Wednesday, May 28, 2008

Looney Tunes Meet The Marx Brothers

The Governance of Britain

The other day we asked why Tim Yeo thinks he's a Tory? Today we ask why Bugs thinks he's a socialist?

Well, no, that's the wrong question. The real question is why a senior Labour MP thinks you can have Big Government without Big Cost?

You will all have seen Denis MacShane's extraordinary article in yesterday's Telegraph. He reckons Labour can become the party of tax cutting, and says it can be funded by - wait for it - cutting spending:

"I do not know of a single minister who privately does not despair at the waste of money on pointless projects, publications, or legions of press officers that add no value. The taxpayer has given more than £1 billion of aid to India, even though that great country has more billionaires and millionaires than Britain and runs its own well-financed development aid programme (well, we certainly agree with that).

I was baffled as Europe minister to be told I had to waste 90 minutes being quizzed by a consultant when the kindly but shrewd tea ladies in King Charles Street knew what needed to be done. How much was paid to the consultant? What happened to his report? No one in Whitehall knows or cares. When I suggested using easyJet to cut flying costs in Europe, fellow ministers and senior officials looked at me as if I had left a nasty mess on their doorstep.

Can I be the only MP outraged that town clerks - even dressed up with fancy titles such as chief executive - can now get paid £200,000?plus for running rubbish collection services in small towns?"

So all you've got to do is cut out the "pointless" stuff. You save a shedload of money and you can cut taxes. Easy.

Indeed, Bugs urges Gordo to make parsimony the cornerstone of his policies, and helpfully suggests "he might care to call it a prudent state which leaves more money with the citizen so that social justice is not confused with state aggrandisement".

What a brilliant idea. A huge breakthough in our thinking about government.

And yet... and yet... cutting out waste... efficiency drives... you know, somehow it all sounds a little familiar.

Wait - surely the Marx Brothers already did it! Yes, I'm sure they did. It was called The Gershon Efficiency Programme.

We've blogged Night At The Opera Gershon many times (see all previous blogs gathered here). As you will recall, it was Brown's 2004 Budget headline to save £20bn pa by improving public sector efficiency by 2007-08.

Most of the subsequent "savings" have been pure fiction. The NAO concluded only one-quarter of the announced savings are "reliable", with the rest comprising deckchair rearrangement or service cuts (many of which- such as kicking patients out of hospital early- have expenditure increasing knock-ons). Worse, the programme has spawned its own Whitehall "Gershon" industry, inflating costs even more.

Clearly Bugs doesn't know about the Marx Brothers. He doesn't know that Big Government programmes for improving public sector efficiency never work. He doesn't know you can only ever play that script for laughs.

But we know.

We know that the reason efficiency programmes work in the private sector is not because the men at the top are more ruthless (as he argues), but because in the private sector the customer is king. Unless firms keep themselves broadly efficient, customers desert them and they go bust.

In the public sector, Whitehall is king. He who pays the piper always calls the tune, and public sector operations have to dance to Whitehall's tortured tunes, be they "efficiency" targets, diversity targets, outreach targets, spending targets, or target targets. The supposed end-customer gets no say, other than every few years possibly replacing Bugs Bunny with Harpo Marx.

What needs to change is not the name of the efficiency drive, but the whole structure of government. It must be broken up, spending power put into the hands of customers, and service suppliers made dependent on them for their survival.


PS I know we keep saying it, but boy, hasn't the political cycle turned. I can't tell you how delicious it is watching an EU superstate zealot like Bugs twisting and turning as he tries to leap aboard the lower tax bandwagon. On the doorsteps in 2005 you couldn't give away the case for lower tax. Back then, "informed opinion" held that the Tories had to accept the "Labour settlement" of high tax and spend because anything else was unsaleable to the electorate. Malcontents like your correspondent were told they were living in the past, and that we were all progressives now. We knew that was wrong, but we had no idea things would change so quickly. And even better, the failure of the Tory leadership to keep the Small Government flame alive spawned a raft of campaigning groups outside the party, groups such as the TPA, which are now firmly established for the long-haul. Sweet.

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