Month: May 2008

I have commented before on the lamentable failure of parts of our public services to keep pace with demand, to recognise the big improvements in customer service elsewhere, and to tackle the high error rates they currently experience. I have been visiting some factories recently and seeing just how far the private sector is getting with high quality and reliability. Manufacturing is well advanced with total quality systems, as it has to be to stay in business. Firms use the Kanban techniques (cards or other devices triggering action when needed) first developed by Toyota in the 1950s to control inventory and work flows through the factory. They use Poka Yoke techniques, also pioneered by Toyota to prevent mistakes, by “idiot proofing” processes. Many now use a variant of Motorola’s 6 Sigma system pioneered in the 1980s for total quality management, training leaders to collect data, and manage continuous improvement. The only acceptable level of defective products leaving a factory is zero. Keen inspection and checking regimes aim to remove any failures or wrongly made parts. In order to cut waste and improve efficiency, the private sector is aiming for well under 1000 defective parts per million in what it does, and seeking to eliminate almost any that are not properly made first time. It is aiming to find them all and understand why they failed before any reach the customer.

Meanwhile the public sector stumbles on as if none of this had happened elsewhere. We accept large numbers of people contracting serious diseases in NHS hospitals, we put up with very high error rates in tax calculation and benefit assessments and allow poor performance in a whole variety of areas. Error rates can easily exceed 10,000 per million and in some cases like secondary infections in hospitals might reach much higher levels! In a well run supermarket queues are monitored and more tills opened up if the time you are waiting gets too long. If you hit Immigration and Customs at the wrong time of day you end up in a huge long queue which no one in government seems to care about. If you ring a private sector phone line there should be rapid response, with call monitoring, to make sure your call is captured and answered promptly. It is true that some of the less competitive large companies have poor phone in arrangements for some of their services, but a competitive business has to have a phone system which works well and is monitored to ensure speedy response. Compare that with the problems my constituents and others experience trying to get through to Benefit offices or the GP booking line, where delays can be huge and redialling on a regular basis a necessity if you to have any chance of getting through.

The defence of the public sector is that they are doing more difficult things than the private sector, so the same standards and techniques cannot apply. I do not accept that defence. The quality systems developed in the first instance for smart manufacturing could apply similarly to the public sector. Keeping the place clean is one of the first principles of good factory management – so it should be of a good hospital management. Modern factories in some industries have to be run to clean room standard, where tiny particles of dust and fluid have to be kept out of contact with the products. Ensuring a proper workflow, so that everything is done to the time required by the client and customer should apply to public sector customers as well. After billions of spending on IT the NHS still does not have a reliable and comprehensive system for ensuring smooth work flow to all hospitals in a way which guarantees speedy treatment to all patients.

There is nothing intrinsically more difficult about planning a benefit system than running an insurance company, nothing inherently more difficult about running a public hospital than running a private one, and nothing that more difficult in running an Immigration system than running an employment agency. The public sector needs to wake up, and wake up quickly, to how much better the best of the private sector has become., They need to understand the whole approach. Concentration on good work planning, managing quality and good housekeeping, are complemented by believing in the people in the business, giving them scope to be responsible for their own work and decisions about how it is done, and allowing people opportunity to develop with career progression and offers of suitable training. The best of the private sector is not afraid to admit mistakes and seek to remedy them. The best know they are not good enough and are striving to be better. The complacent will fail. We are in urgent need of some of the magic of total quality and full involvement of all staff in continuous improvement in public service. We need the leaders in public service who can do this hands on day by day crucial work, instead of writing more memos, demanding more resources and employing more management consultants.

The figures this week show just how the squeeze on people’s incomes is intensifying. As readers of this blog will know. wages remain under strict control. Real wages (Wage increases after allowing for the increase in the Retail price Index) are now falling by 1% a year – they usually go up by around 2.5% a year. The RPI itself underestimates the cost increases of many family budgets. Food prices are now rising by 1.5% a year more than the RPI, and energy prices, taxes, government charges and petrol prices are soaring.

The squeeze will get worse in the months ahead. The government is determined not to absorb any of the pressure, so it all falls on the private sector. Companies are being more successful at pushing through price increases, so the squeeze within the private sector falls mainly on working people trying to live from their wages and salaries.

The squeeze partly stems from the government overdoing the costs and spending of the public sector. We are now reaching the days of reckoning, so taxes go up and consumers suffer. It partly stems from the ability of overseas suppliers to charge more for everything from oil to manufactured goods. The Chinese now expect better prices for what they make, as they have plenty of demand at home as well. Opec and the Russians are able to sell their oil for more, because Asia has demanded more oil. Governments worldwide – including the UK one – have see higher taxes on oil and oil products as an easy way out of their own overspending. That has made the position worse.

The continuing squeeze means two things. It means the inflation will not get out of control. It means the political outlook remains poor for Mr Brown, the main architect of the UK squeeze thanks to his tax and waste policy.

All this week, Parliament is once again in recess. It may suit the Prime Minister. It gives him a fire-break from all those frantic conversations between MPs about his suitability to remain as Prime Minister, and all those plots about how to get the PM to change his agenda and to understand the mood of the nation. It may suit individual MPs, who can use the time to travel or catch up with other matters. It does not suit the nation, and sends a bad signal about how much value we get for all those salaries and expenses. At a time when the public is learning how much it costs to keep so many politicians, it is especially ill-judged that, once again, we should be locked out of the main job.

There is so much Parliament should be doing. It should be going through the public accounts line by line, looking for ways of cutting the waste and needless expenditure. It needs to come to a conclusion about how much MPs should be paid and how much they can claim to help do the job, and then explain it to the nation. It needs to cross-examine the government more strictly over many of its plans, from ID cards to the new curriculum for the under-5s, with a view to getting improvements in them.

Parliament should be so much more than an occasional meeting used by the government to rubber-stamp its legislation. The old idea was that MPs sought redress for their constituents’ grievances – better government – before they voted the government more taxes. This side of the job has been squeezed by this government’s regular holidays and shorter hours. They may find that more convenient for Ministers, but it makes for worse government. If they had been prepared to take a bit more scrutiny and criticism in the spendthrift years, they might not have landed us in such an over-borrowed mess today.

Gordon Brown and Alistair Darling met the oil industry yesterday to see what they could do to boost production of oil. They reasoned that if they could help the industry pump more, the price would fall and alleviate some of the pressure. I have no objection to such discussions, but wonder why they have left them so late, and wonder what they made of all the industry representations before recent budgets. These sent a consistent and simple message. The North Sea now offers only expensive and marginal new prospects compared with opportunities elsewhere in the world. The way to encourage oil companies to do more here is to lower taxation on new exploration, development and production. In recent budgets, the government decided to ignore that advice.

Part of the reason for the meeting seemed to be the wish to divert attention from the government’s tax take at the petrol pump and highlight the part played by higher crude oil prices. Unfortunately for the government, this technique will no longer work. Their greed at the pumps has made most people aware that the majority of what they now pay for their petrol is tax on fuel levied by the UK government. Their wish to raise it another 2p a litre after such a big rise just underlines how high the tax already is.

It also illustrates just how much time the government has wasted in consulting and dithering on energy strategy. Eleven years have gone by without a government lead on whether to replace nuclear stations with more nuclear or not. Eleven years have passed without a proper lead on the role of renewables, eleven years without a strong programme of energy reduction measures throughout the public sector, and eleven years without major new power projects in the UK. An island of coal, sitting in a sea of oil and gas, has been left strangely vulnerable to the fact that the main oil and gas reserves are heavily concentrated in the world, and supply is far from perfect. It is better to do something late than never, but the government really has left this one extraordinarily late. It puts in context all those fine words about how this government works for the long term and is prepared to make the tough decisions. There was no sign of that in the energy field. As a result we are now short of energy, and caught with ageing power stations that are not up to modern standards of fuel efficiency in some cases. This is not a problem that can be solved by a tweak on North Sea oil output. This requires some immediate decisions, granting planning permission and other permits to all those who want to build the next generation of energy-producing plants, and energy-supply facilities.

Yesterday government Ministers queued up to appear on TV and radio programmes to tell us they are “listening”. We were told to await the Autumn Statement patiently to see if their listening extended to understanding why people are against the big hike in Vehicle Excise Duty which they defended in the Commons recently when the Opposition told them to drop it. I guess the conjunction of Labour MPs in a queue to rebel on this issue – somewhat late, considering the amount of parliamentary time it has already enjoyed- with an orderly queue of lorries protesting on the A40 in London was sufficient to give us the benefit of hints in interviews that there could be change in the air.

This leaves us with two problems. The first is that we have learnt, from long experience of this media savvy government, that what counts is not what they say but what they do. A straightforward government that deserved more respect would have come out yesterday and said “Yes, the new higher oil prices change things. We will cut fuel duty and cancel the VED increases as a result.” Instead, we have backtracking from No 10 saying these Ministers went too far! The second, is, how will they pay for any concession they are finally forced to make?

If the government had control of its spending it would be easy to offer something off fuel duty, as they will be collecting so much more tax from VAT on fuel anyway. They could offer us the amount of the extra tax back to show their “sharing of our pain” had produced some response. They could also offer to cancel the worst of the VED increases, by using the substantial windfall revenue they will be getting from North Sea oil.

Unfortunately the government does not have control of its spending, and it is finding it expensive to remedy the obvious economic and political errors of the error-strewn last budget of Mr Brown, and the first budget of Mr Darling. There is the £2.7billion of cost of alleviating the 10p income tax band abolition. There is the £24 billion offered to support Northern Rock, and all the contingent liabilities which may well produce losses for the taxpayer to fund. It has been an expensive few months.

What the government needs to do immediately is to take action to get better control over its own costs. It should not be sacking teachers and nurses, and should not be mean to the police in denying them their Independent Pay review increase. They should be getting very tough on civil service and quango staff numbers with a full recruitment freeze, they should be market testing more of the administrative functions of government, and as they are so concerned about how much energy the rest of us use they should go on a drive to cut energy use in the public sector to combat the surge in bills.

We need to cut the tax bill on people. To do so we need to curb spending. Curbing spending is now very easy, because administrative staff numbers are so high, quangoland is so bloated, and the core public sector is profligate. Instead we have a government which is still spending on itself like there’s no tomorrow, whilst losing its authority to raise the money to pay for it all.

There was a good response to my item asking what you thought MPs should be paid, and how many things they should be able to claim in expenses. The range of views was much wider than I expected, and not everyone thought MPs were overpaid.

Today there are rumours that the Committee charged with coming up with proposals for reform of these matters is thinking about a substantial increase in basic pay, or about a system of claims for living expenses that would avoid having to file detailed receipts for the items which give the press so many stories.

My hunch is that as the Credit Crunch tightens, and as people find it more and more difficult to afford the basics, the climate will become more hostile to the idea that MPs should have a pay rise or any relaxation of the controls over expenses.

Having seen what some MPs claim – quite legally under the present system – I would like to see similar figures and details for other senior people in the public sector. How do all those so-called chief executives in local government fare? What about all those chairmen and chief executives of quangos? Can we see how much foreign travel, staying away from home and the like they all get up to? One of my Parliamentary colleagues is asking under Freedom of Information for details of judges’ expenses along with their private addresses, as he feels so strongly MPs should not have to divulge their private address. I am all in favour of proper controls over public sector expenses, but would like the system to be tightened up for everyone while we are about it.

The haulage industry is suffering badly from this government’s crippling taxes on motor vehicles and fuel. It does not drive lorries off the roads. Instead it gives a huge competitive advantage to foreign lorries to come over the Channel and grab the business.

This government has done practically nothing to increase rail capacity, offsetting the completion of the Channel tunnel rail link with measures which have reduced the use trains can make of existing tracks – the railways cut services again over the bank holiday for engineering works. You cannot deliver to most shops and factories by train – the goods have to go by truck to reach the goods entrances. If the government wishes to see the people fed, and jobs provided in British factories, it has to accept lorry traffic to move the products around. Treating lorries and vans as villains in some environmental horror movie raises the prices of food and essentials, hurting those on low incomes most, and transfers jobs from the UK to abroad.

A foreign truck business can fill their vehicles with cheaper fuel at Calais or some other French or Belgian port, and ply their trade in the UK. They can pay a foreign rate of tax on the vehicle, considerably lower than that of the UK. They can pay their drivers the overseas rate, which, in the case of the Eastern Europeans, can be a lot lower than UK pay levels. Foreign trucks drive round Labour’s nasty attack upon British hauliers, and take the business the UK industry needs to be able to have a chance of paying the government’s rip-off at the pumps. The Conservative party has long argued for a Brit disc or some other tax device to get the foreign lorries to pay their fair share of motoring taxes when using UK roads. This revenue could be applied to cutting the tax requirements on the UK vehicles. We set out ways of alleviating the tax burden on UK lorries and levelling the playing field with foreign lorries in the Economic Competitiveness review (Freeing Britain to Compete, p. 27). We pointed out that, as of last year, 75% of all lorries leaving the UK for the continent are now foreign-owned. With the vicious taxation of diesel now at the pumps this proportion will rise still further. It is high time the government at least came up with a system to balance the tax burden on transport more fairly between UK and foreign trucks, if they insist on this very high overall level.

Some Labour MPs now seem to realise that they are fast approaching high noon for their lop-sided green strategy. Over the last decade Labour has pursued a dogged and unpleasant campaign attacking the motor vehicle in all its guises. The car has been castigated as if it were the main generator of carbon dioxide, attacked for being unsafe, and singled out to be the one part of the economy which must not grow. In their ever more frantic desire to stop people getting around – and now to stop goods as well – they have lighted upon their ability to take ever larger sums of tax off motor vehicle owners and users. The robbery at the pumps is now so extreme that the public are saying very clearly to the government they have overdone it. News that next year will see a big increase in Vehicle Excise Duty for most people as well is just insufferable.

Labour’s green policy is about to fall because it is lop-sided and mean-minded. Tax and regulation were used in a draconian manner to try to stop people driving, while the government offices belted out the heating and the air conditioning, Ministers swept by in government cars paid for by the taxpayer or took to the skies to fly around the world at the taxpayers’ expense. Street lights are left on all night, even in places where no-one ventures out after midnight, some public buildings are floodlit at night, and few government offices have proper heating and lighting controls that switch off the systems when not needed. Labour has not yet dared target our homes with the same intrusive taxes and regulations on domestic power use as they inflict on us in the car. If they were thinking of doing so, the huge unpopularity of their attacks on motoring must now be driving home to the most insensitive Minister that they cannot go further down this route.

This week with the fuel protests from hauliers and the awakening of Labour MPs to the Vehicle Excise Duty increases – the Poll Tax of Wheels – it is likely the government will come to understand, finally, that it has driven the motorist into sullen hostility to all this government does and stands for. The attack on motorists has been unfair and unacceptable. They forgot that most people use cars, and we all rely on the work done by lorries and vans for our food and other supplies. They will have to think again, unless they want to go down to a very large electoral defeat.

There are two big reasons why no UK government will introduce personal carbon accounts. The first is the cost and complexity of setting them up. The second is the impossibility of doing them in a single country on a fair basis.

The initial response to the idea has concentrated on the enormous amount of computing and form filling there would need to be to capture everyone’s travel, heating, lighting and other uses of energy. It would make the ID computer look modest, cheap and not so intrusive. Government inspectors would need to watch over everyone’s habits and try to find a way of recording just about everything we do.

Equally implausible is the idea that this could be done in a single country, in the age of overseas travel and the internet. Presumably if I wanted the carbon debits of my shopping to be invisible to the UK authorities I could slip across to Calais to buy what I needed, or order it from abroad on the internet. If I wanted to undertake a round the world trip I could book a plane to Schipol under the carbon credits scheme in the UK, and then book the rest of the travel in Holland out of sight of the UK government.

To be realistic a scheme would need to be very detailed about our share in collective expenditure of energy. The regular fair goer would presumably have to spend carbon credits everytime he went on the big dipper. The shopaholic would presumably have to pay for their regular use of the shops’ heating and lighting, and the party animal might be asked to spare a crumb from their carbon account to help out the host with his electricity bill.

The mind boggles that anyone could think this kind of thing might be possible technically, let alone that you could sell it to an electorate punch drunk on the forms, rules and taxes already imposed. The way to encourage people to be greener is to give them simple rewards for good behaviour, as we did with lower fuel tax on lead free petrol.

David Miliband should put an end to speculation that he is going to replace Gordon Brown. He can do so easily if he wishes. Instead of saying stories about his running for the Leadership are works of “fiction”, he should categorically rule out seeking the Prime Ministership or allowing his name to go forward. He should call in his supporters and tell them they are no friends of his if they insist on fuelling such press speculation. He should ask them to help him stamp out any idea that he is the Leader in waiting. Assuming he wishes to be loyal, his best career option is to offer full support up to a possible General Election defeat, and then run for the Leadership of the Opposition once Gordon resigns and a vacancy is called.

It is easy to do to stop speculation. I remember MPs approaching me in the 1990s when I was in the Cabinet asking me if I would stand or wanted to take over from the Prime Minister. I always stamped on such speculation at source as I had no intention of challenging an incumbent Prime Minister or doing anything in public that could make his task more difficult. No stories about me running for Leader ever appeared prior to the Leadership election of 1995 created by John Major’s resignation, although they did about other cabinet colleagues. The danger of Mr Miliband’s approach is that he comes over as weak, the man who is prepared to see others wound the incumbent Prime Minister on his behalf, but who lacks the instinct to finish off a Prime Minister at bay. He is coming over as a ditherer, as he did when he seemed to look at the possibility of standing last year when there was a vacancy and then finally ruled it out. He is making his potential opponent, Gordon Brown, look positively decisive in contrast.

The second useful thing Mr Miliband could do for the country is to propose an agenda from within Cabinet that could help his party and the rest of us get out of the mess. Unfortunately from what we know of Mr Miliband he lacks such an agenda. It does not appear that he has been arguing against the Pensions Tax, the hikes in fuel duty, the vehicle Excise Tax increases and the abolition of the 10p tax band which lie at the heart of this government’s unpopularity. I see no evidence that he has proposed better spending controls to cut waste and needless expenditure, which the public accounts require. He did not seem to have a distinctive view of how to run the financial system, handle Northern Rock, or sort out the war of the financial Regulators within the tripartite system. He does not seem to want to pull our troops out of Iraq and Afghanistan more quickly than his boss.To the extent that he does have a different agenda to Gordon Brown, it comes down to wanting to be more up front about transferring power to the EU, hardly a popular cause, and maybe some more choice in public service provision which would be welcome but would be at the margins of the NHS and educational system.

When John Major held his extraordinary “Put Up or Shut Up” Leadership election in 1995 I found myself in a different position. I had consistently argued within Cabinet that Maastricht threatened to transfer too much power to Brussels, and that we needed to rule out membership of the Euro to show that the biggest part of that treaty did not apply to us. I had consistently argued for lower spending to keep our promise on taxes, and had sent some money back to the Treasury from the budget I supervised because the department had been able to deliver good services for less than the allocation. I hoped that I could persuade the Prime Minister that others could do the same and we could turn the tables on Labour’s very successful campaign against “Tory tax increases”. That was why I felt honour bound to take up the challenge when the Prime Minister said these arguments, which I had carefully kept from public view, should then be conducted in the open. There does not appear to be any real argument within the Labour Cabinet over how to manage the economy better, yet that is the cause of the present discontents.

In such circumstances Mr Miliband should keep his powder dry, and spend some more time on all those long-haul flights he has to make as Foreign Secretary thinking about what a post-Brown Labour party should stand for. Labour’s tax increases are destroying the government. How could Brown’s Labour critics offer something better?

Yesterday the press hit a new low for the Prime Minister. The papers plastered a photo of him visiting a hospital, with the sign for the Fire Exit prominently displayed above his head. Apparently, in the mad world of the media, this is a gaffe. We are into that phase that I remember well from the dying days of the Major administration, where photographers are out to get any bad or ludicrous picture they could of the Prime Minister at bay (and in 1995-7 of any senior Conservative). In the words of the spin doctors, “the narrative” is a useless Prime Minister and whether he will go, so the pictures have to fit the story. In his last General Election campaign as Prime Minister John Major was prey to several photo opportunities that were turned into metaphors of his likely defeat.

It is time to take stock of what matters. There was nothing wrong with the Prime Minister visiting a hospital. It is not possible for a democratic politician to get out and about without allowing people to take photos that can juxtapose the unfortunate or the ludicrous against their profiles. Some in the press will say that a professional spin doctor outfit will, as in the early days of Blair, dragoon and control the media to shut down any possibility of embarrassing angles or unhelpful backgrounds. They got away with it then because Blair was popular and enjoyed considerable political authority. A more battered and less popular government will not be able to do it, and as a government loses authority more people exercise more skill in getting the unflattering shots. As far as the public are concerned, our problem this morning is not that we have an “accident prone” Prime Minister who gets into the picture the wrong way. Our problem this morning, as yesterday morning and as tomorrow morning, is that we have a Prime Minister who taxes us too much and spends the money badly. It’s the economy stupid. The Credit Crunch was brought on by reckless borrowing. In the UK the government is the borrower of last resort, the architect of off balance sheet finance on a huge scale, the author of all sorts of expensive PFIs, and now the proud owner of a mortgage bank in run down mode.

Instead of hiring another spin doctor to try to change the narrative, or extra staff to herd the photographers, the Prime Minister should make some of his army of spin doctors redundant. If the expensive spin doctor appointed to avoid embarrassments for the PM can’t do the job – and that seems to be true from the evidence of the recent press – then get rid of him. If the army of spin doctors cannot secure a better press, then slim it down. Spend less time with the spin doctors, and more time trying to get the underlying issue right. Spend less in the public sector by cutting waste and needless spending , and the UK economy will start to improve. Gordon Brown should go back to the period of his greatest success, the early years when he was still married to Prudence and kept a much better balance between spending and revenue. Even then his Pensions Tax was ticking away, but the overall budget was more realistic and the economy performed much better. He was popular in those days. No one took silly photos of him, because there was no need to.

As a Conservative I am delighted to see the leadership turmoil in the Labour party. It helps our party cause. As someone who wants to see my country well run, it fills me with concern. In the phoney campaigns for a change of leadership, fought by shadowy figures through intermediaries, stalking horses and unattributable briefings, one thing stands out. No-one is yet coming forward with the changes the UK needs to give people a better chance in life, and to sort out the economic problems. The nearest anyone has got is those Labour MPs who are calling for the cancellation of the Vehicle Excise Duty increases scheduled for next Spring (see a previous post) and the cancellation of the further increase in petrol tax. They do not go on to say how they would pay for this, in a budget which already contains far too much borrowing, itself just deferred taxation with the extra problem of having to pay interest on the loan. They do not offer any immediate financial relief to people, by proposing cutting the existing level of petrol tax or any other tax. They do not propose a permanent solution to the sting of the abolition of the 10p tax band, after this year’s one year only promise of some compensation.

The truth is that the country needs a new budget and a new economic policy more than it needs a new Labour Prime Minister. The “crown” maybe on the thorn bush after the battles of May 1 and Crewe, but who wants to pick up such a tattered bauble, and who in Labour has more of a clue about what to do to save the country were they to seize the diadem? The most likely runners to take over from Gordon – Milliband, Johnson, Straw – are all cabinet members. We hear no leaks or hints that they opposed the last budget, no suggestion that they are desperately trying to get a change of economic policy, no briefing that they went to the Cabinet with a proposal to lighten the burden on the voters of Crewe and elsewhere in a way which would win some support back. Changing the leader could just be shuffling the deck chairs on the Titanic. The rock of election defeat still looms out of the mist of economic incompetence.

If Labour wants to help themselves and help the country, they should be debating this week how to get much more value out of their public sector, and how to send some money back to the hard pressed voters. If they are not careful Boris Johnson’s better housekeeping at City Hall will sweep through the over bloated costs of the government of London, resulting in a tax rebate for all London taxpayers. That would simply underline what most electors already know. You could deliver what this government delivers for a lot less money, and leave the taxpayer more of his own cash to get on with meeting the soaring costs of living.

So what should the Tories do now? Mr Timpson should show himself a dedicated and caring MP for Crewe, highlighting all the problems of his constituents in the House. Conservative local government should get on with the job of curbing costs and cutting Council taxes, as Hammersmith and Fulham has been doing. The Conservative leadership can leave the personality squabbles and rows to Labour to do for themselves. We need to carry on shining a light onto the government’s biggest failings. We need to show time and again just how much money has been wasted, and how given the chance we would spend more wisely. If Labour do not reform and curb their public sector it does not matter a jot who is their Leader.