How to fix public services
Learning from the 1990s
Across the developed world, a third or more of the population have lost confidence in their governing class. In some places this takes the form of a revolt against established liberal-inclined political parties, as here in Britain, France or Germany; where these parties have been ousted, such as in Hungary, or taken over by the rebels, as in the US, the public revolt against these new ruling elites. What is driving this? That is hard to say - there is a cultural component, and an economic one, and then there is a simple question of competence. I want to look at the last of these. I will focus on Britain, but the lessons are doubtless broader.
The public are exasperated by the quality of governance. Many public services are driven into rack and ruin; attempts to prioritise resources leave areas of deep neglect (consider the policing of shoplifting or antisocial behaviour). When politicians promise to put things right, nothing seems to actually happen. Look at the blood infection scandal, or the abuse of Post Office contractors. Any major building or infrastructure project quickly gets bogged down.
There are many explanations. Demographic changes put services, and finances, under pressure, with demand outstripping resources. Government ministers have been subject to rapid turnover, and tend to have expertise in public relations and campaigning rather than management. Unions and other pressure groups cast a baleful influence over any kind of innovation; the public at large aren’t much better. Risk aversion seems so heavily baked into public service culture that it is hard to change anything. Local and national government are full of people whose only job seems to be to say “no”.
But there is a paradox. If you meet public servants as they go about their job, you will often find people who are conscientious and competent. My main experiences are through being a primary school governor; the managers and staff of schools and the people they work with in local authorities are generally highly competent, even if the latter lack the resources to achieve what they should. Emergency service workers regularly show extreme bravery in the face of danger. And so on.
To me, this paradox of competent workers and managers within a system that is failing overall is a familiar one. It is one that exercised business management thinkers in the 1980s and 1990s, when so many large businesses were flailing. Business leaders would come up with plans to put things right, perhaps involving massive amounts of investment, but the results would vary from disaster to, more commonly, underwhelming improvement. What arose from examining this chronic underperformance was an idea that, in my world, was called Business Process Engineering (BPR). The critical insight of this was that big businesses tend to be organised according to functional specialisms - following the prevailing wisdom of the division of labour, lauded as far back as the 18th Century by Adam Smith, and taken to an extreme by Henry Ford. You might have different specialists in car bodies, engines, seats, etc, moving up the organisation by the division between sales, marketing, manufacturing, maintenance and finance, all peopled by specialists. These specialisms became functional “silos” that were inward looking, and the organisation lost its ability to work as a whole. Attempts to improve performance, for example through automation, worked within the silos and simply served to bake in inefficiencies at the corporate level. There were constant exhortations to work harder and communicate better, but to little avail. Failures were met by the response of “learning lessons” by making procedures even more complicated and less effective.
The idea behind BPR was to reconstruct the business by focusing on “processes”. Processes were defined as providing an outcome for the end user. The end user wanted a well-performing and reliable car, for example, and wasn’t bothered by how individual bits performed. The idea was that the processes would became better integrated, and the organisation’s functional structure dismantled - cutting against the conventional wisdom about division of labour. This coincided with the availability of new technology: graphical user interfaces, relational databases and, above all, the internet which allowed people to work together in new ways. When technological change was combined with a new working philosophy, a revolution ensued. Businesses started to become much more efficient. I was part of this in a small way in financial services, where I implemented BPR change programmes that resulted in the doubling of productivity, typically by ensuring that potential problems were dealt with at source.
This was all part of a massive wave of optimism in developed countries’ business communities that took place in the late 1990s. This had more than its fair share of hype and foolishness, but featured much genuine advance too. It was this wave of optimism that Tony Blair tapped into when he reengineered his party into New Labour in the late 1990s, winning the his first landslide in 1997. Mr Blair enthused about what the public sector could learn from private enterprise, admiring the way that so many businesses were innovating. Since BPR tried to see things from the customers’ eye view, it started as being a very customer-focused approach. What was not to like?
Government itself only embraced the revolution half-heartedly. Tax collection was transformed by self-assessment and online interfaces. The Passport Office was a notable success. Other achievements of the Labour government, in the NHS and education, owed more to extra resources and tougher accountability for outcomes - old-fashioned management rather than reengineering.
Private enterprise went its own way after the BPR revolution. “Shareholder value” became the new watchword. Once the basics of process design were grasped, things could be pared down - customer focus was replaced by “enshitification” as they didn’t call it. Think Ryanair - sound process design combined with contempt for the customer. New technology enabled network effects that allowed (almost always US) technology giants to emerge, who took enshitification to new levels. Technology continued to transform lives, especially with mobile devices and social media - but this did not lead to anything revolutionary in business efficiency, outside the admittedly important worlds of advertising, marketing and entertainment - in the developed world at least (mobile devices had a huge impact in the developing world). Whether or not coincidentally, economist-measured productivity improvement slowed to a crawl. There was no positive energy being transmitted from the private to public sectors: the private sector merely offered enshitification to anything outsourced to it.
Government services remain a massive homage to silo organisation. Departments and agencies were run in fiefdoms, enforced by the Treasury whose role is to stamp out any loose thinking that might lead to strategic benefits. To be fair on those Treasury officials, the silo system means that nobody is accountable for strategic benefits (say, the effects of better housing on health and crime), and projects proposed on these lines would almost certainly have disappointed. This is so baked into our political and public culture that change looks more than daunting. We think about public sector outcomes by fiefdom - education, health, criminal justice, and so on. We think that other ideas, such as wellbeing, and a healthy, well-ordered society, are too fuzzy to drive public policy. But all the hallmarks of the poorly-functioning silo-based organisation that I was taught about in the 1990s are present in abundance. The failure of complex projects, and a record of underachievement; the occasional spectacular under-communication leading to catastrophic failure (like the covid pandemic). And whenever something goes wrong the familiar cry of “never-again” leading either nowhere or to clogging systems up with tick-box management. When the call comes for cost-cutting, it is usually areas of high strategic benefit that are put on the block first (the fate of Sure Start centres, set up to intervene early in a child’s life, come to mind). Financial pressure makes people become defensive and inward-looking.
What to do? One obvious step is to devolve government into smaller units, breaking up the national silos into regional and local levels of accountability. Smaller countries are often better run than ours: the Scandinavian countries come to mind (though we need to be careful about rose-tinted glasses - these countries have plenty of problems too). Britain has unusually high levels of centralisation. If the aim is to achieve integration between the silos, then the smaller they are the easier it will be. This idea seems to enjoy wide acceptance in principle, but follow through has been very cautious. Regional “mayors” are meant to drive cross-agency initiatives, but their powers are limited. To get anything done usually means referring back to the Treasury.
And the country’s two most serious devolution projects - Scotland and Wales - have been a disappointment (Northern Ireland is a special case but the outcomes there have been no more encouraging). Public services have tended to fall behind those in England. The devolved structures have given opportunities for conservatives to resist change, or reign given to fashionable left-wing ideas with little proven impact. Political leadership has shown little interest in transformative change. Devolution may be a necessary step, but it is not a sufficient one.
Might not technology help? The next big thing is on its way: artificial intelligence (AI). Like all technologies this will only live up to its true potential if it is accompanied by reengineering processes. There isn’t much sign that it is being used to do that in the public service or business worlds. Its superpower seems to be its ability to analyse vast amounts of data and draw out patterns. This is transforming scientific research, and has potential in diagnosis. I’m not so sure about its application to improving public service more widely. It could help with paperwork - but first you need to understand what the point of that paperwork is…
Anyway, what is required is to bring agencies together to solve strategic problems. I think this has two main aspects. At the strategic level a picture of the goal needs to be articulated and ways of understanding progress developed. What we are looking for is physically and mentally healthy communities, that are economically active, and where crime is low. But while I am using the word “strategically” a lot, at the ground level services need to be centred on individual people and families, rather than tackling problems functionally. People with complex needs need to be given a top priority, and helped by people-centred multi-agency teams. Somebody might present as a frequent attendee at their GP surgery or at Accident & Emergency: but dig deeper and there may well be mental health, housing, employment, addiction or other issues. These people-centred multi-agency teams, of course, need to have the powers and resources to make a difference. It will often be the case that a lot of pressure on public services comes from a small number of people or families - so these need to be the priority, rather than left to last in the search for quick-wins. The hope is that a virtuous circle can be created, as longer term solutions for such people ease the pressure, allowing more to be done.
Centring on the end-user, and breaking down organisational barriers: this is what we can learn from businesses in the 1990s. But public services are different. The first difference is that the aim of public services is to reduce demand for them, not to create growing demand. And the second is that public services get the most benefit from tackling complex cases - which in the private sector would be regarded as loss-making and to be avoided. This is what Mr Blair and his New Labour cohorts failed to understand in their credulous enthusiasm for the private sector. This points to a different ethos for public services: one that is prepared to look for trouble, but which derives its motivation from enabling human progression. At the heart of success will be human contact - both because complex problems require humans to solve them, and because human problems usually have an emotional basis that only engagement at a human level can solve. Indeed a lot of public frustration with public (and commercial) services has to do with their inhumanity. So while technology will doubtless help teams from multiple agencies to work together, we must not let ourselves think, as we too often did in the 1990s, that technology is at the heart of the solution.
Will this happen? I have seen various aspects of this idea being taken up over the years. I think the closest we got to it was under Gordon Brown’s government of 2008-10 (including those Sure Start centres), although that was wrapped in unbearable waffle and were too centrally-directed. I think there is a future in pilot programmes run jointly by central government and unitary local authorities. I have no idea whether anybody in government is thinking along these lines.
The alternative increasingly seems to be that the government will cut resources available to public services and benefits in exasperation, and hope that this gives people the incentive to sort things out for themselves. This seems to be the direction that the Trump administration is going in America, and their imitators in Reform UK. Alas, all that is likely to do is to fill our bursting prisons, feeding a vicious cycle rather than reversing it.