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May


Government isn't a black box - it's a black hole

Sun, 14th May 2006

ANY COMPANY simultaneously suffering a succession crisis, a workforce in revolt, customers complaining about service quality and value, failing computer systems and a sex scandal would either be bankrupt or threatened with dismemberment by a private equity fund.

It can't happen to a government. But that's about the only consolation Blair and Brown can have as they contemplate their wrecked reputations for competence. It is ironic that an administration that sets such store by efficiency and private-sector methods should end up resembling Fawlty Towers. It is doubly so that with policy differences between the two parties hardly visible, the only terrain of differentiation is execution, or 'delivery', as Whitehall calls it: when management is the new politics.

It would be unfair to pre-judge the Tories as managers on their past performance in office. But what is unarguable is that with the exceptions of the Iraq war and John Prescott, all the government's difficulties stem from faulty, or Fawlty, management at the highest level. While ministers submit every other part of the public sector to audit and inspection, it is their own failure that came back to bite them in last week's local elections. In management terms, central government is not so much a black box as a black hole.

Here are some howlers a management audit of the government might pick out:

* Bungled succession planning The most glaring mistake is entirely self-made. Like all bungled successions, the Blair-Brown stand-off wounds both individuals and the collective, wasting energy and paralysing decision-making. Succession crises are by no means unknown in the private sector, but even the weakest board would have fired one or both of the feuding pair by now.

* Confusing ends and means, and cause and effect This causes ministers to do things the wrong way around. Reform is a result, not a starting point - it's impossible to know in advance, before establishing real demand and capacity and removing the waste from the system, what resources will be needed for a task. A textbook case of how not to do it is the campaign of the Department of Work and Pensions (DWP) to cut 30,000 jobs to meet arbitrary efficiency targets. The result: strikes, permanently engaged phones at call centres and increasing violence in benefits offices due to deteriorating service. This is reform in reverse: raising costs and worsening service.

* Poor procurement Having outsourced IT and management capability, Whitehall is a sucker for computer and consultancy salesmen. Bad clients get expensive and overdue projects. The total cost of the new NHS computer systems could in one estimate reach pounds 40bn. Minor in comparison, Defra's new computer system for making farm payments is now five months late if, as is likely, it has not made them by the end of June, the department will face a pounds 20m EU fine.

Having obliged the public sector to install IT-enabled call centres, supposedly to free resources for the front line but actually doing nothing of the kind, ministers are perpetrating the same mistake on a much larger scale by bullying councils, police forces and even research councils to set up vast IT factories to handle routine administrative functions. These units will cut little cost and make waste harder to remove since it is now hidden in computers.

* Overestimating the gains and underestimating the cost of change projects The travails of the DWP is one example. So is the near meltdown of the NHS, which has been reformed so often (in fact subjected to every known form of mismanagement) that it no longer knows its arse from its elbow. More than anything, the howling down of Patricia Hewitt by NHS nurses is a symptom of change fatigue. Meanwhile, HM Revenue and Customs is so busy restructuring that it is unable to prevent VAT fraudsters making off with up to pounds 7bn this financial year, the equivalent of 2p on income tax.

* Failure to take a joined-up view The Treasury pensions catastrophe - Labour's worst failure - is the most glaring example. At the 'seriously dysfunctional' Home Office - an extraordinary admission from a government that has run it since 1997 - the inability to get prison and immigration services to talk to each other is indeed a comprehensive systems failure problems in the probation service and the courts are nearly as bad. Managing by target aggravates the fragmentation. For example, some suspect that the Home Office's carelessness with criminal deportees can be traced back to Tony Blair's airy promise to waft away half of all asylum seekers in 2004. Simply releasing foreign criminals at the end of their sentence is one convenient way of reducing the numbers.

The late JK Galbraith once remarked that left-wing governments' penchant for intervening meant that they needed to be better at management than right-wing ones. The truth is that practically the only areas the government has got half right - the economy and the railways - are the ones it has removed itself from. Everywhere else, ignoring Galbraith and its own heritage, Labour has marched management backwards. Meet the new boss, same as the old boss.

The Observer, 14 May 2006


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