Although the talk since the Reagan-Thatcher years has tended to be of the reduction in the power of the State and the importance of markets, the rhetoric does not quite fit the actuality.

All that has happened over thirty years is that the threat of a public sector monopoly over productive capacity has been replaced by a duopoly of power in which innovation and infrastructure have shifted into private hands but provision of services remains state-led.

Decentralising The State

Radical conservatives (including many who purport to be on the centre-left) were moving to change this balance in the boom years before the 'credit crunch'.

This position has gone underground while the public is forced to place more trust in the State as a guarantor of last resort against financial system failures - but it has not gone away. The British public sector is now readying itself not just for spending cuts but for a possible administrative revolution.

Currently, our national administration is operating on a 'care and maintenance' basis because of the uncertainties of the coming General Election.

It may take months after the result is announced to get things started again (if only because new ministers will not rubber-stamp predecessors' decisions). By the time that they do, in the Autumn, the mantra will be cost-savings and cuts, regardless of who is in office.

The current theme, partly dictated by the full employment and votes requirements of the incumbent Government but also by economic strategy, is that capital investment is to be cut but head-count ('front-line' services in the speeches) will be sustained.

This is, of course, absurd in the very long term. It is capital investment that creates sustainable wealth and greater efficiencies (as well as jobs). Having lots of people working within a crumbling infrastructure is tantamount to embedding long term economic decline for fear of short term unemployment figures.

Beyond Cynicism

What can be done about this? The first and most cynical thing to say is that this delay in cuts affecting head-count is only partly to do with keeping the economy going. It is also a determination by an incumbent not to disturb a public sector whose votes will go to it all things being equal.

Another cynical observation would be that one cost, neither truly capital investment nor head-count, that might be cut to buy time is the elimination of consultants (before the election) and the quangocracy (after the election) - just work the existing staff harder. We'll come on to that.

If the economists are wrong and if the IMF manages to hold the line in the outer rim of Europe and we are not faced by a sterling crisis, then, perhaps, just perhaps, the infrastructure of the State and 'frontline services' will hold together and we can go back to business as usual in due course.

Through natural wastage and slow growth, with such a strategy, the State can retain its role in society as something more than law enforcement against the surly unemployed. The remnants of social democracy, which is always civil servants' natural preference, might be preserved.

However, we hold to the view (based on experience) that all institutions have an acute sense of their own survival. The machinery of the State cannot be identified entirely with the people who pay for it and whom it serves. It has a politics all of its own.

State Survivalism

As the months go by, you are likely to see at least three 'survival tactics' emerge that are quite new and are designed to preserve the core of the State against radical decentralisers who have emerged on the Right of New Labour and, above all, in the Tory Party.

The new Tory Parliamentary intake will include many experienced local government 'cutters'. Influential Tory 'intellectual' politicians like Douglas Carswell are pushing hard (with some Liberal Democrat sympathy to be expected) for a significant decentralisation of power.

We have already noted the first 'survival tactic' - the slashing of the use of consultants, in effect a decision to throw the private sector hangers-on who have benefited so much from New Labour approaches to private/public partnership overboard to sink or swim.

The second is to start bringing in academics to 'nudge' the population into acceptance of the value of the State and the third, perhaps most interesting of all, are tentative moves to try to quantify the value of what Government does in preparation for aggressive media and PAC questioning.

Away With Agents & Consultants

Since we are associated with the public relations industry, this might be the place to start looking at signs of what is to come. Government communications are an easy target for a new Parliament of Tory provincials - they represent 'spin' and they cost a lot.

On December 11th, PR Week 'revealed' that the COI was going to undertake a highest-level review of government communications with planned efficiency savings of £650m from marketing and management consultancy spend.

Some of the savings will come from an eventual assault on the quangocracy (123 bodies seem to have been targeted for merger or abolition across Government). The claim is that overall consultancy spending in Whitehall will be cut by 50% and marketing by 25%.

What is perhaps most interesting (especially to those exercised by what the centralisation of gritting roads says about New Labour) is the hint that the COI will become more powerful as the central point for all Government communications efforts, which is certainly logical in terms of economies of scale.

This, of course, centralises the State's effort even further into 'one message' communications. This is a challenge to the Tory instinct for the decentralisation of power, although it might suit the Right to have a smaller State communicating more clearly.

However, before we get too excited, New Labour is not cutting a steady-state marketing capability. The COI spend on PR and news management (according to PR week) in 2008/2009 was actually 50% up on the previous year at £41m so a big slash could merely return it to 2007/2008 levels.

The suspicion of Tories has always been that the relatively recent surge in expenditures on education and health communications was 'political' - designed to increase awareness of New Labour's zone of electoral advantage.

A true cynic (not us!) might wonder whether this was legerdemain. A surge of expenditure in the run-up to a known election year and then newspaper-friendly responsible cuts  - back to normal once the vote was in. Surely not!

Nudging Approval

We have already raised concerns in As It Happens and elsewhere about the politicians' new fascination with anthropology and the cognitive sciences. This is a general phenomenon, to be found in Cameron's circle as much as anywhere else.

We have cruelly likened it to the fashion for race politics in the first half of the twentieth century that led to the death camps. It is imperfect science within an undeveloped paradigm seized upon by politicians desperate for a solution to their problems of social order and legitimacy.

In the same edition of PR Week, having announced cuts in consultancy and agency, the COI also announced a new raft of advisers - a planned panel of 'behaviour change experts' (i.e. psychologists, behavioural economists, anthropologists and sociologists) to assist in PR planning.

There are philosophical issues here - should your or my money be spent on systems that try to change my behaviour rather than just require compliance with the law? Should a democratic state be using techniques designed to sell goods and services against its own people?

This is the famous 'nudge' approach to public policy and probably as doomed in the long run as all such theoretical and manipulative interventions into our lives, but we can rant as much as we wish - clearly Government thinks that this is the way forward.

In fact, much of this is benign. There is an obesity problem and behavioural psychology can legitimately be used to change behaviour in the interests of the public (assuming they retain the right to be obese by choice). What we have to watch for is drift into projects that suit them and not us.

The point is that the State is now shifting from simply being the client to agencies who take the cash and communicate messages into a more complex animal that learns how to manage perception of itself and so the skills institutionally to embed itself in society against threats to its legitimacy.

This is a major challenge to libertarians because the main claim against the State at the moment is, in fact, that it is not truly competent (often unfairly so but a widespread perception). Changing perception does not change competence but merely perception of competence.

The COI And Value For Money

We leave the best to last. Hidden away but public domain on the COI 'big thinkers' blog is a paper boringly entitled Payback and Return on Marketing Investment [ROMI] in the Public Sector. It is what it says on the tin and the tin was opened up to consultation within the COI family at the end of November.

We don't propose to analyse it here but it is very significant and very creative. In essence, it is taking the bull by the horns of value in marketing (an old debate that has created a mini-industry of evaluation in public relations for nervous corporations).

It is a pre-emptive strike against Parliamentary scrutiny. Under the current regime, 'spin' is good if the Cabinet office or the Prime Minister's Office thinks it is good. There was no need to evaluate. But things change.

'Spin' is not going to be good if New Labour loses the next election (any post mortem will place the collapse down to a history of public manipulation going back to the mid-1990s) and the COI is going to have to demonstrate quantifiable social benefits to ministers under increasing backbench pressure.

Although all these initiatives relate just to one key Department (the Central Office of Information), their appearance at the end of 2009 in anticipation of new conditions by mid-2010 is neither accidental nor unique to communications.

The threat to the State is not simply sheer lack of funds but also legitimacy under conditions where more funds are being raised from the private sector through taxation for services that are undoubtedly going to weaken through cuts - and this may go on for many years.

The new Parliament, regardless of Government, is going to have a phalanx of cost-cutting anti-statist libertarians in place hungry for decentralisation and placing constant pressure on the State to justify its existence against starving packs of private sector rivals and angry letters from constituents.

Legitimacy & Cuts

These three strategies: bringing business back in-house, using academics to build strategies for legitimacy and demonstrating value to Parliament more quantitatively: are three survival tools of value to public administration in very difficult new times. They are pre-emptive strikes against slash and burn.

One last note - the agencies and consultancies who are about to be pushed out may have little to say in the matter (though they will no doubt be lobbying to get back in when things pick up) but many civil servants are not going to like Mark Cross' initiative at the COI one little bit.

If you are used to making relatively unstressful decisions based on your Oxbridge judgement and keeping your head below the parapet to avoid fairly rare Parliamentary scrutiny, Cross' initative, if it spreads through Whitehall, sounds like a lot of hard work and risk.

The Luddites would be mistaken. It is not just the Tory backwoodsman that the State has to worry about (after all most will sink back into relative laziness or end up on the payroll vote after a while) but the new breed of citizen journalist and blogger.

In the coming decades, the issue is not whether Parliament backs the State but whether the public backs both State and Parliament. Parliament is in bad odor with a written warning in its HR file. The State needs direct public legitimacy if taxes are to be paid and laws obeyed.

And here's a thought that should concentrate minds - what if an enraged and angry electorate decides that not only should bankers' bonuses be clawed back but also 'fat cat' public sector pensions? Unlikely, yes, but Luddites ought not be complacent - the anger out there is palpable.

We should take the current planned cuts with a pinch of a salt and be highly suspicious of government by 'nudge' but the COI's initiative on ROMI should be welcomed and encouraged - in the public interest.