A revolutionary stalks Whitehall: William Waldegrave is part of a worldwide conspiracy that could transform citizens' lives. But first he must rout the bureaucrats

A quiet revolution is taking place in British government. It is part of a worldwide conspiracy led by little-known agitators, whose abstract, jargon-filled language hides their true purpose. But if the revolutionaries are successful then the lives of ordinary citizens will be changed for the better.

Their targets are the old bureaucracies, which built the great welfare democracies but have become obsolete, costly and sluggish. This revolution is about dismantling these out-of-date organisations and their local government offspring. It is about destroying the old habits of thought - mindless annual budgeting; the treatment of citizens as subservient blobs; the asphyxiation of independence and risk-taking in the public service.

Most people are vaguely aware that there have been bureaucratic reforms, without seeing much evidence of them. This managerial revolution, so far, goes no way towards making up for the recession, industrial failure or a feeling of national malaise. But pushed to its logical conclusion, it will have a real impact on the quality of life in Britain. Botched, or backed away from, it will contribute to utter disillusionment with politics. A lot depends on the revolutionary fire of that arch-Tory, the Rt Hon William Waldegrave, the cabinet minister in charge of central government reforms.

One real problem is that so much writing on this subject is abstract to the point of meaninglessness. To see what it means, the most basic levels of government are good places to start. And the Citizen's Charter, though still in its early days, has highlighted some isolated yet impressive examples of better management. Over the past week I have spoken to headteachers, police representatives, hospital administrators, civil servants, executives of water companies, and others. And yes, good management - as good as good private management - has been spotted in our dear old public services.

One example is the housing department of Braintree, Essex, with its devolved management and 24-hour caretakers. Its managers live close to the housing estates. It collects 99.6 per cent of its rent, much of it ploughed straight back into improvements. No homeless families are put into bed and breakfast; they all get houses or flats. The council is developing self- build schemes, sheltered accommodation and shared ownership. Braintree's rents are about the norm, pounds 35 a week, and management costs only slightly above average.

Then there are the Kent police who, after polling local residents, have abolished a tier of management and given local stations much more autonomy, both financial and operational. Old rules about manning have been torn up, so that the more incident-packed times of day are matched by more officers on duty. Faster call-out times have been promised, and striven for. The rise in crime in Kent has been halved; though there are other reasons for that, too, the Kent force says it is making more arrests than ever before.

Similar techniques have been used by the county's arts and libraries department. Against a background of decline in many British libraries, in Kent they have been redesigned. Borrowings are up by as much as 25 per cent. Upmarket videos and classical CDs are hired out. The libraries provide other services at the right price, from genealogy to booklets on local history, netting an extra pounds 2m a year.

Scores of similar stories could come from other councils, from privatised water companies, hospitals and schools. They are small, local stories. But multiply them by several thousand, and continue 'entrepreneurial government' for another decade, and you would have a big national story.

What of big national government itself? After the high-profile privatisations of the Thatcher era, the hiving-off of half of Whitehall to self-managed agencies has hardly been noticed. But the anti-bureaucratic principles introduced locally can be applied centrally.

Indeed, this managerial revolution began with national governments. Take New Zealand, so often mocked for dullness ('Tragedy in South Seas] Three million people trapped alive'). It has been the most important centre of the new thinking. Unprompted, three cabinet ministers mentioned to me within a few days that they were studying the place.

What happened there? Well, in 1984 a Labour government took over a country in crisis. Everything had been frozen - prices, rents, wages, the exchange rate and interest rates - to no effect. Subsidies were slashed; the civil service was reorganised to reward initiative; state businesses were privatised or introduced to competition; local management was introduced for schools; managers were given greater freedom; budgeting was changed so that it focused on performance, not inputs. When internal rows eventually helped to topple the government, the new Conservative administration carried on in much the same style.

In the United States, similar reforms have been under way in a whole range of public institutions, from East Harlem schools to the Department of Defense. Again, the reason was crisis: the revolt by US taxpayers meant that public servants had to find ways of delivering better services, more cheaply.

The new managerial techniques come from the market, and from the private sector. But they are clearly not the sole property of the political right. The Clinton camp sees them as demonstrating that public service reform is not simply about privatisation. In a recent pamphlet, Mr Waldegrave argues that 'private monopoly is not inherently any more efficient or responsive than public . . . It is the distinction between monopoly and competition which is crucial'. That could come out of any publication of the old SDP, today's Liberal Democrats, or for that matter from the speeches of Labour reformers.

But what is becoming consensual in theory may still prove controversial and radical in practice. Mr Waldegrave insists he is a good Conservative, not a revolutionary figure. Yet if the reshaping of government is to work, it has to be revolutionary. Take Whitehall. These new agencies are meant to be self-managing, outside the old bureaucratic constraints. The more independent they are the more flexibility they have, but the less ministers can reasonably be held accountable for them to Parliament. The answer is obvious: their chief executives, anonymous figures today, must become as well-known as private sector bosses, highly rewarded and praised for success, sacked and lampooned for failure. They must appear before parliamentary committees and negotiate annual contracts, semi-publicly, with government. To get the benefits of entrepreneurial government, Whitehall will have to tolerate mistakes - and the occasional scandal.

Yet the Treasury is too conservative and too scared to give the agencies real autonomy. Their managers do not have full control over their staff, budgets or property. You cannot have both tight central control and a revitalised, more devolved and responsive public sector. This is true for self-managed schools, for local authorities who want to break some old-fashioned rules to provide better services, and for Whitehall itself. At some point, if it means what it says, John Major's government is going to have to shut its eyes and hand over the reins. It is going to have to take some risks itself.

There are signs that some extremely senior civil servants are deeply hostile to the revolution. Some, indeed, are contemplating resignation. Whether, after 14 years in power, the Conservatives have the courage and imagination to follow the logic of this revolution is one of the most intriguing questions of the next few years.