Bright ideas ripe for the export market

Click to follow
IDEAS are in fashion again. Hardly a day goes by without the publication of a new pamphlet on some aspect of public policy - what should be done with the health service, pensions, taxation, schools, housing. These are not, in the main, 'ya boo' papers, slagging off the Government for its policies or asserting that the policies have not gone nearly far enough. They are well-researched, thoughtful and, to a large extent, non-partisan.

Not since the late Seventies and early Eighties, when the ideological right was at the height of its offensive, have so many interesting ideas on how to run the modern state come out of Britain. About 15 years ago this country became a test-bed for the application of the market to a host of public services. Now we have the prospect of being a very important player in the next stage of the policy revolution - but with the impetus being less ideological and more practical.

What has changed and why? For much of the Eighties the left, at least in Britain, was preoccupied with countering the market revolution: charting its costs, noting its weaknesses, worrying about the impact on society in general. The right, for its part, could ignore these criticisms because its policies, in particular privatisation, were being seized on by governments abroad. If just about every other country in the world was selling off its nationalised industries - and sending people to Britain to learn how to do it - then it mattered little that some people here felt uncomfortable.

At the end of the Eighties the self-confidence of the right was reinforced by the events in Eastern Europe, the former Soviet Union and mainland China.

Now there is a new focus. Three things have changed. First, the centre-left is back in the game, with the founding of new institutions and the revitalising of existing ones. Last year saw the launch of Demos, a non- aligned think-tank, liberal and tough-minded in its ideas. The Labour Party has established its Commission on Social Justice, an unfortunately pompous title which belies the fact that it is carrying out thorough and pragmatic research for Labour.

The Social Market Foundation, once a fount of ideas for the Social Democrats, has survived the party's demise and has generated solid cross-party support. It may prove more influential now than it ever was under the wing of the SDP. And the Institute for Public Policy Research (IPPR), the left-leaning think-tank founded in 1988, is also producing a stream of ideas about public policy.

Finally, in a different vein, the Joseph Rowntree Foundation continues to turn out solid research about the changes taking place in British society, together with policy prescriptions. It is one of those curious twists of fate that the commercial takeover of the confectionery company by the Swiss Nestle group has vastly increased the funds of the non-commercial foundation which was the largest single owner of Rowntree shares, enabling it to promote much more effectively its core argument that the market should be guided and tempered.

Not only are there new institutions of the centre-left. The whole left-right debate has become much less adversarial and ideological distinctions much less important. Organisations on the right, such as the Institute for Economic Affairs and the Adam Smith Institute, have continued to advance the cause of markets.

But Demos has produced pamphlets which call for the privatisation of the BBC and for taxation linked directly to specific spending. And the latest edition of the IPPR's policy magazine, New Economy, carries articles entitled 'The benefits of contracting out' and 'Choice and fragmentation in schools'. (It also has 'Taxing speculators makes sense' and 'Free market disaster in Eastern Europe', so it has not entirely sold out to the opposition.)

The third element in the new generation of ideas is their international dimension. Go back 10 or 15 years and most policy debate was couched almost entirely in national terms and centred on how governments might intervene to achieve their objectives. There were a series of distinct national 'markets' for ideas: while governments might be interested in the policies of others, there was a general view that they should try to develop their own policies rather than borrow from abroad.

One of the effects of the market revolution has been to force a more-or-less common approach to public policy - an international market in policy. Take three examples from the Eighties. One was privatisation, noted above. Another was a decline in top marginal rates of income tax. A third was closer regulation of financial markets, with Europe and Japan both establishing regulatory systems broadly based on US practice.

Both the desire and the need to keep policies in step with those of other industrial countries has intensified. In all areas of public policy - health, education, social security, control of crime, control of inflation - governments need to find things that work. And so, if by general agreement inflation seems more likely to be beaten, where the central bank is made more independent, hey presto, the Bank of England finds itself increasing its power. The really interesting test for the centre-left will be whether the ideas it is now generating on a 'what works?' principle will start to establish themselves in the international marketplace. There are, for example, several areas where the experience of this country could be enormously useful to continental Europe.

We have much more experience of private pensions than any other European country, bar the Netherlands. Demography requires continental Europe to establish funded pensions schemes if the social security burden is not to soar over the next 25 years. So they have to follow us. But we have made serious errors in the control of our private pensions industry, allowing pensions to be improperly sold and, on occasion, funds to be stolen. If we can improve our performance, we can export our ideas.

There are others: the efficiency of our higher education (packing high-quality degrees into three years), the cost-effectiveness of our health care (for all its problems), our ability to attract and make foreign investments. This is a good base from which to work. Our centre-left think-tanks are already importing the expertise of foreign academics to fill their pamphlets. If they find it hard to influence the present UK government, they can wait and hope for a change - or they could go into the export market, and ship their ideas abroad.