To advise that public sector inefficiency is the reason why we are in recession is sheer science-fiction. It’s how management used to be taught a few decades, with reference to the seminal work of Frederick Taylor, productivity and lighting. In the late nineteenth and early twentieth centuries, Frederick Taylor was decrying the ” awkward, inefficient, or ill-directed movements of men” as a national loss. He advocated a change from the old system of personal management to a new system of “scientific management”. Scientific management met with significant success. Taylor’s personal work included papers on the science of cutting metal, coal shovel design, worker incentive schemes and a piece rate system for shop management. Scientific management’s organisational influences can be seen in the development of the fields of industrial engineering, personnel, and quality control.
This notion of productivity has been pervasive in ‘reforms’ of the public sector, such as the National Health Service. However, the problem which faces strategic change managers, trying to implement change in the NHS, is that data currently provide that the NHS model is extremely efficient already, and the NHS is not easily amenable to reductionist metrics; it might be easier to calculate the number of bed-days involved in a given surgical procedure, than to count the cost of a new diagnosis of dementia. Counting the cost in raw terms is intrinsically difficult for different health providers in different submarkets of health, especially when you consider the value of different products and services in health vary markedly – for this ‘quasi-market’, this means comparing apples and bananas, and this is one of many technical flaws in the new Health and Social Act which should have been eliminated by the Liberal Democrats.
The supremacy of the markets in England has instead been used as a threat. We were continually to vote conclusively for a particular party to avoid a Hung Parliament, such was the lack of confidence by the Conservatives in winning prior to May 2010. This prediction has been borne out. We have been told about the need to ‘get on top of the deficit’. In fact, the Government has made some progress in reducing the deficit, but the fact that the deficit doubled and the cost of borrowing increased during the course of this year is a direct consequence of the non-Keynesian policies implemented by the Conservatives and the Liberal Democrats. We have been continuously warned about the UK losing his triple A credit rating, but the double-dip recession has in fact been the biggest threat to this for the last few months.
The lack of regulation in new financial products in 2008, to some extent enabled by the creative (and sometimes illegal) practices of some corporates, has led to an extreme market failure, for which many in the public sector, comprising the ‘State’, such as innocent teachers and nurses, have been paying the financial penalty. Meanwhile, the top earners have received a ‘tax cut’, completely unjustifiably. Market failure is also the reason why privatisation has not worked. Privatising trains, water, gas and electricity has not introduced greater competition; it has been a licence to print money for shareholders of those companies, given that these are just a few entities in sectors which can collude lawfully to set prices to maximise profit, with no obligation to improve in material times the quality of their service or product delivery. It is this market failure, which if totally unfettered by liberal and libertarian thinkers, which could lead to massive inequalities; and this matters in specific scenarios such as the National Health Service. Without adequate protection and representation for workers in these sectors, such as through unions for teachers and nurses, and adequate protection and representation for employees in certain other sectors, such as through the British Medical Association, we do have an economy which is fundamentally dictated by shareholders not stakeholders.
The biggest threat for the NHS, specifically, is that private limited companies have a legal obligation to maximise shareholder dividend. This applies to all new entrants into the health sector, such as Virgin Care, and there needs to be stricter legal controls to ensure that healthcare is not compromised in making a profit. Making a profit is not intrinsically undesirable, but it is undesirable if private companies fail on a scale which would be unusual for the public sector. The recent alleged corporate fraud of A4e and criticism of the operations of G4s should provide a salutary warning for this. To imply that the problem is a public sector inefficiency rather than a private sector market failure is actually therefore very offensive indeed.
