Derek Scott at the ERC


Earlier this week I heard Derek Scott, formerly Tony Blair's Economic Adviser, speak at the Economic Research Council (whose events are well worth a look).  His subject was "Reform: Past, Present and Future" and his insights were very interesting.

He said that the Thatcher reforms were huge, albeit incomplete. Two things helped her: (1) she came to power at a real turning point in British history, when everyone knew things needed to change; and (2) her election manifesto had been very clear on what she wanted to do, which gave her real authority.

That second point was particularly important. Although Tony Blair had a much larger majority than Thatcher, his manifesto had been very vague and so his authority was diminished. But despite this, and the Labour Party's left-wing 'intellectual baggage', Blair was determined to carry forward the Thatcher reforms, particularly in public services.

The problem was, said Scott, that Labour tried to drive reform from the top down, making services more accountable to the government, rather than to users. There was lots of change but not much reform. Now, he said, the government needed to really focus on putting patients in charge of education, patients in charge of healthcare, and local communities in charge of policing.

Labour's centralization was accompanied by a huge spending splurge, with success increasingly measured by inputs, not outcomes. Scott criticized Gordon Brown for taking the UK from a healthy surplus to a large and growing deficit. We need a good atmosphere for entrepreneurs, Scott said, and Brown's tax, borrow and spend approach has undermined it. He suggested that the government establish a new fiscal rule: public spending as a proportion of GDP must fall from 43% to 35% in the next ten years.

All of which was music to my ears. On this evidence, it's a shame Derek Scott wasn't running the Blair government's economic policy, rather than just advising on it.