Wednesday, May 31, 2006

Saucy Buffoons

Sauce Box

Excellent article by Danny Finkelstein explaining why Labour is now happily pleading incompetence in the Home Office and numerous other fiascos.

It's an inevitable result of "the centre-left plan to beach conservatives. You neutralise the handful of popular issues on which the Right has an advantage, by positioning yourself as equally tough. This leaves only traditional left issues (public service provision, green issues and so on) to fight over, putting the Right at a huge disadvantage...The economy, crime, immigration and defence...the Right’s popular issues...Tony Blair has always seen it as vital that the Conservatives not be allowed the ability to distinguish themselves in any of these areas, unless they were prepared to make themselves look extreme."

But of course, while New Labour has managed the headlines by talking tough, they have not enacted the means to back the talk. For example, they have not built nearly enough new prison places. "At every stage, the aim has been to manage headlines rather than to manage crime and immigration. The important thing has not been to be tough on crime but to be seen to be tough on it, not to control immigration but to control media coverage of immigration."

And now the chickens are roosting, the obvious escape route is to blame officials for being incompetent. And to suggest that ministers' only fault is to have been too trusting and too forgiving for too long.

Fink's argument has the ring of truth. I'm very naive in such matters, but having now sat through numerous meetings of the Public Accounts Committee, I've been struck by the sheer sauce of certain Labour members forever seeking to pin the latest fiasco on Civil Servants rather than ministers.

The otherwise entirely splendid Kitty Ussher is particularly saucy in that regard. But then, she used to be a special advisor to the Commissar herself.

Tuesday, May 30, 2006

Look On My Works And Despair

Health Minister Lord Warner today admitted what we all worked out months ago: the massively expensive NHS super-computer is massively behind schedule, and massively unwanted by those it was meant to serve.

He's reiterated that the National Programme for IT- the biggest civilian IT programme the world has ever seen - will cost about £20bn, rather than the £6.2bn originally advertised. "The latter figure covered only the national contracts for the systems' basic infrastructure and software applications. Hospitals and other parts of the NHS would, however, spend billions more on training staff, buying PCs and upgrading and assimilating existing systems over the decade-long programme."

He reckons some parts of the programme "are going pretty well and pretty much to time". But others, he admits, "are going more slowly than we would otherwise like". Overall, he reckons it's two and a half years behind schedule.

Translation: our crack team of project facilitators has agreed on an exciting new logo for the programme and we've already drafted a 400 page cultural diversity protocol; but for some reason the dratted thing itself doesn't work, and nobody has the faintest idea when or if it will ever be finished.

Naturally he's trying to shift as much blame as possible onto others: in this case the GPs, who for some strange reason haven't being showing much enthusiasm for uploading their confidential patient records onto an unreliable hackers' delight like the NPfIT (see the good Doc Crippen for a good deal more colour on that - it makes him quite dispeptic).

Of course, Warner's £20bn figure is still way short of the true number. As we blogged back in January, the overall cost is thought by insiders to be heading for £50bn. Making this the most expensive government grandiosity since the Pyramids. Except this one won't generate any tourism revenue.

PS Who exactly is Lord Norman Warner? Yes we know he used to be head of Kent Social Services, and has chaired all manner of quango type stuff. But who is he really? All I've been able to discover is that he was Barbara Castle's Private Secretary during Wislon's disastrous regime.

£900 Per Day For CSA Axeman

Before and after

This morning it's the Guardian's turn to splutter:

"The man appointed by the government to scrap the Child Support Agency is being paid £900 a day to find a solution - a higher daily rate than the country's most senior civil servant, according to the Department for Work and Pensions. The money is equivalent to £234,000 a year - Sir Gus O'Donnell, the cabinet secretary, gets just over £220,000."

They're talking about Sir David Henshaw, the former chief executive of Liverpool council, whose appointment we blogged back in February.

As we all know, the abysmal CSA certainly needs sorting. The facts are that it employs about 10,000, and costs us some £0.3bn pa. And ever since its inception in 1993 it has been a case-study in public sector inefficiency: from its fearsomely complex rules, to its lack of proper implementation and follow-through (currently a case backlog of 330,000 and £3.3 billion arrears), to its failed mega IT development (£0.45bn and still not working properly), to its rock-bottom staff morale and rocketing staff turn-over (over 20% pa). It costs us 54 pence for every £1 it collects.

So if Henshaw could sort it, he'd be well worth his £900 a day- personally, I'd round it up to a grand and stand him a couple of beers and a peerage when he'd finished.

But the question is whether he will sort anything. For a start, he'll only be doing a three day week: three days may be traditional in the Liverpool docks and car plants, but it may not be quite enough to sort out an intractable disaster that's defeated all-comers. Even more seriously, his track record is... er... "patchy". As we noted previously, the Audit Commission was distinctly underwhelmed by his performance in Liverpool: ranked against other local authorities, here's how they assess his council at the the end of his tenure:
  • Star rating: bottom 32%
  • Direction of Travel (ie getting better or worse): bottom 30%
  • Value For Money: bottom 2%!!!

Once again, we taxpayers better not hold our breaths.

PS- Henshaw is an alumni of Sheffield Hallam and - surprise, surprise -was heavily involved in student politics along with Jumping Jack Straw. The Peoples Republic of Sheffield was of course run for many years by Commissar Blinkers, another notorious beardie.

Monday, May 29, 2006

Don't 'Ave Any More Mrs Marr

33 years ago, when Tyler joined the Civil Service (true I'm afraid), he fondly believed he was climbing aboard the purring Rolls Royce of State. It soon became clear that was a tad optimistic, but it was at least the Mk II Ford Cortina of State- broadly serviceable and would eventually get you from A to B.

Sadly, today's Civil Service is no longer even the Trabant of State, and even such Big Government luminaries as Mrs Marr are railing against it:

"The government system is riddled with poor management, cost overruns, failing IT systems and bad service. Sometimes it is the NHS, or the Probation Service or the Ministry of Defence. Even HM Revenue & Customs, meant to be a bright bunch of bunnies, have messed up the tax credit system."

Jackie, welcome to the real world. But what to do?

"There desperately needs to be a change in the rules of the game. The days when the civil service was a badly paid, understaffed operation are long gone. The people in charge of major departments are well-paid managers with excellent pensions and job security. Why shouldn't they bear responsibility when things go wrong? Everybody else does. If a journalist makes a mistake, she doesn't expect the editor to be sacked. If a shop manager loses billing information, the chief executive doesn't resign."

Well, we certainly agree with accountability, as we've blogged many times. But your solution- taken from your old friends at the IPPR- is yet more centralisation:

"Ministers should be clearly accountable for policy, but civil servants must take the rap for operational performance. There should be a new prime ministerial and cabinet department, what they call a Whitehall West Wing, giving government a strong centre."


Let's set aside the sad fact should we put this gently...the West Wing doesn't actually exist Jackie. Think of it like Doctor Who. That doesn't exist either.

There are two major problems with the IPPR plan.

First, more top-down, one size fits all, centralisation is the very last thing any of us need (see virtually any post on this blog).

Second, that neat theoretical distinction between policy and implementation: you really think that would work, huh? If I'm a politician I say '"Ok, our policy is to abolish unhappiness. And now I've done the difficult stuff, Sir Humphrey, all you've got to do is the implementation. How hard can it be? Oh, and if you fail, I'll sack you."

That approach is the very reason our public services are collapsing. It's dead easy for our pie in the sky politicos to dream up any number of half-baked "policies" The problem is that nobody
can make them work. And would you really want to work for an organisation that was going to hold you accountable for the inevitable failure?


I reckon Jackie shouldn't have any more brilliant ideas. She should get back to ironing Andy's shirts.


PS For some reason I've only just realised that Jackie is a member of the Ashley Labour dynasty.

Soft On Crime

The Major is spluttering with rage over the disclosure that while serious crime is soaring, conviction rates have collapsed:
  • Serious wounding- offences have quadrupled since 1980, but conviction rate has slumped from 30% to less than 10%
  • Robbery- offences have quadrupled since 1980, but conviction rate has slumped from 23% to 9%
  • Rape- offences has increased ELEVENFOLD since 1980, but conviction rate has slumped from 40% to 5%

Doubtless there are all kinds of complex mumble explanations for why this has been inevitable, but the Major and I blame government incompetence.

First, they have been in denial. Even though we can all see the surging tide of lawlessness, and even though recorded crime is through the roof, they keep telling us it's all in our minds. According to their preferred measure- the opinion poll known as the British Crime Survey- crime is falling. But of course, when it comes to serious crime, the BCS is shot full of more holes than a victim of soft crime policy:

"First, almost half the 2.4 million 'violent incidents' that the BCS estimates happened in Britain last year involved no injuries at all, and most of the rest caused only very minor ones. Just 2 per cent required a visit to hospital. Second, even the BCS accepts there have been 'statistically significant increases in stranger violence and in the proportion of offences receiving medical attention', and that when it comes to more serious assaults, police figures have always been much more accurate. The more serious the assault, the more reliable the police figures become: stabbings or beatings that leave their victim near to death have never been likely to pass unreported."

Second, the police spend all their time filling in forms so that detection rates are well under a quarter ( see the Policeman's Blog) .

Third, the penalties are thought by peasants, Majors, and criminals alike to be trivial. A long weekend in Sussex by the sea is not really ten to twenty on the Rock.

And fourth, our criminal prosecutors are hopeless. We previously blogged the Public Account Committee's probe into the shambolic Crown Prosecution Service, and here we see the consequences.The £600m pa CPS is a classic bureaucratic quagmire staffed by low-grade lawyers who can't get a job elsewhere. The result is that many bad guys walk free because cases are withdrawn by the CPS: in reality, the CPS can't even answer their office phones, let alone mount consistently professional prosecutions.

As we said before, we need locally elected sheriffs. We also need to break up the CPS and put criminal prosecutions on the hands of locally elected DAs.

Meanwhile, the Major is organising the vigilantes.

Sunday, May 28, 2006

Bad Bad Bad

We keep ranting on about how amateurish Big Government is compared to our big companies. And exactly the same thing applies to standards of personal behaviour.

As we peruse today's photos of Groper Prezza giving his balls another outing at Dorneywood, it's interesting to note what a top City grandee says about chairing FTSE 100 companies. Paul Myners is understandably miffed about being ousted as chairman of the spectacularly recovering M&S. He reckons successful chairmen should only be removed if they are "alcoholic, behaving badly with their secretary or got their hand in the till".

Can you imagine what would happen if the same standards were applied at Westminster?

And most of them aren't even any good at the job.

Or on it, shouldn't wonder.

Recent Bonfires- 18

In the news this week:

£70m for spreading muck- "It has become a criminal offence for farmers to carry out any task around the farm that involves what the EC chooses to call "waste", unless they get specific written permission for an "exemption" from the Environment Agency. Such controlled tasks include anything from spreading manure on fields, or allowing vegetable stalks to rot down in the soil, to burning the straw from a cattle shed. What becomes completely illegal is anything which can be described in EU-speak as a "dump" or "tip". This includes anything from a manure heap to an old plough rusting in the corner of a farmyard (even a "single deposit of waste" is now deemed a "tip"). Within a year the farmer must pay up to £228 a tonne to have it removed by a licensed waste carrier to a licensed waste tip (or pay astronomic sums for a full landfill site licence). Defra admits that compliance with this new law will cost farmers up to £70 million a year, quite apart from the cost of the army of new officials needed to process those millions of exemptions." (Sunday Telegraph 28.5.06)

£21m for rail crash companies- "The two companies fined over the Hatfield rail crash have been handed £21 million of taxpayers' money to pay for their defence costs - £7 million more than their record penalties last year. The money has been given to Balfour Beatty, the engineering company, and Network Rail [formerly Railtrack] to pay for defending themselves against manslaughter and health and safety charges - accusations on which they were cleared. Mr Justice Mackay, sitting at the Old Bailey, described Balfour Beatty's failings as "the worst examples of sustained industrial negligence in a high-risk industry" that he had seen. John Pickering, the solicitor representing the four victims of Hatfield and some of the survivors, said: "There seems to be a disconnection between the level of the penalties and the level of the costs they are recovering. It's hard to understand the logicality or the morality of this award." (Sunday Telegraph 28.5.06)

£5bn academies fail to deliver- "Schools in the government's £5bn academy programme have failed to improve results compared with the comprehensives they replaced...a study...found the number of pupils getting five GCSE A*-C grades including English and maths has increased by 0.2% - equivalent to three pupils - across the first 11 academies. the report said that some academies were diverting children away from GCSEs to boost their standing in school league tables. The study found that many children had been switched from taking separate subjects at GCSE to the vocational GNVQ qualification, which counts as four GCSEs in government tables." (Guardian 22.5.06)

£5m to destroy farm- "John Prescott spent millions of pounds of taxpayers' money on buying an area of outstanding natural beauty, with proud boasts that it would be "transformed" into a "community green space". In an environmental blunder that may result in criminal charges, a picturesque 360-acre home counties farm, once teeming with skylarks and other songbirds, now lies ruined. What remains is a barren wasteland of ploughed-up fields and withered crops, where the sound of birds is a distant memory because their nests have been destroyed. The guide price for the land was between £1.1 million and £1.3 million, but villagers say the ODPM must have paid well over the odds to secure it against rival bids from other interested parties who would have kept it as working farmland. Local agents estimate that at least £5 million was spent on buying, converting and maintaining the land." (Sunday Telegraph 28.5.06)

Total for week - £5,096,000,000

Friday, May 26, 2006

Move Along Please

Now we all see the Home Office for the costly shambles it is, what about the police? According to the Policeman's Blog, our boys and girls in blue spend most of their time filling in forms and undergoing diversity training. But from time to time they do get rostered to put on a show of strength. It could be a brief appearance on our streets, or perhaps a spot of overtime at a footie match.

A couple of nights ago it was civil liberties suppression: the removal of anti-war protestor Brian Haw from most of his pitch in Parliament Square. Fair enough you might say- he was creating a dreadfully messy spectacle for tourists. Not to mention our MPs.

So what would you reckon it would take? A quiet word from a junior PC?

Er, no.

It actually took a 2am visit from 78 officers to remove Haw's fearsome posters and deckchairs. 78! At a cost of £7,200:

"The raid ran up a bill of £3,000 in overtime and £4,200 for "transport, catering and erection of road barriers", said Sir Ian Blair, the Metropolitan police commissioner."

So now we know.

Sleazy Lover

There are no free lunches. No free limos. No free champagne parties with attractive young ladies hanging on your every word. No free fact-finding holidays. No free secretarial services.

Somebody is always paying. And mostly they're doing it because they want something from you.

Our politicos and senior bureaucrats are surrounded by such temptation. And the lobbying industry has developed ever more sophisticated techniques for buying influence. It's no longer simply a matter of stuffing fivers into envelopes: this £10m pa (plus) industry now has 50 firms working round the clock devising whole new dimensions of sleaziness for the delectation of our rulers (see this Spinwatch post).

You can't blame the lobbyists: conditional love is the nature of the beast.

But you can most certainly blame our politicos and bureaucrats. From peerages to lobbying, they have an unflagging ability to persuade themselves they're not being bought. Vanity, bubble-life, and plain boneheadedness all play a part: learning from experience doesn't.

This morning, the Times reports one small countermeasure. As you will recall, they investigated the 300 all-party groups of MPs who have no formal status but who act as insider lobby-groups for worthy entities like the beer and pharma industries (see this blog). Many of these groups have been getting all kinds of unpaid help from lobby companies, often funded by anonymous backers.

Now, the Parliamentary Commissioner for Standards has "called on all lobbyists to reveal their client lists and urged MPs to act with caution when dealing with those who did not".

It's not exactly the public flogging we peasants would like to see. But it's a step in the right general direction.

Thursday, May 25, 2006

Death And Taxes

The problem with death is that it's getting much less inevitable. The golden superannuated third age is all very well, but it's damnably expensive and we taxpayers' can't afford it. Have we been rescued by today's Pensions Whitepaper?

If the numbers are to be taken at face value- always a big IF where Gordo's involved- then the proposed package takes overall state pensions spending up by about 1.5% of GDP by 2050. That's in line with the projections in the Turner Report (see previous blog), and doesn't feel too bad in the circs.

But as has been widely reported, it's not enough to sweep away the nightmare of Gordo's pensions means testing, with a third of pensioners still on means tested benefits in 2050. And as the demographics move inexorably towards greyer votes, the pressure will remain for yet more taxpayers' money to be spent on pensions. Taking a thirty year view, we taxpayers remain in serious danger.

So forget retirement at 68: from a taxpayer's perspective, we should be pressing for an increase in the state pension age to 70. As we estimated previously, that would save another 1.5% of GDP. Which would be just about enough to abolish pensioner means testing.

Much better for taxpayers, although from a personal standpoint you might want to start reviewing your B&Q job options now.

Pic shows superannuated Pensions Secretary Andrew Smith starting at the Reading store.

Bring On The Judges

The news that half of all fines are still unpaid six months after being imposed is yet another symptom of our chronically lackadaisical justice system:

"In some parts of the country the proportion of fines collected is as low as one in three. Last year alone, magistrates' courts imposed fines totalling £352 million but only £222 million was collected. Of the remainder, around £75 million of fines were cancelled because they had been set at the wrong level, while the remaining £55 million were unpaid."

The NAO reports that the Department for Constitutional Affairs has been tightening up its procedures. But that's what departments always say.

DCA has certainly been moving its goalposts for measuring collection rates, by excluding cancelled fines from the denominator. But while letting off a quarter of all miscreants may improve the calculated collection rate, that's just not what we want from our justice system. We want, like...Justice.

The Major has some refreshingly direct ideas.

Or we could just jump to The Judges.

PS A few days ago we blogged that five senior officials in the Immigration Directorate had been exposed as illegal immigrants. A commenter pointed out that they were actually only cleaners. But now it turns out that the senior immigration officer who- Nigerian gangster style- demanded sex for visas, was himself originally an illegal. We await news of the other four.

Wednesday, May 24, 2006

Picking Winners

At a cost to taxpayers of a mere £2.6 BILLION every single year, Gordo's Small Business Service perfectly illustrates the incompetent arrogance of Big Government.

Gordo set it up because for some unfathomable reason he believes he can pick business winners, and likes to back his hunches with our money. In particular, he reckoned many small businesses are failed by commercial lenders, who fuss too much over tedious details like whether a business will be able to repay a loan. His new Service would break free of all that to fund the white hot seedcorn of the new post-neoclassical endogenous sunlight uplands acorn thingie. Kind of idea.

The dismal results have just been assessed by the National Audit Office. They find that already, after just a few years, the default rate on loans made by the Service is NINE TIMES that of comparable commercial loans. What's more- surprise surprise- it seems that by favouring the weaker small businesses who can't get commercial loans, Gordo's soft loans actually damage stronger competitors- ie the businesses that actually are the seedcorn etc.

Other NAO findings are that the Service's role in "championing" small business in Whitehall has been a complete dud: red tape has not been slashed, and most government departments simply ignore the SBS. Even worse- but in common with many other agencies we've looked at- the SBS has not put in place any framework for measuring its success. So nobody knows just how pisspoor it actually is.

Meanwhile, government programmes aimed at small business continue to mushroom: "there are 15 government departments with 265 programmes aimed at small business and when those are added to regional and local schemes, the total climbs to over 3,000." As the late great Ronnie R was wont to observe: "The nine most terrifying words in the English language are: 'I'm from the government and I'm here to help."

The Pink'un sums it up:

"Mr Brown works on the basis that government intervention in business is helpful. Businesses know that very often it is not. Small businesses, with disproportionate regulatory costs, feel this most strongly. The real lesson is that people do not start businesses in the hope of closer contact with civil servants. They do so because they have skills or bright ideas and want the freedom to get on with working for themselves. The less small business hears from the government, the better."

When even a pink paper that has consistently backed Big Government Labour since 1992 says that, maybe we can see the first faint glimmerings of hope.

PS The issue of picking winners also came up at a talk last night given by the stalwart Prof Patrick Minford. He was talking about flat tax, and he pointed out how the wildly complex tax system we now have actually embodies the idea of picking winners: government is saying that it so well understands how the economy works it can fine tune its tax rates across thousands of variations in order to achieve maximum revenue for minimum economic distortion. Prof Minford and several other eminent economists in the audience seemed to find that hysterically funny.

Tuesday, May 23, 2006

Responsibility? Er...ummm...

We already blogged the NAO report on the abolition of GPs out of hours (OOH) care. From a taxpaying customer's perspective it was an Unmitigated Bad Thing- we've ended up paying £200m pa more for a worse service.

From the GPs perspective of course, it looks very different. In his usual robust style Doc Crippen explained to us what an unsustainable nightmare the whole thing had become, and I for one believe him. Particularly once I'd discovered that GPs rarely provide such 24/7 care elsewhere in the world.

So the question now is whether we taxpaying customers got good value from the switch to the new depersonalised third party OOH service? Yesterday the Public Accounts Committee grilled the three top Department of Health officials on precisely that question.

And what an uninspiring bunch they were...nearly as unfunny as the Three Stooges. Sir Ian Curruthers OBE is the Acting NHS Chief Executive, thrust into the bunker three months ago following the field execution of the unfortunate Crisp. He's clearly been dragged in from running an unsuccessful chip shop somewhere up North, and came across as someone not quite on top of things: the PAC Chairman summed up his appearance as being "underwhelming". His wingmen were no better, even though they are the guys ultimately in charge of all our primary care (ie all our GPs etc). It's frankly quite scary.

We were taken through an all-too familiar catalogue of muddle and incompetence:
  • Is the new OOH service emergency only, or must it also cover on-demand unscheduled consultations (like Doc Crippen being summoned out at 2am for a chat about someone's tennis elbow)? Most of us presume it would be for emergencies only, but the department doesn't have a position- it's still thinking, even though the new system is already up and running
  • Why have the costs been so much higher than anticipated? No real answer...that's a matter for the Primary Care Trusts, not us
  • How's the over-run being funded? No real answer...that's a matter for the PCTs
  • Given that OOH was so unpopular with GPs, and 90% have now opted out, why were they allowed to do so for the trivial sum of only £6,000 pa? Not our responsibility- down to the PCT negotiators
  • Where did the £6,000 come from, given that the actual cost of replacing the OOH service seems to be closer to £15 grand? There was some kind of "economic analysis", but not our responsibility
  • Why do the new replacement OOH services miss virtually all their critical service targets, including patient response? "Disappointing"...but er, not our responsibility

It's that old power without responsibility thing AGAIN. The Dept has set its top down Stalinist strategy, but then walked away from its implementation. We've ended up getting the worst of both worlds.

Why do we need the Dept of Health? We blogged yesterday about how we'd do better by winding up the Home Office, getting our money back, and doing our own local justice. But with the Dept of Health, we could just wind it up, get our money back, and spend it all on holidays. We'd be miles better off, both in our wallets and our health.

Monday, May 22, 2006

Give Us Our Money Back

Some people seem to be arguing that you can't blame the government for the shambles at the Home Office- that's just the way it's always been.

Can that be right? Did we always have the releases of foreign murderers and rapists, the absconding prisoners, the predatory paedophiles left at large, the cocked-up criminal records system, the non-existant border controls, the officials selling visas for sex? (As a real teeth grinder, watch this video to see how our Immigration Directorate is now manned by the self-same guys who demand bribes at up-country Nigerian road blocks).

Did we always have Home Office mandarins who never take responsibility and who can't even produce accounts that add up?

Alarmingly, it seems quite possible: Michael Howard says that when he became Home Secretary his officials told him his main job was to explain to the public why government could do nothing about rising crime. Another part was to big up the Home Office's preferred measure of crime- their annual opinion survey that somehow always says it's falling, even though actual recorded crime goes on rising in line with the evidence of our own eyes (the British Crime Survey).

But if these problems have always been there, what makes anyone think our meet-the-new-boss-same-as-the-old-boss national politicos have the slightest chance of sorting it out?

This is protection we'd be better off without.

Time to go back to the drawing board. Every year government spends about £30bn on law and order, including the Home Office. That's about £500 pa each. Now take Mrs T and I: we live in a town of about 100,000 people, so its share is £50m. We could buy an awful lot of law and order for that, epecially if we implemented some of the Major's more innovative ideas for Shock and Awe Justice.

Give us our money back and we'll look after ourselves. A local sheriff, cheap and cheerful prison, and community engagement- we'd all be a whole lot safer than struggling on under the guardianship of these unaccountable clowns.

Sunday, May 21, 2006

Recent Bonfires- 17

In the news this week:

£1,100 to change BBC light bulb- "For more than a month the iconic sign at BBC Television Centre on Wood Lane, west London, has been out of action. But what should have been a simple job, to repair a light illuminating the second "i", has descended into farce. So far two outside companies have been hired to fix the problem. One has been tasked with erecting a series of hydraulic platforms to reach the sign, 50 feet up in the air. The other is evaluating the damage. It is estimated that it costs the corporation £1,100 each time this procedure is carried out. Only once a full assessment is made will the BBC's own staff decide what course of action to take before handing the repair work to one of the "outsourcing" contractors." (Sunday Telegraph 21.5.06)

£6bn cost of pensions surrender- "Last October, under pressure from trades unions, the Government backed down over plans to raise the retirement ages of three million public sector workers from 60 to 65. Since the U-turn, the Government has hired about 60,000 new public sector workers who will also be entitled to lucrative "gold plated" final salary pensions. The IEA says that would put the total cost since the climbdown at at least £6 billion. "Every month that passes when the Government fails to increase the public sector retirement age costs Britain's taxpayers nearly £1 billion." (Sunday Telegraph 21.5.06)

£21m on Home Office navel gazing- "The Immigration and Nationality Directorate (IND) is so lost about its role that it hired management consultants at a cost of £21m last year to work out what it is supposed to be doing. The result? A lot of cartoons, some graffiti and various squiggles in what may be one of the most bizarre reports ever seen in Whitehall. Executives were invited to scribble their thoughts on a “graffiti wall” and were divided into five teams that “moved between themed rooms”. They had to imagine time-travelling to 2010 — when the IND would, apparently, be a roaring success — and visualise how they had got there." (Sunday Times 21.5.06)

Cabinet's £25m Golden Pension Pot- "Tony Blair and his cabinet are sitting on a gold-plated pension pot worth in excess of £25m that will allow them to retire at least £50,000 a year inflation-proofed for the rest of their lives. The packages have been described by experts as 'beyond the wildest dreams of ordinary people'. The Prime Minister stands to gain most - an index-linked annual pension of two-thirds of his final annual salary of £184,000, guaranteeing a pension when he leaves office of £123,000 a year. For an individual in the private sector to achieve this they would have to invest almost £5m in an investment fund. Gordon Brown, who has been arguing that Britain cannot afford to increase the state pension, is sitting on pension savings paid for by the taxpayer equivalent to £1.75m. This will ensure he has a pension of at least £53,000 a year for life. If, as expected, he becomes Prime Minister after Blair leaves office, Brown will see his guaranteed pension entitlement more than double, even if he only serves a few months as leader. And despite being stripped of his departmental responsibilities, Deputy Prime Minister John Prescott's pension pot is worth the equivalent of more than £1.5m." (Observer 21.5.06)

Total for week- £6,046,001,100

Saturday, May 20, 2006

Paying For The North

As today's Times reminds us, we Southerners pay through the nose to support most points North of Watford:

"In the North East in 2004-05, the Government shelled out £7,167 per person for public services; in the South East it was £5,624. With the exception of London, spending is higher per person in the North on public order, housing, health, enterprise and development, employment policies and education.

These figures exclude benefits and pensions. Analysis by the Centre for Economics and Business Research, an independent consultancy, shows that when you include these, as well as debt, defence and EU transactions apportioned per region, public spending as a percentage of regional GDP is a whopping 58.7 per cent in the North East — that is nearly three fifths of the local economy — but 32.6 per cent in the South East and 34 per cent in London."

Pretty staggering. But even that leaves out of account the huge regional inequity in the tax burden. Because incomes are higher in the South East, taxes are also much higher. And before you say that's quite right, remember the cost of living- especially housing- is also much higher.

The last time I did some proper number crunching on this, I found that- taking account of both the lower spending and higher taxes- roughly 10% of the South East's income is transferred right out of the region to fund the rest of the UK. The South East would be much better off declaring independence.

With updated regional spending stats now available, it's time to wrap another towel round my head and update the calculations.

Friday, May 19, 2006

Sick Hospitals Haemorrhage Cash

Three times over budget, seven years behind schedule, zillions spent on consultants...and finally just abandoned. Yes, the Paddington hospital project is another everyday story of the dribbling institutionalised incompetence inside the NHS.

As the National Audit Office reports, the dribbling in Paddington's case was pretty extensive: no coherent leadership, no adherence to standard project rules, no appreciation of the risks or the rapidly escalating costs, no financing plan, and- most astonishingly of all- no idea how to secure enough land for the buildings themselves.

And the cost? Well, the £15m wasted on professional fees is just the start. There's all the time put into it by NHS staff. Yes, I know they're all administrators who wouldn't have been doing anything useful anyway, but we're still paying. And then there's the cost of now refurbishing the decrepid hospitals Paddington was meant to replace. Construction costs have soared in the interveing period and the NAO report suggests the extra cost could run into hundreds of millions. And all that's before taking account of the costs to patients (and indeed staff) of struggling on in buildings that Florence Nightingale would have been ashamed of.

The NAO report also contains this absolutely gob-smacking chart on cost over-runs in hospital projects generally:

They comment:

"All large NHS capital investments (schemes above £75 million) cost significantly more than their initial Outline Business Cases. For major schemes either in planning or build stage, the average cost increase above the original OBC is 117 per cent."

We've discussed salami slicing tactics before, and we know that worldwide 90% of public projects exceed their initial budgets. But this really takes the hospital Rich Tea.

Again- and I apologise for droning on about it- this kind of shambolic carry-on would simply not be acceptable in a FTSE100 company.

True, in Paddington's case, the original Project Director’s contract "was terminated by mutual agreement", but precious few other heads seem to have rolled. Indeed, one "Gareth Goodier, the chief executive of the health authority, received a £10,000 bonus on top of his £150,000 salary after the collapse of the scheme for achieving "organisational objectives" (see here). Do we think Sir Terry was so forgiving when his new store at Beaconsfield fell onto the railway line?



Iain and Guido have done the biz and the queue's already forming outside Guildford Waterstones (or order from Politicos).

Can't wait.

I Demand Compensation

What the Dickens is going on in our prisons? Just how does a convict get to have his finger bitten off by a horse? Were they both on the same treadmill?

And the prisoner who got £2.8m compensation for a failed suicide attempt...what on earth is all that about? Even if you don't go along with the Major's scheme to leave "happy release" pills beside every bunk, surely our duty of care to convicts goes no further than best endeavours.

Having heard this, I'm in a state of extreme distress. My heart rate has increased dangerously and I'm grinding my teeth so hard I may need dental work.

As soon as the Home Office opens- probably about 10.30- I'm going to demand a compensation form.

PS "You couldn't make it up" stories are now coming out of the Home Office so fast, I can't keep pace. The revelation that five senior officials in the illegal immigration unit were illegal immigrants has done nothing to slow my heart rate. The sooner those bounty hunters get started the better.

Thursday, May 18, 2006

Plumbing New Depths

"One of the worst cases of conflict of interest and impropriety that this Committee has seen... plumbed new depths... the taxpayer let down by almost everyone in the chain of responsibility... a culture which seems to have had no respect for the proper conduct of public business... every one of Lord Nolan’s seven principles of public life have been breached."

So which department is the Public Accounts Committee describing? The Home Office? Department for Work and Pensions? Department of Health? Tricky isn't it. Could apply to virtually any of them.

But it's actually Northern Ireland's Department of Enterprise, Trade and Investment: the PAC are reporting their enquiry into an outrageous catalogue of complacency and ineptitude that has squandered millions and may yet result in criminal prosecutions.

Briefly, the Department of Enterprise set up a quango, LEDU (the Local Enterprise Development Unit) to dish out our hard-earned money to whatever hi-tech/lo-tech/start-up mumble happened to take its fancy.

Now the Deputy Chair of LEDU was one Mrs Teresa Townsley. She's one of those Greatandthegoods who sit on the boards of so many quangos- in her case, the Health and Safety Executive, LEDU, Invest Northern Ireland, the Department’s Audit Committee, Chair of the LEDU Audit Committee and the Health and Safety Executive Audit Committee and Member of the Senate and Honorary Treasurer of Queen’s University Belfast. Get the picture?

But she was also on the board of the Emerging Business Trust, another conduit for disbursing all those lovely public funds, and which depended for its own funding on LEDU.

Pause right there. Does that sound right to you? Wouldn't your average five year old have thought there could be the teensiest potential conflict of interest where the giver is also the taker?

But it gets much worse. She was also joint partner with her husband in an accountacy firm, MTF, which was then appointed by EBT- without a proper tendering process- as managers of EBT itself. They received £1.4m in fees for that- a quarter of EBT's entire public funding.

And there's even more. She and her husband had fingers in all kinds of pies and were closely involved with several of the small companies funded by EBT. In one case, Arcom, her husband joined the board and purchased 10% of the shares just three weeks before EBT invested in the company. The price shot up. In a virtually unprecedented statement, the PAC says: "In our view Mr Townsley’s actions amount to ‘insider trading’. Which of course is a criminal offence, and which must surely be followed up by PC O'Plod.

Oh, and EBT has now gone into liquidation and a whole load of files have somehow been shredded.

It all absolutely stinks.

But the really appalling thing is that nobody in the Department of Enterprise thought any of this was in any way questionable. Oh no. They just nodded, smiled inanely and signed the cheques.


What about all those codes of practice and Lord Nolan's Seven Pillars of Public Service? Where were they?

The answer is- as we've seen over and over again in recent years- little of what's promised at the top actually gets translated into effective action down below. More and more of the public sector seems to exist in a dreamworld where the common sense tests have disappeared.

At best our money is wasted. At worst, it goes walkabout.

PS As we know, Northern Ireland is awash with public spending, as is Scotland. According to the latest official stats per capita spending in N Ireland is 35% higher than in England, and it's 22% higher in Scotland. Both countries have experienced more than their fair share of jaw-dropping financial scandals. Is there by any chance a connection?

Postman Pat's Pension

Postman Pat is such a nice chap that it feels wrong to jib at stumping up for his pension fund. Even if the cost of first class stamps has doubled in twenty years. And even if service standards are still "patchy". And even if the head postman gets paid £2.55m pa. And even if some of Pat's thieving colleagues do nick bits of our post.

Today, Alastair Darling has given the Royal Mail another £850m of our money to offset some of that £5.6bn crater in the their pension fund. Darling doesn't say "given" of course. No, he says it's only "the release of £850 million of the Royal Mail Reserve for the company to transfer into a pension escrow account that may be drawn on by the pension trustees in the unlikely event that the company should fail."


First, whatever the technical accounting entries may say, that Reserve belongs to us, the taxpayers: even if it does represent past operating profits, as he claims, we still own the business. So it's "given". Second, no private sector company would be able to offset its pension fund deficit with an escrow account of this kind, and you have to wonder what's really going on: its probably yet another play from the Enron Book of Accounting Wheezes.

As we've blogged before, the reality is that we taxpayers are on the line for all of the public sector's pension liabilities- funded and unfunded alike. Indeed, as we recently discovered, we're even on the line for tens of billions of pension liabilities in companies that were privatised twenty years ago.

Our total liability for public sector pensions is now put at around £1 trillion, or £40,000 for every household in Britain.

I just wonder if Ted Glenn and Mrs Goggins know about all this.

Wednesday, May 17, 2006

Jobs For The Boys

One reason that quangos are such pants is that most of them are headed by superannuated/failed politicos. They're nice little earners and provide a continuing position in the limelight. A good example is my Lord Windbag's position as head of the entirely useless £0.5bn pa British Council (see this blog).

This pm the state broadcaster carried a supine interview with the head of the National Consumer Council, my Lord Whitty. His main claim to fame is that he was General Secretary of the Labour Party during my Lord Windbag's reign, and helped the latter lose two General Elections. Before that he was a trade union official.

We've blogged the entirely superfluous £5m pa NCC before. This is a quango that has no measurable objectives but reckoned itself so well-equipped to lecture British companies on best business practice that it used our money to publish a book, called "The Stupid Company".

As part-time Chairman, Whitty's main tasks are to draw fifty grand a year, ponce round the media, and eat four free lunches annually (see previous blog). No wonder he's chuckling.

As I listened to him pontificating unchallenged this pm, my knuckles whitened on the steering wheel. But of course, in quangoland, getting cushy BBC interviews is a snap.

Quango to quango.

Pants to pants.


Yesterday's confessions of the removal man were historically jaw-dropping. Dave Roberts, a bearded man who holds the title Director, Enforcement and Removals, at the Immigration and Nationality Directorate, nonchalantly told the Home Affairs Committee:

  • The Home Office has "not the faintest idea" how many people are here illegally (cf the latest Migration Watch estimate of up to 870,000)
  • They think tracking down identified illegals is "not an effective strategy" (cf everything we've ever believed about law enforcement)
  • They do not know how many illegals they themselves have ordered to leave- "I do not have that information" (cf the working standards taken for granted in all properly managed organisations)

And as if that wasn't enough to have our flabbers well and truly ghasted, the Department of Work and Pensions Chief Economist then told the Committee that Jobcentre staff routinely issue National Insurance numbers to all-comers. As we know, NI numbers are a turnkey identification for access to all kinds of things, including jobs. Yet Jobcentres are dishing them out whether or not individuals can prove legal British nationality.

According to DWP- another notoriously dysfunctional department- "It is not about ascertaining whether someone is legally in the country or has the right to work." is it for then?

As we've blogged many times, in a ftse100 company, this kind of incompetence would have heads rolling, and probably a shareholders revolt to unseat the CEO.

PS Even we dedicated small staters normally accept that law and war are two things best left to government. But the appalling state of the Home Office does make you wonder. We've privatised parking enforcement...maybe we could do the same with tracking down illegal immigrants. Fire Dave and his team and use the money to fund freelance bounty hunters. It would have to be an improvement on where we are now.

Tuesday, May 16, 2006

The Prerogative Of The Amateur

The Cabinet Secretary, Sir Gus O'Donnell, appeared before the Public Administration Committee today, trying to explain why no Civil Servants had been bulleted over the meltdown at the Home Office:

"I'm not clear that there was sufficient direct accountability for that to be appropriate. This would have been assessed by line managers along the way and people will be looking at what lessons to learn and what staff changes are necessary." A "wide range of officials" were responsible for "a number of jobs."

Somehow it's never "clear that there was sufficient direct accountability". In fact, with the exception of the unfortunate Crisp, I can't think of a single senior Civil Servant who ever got fired for bogging up. As long as they don't get caught leaking to the press, or having sex on the Governor's carpet, they're pretty safe.

The cult of the amateur.

Power without responsibility.

Somebody's 'avin' a larf. And we're paying for it.

Sure Start: Another Expensive Flop

The government's Sure Start programme- loudly and tediously trumpeted by them as a rare example of success- is now recognised as another expensive flop. Yesterday, even Tony was forced to admit it.

Sure Start began in 1997 as a limited programme to help the young children of problem families in deprived areas. But over the years it has become much more ambitious- and much more expensive. Exact costs are difficult to pin down, but the best estimate is £3bn so far, with spending budgeted to increase to £1.8bn pa by 2008.

As with so many half-baked government initiatives, all the initial targets (such as reducing illiteracy among target children) were missed. But instead of ditching the whole thing, they expanded it, and even appointed the first ever Children's, Margaret Hodge. A major study was commissioned- the National Evaluation of Sure Start (NESS)- to dig up some evidence- any evidence- of success. Unfortunately, NESS concluded that Sure Start had actually made things worse:

"The programme is setting back the behaviour and development of young children in the most alienated households...Children of teenage mothers and unemployed or lone parents did worse in Sure Start areas than those in similarly deprived communities elsewhere. The behaviour, speaking and social skills of three-year-olds in the most disadvantaged families all suffered in areas covered by Sure Start programmes, which run in 524 poor areas...those in the greatest need may feel "overwhelmed or turned off" by the Sure Start support on offer."

So there we are. Upwards of £5bn down the tubes, and counting. And life made even worse for those it was meant to help.


Efficiency Quango Inefficient

One of Gordo's most extraordinary beliefs is that he, an old skool Scottish socialist, somehow holds the key to making our economy more efficient.

Naturally, much of his destructive tinkering has comprised loads more public spending- everything from those multibillion R&D tax credits to our shambolic unwanted £9bn pa state "skills" industry. But on top of that, he's taken it on himself to instruct and regulate Britain's private sector businesses to improve their performance. And more regulation of course means more jobs for quangocrats.

One of the bigtime winners has been the Office of Fair Trading: since 2000, its budget has increased by 70% to £56m pa. That was to enforce Gordo's stern new competition laws, supposed to deliver more competitive markets, and pressure companies into greater efficiency. Consumers would gain from lower prices, and the economy from higher productivity. Simple.

Hmm. If only.

The Public Accounts Committee has just reported on the reality. Instead of efficiency, all it found at the OFT was the usual morass of bureaucratic incompetence and delay:
  • No effective strategy- "The OFT relies largely on complaints to select its cases. It receives around 1,200 complaints from the public each year. There is no guarantee that complaints will relate to one of its priority sectors." Reactive working practices and lack of strategic prioritisation- the classic recipe for organisational wheelspin
  • Poor operational management- eg its internal case manual, vital to ensure consistency, is only half finished; staff don't understand what top management want; it does not maintain a competition database to retain and share knowledge
  • Weak staffing- "The competition enforcement division has suffered from staff turnover of 20% per year, and 12% of its posts were unfilled in 2005. Many of its staff leave to join the private sector." Main grade OFT lawyers are paid only £39,000 pa- if they're any good, they can get a multiple of that in the private sector
  • Culture of delay- "The OFT has published standards for how long its investigations should take. The standards state that 75% of its investigations should be completed within 9 months. In fact, no investigations have been completed within this timeframe...
    Many investigations take at least 3 years...Some have lasted over 4 years"
  • No measure of success- it's impossible to assess value for money since OFT have not considered it necessary to measure the benefits of their actions: when pressed, all they could come up with was reducing the price of football shirts, and- possibly- the Monopoly board game...not quite what Gordo promised

The really concerning thing about the OFT is that- on top of its £56m pa funding- its activities always load additional costs on business:

"Legal costs alone costs can be sizeable. CBI members estimate that they can incur legal fees in excess of £200,000 on an OFT case. In complex cases, these costs can be far higher, particularly if the company appeals. One company has incurred legal fees in excess of £1.7 million."

And the legal fees are just the tip of the cost iceberg. Senior competition lawyer Edward Pitt, commenting on the OFT's recent decision to ditch its bumbling and long-running cartel investigation into the telecoms market, fumes:

"If the OFT spent £1.5m on this investigation, you can multiply that by five for the companies that spent four years defending themselves against these allegations. The real cost of such an unnecessary and long investigation is the economic inefficiency caused by business uncertainty, as well as the disruption of management time."

Right now, the OFT is again pursuing the big supermarkets. It's another reactive decision, diverting resources from much more important matters. Because in reality, fierce competition among supermarkets has been brilliant for consumers, routinely driving down prices just like Gordo wanted. But they are naturally unpopular with suppliers and small shopkeepers, and are evil personified in the eyes of the BBC and many other leftie pundits. So the OFT is jumping back in, even though its time would be much better spent concentrating on say the appalling anti-competitive practices in the construction industry. And even though its intervention will increase supermarket costs.

There is a school of free market thought that says governments should stay out of competition enforcement altogether. It's yet another burden for taxpayers, organs like the OFT never know what they're doing, they can easily make things worse, and anyway markets have their own self-correcting mechanisms (eg excess profits attract new suppliers to enter the industry).

We may not be ready for that, but as things stand the OFT is pretty much a waste of space.

Monday, May 15, 2006

Extreme Flatulence Alert

The Beloved Leader has always suffered from...well, let's call it wind energy. And he's having a particularly distressing bout just at present. After the Big Stink, and the Big Room Clearer, he's run out of names and this one's just called the Big Wind. Stand well back:

"I think what people want is a society without prejudice but with rules - rules that are fair, rules that we all play by, and rules that if they are broken carry a penalty. Despite our attempts - and we have made many of them - to toughen and reform the criminal justice system ... the criminal justice system is the public service most distant from what reasonable people want."

Of course, it can't be his fault that we have all those tens of thousands of reoffending foreign rapists and murderers rampaging through our streets: he's only been in power for a decade. And why would he have had the faintest idea he was going to need to be tough on crime? He's only a Labour lawyer after all.

We- along with 99.217% of the population- know what needs doing: forget all that wishful thinking about reformation and sorting the sheep from the goats- for a mere £3bn pa we can double the number of prison places and lock up bad guys for good (see eg this blog). We'd save at least £50bn pa in crime costs, and we peasants might once again believe the Law was on our side.

But instead of that, we've got at least another four years of flatulence.

Get yourself a Big Clothespeg. And a gun.

Latest On "Cuts"

Flywheel, Shyster, and Flywheel have been beavering away on those Gershon civil service "cuts" (see previous blogs eg here and here). It now seems that most departments have solved the obvious difficulty by simply ignoring the targets:

"The situation is most serious at the DWP, which was instructed to cut 40,000 of its 130,786. The DWP's departmental report, published last week, reveals that in 2007/08 it plans to employ 107,580 full-time and part-time staff - just 23,206 fewer than when the efficiency review was implemented and nearly 17,000 short of target."

And that's even without counting the fact that DWP doesn't include its ballooning legions of temporary staff in the total anyway (see this blog).

Other departments targeted for cuts are now actually planning to increase staff:
  • Department for Transport- target reduction 650; now plans an increase of 1,406
  • Home Office- target reduction 2,700; now plans an increase of 4,000
  • Law Officers Department- target reduction 50; now plans an increase of 400

As we blogged before, the best moment in the Budget speech was when Gordo tried to brag about Gershon and everyone just laughed. Sounds like tears will be needed next time.

PS On our recent drive back from Norfolk, Mrs T and I amused ourselves by trying to decide the best from the many thousands of half-baked New Labour initiatives that never actually got implemented, and are now simply ignored by everyone in the real world. Banning mobile phones while driving was an obvious one- usage is now pretty well universal. Banning fox hunting. Banning handguns. Banning anti-social behaviour. Banning bogus asylum seekers. Banning reoffending. Banning waiting lists. Banning exam failure. Banning disrespect. And soon, banning unhappiness.

I Was A Miner In Times Of Austerity

Billy's austere socialist paradise

The miners' compensation scheme is costing taxpayers £7.5bn. Quite right too- we were the ones who voted for the politicians whose hare-brained romantic socialism led them to nationalise this dangerous dirty disgrace in the first place, and whose gutlessness then had them propping it up with public money for years after it should have been chopped.

Unfortuantely, as we've blogged before, it turns out that most of the money is actually going to lawyers rather than the sick miners it was meant to help:

"THOUSANDS of miners with chronic chest disease have been paid less than £100 in compensation under a programme that earned their solicitors 20 times as much per case. Newly released details of the £7.5 billion scheme, the largest in the world, expose the way in which public money has benefited law firms far more generously than pitmen and their families. One family, whose father died after spending almost half a century underground, were offered only £7.13. Yet the law firm that handled their claim has earned £41 million."

Dealing with the claims of the 3,949 miners who each received less than £100 cost the taxpayer £15.3 million, of which less than £400,000 went to the claimants. Thirteen law firms have been paid more than £10 million each for their work. Thompsons, a firm of solicitors with a close relationship to the National Union of Mineworkers, has received £83.7 million from the public purse, while Doncaster-based Beresfords, linked to the Union of Democratic Mineworkers (UDM), has been paid £66.7 million."

Is this really what St Billy of Bragg had in mind when he penned his famous hymnal of support for the pit bruvvers?

"Call up the craftsmen
Bring me the draughtsmen
Build me a path from cradle to grave
And I'll give my consent
To any government
That does not deny a man a living wage."

Or indeed compensation for pneumoconiosis.

The trouble is, Bill old mate, romantic twaddle like "cradle to grave", or "social justice for all", may have sold you a few records, and bought you a lovely Victorian mansion looking out over Lyme Bay, but in the real world it just don't work. What happens in the real world is that you get stuffed by a whole load of unintended consequences- greedy lawyers, bureaucratic gridlock, Swiss bank accounts, or- as in this case- plain old administrative incompetence:

"Under the terms of an agreement signed in 1999 by the claimants’ lawyers and the Department of Trade and Industry, the legal costs paid to a solicitor after each claim is settled — on average £2,125 — are entirely unaffected by the size of the compensation award."

We should feel very sorry for our sick ex-miners. They are the victims not just of past political bungling, but also of the present day public procurement incompetence that costs us all billions every year (eg see this blog).

Sunday, May 14, 2006

Recent Bonfires- 16

In the news this week:

£95m pa for EU driving licence- "THE cost of a driving licence will almost DOUBLE under a plan before ministers. Another option would see ... car owners face being hit with a £3 annual fee to keep the cost of licences down. All drivers will also be clobbered for £19 every ten years to renew photocard licences. The fees shake-up is down to EU laws banning paper licences and ordering photos to be updated every decade. The DVLA believes it must generate up to £95million a year to cover the costs of the reforms." (Sun 12.5.06)

£700,000 on hatchet consultants- "A team of consultants who drew up plans to cut 400 hospital jobs have been paid almost £700,000 in three months. The turnaround team from KPMG has been paid the money after the firm was hired by Surrey and Sussex Healthcare NHS Trust, which is mired in £40.9 million debt. Geoff Martin of Health Emergency said: "It's a scandal that big firms of accountants are being paid fat fees to recommend trusts to sack front-line nurses. That's New Labour's modernisation of the NHS where pen-pushers and hit-squads are seen as more important than the hard-working staff at the frontline of our hospital services." (Guardian 11.5.06)

£14bn pa extra on Scottish Devolution- "At the start of devolution, Scotland was given £16 billion to spend. By next year this will have almost doubled to a staggering £30 billion. Audit Scotland has just turned its attention to the £2.15 billion apportioned to Scotland’s teachers ...What they discovered, among the salary increases of 23% and the shorter working hours, was calm and stability within the teaching profession. What they couldn’t find, however, was any evidence of better-educated children....But you don’t have to be an auditor to work out that a record £9 billion invested in the health service in return for waiting times longer than they were pre-devolution, longer than they were under Margaret Thatcher, is poor value for money....The public wants more than investment in its services; it wants results." (Sunday Times 14.5.06)

This week's total- £14,095,700,000

Wednesday, May 10, 2006

Lab Work: Another PFI Fiasco

Taxpayers have lost another pile of money on another bungled PFI project. This time it was the scheme to rebuild the National Physical Laboratory.

Despite supposedly being a fixed price contract, after years of delays and cost over-runs, the suppliers effectively threw in the towel: indeed, the lead contractor exited the construction business altogether.

The upshot is that taxpayers have now taken over an unfinished building which is running six years behind schedule. We've had to stump up £122m for a shell that's worth only £85m, and which still needs an estimated £17m to complete: and that might well be an underestimate because it covers all the hard bits that have caused the problems.

According to the NAO report, the project was fatally flawed from its inception in 1998. In particular, there were grave doubts about whether the contractors- John Laing Construction- were capable of delivering the complex and demanding specification, which included very precise requirements for laboratory temperature and noise supression.

Particularly shocking is the fact that the DTI pressed ahead and signed the deal even though its own project team had expressed serious reservations. The NAO describes the whole procurement process as "weak": with only one and a half serious bidders, there was lack of the competitive tension essential to driving a good deal.

It's quite true the private sector suppliers have lost a ton of money on the deal, but that's no comfort to taxpayers.

We've blogged about the pitfalls of PFI many times, and the NPL fiasco once again highlights some key points:
  • A half-baked deal was bulldozed through by pressure from the top: Brown's Enron drive to borrow off-balance sheet was the fundamental cause
  • Commercial naivety led the public sector to put far too much faith in the letter of their fixed price contract, rather than grasping the underlying reality: their deal counterparty was a thinly capitalised "special purpose vehicle" (Laser) which did not have the financial capacity to deliver the guarantee, and eventually folded
  • Fixed pricing does not guarantee timely delivery: this supposed three year project is running six years late, and we've all seen the delays at Wembley

Think about this, think about the multi-billion Olympics, and shudder. The quangocrats building that giant bonfire reckon they will deliver it on budget and on time using fixed price contracts just like this one.

Hold on to your hollyhocks.

Tuesday, May 09, 2006

MoT Breakdown

Another public sector IT fiasco continues to rumble on. This time it's the MoT system commissioned by the Vehicle and Operator Services Agency (Vosa).

The £230m system was ordered from Siemens Business Services in 2000 and was due to be rolled out across 19,500 MoT testing stations by May 2002. But numerous problems caused repeated delays and it wasn't finally completed until March this year- four years late, and over budget. And now it is finally installed, wild unreliability is causing major problems for both garages and motorists:

"Glitches have left many of the country's 19,500 testing stations unable to work...They are having to issue paper MoT certificates then register the details of the car on the Vosa database over the following five days. But post offices are supposed to check the MoT database before issuing a tax disc. Although they are allowed to tax a car when presented with a paper certificate, some are refusing to do so."

Moreover- as so often- the public sector seems to have put its faith in technology that is already prehistoric:

"The new technology uses a slow dial-up connection, rather than broadband, and dot matrix printers - technology that is regarded as 10 years out of date. The difficulties have been exacerbated by the back-up system, which relies on garages ringing a call centre for an authorisation code to validate the paper MoT certificates. "With more than 19,000 stations out there, the switchboards have jammed".

As we've said before, the public sector's IT record is absolutely appalling. In fact we're thinking of offering a prize to anyone who can name any project that's come in on time, on budget, and actually does what it says on the tin.

Danger UXB

Do you realise there is a gigantic unexploded bomb buried beneath every street in Britain? It's called the gas distribution network, and it could blow at any time.

Because it turns out the network still largely comprises ancient iron pipes laid down by Isambard's dad. And most of the rest is something called ductile pipe, dreamed up by Gas Board boffins in 1970, and now known to be even more dangerous than any old iron.

Yesterday the head of Ofgem, the gas and electricity regulator, appeared before the Public Accounts Committee and accepted that this is a "very serious" situation. But, said Alistair Buchanan, even though he's the industry regulator, it isn't his responsibility. Safety is down to the Health and Safety Executive...yes that £200m pa quango that gave us the Buncefield Oil Explosion (see this blog). Hmmm...

What is Ofgem's responsibility is money; specifically, they're meant to ensure these monopolistic gas distributors don't rip our faces off. And the main topic of yesterday's PAC was the National Audit Office report on the June 2005 sale of four regional gas distribution companies by National Grid plc. Were Ofgem right to permit the sale, from which National Grid shareholders trousered £5.8bn? Had they properly protected consumers?

It transpired that Ofgem's legal duty was not to maximise consumer benefits from the transaction, but only to ensure consumers weren't left worse off. They reckoned they'd secured that because they expect the introduction of new players will allow them to practise "comparative regulation", and thus squeeze the entire industry harder during their five-yearly price reviews. And they'd crunched an impressive mass of stats to support their contention- aided by PA Consulting who charged them £1.3m for the work...a mere ten times the original estimate.

But as with all financial modelling, it's garbage in, garbage out. And it soon became clear their were some pretty shaky assumptions and analyses underpinning Ofgem's decision:
  • Their assumed scope for future industry productivity gains- a ludicrously precise 4.13%pa- was mainly based on simple extrapolation from other regulated industries like electricity and water, from which gas distribution differs in some obvious respects...not least the risk of skimped maintenance blowing say Surbiton off the map
  • The timing of gains is extremely uncertain- Ofgem themselves admit 80% of them won't arrive until after 2013, and NAO calculations showed how further delay could easily reduce their present value to virtually nothing
  • The expected £100m costs are much more certain and arrive immediately
  • Risk had not been adequately modelled- indeed Ofgem had actually ignored standard Treasury "Green Book" guidance..."a learning point for the future" was all Buchanan could say

Taking it all together, NAO figures suggested Ofgem's projected net benefit to consumers of £225m could very easily become a net loss of £63m.

What's more, the acquirors, as is usual in take-overs, overpaid for these companies. The 14% "winners' curse" premium they paid will have to be recouped somehow by making the assets sweat. Like the sound of that down there in Surbiton?

The fact is these dodgy old pipes have now been put into the hands of companies that are smaller and less well capitalised than National Grid, and who will be financing themselves with a lot more debt. All of which will need servicing.

As we know, regulators are notoriously prone to "capture" by those they are supposed to regulate. It rarely takes the form of crude brown envelopes stuffed with fivers, but much more subtle techniques. For a start, the regulatees can and will pay for the very best operators to be on their side, and ominously Buchanan flagged up yesterday that his people are "only on civil service scales". So there is very likely an imbalance of power.

And those smart regulatees will always subject the regulators to the entire battery of negotiation nukes. Like statistical befuddlement, and veiled threats of awkward legal embroilments. And of course flattery. Mr B boasted yesterday of how his regulatees were always squawking about his harshness, and I found myself remembering one of the first rules of negotiation- always, always, ALWAYS flinch...even if you are secretly pleased with the other side's offer. Ideally, you want the other guy to think he's put one over on you.

So should we be worried? As consumers and taxpayers the answer is almost certainly yes. Even if Ofgem does manage to extract the additional efficiency gains they project- and frankly I was left unconvinced- they will do so only by pushing these new smaller players a lot harde than they've been able to push National Grid. The risks to safety are obvious, but then what?

The example of Railtrack is instructive and chilling. Once safety becomes a frontpage issue, and once casualties have reached a certain level, government is compelled to step right back in. The railways were renationalised post-Hatfield and vast amounts of taxpayers' funds are still being pumped in to put right what Railtrack failed to do.

We could all soon be paying for Ofgem's decision bigtime.

PS If you're in Surbiton and worried, I suggest you put on a quilted asbestos suit and get out as quickly as possible.

Monday, May 08, 2006

Meat Sandwich

I once had an unhappy client who was forever giving me meaningful looks and telling me that he "understood the supplier/customer relationship". Eventually, after numerous complaints about poor delivery and high fees, he sacked my firm. Well, specifically he sacked me. Despite leaving me feeling bruised, it was actually a happy release on both sides- the market in operation.

I recalled this as I read the Doc's charge that I'm a member of the "twittering middle class".

Now I've known Doc for longer than either of us care to remember- way back in the days when he still had his own teeth, and I could still walk without the surgical corset and the talcum powder. But he's never called me that before. "Fascist hyena", yes- fair comment. But stuck in the middle with a Ronnie Barker trilby....has it really come to this?

As those who've read Doc's recent splendid post (if not, do it here) will know, he's fed up to the back teeth (or at least, the back gums) with all of us punters moaning about the withdrawal of GPs out of hours (OOH) services. He's had thirty stressful years of being at our 2am beck and call, reckons most of the calls are trivial and/or could easily wait til morning, and he's just had enough. He thinks most GPs will never go back to offering it.

On the basis of "a mile in my shoes", I can see his point. Free at the point of use might have been fine when most people wore Ronnie Corbett flat caps and knew their place: deference to professional men like the Doc might have made people uncomfortable calling him in the early hours except in the direst emergency (especially since most punters would have had to trudge eight miles to the nearest phone). But in these days of 24/7 pizza deliveries, things are very different, as the Doc vividly explains.

On the other hand, from the customer standpoint, we're all totally hacked off. What we'd always imagined was part of our GP service package has just been unilaterally withdrawn. Even worse, it's cost us an extra £212m pa. We've had no say in it whatsoever even though we're the fuggin' customers and we're paying the fuggin' bill. That normal customer supplier relationship just doesn't exist.

And here's the real killer: although we don't have any normal customer power over our Docs, that doesn't stop us complaining to them about service shortcomings. They're our main point of contact, our NHS account executives.

Our GPs have become the classic meat in the sandwich. Senior NHS management decrees certain outcomes- be they obesity empowerment programmes or crackpot IT systems- and the Docs have to deliver them. And when we customers can't understand why the free menu doesn't include Herceptin or anything else we fancy- like calling Doc out at 2am for a bit of a chat- it's the Docs who have to deal with it. They are the ones required somehow to implement and explain the rationing entailed in "free" socialist medicine.

What it's all telling us- yet again- is that we have got to move towards a more market based healthcare system. Free healthcare produces pretty well infinite demand. Which can only be controlled by administrative rationing- just as we have now.

How much better it would be if we could control our own finances and make our own healthcare choices count with our own wallets (subject to a poverty safety net of course). GPs would not have to offer OOH services, and we would not have to pay for them. But if enough people did want to do so, then some GPs would offer them. At a price.

No meat in any sandwiches. Just that customer supplier relationship.

Sunday, May 07, 2006

Recent Bonfires- 15

In the news this week:

£45m on fake Roman spa- "Bath Council's attempt to build a modern answer to the city's Roman baths involved everything from the Three Tenors to mating mallards, but so far not one happy bather. The spa, initially due for completion in Easter 2000, remains unopened after leaking floors, legal wrangles, and allegations of council "blank cheques"...Fears of disturbing a nesting pair of mallards caused the first delay. Two weeks after Pavarotti sang, paint in the hot pools was peeling...The floor started leaking and all 274 windows needed replacing at a cost of £700,000...the original water filtration system had to be replaced at a cost of £91,000. The council-run project has more than trebled in cost to £45 million...and will cost more than five per cent on council tax in 2006/7 and every year thereafter." (Sunday Telegraph 7.4.06)

£212m extra for worse GP service- "Medical care at nights and weekends when GP surgeries are closed is a shambles with slow response times and escalating costs, according to a report by the National Audit Office. From January last year, responsibility for most out- of-hours cover was switched from GPs to primary care trusts, who frequently contract out the work to private companies. But the costs of the new service have risen by more than £200m, increasing the financial pressure on NHS trusts, and it is failing to meet its quality standards." (Independent 6.05.06)

£70bn on consultants- "..Labour will have spent £70bn of state funds on management and IT consultants by the end of its third eye-watering number. Far more disgraceful than the size of the expenditure, however, is the scale of waste. In "a catalogue of catastrophes", the Government has tipped billions down the drain. Customs & Excise, for example, spent £28m on 300 consultants in two years with no identifiable benefits. And while the National Health Service is overseeing the closure of hospitals, it's still hiring consultants whose charge for a couple of weeks' work is not far short of what many nurses earn in a year." (Telegraph 5.5.06)

More overspend at £500m Scottish quango- "Scottish Enterprise ran up a £34m overspend on its 2005-06 budget of £500m by approving funding for too many projects, then failing to rein in...has asked ministers to plug a £60m hole in its budget this year." (Herald 3.5.06)

Total for week- £70,757 million.