Ministers need to be ready for a revolution The unabated controversy over George Osborne's decision to cap the tax relief on charitable donations may look like another of the small-scale bushfires that sprang up in the wake of last month's Budget. These rows over the ambient temperature of pasties or the freezing of tax allowances for pensioners have been dismissed as media-led distractions from the main thrust of the Chancellor's strategy, which is to focus on restoring the health of the public finances. Yet the charities issue is different, because it is emblematic of a wider failure of nerve and of vision. It is underpinned by a worrying premise: not merely that many charitable donations are intended as tax dodges, but that the state is the proper recipient of all money to be spent on public services. This suggests that the Government has not understood the logic of its own commitment to a smaller state, something that the two Coalition parties, when in Opposition, saw as an essential response to 13 years of Labour dirigisme. The Conservatives, in particular, recognised the need for a fundamental break from the post-war assumption that the state would care for every need of every citizen from the cradle to the grave. Even before the crash of 2008, it was clear that this paternalistic ambition was not sustainable, let alone palatable. Tory strategists believed the country was instead entering what they called the "post-bureaucratic age," a clunky phrase that later morphed into the Big Society. The essence of this idea was to give people control over their own lives and get government off their backs. From schools and hospitals to policing and social care, the aim was to ensure that decision-making was carried out, as far as possible, by the individual or community. Instead of getting what we were given, we would get what we chose. To that end, the Coalition can point to some successes, notably in education. But in other areas, it has been less bold. Even the NHS reforms, which caused such political damage, have failed to confront the biggest question of all, namely the state's monopoly of health care. There is, however, a wider issue that needs to be addressed - one far more important than tinkering with the ways in which existing structures work. Put simply, it is the need for a complete reinvention of government. The cuts that must take place in the public sector, and the relentless pressure on services in the coming years, mean that those services must be provided with changed systems, reduced numbers - or not by the state at all. A public services revolution is unavoidable. How often, however, do we hear our politicians talk about this? If there is a debate, it is one that takes place principally in think tanks and academic institutions. True, this is difficult terrain for politicians; some necessary decisions that the Government has made - such as restricting universal benefits or reducing public-sector pensions - have been fiercely resisted. But that does not mean ministers should back away. Instead, they need to be more forthright about what will be required over the next 20 or 30 years, in particular about the need to take the state entirely out of the provision of services, just as it stepped away from running heavy industry and utilities in the 1980s and 1990s, and to ensure that we spend for the future (in the form of infrastructure and education) rather than the past. The Coalition parties talk about change, but fail to acknowledge how far-reaching it must be or give any detail about how it might be achieved. Yet there is a template to hand. Although the Big Society is a much-maligned concept, it encompasses a radical departure from the political and economic presumptions that have held sway for the past 50 years. However, it also requires a complete rethinking of what government does and why, as happened in Canada in the 1990s. As the International Monetary Fund reminded us this week, coping with the additional pressures of an ageing population will require huge decisions about the sort of society we want to be and the public services we want to have - not to mention how we pay for them. Reversing its decision on charitable tax relief would show that the Government is starting to understand what needs to be done. But even that would only be a beginning.