Brown's public sector policy redolent of Soviet-era socialism

London Briefing: "Any man who is under 30, and is not a liberal, has not heart; and any man who is over 30, and is not a conservative, has no brains." In this old-fashioned use of the language, Churchill uses the word "liberal" in the same way that many people use it today, at least in the US.

By contrast, to be a liberal in the UK is something of a joke. But the underlying message of this much used quotation remains the same: socialism is just a rite of passage and anyone who doesn't grow out of it probably has lots of other problems with maturity.

Not everyone conforms to the exact pattern, of course. Tony Blair matured in classic Churchillian style and found himself to be a conservative prime minister leading a modern liberal party that still refers to itself as Labour. The circle was squared with the label "New".

Gordon Brown cannot be so easily classified. Although he has been at the centre of the New Labour project, it is nevertheless tempting to describe him as precisely the sort of chap Churchill had in mind when he referred to the ageing liberal/socialist with no brains.

However, Gordon, according to Treasury press releases at least, has brains the size of a small planet, so something else must be going on. Perhaps it is simply that the careful nurturing of his socialist persona is just a pose: anything to distinguish himself from Tony. But I've often thought that the refusal to dress properly for formal occasions smacks of maturity issues: the sort of thing we would have done when we were liberal/socialist students. And the sort of thing most of us have outgrown.

Gordon's socialism reveals itself with his absolute refusal to allow market mechanisms to be introduced into the provision of public sector services. Instead, we have just lived through a series of policies best described as "let's throw money at education and health until some of it shows signs of sticking". As an afterthought, lest some pesky audit committee ask where the money actually went, performance targets were set, particularly for the NHS.

Anyone of a certain vintage immediately recoiled at the unveiling of those targets. That was redolent of Soviet-era socialism. There is, of course, an old Russian joke that neatly summarises the problem with running an economy via centrally set targets. The factory that made the nails was running into its usual production problems: output was falling short of the monthly quota of 10 tons. The Kremlin was unhappy, the bosses were apoplectic and the workers went hungry. Then one bright spark hit upon the solution: all targets were met with 100 per cent accuracy via the simple device of producing one nail per month that weighed 10 tons.

The moral of this story is not the absurdity of the large nail but rather the subsequent satisfaction of all concerned: targets were met, that was all that mattered.

Targets, met or not, always produce unintended and daft consequences. The targets set for the NHS have resulted in some GPs earning £250,000 (€360,000) a year - and that's without any private practice whatsoever. One lucky doctor, sitting on an island several miles from any highly populated areas, has found that he now earns £300,000 a year.

Actually, there should be nothing wrong with doctors making this kind of money, provided there is some rational basis for arguing that they were worth it. And that means some sort of system for measuring their output, one capable of saying that doctor A is better than doctor B.

Except that such a system is never allowed to come anywhere near the NHS. The thought that some doctors are better than others, and should be paid accordingly, is far too suggestive of market forces.

The problem is that we have no logical way to establish with any kind of clarity or certainty whether the guys earning 250k are making that money because they are the best doctors in the UK or because they are experts at playing the system. We recoil from making these kinds of judgments partly because we want to believe that all our doctors are brilliant and partly because we want to trust the ability of Gordon Brown to make better decisions than those hated market forces.

The NHS has 26 key targets set for it by the Government, 11 of which are likely to be missed, according to the health secretary. Bad enough, but hitting 15 may not give rise to much satisfaction if we hear about more unintended consequences.

Chris Johns is an investment strategist with Collins Stewart. All opinions are personal.