Category: Blog

                This week-end I noticed the public sector is still out and about recruiting. The Business Department wants a Chairman and four Board members for a “Technology Strategy Board”. Couldn’t Business  senior officials do whatever work this is meant to require?  Network Rail wants “Business Change Managers”  at up to £90,000 a pop. “It will be our most exciting journey yet” as they tell us, but perhaps not for the taxpayer subsidising all this.  Perhaps more necessary, Crossrail wants a Chief Executive for “the largest construction project in Europe”.

             Transport for London seeks an “Infrastructure benchmarking specialist”.  The NHS needs  a “Health Economics Consultant” and an “Innovations Adviser” under the slogan “from bench to bedside. Fast”.

                It was strange timing for the Governor to give an interview attacking the attitude and approach of the commercial banks shortly after the government had declared an end to the war on banks. The Merlin deal was meant to mark an end to the era of hostility. It was to usher in an era of co-operation. The banks are now meant to offer good service, help the economy expand and grow, and behave responsibly on bonuses. In return the government would drop the hostile rhetoric, not impose any extra taxes than the ones already imposed, and ensure proportionate and effective regulation.

The Governor maybe wished to show he is no poodle of the government by carrying on his own public verbal war after hostilities have ceased elsewhere in the Establishment. He aligns himself with Labour in Opposition rhetoric on the banks, whilst confirming his support for deficit reduction by the government. That may well be balanced and sensible politics. It does however, have a drawback for one in his important position.

The Governor happens to be the system regulator for the banks already, and is about to become their day to day all powerful regulator under the changes to the system the government has announced. A Regulator needs to be truly independent. It is normal to avoid colourful prose or one sided remarks as a Regulator, to retain confidence in your role.

We need a detailed banking regulator of the large banks who is fearless and  independent. If customers, political parties, Unions and others bring him complaints about banking conduct, he needs to have their respect as a tough impartial investigator. He needs to call for evidence and promise remedies if they make their case.

He also needs, however, to have the confidence of the banks. They must know he is no pushover and will not suffer unreasonable conduct, but they must also know he is not institutionally biased against them. They too must expect a fair hearing, and know that if they prove their complainants wrong or mischievous they will win their case. They should expect tough action against them if the evidence supports the complainants.

Dr Vince Cable and Mr Jeremy Hunt could tell the Governor a thing or two about the need for regulatory independence and the need to be careful about what you say. Dr Cable’s remarks against Mr Murdoch meant all agreed he could no longer act as regulator in the Sky case. Mr Hunt’s  remarks before taking office praising Mr Murdoch’s contribution to the media in the past led Mr Hunt to rely entirely on the judgement and advice of independent regulators, instead of exercising his right to make his own decision on his own assessment of the merits, as a buttress against legal challenge. Mr Hunt first said the original deal should be referred on the advice of the authorities, and subsequently said the revised deal with an independent Sky News did not need to be referred, again on advice.

Any Regulator must be careful in public speech, and genuinely have an open mind. It is not sufficient just to avoid expressing a prejudice. It is important not to have a prejudice.  They need to get at the truth,even if the truth is sometimes unpopular or contrary to common spin. Exciting interviews make this more difficult. At least the Governor lined up on the popular side of the row about the banks, which will limit the criticism of him.

Tomorrow I will discuss the merits of his individual criticisms of modern banks.

               There is a convenient assumption amongst the media and many contributors to political debate that Ministers are all powerful. If a problem needs fixing they can fix it. If they fail to, it is wanton neglect or pig headedness that has meant they have failed  complainants.

               I am pleased to say there were always substantial limitations on Ministerial power. I am less pleased to report that the last decade has seen the erosion of some powers that Ministers do need to do their jobs. The task of reconstruction requires the careful rebuilding of elected power within the body politic, as well as the strengthening of Parliament to hold that power to account.

               Before the EU was given so much power, and before the European Courts became so assertive, Ministers had considerable scope. Rightly, Ministers have always been beneath the law like the rest of us. They have to obey and work within the inherited law codes. If they transgress, individually or collectively, they can be sued, charged or judicially reviewed. Their power compared to the rest of us came from two main sources. The first is  they can command the money and the personnel of government to do what the law allows with public sector resources. The second is they can change the law to allow them to do as they wish in the future, or to control the conduct of others in the future. It is true they need to persuade Parliament, but usually a Ministerial decision which automatically commands the majority whips can command a majority in the Commons.

                As we have seen in recent weeks, there are more areas now where European Courts tell Ministers they cannot change the law in the direction they wish, or require Ministers to change the law as the Courts dictate. Increasingly Ministers use their law making powers and the command of a majority in the legislature to enact more and more EU laws and regulations into UK law codes. Many of these are one way tickets to surrendering UK democratic power. Once passed these laws cannot be amended or repealed on the wish of a UK Minister, unless a majority of all EU member states and the Commision agree.

                    There has also been an erosion of power over the Labour years even within areas where UK Ministers remain free to decide. Ministers I am told  now sometimes make senior public appointments to  positions accepting the single preferred candidate of the civil service instead of going through a proper sifting and interviewing process themselves. Transferring many quangos into civil service departments as they are doing will leave Ministers with less potential influence over the senior people and the corporate plan of the organisation than if they had maintained a segregated identity (that’s where they cannot be abolished). The scrutiny of quango corporate plans, challenging their  charge and fine raising, questioning their costs, examining  the business cases for spending, considering the impact assessments of regulations – these are all parts of a junior Minister’s job which often went undone in the Labour years. It is important work, and Ministers need to return to it, and explain to their officials they intend to do so vigorously.

            The junior Minister, working to the general aim of the Cabinet member or government’s overall strategy, can play a vital role in ensuring effective implementation. He or she should be the taxpayer’s representative, asking if the costs are controlled and if the proposal is necessary. He or she is also the consumer or complainant’s representative, asking if the proposed spending or regulation will do what is needed by the groups affected. Some junior  ministers over the last decade concentrated on the media, messages and spin. They revealed their ignorance of the detail of their department’s work and of the policies they were administering. The taxpayer expects Ministers to lift their game and to gain control over how many people they employ, how they are motivated, how they pursue their aims, how well they buy in goods and services, how they raise quality and cut costs. It may not be glamorous work, but it is both interesting and essential. We need to value good management of the puboic sector more, and good tv performances less.

                Going into London by car, and finding my way round the centre on foot, I have to run  the gauntlet of large amounts of public spending. I kept a mental note one day last week. On the way out of Crowthorne I had to wait whilst four vehicles with more than  half a dozen men closed the road in the direction I was heading in  order to tidy the verges. Further on, there were more works on the A322. The M3 still has a long section of 50 mph restriction with various roadworks being undertaken. In Richmond there was another missing lane for roadworks. It was not possible to work out what they were doing. Along the Cromwell Road there are restrictions on the carriageway to allow a complete rebuilding of the pavements. Along the Embankment by Millbank they are  putting new wide pavements in to the middle of the road with aggressive kerbs. The roadspace is similarly being reduced along Pall Mall, with a pavement being put in the middle of that road. In  other locations around the West End there are works putting in expensive granite paving where once there was tarmac road.

It does not feel as if there is a spending squeeze on when you see this kind of work proceeding. We have managed without a wide pavement in the centre of the Embankment or Pall Mall for many years. Why is it suddenly urgent to spend money on this right now, in the middle of a spending crisis?

I also noticed a profusion of relatively new signs, freshly coloured paint on the roads and plenty of sets of traffic lights, some of them fairly new. I did not notice many new features which would help keep traffic and pedestrians apart to improve safety, nor junction changes to make them freer flowing and safer. There are still plenty of sets of London traffic lights where they have red in every direction phases for cars. I rarely see someone wanting to cross both ways at the same time taking advantage of this.  I am mainly a pedestrian in London. As such, I can say it does not usually help me to have all red sequences.

             The Barnsley by election might have been a good time for the Eurosceptics to come out and show their strength. After all, the Lib Dems  were not very popular, a Labour victory was always likely, but the cause of  the by election was not a helpful one for the defending party. In a by election more people might be persuaded to say what they really think. Apparently they really think federalist Labour is best for Barnsley.

           As always the Eurosceptic splits were on show. This time UKIP edged into the lead amongst the Eurosceptics, but only managed 12.2% of the vote. The total Eurosceptic votes was 22.7%, plus 6% going to the BNP.

          Once again those who say the electorate are ready to take strong action on the EU are wrong. The Eurosceptics could not  even reach one third between them, let alone a winning margin. We get the governments we vote for.

                 This week has seen at least two attempts to destabilise the health reforms. Channel 4 came up with a very sloppy piece of journalism, wrongly claiming that the whole of Parliament had failed to spot an error in the Health Bill that would allow GPs to profit from conflicts of interest. The Today programme followed up yesterday by seeking to show that regional and national “reconfigurations” of services would not be possible if GP consortia do the buying, whilst missing the obvious point that the reconfigurations they seemed to want were not happening under the current regionally managed system.

         They clearly do not enjoy interviewing Andrew Lansley, as he knows his NHS inside out and makes them look silly by setting out the facts and the context. The interviewer is left spluttering that he wants shorter answers, in the hope that there will then be a loose phrase they can blow up out of all proportions.

         The new spectre at the feast is that someone may profit from the NHS. What kind of world do these people live in? Have they not seen the profits over many years earned by the leading pharmaceutical companies out of supplying the NHS? Or the profits of the management consultants, advertising agencies, recruitment consultants and other business advisers who had plenty of contracts under Labour? Or the profits of the cleaning, catering and supplying companies that keep the hotel services going in hospitals? Some NHS money has always gone into profits.

          Have they not also grasped that under Labour incentive pay and higher pay for directly employed managers and other senior personnel was a big part of the deal. Many senior staff now earn more for performing in certain ways. I agree with incentive pay, but it is a way of profiting from the employment.

          The new canard Channel 4 introduced was a GP might both have power to decide where someone went for care, and have shares in a private sector nursing home or private health care company which he used for some patients. Ministers made it clear the Bill said GPs should not exploit  conflicts of interest, and they are putting in Monitor, a Regulator with the duty of stopping that and other bad conduct. So why did the story run when it was clearly denied by reference to the Bill?

          Did these same journalists spend time in the last thirteen years trying to see if any GPs did behave like that?  It would be possible for a GP under the existing system to behave badly, against the spirit of the NHS, and have shares in private companies that profit from NHS purchasing. Maybe  the absence of such stories shows that GPs behave better than Channel 4 journalists expect.

          When it comes to  planning national and regional services, the criticism was again ill judged. As Mr Lansley pointed out, GP consortia can persuade the providers of health care to change what they offer through their large buying power. The irony was that the chosen case in South London was an example of where the current system of planning had failed.

                 The 84,000 MOD personnel are all civilians – in charge of desks and related duties.  These are in addition to the 180,000 or so uniformed personnel in the army, navy and air force.

            The Coalition government has been hit by a blizzard of difficult court judgements from the European Court of Human Rights (Convention) and from the European Court of Justice (EU).  They have served to underline just how constrained Ministers and Parliament now are, given the UK’s acceptance of both these jurisdictions. The European Court of human rights has become more activist, intervening in more issues.  The ECJ’s powers were mightily strengthened by Labour’s signatures on the  Nice, Amsterdam and Lisbon Treaties.

              There will be some occasions when many UK people agree with the courts’ judgements. There will be other occasions when we disagree strongly. What many will also agree is that the issues they are now settling should normally be settled in Parliament, by MPs listening to public opinion and having to defend their voting decisions to their electors. They should not be decided by judges who do not have to explain what they conclude, cannot be removed from office, and have no need to heed UK public opinion.

              I happen to disagree strongly with the recent judgement on insurance. Men should pay more for their car insurance because on average men take more risks than women. The insurance industry can measure that and reflect it in premiums. Men should receive more generous annuity payments for their pension savings, because on average men live shorter lives than women. Actuaries are employed to work these figures out, to keep the insurance company’s books straight. I do not see that judges have a better approach to running insurance companies. I doubt if the judges will want to be blamed or sued for some money if as a result of disrupting actuarial and risk assessments they undermine a few companies. If they do not want that risk they should keep out of the calculations.

           The defenders of the court say it would be wrong for insurance companies to calculate risks by ethnic groups and to charge accordingly. This is an aunt sally, as no insurance company is doing this. Differentiation by age and by sex is accepted and makes sense for pricing risk. Of course a health policy for an elderly person is dearer than for a young person. So why shouldn’t car insurance for an 18 year old man reflect the likelihood of him crashing?

              The Coalition government is currently introducing a Freedom Bill. It gives them the opportunity to bring the Uk into line with some of these European judgements. For example, the Bill does amend the rules on retaining DNA samples and details taken from innocent people when being questioned by the police. I welcome this change, though again I think it is an issue which the UK Parliament should be able to decide for itself.

               Parliament has expressed itself clearly on votes for prisoners. Time will tell whether it also marhsalls forces to resist the insurance judgement. The growing list of disputes points to the need to change the balance of powers, but this Parliament does not seem to have a wish to tackle it.

             Amidst the controversy over sacking armed services personnel I have today received the figures for the MOD headcount.

             The total is down 1470 between May 2010 and January 2011 (full time equivalents). Over this same time period 3250 (fte) left the MOD, implying they must have hired 1780 new people (fte) over the same time period. The total in employment last month was 84,180. (fte)

            There might be  more scope for natural wastage to do the job they want to do.

            As someone who has urged the use of natural wastage to control staff numbers and costs in government departments, I have just asked a series of questions to see how Ministers are getting on.

           One of the first to come through are the figures from the Department of Energy and Climate Change.  In May 2010 they employed 1036 people (full time equivalents).  Since May 53 people have left. They now employ  1154 (fte).

               That means they have employed an extra 118 staff, and replaced the 52 (fte) that have left, making a grand total of 170 extra hirings.

              I am pleased to report that at Business totals are down by 449, with 500 leaving over the period. At  DEFRA totals are down by 539, with leavers amounting to 678. (all fte).  The natural wastage rate is running at over 7% per annum at DEFRA and much higher at Business, if all the leavers were voluntary. It shows that there are substantial savings to be had from natural wastage.