Andy Burnham said he wanted to “rewire” the economy. Then he seemed to slam on the brakes, kicking most reforms into the 2030s.
Local government reorganisation is on hold, along with an overhaul of the much-maligned water industry. Social care and significant welfare reform are matters to be resolved by the next government.
A delay is understandable when the issues are knotty and plans on the left to replace the word “rewire” with “renationalise”, stir up accusations of taking Britain back to the 1970s. And yet delay is unnecessary when the knowledge is available now to get on with the kind of changes that rebuild public trust in time for a 2029 election.
There are oblique ways of achieving success, and the measure of success should be customer satisfaction. Without this aim, the hopes of reform are lost.
The economist Sir John Kay, a fellow of St John’s College, Oxford and former head of the Institute for Fiscal Studies, is a keen advocate of organisations that remember for whose benefit they exist. That means their primary aim should be to achieve customer satisfaction. In the private sector, profits will follow. In the public sector, there will be savings.
In his book Obliquity, Kay shows how those companies that pursued shareholder value as their primary aim failed. And those that wanted to produce the best product secured long-term success.
Just as a devotion to shareholder value – a financial metric of the benefit to investors -proved a blind alley for thousands of now-deceased companies, so the reliance on protocols in the public sector as a substitute for understanding the task in hand leads to failed outcomes and wasted money.
You can see it now in the NHS, where satisfaction levels are rising in relation to GP and hospital visits. The new system for booking appointments has its drawbacks, but people are finding doctors are available more quickly, especially for GP and outpatient appointments.
You can see the failures in the NHS from the cover-ups by maternity unit managers of rising mortality rates.
Neither the success nor the failure can be attributed to the regulation of the health service. Regulation is an extra layer of cost that has, time after time, been shown to undermine productive behaviour, either because private providers and managers find they can game the system or it stifles innovation.
Another example can be found in two unconnected government agencies. Last week, the Environment Agency said it would fund the planting of half a million trees, giving funds to councils and mayors and other government bodies to carry out the work. Surely this is a good thing?
On the other hand, you might think it a complete waste of time and money when National Highways, the main road builder in England, planted 850,000 saplings in 2020 along a widened stretch of the A14 north of Cambridge, only to report three years later, in an internal review, that three-quarters of them had died.
These failures are about the way public sector departments and agencies go about their work. Regulation only adds to a tick-box culture that asks: “Did you follow the protocol? If so, everything’s fine.”
Eminent figures in Whitehall, from the former mandarin and Bank of England deputy governor Sir Jon Cunliffe to the House of Lords industry and regulators committee believe the answer is more intensive oversight.
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Kay has many examples of companies that grew because the boardroom was dominated by people who were more obsessed about delivering the best service or product than rewarding their shareholders as the chief metric. Profits and improvements in things such as market share were not the dominant metrics in companies that expanded.
The aircraft maker Boeing succeeded before it lost its way chasing quarterly profit targets. ICI, once the UK’s largest industrial company, was broken up and faded away after a higher stock market value became the main target.
The management consultant John Seddon, whose Vanguard consulting firm has adapted the Toyota systems method, supports Kay’s studiously well-informed analysis of what it takes to make a successful organisation. Seddon puts flesh on the bones with the kind of practical systems approach that has helped Portsmouth city council’s housing department win international awards for its repairs service.
He has seen many new initiatives in public sector management from grand strategies to more prosaic schemes for benchmarking services against the private sector. All have failed to improve services.
Seddon is not in favour of ditching regulation altogether. Regulation based on how well an organisation achieves the purpose will, he says, avoid the persistent problem of regulation “running behind events, shutting the stable door after another horse has bolted”.
He adds: “Having a clear statement of purpose will enable regulators to apply sanctions immediately if and when an organisation is found to be undermining its allotted purpose.
“It is time to liberate public servants from the prison of suspicion and distrust that our current method of regulation locks them in, demeaning their professionalism and casting them as part of the problem rather than as active creators of solutions.”
Burnham’s staff should avoid letting the debate about ownership dominate – ignoring a maxim that says “private bad, public good.”. They should work more closely on how public sector organisations achieve better outcomes. The evidence is available. They don’t need to look very far.
