This appears to be a particular problem in the UK which is undergoing a form of political revolution, though quite to what end and in whose interests is unclear. A few days ago I listened to an interview with Adrian Wooldridge of The Economist newspaper whose forthcoming book is titled The Wake-Up Call in which he explores how the Covid crisis has exposed the flaws in the model of western governance. He noted that we can trace the problems in the UK as far back as the 1960s when the hubris associated with being on “the right of history” meant governments took their eye off the ball. Wooldridge further made the point that over the past 40 years, as governments have tried to reduce the role of the state by contracting out service provision, they have also lost a lot of in-house expertise. This chimes with my long held view that the obsession with finding private sector solutions to state service provision often results in sub-optimal outcomes and is not proven to generate value for money for the taxpayer.
Problem 1: Outsourcing government functions to the private sector
There are numerous examples of how the outsourcing of public services to the private sector has resulted in less-than-ideal outcomes. Examples include the history of rail franchising where the main East Coast franchise covering the London to Edinburgh route has failed three times in a little over 20 years (one of these days I intend to look more closely at the issue of rail travel, since many of the flaws inherent in the current system were evident from the start way back in the 1990s). More widely, the National Audit Office two years ago issued a report on the Private Finance Initiative. Under this scheme a private finance company sets up a Special Purpose Vehicle (SPV) which then borrows to construct a new asset such as a school, hospital or road. This is repaid by the taxpayer over the contract term (typically 25 to 30 years). The NAO found “no evidence of operational efficiency” in the hospital sector and it is at best arguable whether private sector participation has delivered the benefits which its proponents promised.
One of the biggest problems is transparency, or the lack of it. This takes two forms. The first is relatively trivial – the hidden costs associated with PFI schemes and the fact that off-balance sheet vehicles mean that debt does not appear on the public sector balance sheet. Such structures have been criticised by the OBR as a “fiscal illusion” since the debt burden associated with the provision of public services is higher than the official figures suggest. The second form of transparency is more nebulous and relates to the way in which public sector contracts are awarded. The law states that the government must produce details of any contract within 30 days of being awarded but as The Good Law Project notes, this requirement is routinely flouted. Over the course of recent months, there have been numerous examples of contracts being awarded to firms with links to government (see here for an example) whilst the FT reported last month that the government has awarded £1.7bn of contracts to private sector firms during the Covid crisis without a competitive tendering bid, as required by law. It may be that there is no case to answer here. But the evidence appears to suggest that due process is not being followed, which not only undermines the propriety of the scheme but is unfair on other companies with an interest in tendering for contracts.
Problem 2: Pandering to special interest groups
A further problem is that successive UK governments have allowed themselves to be distracted from the bigger picture by the demands of special interest groups which have exploited dissatisfaction with the status quo in the wake of the 2008 financial crisis. In 2014 the government was focused on the Scottish independence referendum, which David Cameron was confident he could win. But the government’s handling of the referendum betrayed the complacency of an administration that had made no provisions for what to do in the event that the result went against them. A similar complacency was evident in the run-up to the Brexit referendum but this time the result did indeed go against them.
On both occasions the government made the mistake of asking a question to which it did not already know the answer. It got lucky in 2014 but nonetheless gave momentum to the Scottish nationalists which they retain to this day. But it failed in 2016 and in so doing changed the character of the Conservative Party from a nominally inclusive party of national unity to, in effect, an English nationalist party. And it is here that the governance problem really starts to become a critical issue.
For all that Theresa May was not a great prime minister she at least tried to strike a balance between the moderates in her party and the strident Brexiteers (the nationalist wing). Unfortunately, this also meant putting the unity of the Conservative Party ahead of the national interest. But because the Brexit vote effectively ended the era of consensus politics, it also brought an end to her tenure in Downing Street. We now have a prime minister in the form of Boris Johnson who is the figurehead for the nationalist wing. Whilst Johnson may be a very effective campaigner he is not a good administrator, as foreshadowed by his tenure as Foreign Secretary. Worse still, he leads a government of campaigners rather than governors and his key advisers are radicals who want to overturn the status quo.
Problem 3: Make sure you know how to deliver the changes you promised
There is nothing wrong in wanting change: It is how one goes about it that matters. Brexit has been the defining issue of the last four years and after three years of political wrangling, the first thing Johnson did as prime minister was to prorogue parliament in a bid to force the policy through. As I noted a year ago, this was a profoundly undemocratic action. Worse was to follow as the Johnson government took action to expel Conservative MPs – the governing party, lest we forget – who dared oppose it. This is not how parliament is supposed to work: Its role is to hold the executive to account and such actions undermine the basis of the parliamentary system.
One of the defining features of the Johnson government is cronyism – the appointment of like-minded individuals to office irrespective of their ability and who are defended to the hilt even when they make big mistakes. We see this in the Brexit debate where the negotiating team is led by those who seem to think that the EU loses more from a no-deal Brexit than the UK. Precisely because they are true believers who have never doubted the righteousness of their cause, they may simply never have stopped to consider whether they might be wrong. That in itself is a dangerous trait as it promotes ideology over rational, evidence-based policy – an approach which has a habit of ending badly.
We also see cronyism in action in two more policy areas. The first – and perhaps least important – concerns the recent exam debacle (here for a sober assessment of the issue). It now transpires that the government was warned about the problems of the algorithm used to provide grades in the absence of sitting the exams. However, the government is trying to distance itself from the problems and appears to be laying the blame on civil servants for the problems rather than accept its own failings.
We see it in the way the government has handled the Covid-19 problem. This article from The Atlantic Magazine suggests there was institutional failure, as large parts of the state mechanism were insufficiently prepared for the scale of the crisis and were slow to adapt. Whilst it is true that the government cannot be blamed for all that went wrong, the article fails to mention that the changes imposed on the health system by the reforms introduced in the Health and Social Care Act of 2012 crippled its ability to respond. Moreover, the law was changed in 2012 in the teeth of opposition from health professionals who warned that it risked undermining the operability of the health service. The government’s response to the failings has been poor. It is set to abolish Public Health England in what looks like an attempt to deflect the blame onto the health service (never mind that PHE is an executive agency that actually reports to the health minister – it is not some out-of-control quango). And to add insult to injury, the new replacement body will be headed by Baroness Dido Harding - a Tory insider with a chequered business career who has no background in public health.
At some point, however, the government will run out of ways to deflect the blame for its shortcomings. It will have to stop operating as if it were running a campaign and start to govern effectively. It cannot afford any more missteps and needs to get Brexit right. For if not, the economic as well as the political costs will be very high indeed.
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