from the private sector were surprised to learn of the restrictions and demands made on free schools by central government.

Another key concern was the cost to the independent sector. Only a small proportion of independent schools are actually resource rich.  At a time when independent schools are feeling the squeeze, these new relationships need to be cost neutral. Some approaches, such as sharing culture and ethos, don’t cost money. Governance support came through as another area where the state sector has lots to learn about making the most of independence. One attendee, who is involved in setting up a free school, pointed out that if there is a cost to independent schools in providing this support, then it should be charged for.  For example, at their free school they have bought in advice, equivalent to the cost of half a teacher.

By Will Tanner

The Government has placed prisons at the heart of its ‘rehabilitation revolution’ in criminal justice, pursuing innovative forms of payment by results, the development of working prisons, and the introduction of greater competitive pressures in order to improve value for money and outcomes across the estate. This seminar was convened to explore the subject of “Unlocked potential: The role of prisons in offender rehabilitation”, and was led by Dame Anne Owers DBE, who between 2001 and 2010 served as Her Majesty’s Chief Inspector of Prisons. The discussion around the table, held under the Chatham House rules, was broad and valuable, raising a number of key points.

Prison is all too often a service of last resort, forced to pick up where other areas of society and government have failed, and where intervention is, in many respects, already too late. The problems that prisons deal with are complex and not merely criminal, incorporating mental health issues, substance abuse, homelessness, family breakdown and other social issues too. The incentives – political, financial and operational, and for providers and commissioners alike – all lean towards containment rather than rehabilitation and isolation rather than partnership. Clearly if the criminal justice system is to effectively rehabilitate offenders, then prisons must be part of a greater, multi-agency whole that is equipped to deal with complex demand and incentivised to do so.

This is possible. The evidence from around the table demonstrated that innovative prisons, from both the private and public sectors, are already developing valuable partnerships with other local organisations and intervening further upstream, with a real, positive impact on recidivism. However if these pockets of best practice are to become both systemic and sustainable, other providers need to be incentivised to do the same. The greatest incentive is financial. The Government’s introduction of payment by results in this regard goes some way to incentivising providers, but a more intelligent approach to commissioning holds greater promise still.

In commissioning, the best way to incentivise reinvestment, partnership and earlier intervention would be to devolve budgets and powers for criminal justice to a local level. The Ministry of Justice has neither the capacity nor the expertise to deliver payment by results schemes in every locality in the country, and the Government has already hinted that Police and Crime Commissioners (PCCs) will have powers wider than their current policing brief. The geographical challenges of the prison estate notwithstanding, PCCs will be well placed to provide leadership and accountability for a broad range of justice outcomes, and they would be incentivised to look beyond the silos of the criminal justice system at more integrated solutions.

If prison is going to be more than just “an expensive way of making bad people worse”, as Douglas Hurd remarked in 1991, then a focus on rehabilitation is vital. Developing a more local approach that places the offender, not a specific service, at the heart of the solution is key to finding a cheaper and more effective way of preventing offenders from repeating the same mistakes.

By Nick Seddon

The Open Public Services White Paper, published in July last year, advocated greater diversity of provision and new models for public sector value, including personal budgets, payment by results and employee and community-owned ventures. The third and final roundtable in our seminar series with HP was convened to explore “New business models for public services”. The lead speaker was Professor Julian Le Grand, Richard Titmuss Professor of Social Policy at the London School of Economics, and Chair of the Government’s Mutuals Taskforce, based at the Cabinet Office.

Julian Le Grand outlined the themes in his article for yesterday’s Guardian. Social enterprises, charities, mutuals of various kinds, private firms and professional partnerships will all have a bigger role to play in delivering social and public services, sometimes alongside, but more often instead of, old-style public monopoly providers. In particular, he said, robust incentive structures can be found in an employee-led 'mutual' spin-out from the public sector now operating in a competitive market. That said, mutuals “are not appropriate in all circumstances”, he added, just as John Lewis's boss, Charlie Mayfield, has observed that his model is “not the answer to all ills”.

The discussion that followed, which was under the Chatham House rules, was wide-ranging and valuable. The key take-aways for me were:

Firstly, we need to reform fast and at scale. The Cabinet Office is prioritising mutuals and SMEs as deliverers of public services, but we should be careful about inventing business models and believing that what is new and complex must be good. These organisations could take many years to make a significant contribution, while tried and tested “old” models maybe more successful, sooner. The Cabinet Office must also consider the merits of large public service providers, in the public, private and third sectors, who are able to make a major contribution immediately.

Secondly, should any areas of public service delivery be off-limits? There was a debate about the politics, but in principle the answer to this is “no “. One line of thinking was that we should go back to the idea behind Compulsory Competitive Tendering – and extend this to all areas of public service delivery to force even the most recalcitrant of local authorities and primary care trusts to put services out to bidders who can offer best value – the highest quality services at the best price.

Thirdly, to encourage diversity and flexibility we need to keep lowering the barriers to entry. Some of these we have known about for years, like the portability of pensions, access to capital, and so on. The skills and capabilities of the supply side (the new providers) are not always up to scratch; the skills and capabilities of the demand side (procurers or commissioners) also need to improve. The language of “rights” contained in various Government White Papers – such as the “right to challenge” – is insufficient if these rights are not backed up with real force. They do not have legal power. It is a minefield for new providers, so there is a long way to go to create a level playing field.

Finally, we need high quality information about the performance of the new open system – so that we can demonstrate outcomes and value for money, and move away from stale ideological arguments. The Open Data agenda of the Cabinet Office has given particular energy to the notion that what matters is not processes or organisational models but outcomes for citizens and users. 

By Patrick Nolan

There is almost universal support for the idea that the tax system should be simpler. The current system appears excessively complex with, for example, the word “control” being defined dozens of different ways throughout the current tax code. Yet tax simplification is no easy task. If it was it would have happened by now. Simplification involves difficult judgements about how tax burdens should change, the risk of avoidance and evasion and how to manage the process of change.

To help with these choices the Coalition has established an Office for Tax Simplification (OTS). The work of this office was the subject of a recent Reform roundtable lunch with John Whiting, the tax director of the OTS, which was held under the Chatham House rule.

The lunch highlighted trade-offs involved in simplification. Complexity may be based on good intentions. Complex rules may, for example reflect a desire to close opportunities for tax avoidance. An example could be ensuring that people cannot avoid tax by being paid through share schemes rather than salary. Complexity may also reflect a desire to vary taxes by differences in circumstances, with the complex VAT system reflecting the very high number of zero-rated and exempt products.

Trade-offs in reducing complexity are made even more difficult when the process of change is considered. Frequent changes to the tax system are a major concern for business. The current tax system may have many problems but at least businesses are used to working with it. Yet this should not be seen as an argument for resisting changes that would improve the tax system – rather it highlights the need for changes to be transparent and free of political whim.

The lunch also highlighted the relative merits of gradualist and major reforms. The OTS focusses on a gradualist, or more bottom up, approach. This can encourage valuable changes – such as the more consistent use of definitions throughout the tax system and a simpler interface between the tax authority and taxpayers (administrative simplification). Yet while the work of the OTS has led to the abolition of 43 outdated tax reliefs, with a starting point of 1,042 reliefs this work has barely begun.

This highlights the limits of a gradualist approach. As Sir Roger Douglas, the former New Zealand Minister of Finance who substantially simplified their tax system in the 1980s, has noted: “do not try to advance one step at a time – quantum leaps will be required where you remove privileges of various groups all at one time. It is simply harder for them to complain this way.” Making quantum leaps will require asking hard questions: such as do we need certain taxes and reliefs and, if they serve a useful role, could this role be provided for in other ways?

It is important that Ministers, officials and commentators stick with the task of tax simplification. A simpler tax system could support growth and lead to fairer taxes. Businesses would be able to focus more on growth, jobs and exports and less on complying with taxes. Tax burdens would be less arbitrary and not based on the ability to pay for tax advice. Taxes would be easier to administer.

The complexity of the current system leads to many taxpayers, especially SMEs, being intimidated. Yet intimidation is not healthy – at the end of the day all tax systems rely on people complying with their obligations voluntarily. (Monitoring all taxpayers’ accounts in great detail is simply not possible.) By encouraging voluntary compliance a simpler tax system, where rules and processes are clear and understood, would improve the health of the tax system. This would benefit us all.

By Andrew Haldenby, Director

The economic legacy of the London Olympics and Paralympics is meant to be one of the distinguishing features of this year’s Games.  The attendees at this Reform seminar agreed that the various Olympic authorities had been committed to the idea of a strong economic legacy from the moment of the very first intention to bid.  The seminar was conducted under the Chatham House Rule and led by Sir John Armitt, the Chairman of the Olympic Delivery Authority.

Certainly the increase in the capacity of the London economy on account of the Games is already very great.  The project has cleared a remarkable area of contaminated land (actually the site of the Industrial Revolution in London) and freed it for new development.  The majority of development spending, 75 pence from every pound spent, has been devoted to infrastructure (such as better transport links) as opposed to stadia.  These changes have enabled the investment by Westfield into Stratford, to take just one example.  The Westfield investment was initially priced at just less than £1 billion and now may be worth twice that much.

The Games will also cause a temporary boost to generate higher consumer spending, in particular from tourism.  Similar effects have been measured from other major sporting events, such as the 2010 football World Cup in South Africa and the 2011 Rugby World Cup in New Zealand.  The Games are very likely to create major new opportunities for top-level UK design and construction, not least to participate in the creation of future Olympic and Paralympic Games.

The more open question is the impact of the Games on the productivity of the local economy.  Much effort is going in to improving the educational outcomes of local people, for example through a new Westfield retail academy and, potentially, a new postgraduate campus for University College London.  But changes of this kind can only succeed in the context of the development of the rest of the London economy, which is inevitably out of the control of the Olympic authorities.  

The final outcome of the discussion was new (at least to me) – that the Olympics and Paralympics are a model example of joined-up government working in partnership with the private sector.  The Labour Government learnt the lesson of the Millennium celebrations.  It created the right institutional framework for the delivery of the Games and absolutely did not interfere after that.  It eliminated political risk by keeping the then Opposition fully in the loop. This good practice in government should certainly be part of the Games’ legacy to policy makers if not to the economy.