Project Chainsaw: So, prime minister, which quango is next for the chop?

There’s another question reverberating around Whitehall following Keir Starmer’s bold decision to abolish NHS England, writes Andrew Grice: will the cuts make the savings he hopes?

Keir Starmer's decision to abolish NHS England will spark a debate about the role and size of the state.

Government spending as a proportion of national income remained remarkably stable from the 1950s until the Covid pandemic, but grew significantly under the Conservatives between 2019-24. Traditionally, Labour spent more than the Tories, and after Rachel Reeves’s £70bn boost to public spending Budget last October, the state will settle at 44 per cent of the national income by the end of this five-year parliament – five points higher than before the pandemic.

The role of the state has not always been a left-right issue. At the 2017 election, Theresa May promised “active government” and a “strong and strategic state”. Her manifesto said: “We must reject the ideological templates provided by the socialist left and the libertarian right and instead embrace the mainstream view that recognises the good that government can do.”

Some Tories see both sides of the argument. Michael Gove, who in 2023 backed “a state that is active, not absent” to tackle inequality and rebalance the economy.

Today, as editor of The Spectator, he runs a campaign against government waste, inspired by Elon Musk. Starmer has now changed the terms of the "big versus small state" debate. He wants a "smaller, more agile" state but an "active" one.

Crucially, he draws a dividing line with the Tories' ideological crusade to shrink the state. Kemi Badenoch is fully signed up to that, as is Nigel Farage's Reform UK. They admire Musk's drive to take a chainsaw to whole US government departments and would like to replicate it in the UK.

Labour rejects the idea, though it will likely abolish more bodies that form part of what Starmer called "the watchdog state”. Whitehall insiders tell me the Care Quality Commission (CQC), UK Health Security Agency and water regulator Ofwat might need to justify their existence. Like many of his predecessors, the prime minister is frustrated that the Whitehall machine isn't working. Starmer has seen this movie before.

As the only PM to have held a permanent secretary-type role before entering Downing Street – as head of the Crown Prosecution Service – he already knew what it was like to ask for something to be done, only for nothing to happen. After a false start last December, when Starmer apologised after accusing civil servants of liking a "tepid bath of managed decline," he now argues that “fantastic” officials are stuck in a bad system.

However, one unauthorised "Project Chainsaw" media briefing went down badly in Whitehall. Gus O’Donnell, the crossbench peer and former cabinet secretary, believes the government should mind its language. He warned it risked “creating a rift”, when it needs to deliver through the civil service. “You need to treat it with trust and respect,” he said. But Starmer is right to get rid of poor performers and financially reward the best civil servants.

The scrapping of NHS England will see a lot of energy put into yet another upheaval over the next two years – some of it diverted from government priorities like cutting waiting lists.

Last October, Wes Streeting, the health secretary, said another top-down reorganisation was the last thing he wanted. Only six weeks ago, he suggested abolishing NHS England would waste time and money and "not make a single difference to the patient interest”. Oops.

There are grumbles the shake-up was chaotic and rushed; some ministers who would have expected to be in the know seemed to be in the dark. I suspect the savings will turn out to be smaller than ministers hope, after the redundancy costs of shedding 9,500 jobs. But they are right to take direct control of the health service since they get the blame when things go wrong. "My head is already on the block," Streeting said.

However, Starmer will have to change his ways to curb the ever-growing watchdog state. His government has already created 25 new bodies and set up more than 60 reviews, consultations and taskforces – actions he now portrays as a cop-out to avoid decisions (just as he did on social care). As one Whitehall veteran put it: “It takes political will and courage. Civil servants need political leadership before they can get on with it.”

We are now seeing a more decisive Starmer on the domestic front, buoyed by his success on foreign affairs.

The NHS England decision, when Streeting came round to it, was manna from heaven for Downing Street, providing a much-needed example of Labour’s rhetoric about “rewiring the state”.

All governments talk a good game on this but few succeed.

While there is little public clamour for a smaller state, Badenoch's and Farage's pitch could yet appeal to voters if Labour, after raising taxes and spending, fails to deliver tangible improvements to public services. That is what voters care about. Like Starmer, they just want things to work. "If we don't create a better state, we will be in trouble," one Starmer ally told me.