Donald Trump and Keir Starmer agree on one thing at least: their governments need reforming and to be much more efficient. Sadly for those on this side of the Atlantic, our value-for-money policies inspire little confidence.
The UK already needed radical attention but Labour’s first Budget has raised the stakes even higher. As the Office for Budget Responsibility set out, due to the Chancellor’s decisions, the size of the state will settle at 44 per cent of GDP by the end of the decade. That will be nearly five percentage points higher than before the pandemic.
Yet the Prime Minister intervened after the Budget to head off the idea that he was simply a big spender – emphasising that “reform is an essential pillar of this government’s agenda” from the “creaking central state” to public services such as the NHS.
Over the water, in September Donald Trump pledged to make Elon Musk the head of a commission that will undertake “a complete financial and performance audit of the entire federal government”. Last month, the businessman and investor said that he wanted to see a “once-in-a-lifetime deregulation and reduction in the size of government”.
That is quite a contrast with the UK effort. First, there will be a “value for money unit” staffed by 20 civil servants rather than people hired for management experience. It will have an independent chair recruited from business but he will only work one day per week, meaning that his ideas will not take priority.
Second, the Budget offered a two per cent “productivity, efficiency and savings target” in 2025-26. Previous Budgets have included commitments of this kind to little effect. Labour productivity in the public sector decreased by eight per cent between 1997 and 2022 while it increased by 27 per cent across the whole economy.
Discussing his efficiency commission, Musk was asked whether he would seek efficiency gains of “two, three, four, five per cent” from government departments. He replied: “I think we’d need to do a bit more than that.”
Third, the Chancellor promised a “strategic plan for a more efficient and effective civil service”. This has also been seen before. There have been 17 plans to reform the civil service since the Fulton Report of 1968. None have had a lasting impact because they did not take advantage of the objectivity and expertise that outside professional managers and entrepreneurs would bring. Those voices would explain how different organisations have tackled similar problems that face the government today.
The UK has other institutions that seek to deliver value for money, but they also lack force. Select committees in parliament, supported by the National Audit Office, can focus attention on individual examples of bad spending, such as HS2. They can compel ministers and officials to give some account of their decisions. But they only address a fraction of public spending each year and only comment after decisions are taken.
The UK doesn’t need more watchdogs. It needs to bring in effective management for each department and public service. That should begin with the recognition that only the best managers, recruited externally, can lead the improvement of the huge organisations that make up the UK public sector.
Starmer is right – without reform, his government will fail to deliver promised improvements to the economy and public sector. He could use the “strategic plan for the civil service” promised in the Budget to make the necessary changes. Without that, his legacy will be a bigger state but not a better one.