The Incompetence Issue

The issue of incompetence in the British Government system is at the heart of the Home Page welcome to this website, see “Spinning out of Control”.

The consequences of institutionalised incompetence have come thick and fast with the coalition government:

  • immigration and border controls
  • paralysis on new airport capacity
  • endless dithering on energy policy
  • defence and defence equipment manufacture in a complete muddle
  • do nothing “strategy” for economic growth.

to name only the five most important.

Are we seeing something uniquely British or do other modern countries suffer from the same sort of thing?  I think some do, but not to the extent Britain does – the USA is often cited for having lost control of immigration and suffered from enormous defence equipment over-runs, but it isn’t paralysed about airports or energy.  Certainly Germany and Japan have changed their minds about nuclear energy provision, but neither country has adopted a replacement policy which will cause widespread electricity shortages in 2015 – 3 years away.  By contrast, all through the Fifth Republic after de Gaulle came to power in 1958 France has maintained through its Civil Service three long-term strategies.  First, nuclear power for electricity generation (75% of its electricity is from this source).  See Table 5 of “Averting Energy Catastrophe” on this website for international comparisons.  Second, the French government of whatever political hue has steadfastly promoted French manufacturing with the result that France today has the most complete set of industrial competences of any country in the world apart from the United States – cars, trucks, civil and military aircraft, heavy and light chemicals, pharmaceuticals and polymers, electronics, moulding and machining centres, shipbuilding and textiles even.  Of this list Britain retains ownership and significant UK capacity only in chemicals, polymers and pharmaceuticals, and in military aircraft.  The latter, it seems, the government is prepared to see pass under foreign ownership (see post on “EADS takeover of BAE”) – a proposal now thankfully defeated (10th October 2012).  Third, France continues to extend its motorway network so that now, for a similar population and over twice the area of the UK, France has well over twice the length.

Confusion of Responsibilities and Objectives

The two branches of civil government – the executive and the administrative are pretty distinct in the USA (it is one of the foundations of its constitution), but in Britain the two branches have become very confused.  There is confusion not only about policies – which ought to be the exclusive preserve of the elected politicians – but also about administration – the carrying out of policies and maintenance of the smooth running of the state’s functions, which is the Civil Service’s job.

This confusion is exemplified by the five key areas listed at the head of this article.  They all have two characteristic failings in common:

  • The elected ministers (executive) in nominal charge of the relevant departments have come into office without any experience or even prior book knowledge of the fields over which they have to achieve substantial change – and they simply don’t know what to do, nor how to achieve it.
  • The Civil Service (administration) has not been set up to undertake major projects outside its own internal affairs nor to oversee projects subcontracted to private sector companies.  The Civil Service is essentially about maintaining and operating the status quo.

The present government of mainly 40-somethings has with few exceptions, no experience of working with and through large organisations who are composed of people who are concerned quite reasonably to protect their own jobs.  To work with them successfully requires, above all, conviction on the part of the minister, born of deep thought over several years – even decades, before taking office.  The outstanding successes among the present government ministers, Michael Gove at Education and Iain Duncan Smith at Welfare both match these two requirements for effective office.  Unhappily for the UK, Prime Minister David Cameron does not.  Neither his academic training – Politics, Philosophy and Economics at Oxford University with its emphasis on essays about what has been, nor his subsequent work experience outside politics in public relations as a side-kick to Michael Green at Carlton TV, equipped him with the ability to do the one thing which any leader must do, that is to make hard-headed choices between competing priorities and then systematically organise people and resources to achieve them[1], [2].

The Energy Shambles

As a result of ignorance about the realities of energy usage and electricity generation in particular, the anti-nuclear propaganda pumped out by the Greens[3], heavily represented in the Liberal Democrat part of the UK coalition government, and the Labour government’s signing up in 2003 to absurd European CO2 emission reduction targets, embodied in the 2008 Climate Change Act[4] (see “Averting Energy Catastrophe”), no senior member of Cameron’s cabinet, including himself, had the least knowledge of the energy field, still less the realisation that they had actually to choose between adhering to the CO2 emission targets and keeping the lights on in the period 2015 onwards.  (That truth may be dawning after nine years of dithering.)

What we have now

1        A commitment to shut down around 40% of our coal-based electricity or about 16% of total generating capacity by the end of 2015, under the EU Large Combustion Plant Directive.

2        A proposal by EDF (Electricité de France) to build 2 nuclear reactors at Hinkley Point in Somerset generating 3.2 GW using the unproven Areva (French) European Pressurised Water Reactor (EPR) technology at a cost of £14 billion (i.e. £4,300 per kilowatt hour, or about 50% more than the cost of the AP1000 reactor designs from Westinghouse-Toshiba, the company which Gordon Brown sold for a paltry £2.9 billion in 2007.

EDF will only implement its proposal if the British government sets a ransom price for the electricity generated, rumoured to be as high as £165 per megawatt hour (more than four times current wholesale prices).  The other proposer of nuclear power, the Horizon group owned by the German companies RWE and E.ON is up for sale with only one bidder left.

3        About 5 gigawatt of nominal wind capacity (or about 1.5 gigawatt actual – 2.5% of UK capacity).  As shown in “Averting Energy Catastrophe” electricity generation in the cold, high pressure, windless days of January to March, has been virtually nil from the wind farms.

4        All but one of the existing 8 nuclear electricity stations is due to close by 2023 because of end-of-life rules.  Without a crash programme of new nuclear stations, Britain will be dependent on imported energy (chiefly gas) for the majority of its needs for the first time in history underlining the absolute dereliction of duty by the LibLabCon politicians of the last 20 years.  We already have a huge deficit in our balance of trade, and rising fuel and electricity prices from existing energy supplies.  Government policy will make both these situations much worse.

The Railway Shambles

The twin inability to formulate clear achievable objectives and to concentrate on achieving them have likewise come together in the West Coast franchising fiasco which is only the latest in a long line of costly fiascos since the Thatcher government decided to privatise the railways in virtually its last major act.

Techno Managerial Incompetence

Here the role of Cameron’s predilection for promoting unqualified women to top jobs in the executive branch has compounded the Civil Service’s institutional incompetence in handing large projects.

Contrary to the propaganda put out by the government to excuse yet another pointless waste of public money (£40 million to reimburse the four companies in the bidding process), the issues are not particularly “complex” or “technical” – two terms always dragged up to cover up the basic simplicities.

Future Sales Income is Unknowable in all Long-term Capital Projects

Anyone who has been involved in the planning of major capital projects stretching over 10-20 years knows that however many factors you may try to take into account, sales income is by far the major uncertainty.  Most projects over-estimate sales income because this is how projects get through the scrutiny of those who have to agree the expenditure (in this case the West Coast franchise).  The discount rates (essentially the interest rate on the capital required) assumed at different times of the project life also greatly affect the result.  Despite the blizzard of explanations for the bidding fiasco, these are not “complex” matters of “spreadsheet detail”, but ultimately matters of judgement by the most senior authorities in the organisation, this case the Minister of Transport, Theresa Villiers (former barrister) and her boss, the Secretary of State for the Environment, Justine Greening (accountant) at the material times.

The proof that this is true is the fact that within hours of the 15 year franchise award to First Group being announced, its chief rival, the present operator, Virgin, focussed immediately on the claim by First Group that its passenger numbers would be more than double the 30 million that Virgin has actually achieved.  Such an assumption swamps every other factor.  No refinement of calculation or other data can affect the outcome.

Sensitivity of Outcome to different assumptions

It is normal in any investment proposal to require bidders to show how the results of calculation are affected by the assumptions made about the primary unknowns.  In the present case you would expect to see how First Group’s bid looked with Virgin’s passenger assumptions[5].  Did either Greening or Villiers ask to see these comparisons?  If not, why not?  What are ministers for?

The Civil Service: What should be done?

Faced with uncertainty about passenger revenues, the Civil Service seems to have taken refuge in demanding huge amounts of completely pointless details (several tons in fact) – of which much could only be pure guesswork – for example: “How many passengers on October 31st 2018 could be expected to get on at Rugby?” – or standard bookwork such as safety regulations to be observed by train drivers.

According to Sir Bob Kerslake, head of the Home Civil Service, (Maths graduate and Local Government Executive) writing in the Guardian on 5th October stated that the chief civil servant in the Department for Transport, Philip Rutnam, has taken “firm and decisive action” to “address this issue” (of the fiasco).  Two external reviews have been set up (gosh).  Kerslake goes on to say that “while we must acknowledge and accept responsibility for the error which civil servants made, we should acknowledge . . . those who deliver high quality public services every day.”

Civil Service – a status quo culture

Does Kerslake include Rutnam in his acknowledgement of error?  I would have thought he should, given that rail franchising is the biggest thing which the Department of Transport actually does and normally private sector bosses take responsibility for the biggest projects.  And that focusses on the exact point.  The British Civil Service is probably one of the best in the world in administering procedures for what exists, with only minor perturbations from time to time.  Doing this well is a necessary requirement for any government machine ultimately responsible for administering 40% of the Gross Domestic Product.

A project management culture is needed to deliver projects

But the culture of procedures – checking benefit claimants, ensuring the Armed Services get paid, and so on – is a world away from running projects designed to deliver major developments in the country outside Whitehall and Local Government.  After many attempts, the Ministry of Defence seems to have grasped the point that what is required to deliver major projects is project management – that hard-headed amalgam of technical knowledge of the project and the management skills to assemble resources to achieve its aims (see post on Defence outsourcing).  These two ingredients of success are not picked up as you flit from department to department – they constitute a culture in their own right.  That the Department of Transport doesn’t have this culture is witnessed by the fact that no one person was identified on the Department’s side as in charge of the franchise decision-making, except the two ministers who have been whisked out of harm’s way.  There was apparently no person the equivalent of Richard Branson for Virgin or Tim O’Toole for First Group.  The nearest named person is yet another female, who disputes her role in the affair and is taking legal action against her employer, the Department of Transport, apparently to protect her reputation.

Proposal

1                    Remove responsibility for big projects greater than say £100 million from the Civil Service departments altogether.

2                    For each big project, form a team drawn from the relevant industry and head it up with a named individual responsible directly to the relevant minister, answering to parliament.

3                    For careers and pay, the Civil Service grades can be used, but in principle the project managers of really big projects (over £10 billion say) will rank level with the permanent secretaries and be paid accordingly.

Many people prefer the relatively pedestrian progression in a procedures-based culture typical of the Civil Service, but those who accept uncertainty as part of the job will relish the project management culture.  Over time a hugely valuable critical mass of experience in running government projects from a base in Whitehall will be built up, not least in handling private sector contractors – with immediate application to defence, transport and energy.



[1] Duc de Lévis (1764-1830): “To Govern is to Choose”, Maximes de Politique 1812.

[2] Actually Cameron did have one small-scale objective formulated before he became prime minister.  In fact as told to the BBC Radio4 “World at One” the day after his election as Conservative leader, it was his first priority.  That was to increase substantially the number of Conservative women MPs, which he has in fact achieved by parachuting mainly attractive young women into winnable constituencies, pushing aside the local men.

[3] Actually they have changed their tune a bit when they have seen what the rest of us saw – namely that wind turbines blight our precious countryside and biofuels destroy food capacity.

[4] Blair later claimed that he thought he was signing an agreement to reduce emissions from electricity plants, not energy generally.  Certainly his energy minister, the late Malcolm Wicks didn’t seem to appreciate the vast difference between the two.

[5] First Group said their case included additional passenger revenue from two branch lines they intended to operate, but are small beer compared with London-Manchester-Glasgow.


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