As I noted yesterday, it is not just the Post Office that is failing badly at present; HM Revenue & Customs is as well.
As Clive Parry noted in response to this last night:
We are presented with a dilemma.
Having said that private companies are failing in key sectors (eg. water) and that public ownership is preferred we are now presented with two public bodies – HMRC and The Post Office – that are also failing. A change of ownership is not the “magic bullet” we need something more.
You allude to this by saying the Post Office is/was run “as if” it were a private company and I do think that matters…. but we do need to explore how governance should work in the public sector whether it be water, post offices or health.
I entirely agree with Clive on this. And it is not just those parts of public services that are structured as if they are companies that are failing (which includes much of the NHS and schools). It is also government itself. As John Harris notes in The Guardian this morning, maybe 20 per cent of English councils might financially fail this year.
It is easy to say that this is all down to funding - and without a doubt, that is a large part of any explanation that is required. But there is something more than that happening.
Let me be clear that what follows is decidedly tentative: this is definitely the case of a blog post that is little more than thinking out loud. So, take it as read that all that I say next may be subject to revision, but I think it worth saying anyway.
First, let's note that the demand for government services is not going away.
Nor, come to that, is the demand for government going away.
No one is realistically suggesting that there is an alternative to either of these things. In fact, the exact opposite seems to be the case. People want more of the NHS, better education, functioning justice and social care that works, for example, and they want the government to supply them, not because these things are then free, but because they know that the government is the only agency that is capable of delivering these things universally for the public benefit.
These things are what are called 'public goods', which are a supply of goods (sometimes) and services (more commonly) that are provided without the intention of profit being made to all members of society, usually by a government, but possibly by a private sector organisation. I would argue that a properly functioning tax system is another public good.
There are some very important points to note there. First, there is a supply. Second, there is no intention of making a profit from doing so. Third, the aim is to be universal. Fourth, government is most likely involved, meaning the ballot box has a role in decisions on public goods.
This does not mean public goods must be supplied: there is, of course, a resource constraint in all societies. But when the need for a public good is recognised - as it has been on a wide range of issues in the UK - then organising to deliver them is key.
What in that case is not possible is that the delivery organisation be structured on a 'for profit' organisation. That is because a 'for profit' organisation does:
- Not anticipate meeting all need.
- Might decide not to meet some need.
- Assumes that there will be competition to its supply.
- Need not ask whether all consumers are happy with its service as it has no desire to have universal appeal.
- Market segment
- Sets financial goals that are focussed on its needs, and n ot those of whom it serves.
Despite the obvious mismatch between these characteristics of the 'for profit' organisation and those of the agency that should supply public goods, it is the model of the for-profit organisation that has been adopted for those agencies meant to supply public goods on a universal basis.
It is not hard to see why these governance models have failed when used by the suppliers of public goods.
They encourage management to set artificial internal goals for success, which they then use to reward themselves (the Post Office, for example, has used an artificial measure of profit for this purpose).
They also presume that there is no public good being supplied: somewhere, deep down in such structures is the implicit belief that either the 'consumer' (or customer, as HM Revenue & Customs ludicrously calls taxpayers) has a choice of going elsewhere, or can be battered into submission, but either way the concept of service is absent.
And, there is no concept of participation when necessarily it must be the case that public goods require a high degree of cooperation between the supplier and user. Despite that, it feels that far too many supposed public goods are 'done' to people who have no choice about the fact, with their cooperation being demanded, without any sense that an act of co-creation is required.
I would argue that this thinking is pervasive in large parts of our public services now, from the forced fitting of pay-as-you-go meters to low-income households, to the Revenue's attitude to finding people, to the failure of the Post Office, who treated its sub-postmasters as people to be told what to do so, and not as participants in the process of delivery of its services, which no doubt senior management thought was entirely a credit to themselves.
How to change this? I'll muse on that. This is stage one of some thinking on this issue.
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…’far too many supposed public goods are ‘done’ to people who have no choice about the fact, with their cooperation being demanded, without any sense that an act of co-creation is required.’
Precisely. It is so striking that technology, – the internet, cloud computing etc which could potentially make co-creation across the network of all citizens possible for the first time is instead being used to bring the whole ppopulaiton under big brother type subservicene and control from the top.
The govt, the energy companies, know more and more about us – where we are what we are doing what resources we are using , whats in our bank account, enabling them to extract our money whenever they want, while we like serfs hang on to the phone or send them futile emails.
It does seem that we now feel to be less free and have less autonomy than we did thirty years ago.
Until legislation starts to go in the opposite direction – to enable us to take back control whenever we wish, and that the state and the monopolies have to respond within stated time periods , provide minimal levels of service etc etc digitally geared to our own specific needs profile we are going to become some kind of neo-feudalistic digi -state.
I was musing on this very subject with a care manager yesterday. The mindset of public servants has changed dramatically over the past century. Those responsible for funding care apparently now see their role as working for government, and thus there to minimise funding, rather than working for the public and ensuring that everyone gets all the funding they’re entitled to. The same is true of the entire benefits system. It’s nuts. Services should be universal, not just given to those who fight hardest to get them.
“As John Harris notes in The Guardian this morning, maybe 20 per cent of English councils might financially fail this year.”…….& the gov (and probably the next one) think that local gov will be a major player in the erm “energy revolution”. Most amusing.
More amusing, there is an outfit called “ADVANCED INFRASTRUCTURE TECHNOLOGY LTD” they were given money by BEIS to develop some GIS software to help LAs analyse what they could do in terms of energy (heat pumps, ev charging etc) . Gov now promotes the software on its web site & AIT charges £10k+++ per year for its use to the LAs. Given +/- 20% of local govs will fail this year & the rest will be even more cash strapped – where do the political titans sitting on the commanding heights think the LAs will get the money to drive ahead with energy projects? Maybe the politicos think the LA’s have a magic wand, yeah – probably.
As I have said before – UK a basket case – or more aptly “Late Soviet Britain” – which leaves the open question – who fills the Brezhnev role?
I think you’re onto something here, but perhaps there would be value in distinguishing between “government” and “the state”.
Governments can and do change from time to time (arguably not often or soon enough), and along with that change, the principles, policies and priorities by which they operate tend also to change. The state on the other hand, is a much longer-lived entity, and, I would suggest, should operate by principles and priorities that are also longer-lived, particularly in relation to public goods and/or state-provided services.
Written constitution, anyone?
Please
No matter the election results, the UK has normally benefitted in the past from a non-political and permanent Civil Service. The Carltona Principle enshrined the notion of public service for the CS. Direct instruction from the Minister, that was contrary to CS advice, required it to be put into writing; with no fear of dismissal.
It seems to now be that the CS no longer advises the Minister. The voices heard in Whitehall are those of the SpAds and the consultants, outsiders who show ignorance of the Nolan Principles – one hesitates to say that recognising Principles is outwith their ability, but…
How much experience has been lost, one wonders.
Anecdote 1:
When JSA was introduced in 1996, Clerical Officer training lasted 12 weeks, with 100% checking on all work afterwards until cases were completed with no errors. Private outsourcing was sought. After observation, the resounding reply was “Not a chance”. The companies involved knew that to make a profit they had to pay low wages, and 12 weeks + checking would have been long enough for new recruits to find better paid work, thus wasting money and haemorrhaging staff resources.
Anecdote 2:
A truly experienced Executive Officer (one of *my* checkers) took up a new post with HMRC in about 2000. Her appraisals were constantly being low-scored “for being too slow”. As she said, “You can get it fast and sloppy or slow and right.” Her pride in her work only lasted so long, as did her patience in correcting errors of her colleagues, and she eventually left the CS.
You can pay money, or you can pay respect. The First Division Civil Service is being paid neither.
IMHO, and I have probably said it before, the biggest threat to the UK is its management and Political class.
Not fit for purpose
My Mastodon timeline provided some fun refutation earlier today of libertarian belief that the market alone will provide
https://onlysky.media/alee/why-libertarian-cities-fail/
Update
https://grist.org/housing/arizona-rio-verde-foothills-water-wildcat-subdivisions
I think Royal Mail is a good example of how a private sector ethos destroys a public service.
Royal Mail has a legal obligation to make postal deliveries to every address in the UK on 6 days every week for a uniform price (subject, obviously, to the existence of post needing to be delivered). The introduction of competition into the postal delivery market has made it impossible for Royal Mail to meet that obligation at a reasobale price to the consumer as competing private organisations cream off the profitable side of the market. The requirement that Royal Mail makes a profit (a requirement that was introduced before privatisation) adds to the stress for the organisation.
The result? A discussion in parliament on the future of the universal obligation https://commonslibrary.parliament.uk/research-briefings/cdp-2022-0243/, which I think took place on Friday. No real consideration of what regulation may be needed to meet the universal obligation, just do away with it. Or reduce puiblic services.
Cyndy makes a good point, but it’s worth noting that the Royal Mail and the Post Office are separate businesses these days.
For clarification; pre-privatisation the Royal Mail and Post Office had very strong service interconnections that operationally bound them together as a Postal Service monopoly. When privatisation of the Royal Mail was pushed through, the Government defended its case by emphasising the potential of both businesses being free to operate and exploit their potential, and the PO ability to focus on “growing its revenues”; but at the same time claimed the two businesses were in fact, “natural partners”; and would always have a “strong commercial relationship” (Dept. of Business, Innovation and Skills; Royal Mail: Myth-Busters’ PR release, 2013); in short, you can have your cake and eat it.
The scale of the connection can still be found in the Post Office accounts (2023), where 35% of revenues are from Mails; and the Financial Review comments, there was a £46m decline in Mails; ” driven by lower volumes across labels, stamps and international impacted by volumes migrating directly to Royal Mail, cost-of-living crisis, Royal Mail industrial action, and temporary suspension of international services due to a cyberattack on Royal Mail in January 2023″. The Post Office also participates in Royal Mail pensions schemes. That privatisation went well for the Post Office.
In other words, PO and RM together constitute a natural (public service) monopoly. The privatisation of both – one might rather say balkanisation – with its emphasis on commercial profitability has undoubtedly contributed to developments such as the Horizon scandal.
For me it is simple.
Privatisation brings in the ‘profit motive’ which is at the seat of everything – driving cost cutting, pension raids, retrenchment and drops in service levels. But who do these savings accrue to?
The best definition I ever hard of capitalism was in an old American public information film that declared that capitalism was the best economic system because ‘it delivered the most social utility to the most people’.
I did not think that that was too bad a definition if I had to live with capitalism, because of the ‘most people’ bit which I saw as inclusive and how capitalism seemed to work up to the mid to late 1960’s.
The problem is as we now know, that privatisation means that the savings generated actually go to a narrow band of people – shareholders and the management class as well as bankers because of financialization.
This is where capitalism has actually failed because the emphasis has been on moving money around – or – taking money that was usefully used (wages, plant, selling, buying) and essentially giving to managers, bankers and shareholders and claiming it as making a profit. But the profit is just someone else’s loss and society is poorer, whereas only the individual is richer.
If we want to change or re orientate the public sector, then we must surely be looking at externalities – not monetised benefits – of running a service (but they could be monetised too).
We have to remember that only a certain mind set sees these benefits as ‘externalities’ (non-valid) – this mind set (neo-liberal?) sets out to re-write human history and negates society and needs to be expunged, dare I say avulsed (yes, that violently if necessary) from our reasoning for ever.
Externalities matter. We must rediscover them and remediate the damage done by the bottom line robber barons we’ve put up with for too long. That job should start in the public sector.
Much to agree with PSR
Reading PSR’s comment, I am reminded of the motto of the Stockton and Darlington Railway: Periculum privatum utilitas publica (“At private risk for public service”) – and while they hoped for profits, it was the public service that drove them, and indeed most ‘capitalist’ companies – the motivation that whatever they did would, in its way, make the world a better place. Something that was equally true of ‘public service’ proper. And that was largely the way until about the 1970s (?), when corporate profit (and personal enrichment) – maximisation of financial return – steadily took over as the driving force for companies – an attitude and sense of purpose that then spread into the public service field.
It was a Quaker company – one of many amongst north eastern railways.
My experience of working in qangos (Training and Enterprise Councils – TECs) in the ‘90’s and early 2000’s introduced me to the problems that most public sector organisations seem to face. The TECs had no clear purpose. The reason lay with the introduction of a profit motive. We creamed off surpluses (‘profits’) by squeezing the money government paid for youth and adult training, then handing the bulk of this ‘profit’ to local businesses or various pressure groups in the form of short term project funding. The result was a paired down training service operating with less than it needed, alongside a sprinkling of cash lobbed at selected enterprises. No wonder David Blunkett flushed TECs away in 2002.
On the one hand, we were supposed to be good stewards of government money, subject to audit by the NAO. On the other we had a board mainly comprised of local business bigwigs, who wanted to use public money for the development of local businesses, without the necessary accountability. The tension in this badly designed gearbox between public sector ethos and local entrepreneurialism was felt among the staff, many of whom were ex-civil servants. Supposed to be driven by local demand for training and publicly funded business services (e.g Investors in People), in fact we were subject to government whim. One jaundiced member of staff said the role of TECs was to be a post-box and shield for government, taking responsibility away from ministers so they could hide behind the TEC’s supposed independence when asked embarrassing questions about the lack of suitably trained young people or the terribly low numbers of long term unemployed finding work.
The lessons I learnt from my spell in two different TECs are:
– Government services are there, not just to address market failure, but to provide focused and efficient services that suit different communities. Efficiency that the private sector cannot replicate. To be successful, they must have a very clear purpose. They should not be subject to profit incentives, because this always distorts and confuses the necessary clarity of purpose. A government department which hands out Universal Credit to citizens should have the welfare of citizens as its core purpose, not fraud detection and prevention, nor forcing people to take up work. Those latter purposes should be the focus of a separate benefits fraud agency, and the Job Centres.
– Our neighbour used to work in the Benefits Agency, and sardonically referred to his claimants as ‘clients’. I asked a retired policeman recently, were criminals your ‘clients’? He laughed. The customer of the government service must be very clearly defined if the organisation is to be successful. In TECs we pretended our customers were trainees or local businesses, but in reality it was always government. Clarity of purpose only comes when you are very clear who your customer is.
– Our system of Government is far too centralised to ever be capable of designing and running a public service, because the complexity and variety of demand cannot be catered for by one-size fits all approaches. TECs were a laudable attempt to put the design and implementation of a public service at a more local level, but central government controls, structure and lack of clear purpose made them unsuccessful. Everything, from education to provision of benefits, would be better if it was locally managed and controlled, without central political interference.
– There is no reason why any private sector organisation will be inherently better at running a public service. The profit motive will always militate against the provision of good service for the real customers – the users of the service – because for the private sector organisation the customer is government, not the service user. The government as customer demands lower costs, not better service. The private sector company must make a reasonable return. The result is often bad service. Good service will reduce costs by focusing on what matters to end-user customers and relentlessly eliminating waste.
– Having worked in qangos and the private sector I have seen very good management in both, and equally some very bad. There is a problem with management philosophy in the UK and we see far too many managers slavishly and uncritically grasping at the latest fad to emerge, usually originating in the US, which has a very different culture. We do need to get a clear idea of what good management means, adapted to suit the different cultures and purposes that distinguish public service from those of the private sector.
Thank you
I am happy for others to follow your lead
I have been reading and learning from your blog for several years now. Must confess the intricacies of economics still challenge me. But this blog in its entirety is hitting the nail on the head. Please build on this ‘stage one’ and share. Thank you.
I will revisit soon….
But, sadly, Quakers too believe in God!
It’s much more complicated than that if you are a Quaker
The only thing agreed upon is that ‘there is that of God in everyone’.