Select Committee on Public Administration Minutes of Evidence

Examination of Witnesses (Questions 40 - 59)



  40. The Prime Minister is a managerialist. He lives and breathes efficiency and targets and things like that. You were talking about keeping the public sector responding to these external forces, but maybe one of the criticisms is that the public sector itself does not initiate change itself, that it waits for directives or missives from Whitehall. Perhaps you could give us examples of the public service responding itself to pressures it identifies.
  (Mick Graham) I will give one from local government. The Chair made reference to housing maintenance within his constituency. I can quote a very good example where as a result of the demise of CCT the first thing a metropolitan authority in the North West did was consider how they could improve the service to council tenants. The first thing they did was kill the client. They got rid of the client/contractor split. That authority now delivers a vastly improved housing maintenance service. There is multi-skilling of the work force, individuals can go to a resident's house and do all the jobs they are capable of doing, not just what was on their card. Housing repairs have been cut from 28 days to seven days. They did that themselves in conjunction with the local residents, that is a vast improvement on the service. That was a change, a complete culture change. There are many examples of that where, given the freedom to do it and given a level playing field it could be done.

  41. We hear all the time about failures in the public sector like the Hackneys of this world. I wonder whether you could give us some examples of a public sector response to failures in the public sector. Very often the answer seems to be to bring in troubleshooters from the private sector and if there is a perceived failing in part of the public sector, can we have some examples of public sector response you would like to see?
  (Mick Graham) The council I have just quoted. There are several others where there are joined-up services. What is the point of having clean streets but not having decent street lighting, decent street furniture but overgrown parks? Under the old regimes they were all completely separate contracts delivered by different people, different companies. Some joined-up thinking in several councils: an environmental package has now been put together for all the work to be done by one group of people. It works. There are several examples like that.
  (Mr Edmonds) May I talk about the process in the Health Service because this is actually not recognised. While all this noise has been going on and we have been doing all the nasty things that the Chair has criticised us for, in the background there has been some very serious debate going on between Health Service management, Health Service unions and Government about how you make real life improvements in our hospital service and our Health Service more generally. One of the problems is that those debates and those discussions which look as though they were going to be highly successful, were predicated on the notion that there must be some very substantial improvements and A&E was one of the areas which was identified as the main contact point for most people. Unfortunately a lot of that has been sidetracked now because the Government feel that they have to stand up for their argument about the private sector. So every speech about the Health Service has to contain a phrase which says that they will go ahead with their Health Service reforms and they will introduce private companies. The employees feel that they have been set up for another round of introductions of private companies which they now believe is a hidden agenda below these civilised discussions about improving service. That is the tragedy of what has happened in the last four or five months. It is obvious that with the time it takes to train a doctor, the time it takes to train a nurse, the time it takes to train any Health Service specialist, if you are going to make realistic improvements in the Health Service within a reasonable time you are going to have to rely on the existing staff. Their good will and their commitment is going to be the main criterion of success. There is no doubt that this debate has greatly demoralised them. If we can get away from that debate and back to the discussions we thought were going to be highly productive, then everybody will gain.

  42. We have received today a letter from the Minister in the Department of Education and Skills telling us that the individual learning account programme is going to cease. The Minister says that the Government have become very concerned that some people are being pressed to sign up for low value, poor quality learning. Apparently there are 279 providers. I do not have the answer to this but it will presumably emerge later today. Would you be shocked if any public sector providers were included in that 279, the FE colleges?
  (Mr Edmonds) Yes, although FE colleges are working under a strange commercial regime at the moment. I heard, as many people must have heard, the programme on Sunday about some of the individual learning account scams which were going on. This is probably a response to some of the evidence which was produced there in the past few weeks.

  43. We were talking about the public service ethos earlier.
  (Mr Edmonds) Yes, if the public services are involved in those scams, then of course considerable and rapid action should be taken.

Mr Heyes

  44. I am interested in why you seem not to be winning your arguments. You have rehearsed a lot of them today. You have talked about a mass of research based evidence. You have run some very persuasive campaigns and you put forward some very powerful arguments. Yet you seem to be faced at all turns by what seems to be characterised as a stubborn, bloody-minded resistance and determination to resist PFI and privatisation. In your words, no-one seems to be prepared to listen to what you are saying. Where do you see the blockage? Why have you failed to win the arguments? Why are the Government so resistant to your very persuasive arguments?
  (Mr Edmonds) We seem to have won the argument with a lot of people apart from the Government. We have carried out a very extensive MORI poll which we can supply to you. It only reinforces the poll material elsewhere. It shows that as far as the Health Service is concerned very few people in this country, not much more than one in ten, believe that the introduction of more private sector companies into the Health Service will make improvements. We can give you the poll evidence but lots of other organisations have polled. The British public are pretty fed up with privatisation, they are pretty fed up with private companies in the Health Service and in the local government for that matter and it comes through in the polling outcomes. Why are we not persuading the Government to change their mind? Governments do not change their mind, but they sometimes change their policies. We are not looking for some triumphant change here. We are just looking for a bit of circumspection, a bit of a pause, a bit of an examination of the evidence and then maybe a decent debate. I have no doubt we will get that in the end. It has taken a bit longer than we would have hoped, but that is life. I think, as far as PFI is concerned, that the major problem is the public sector borrowing requirement. That is the problem. That hangup in the Treasury is what is driving most of this. The irony of it is that we shall end up with high cost investments providing lower than expected quality as a result of a foul-up in the way we present public spending in this country. If ever there is a tail-wagging-the-dog problem, that is it. If we can get away from the way in which we present public sector borrowing and public spending in this country and get to a more civilised system, a lot of this could fall frankly into a rather more sensible policy. That is the big blockage. As far as the evidence on PFI is concerned, we will give it to you. There is plenty of it from all sorts of directions now. It is the PSBR problem which is the one.

  45. You describe the problem but it still comes down to a feeling that what you are confronted with is bloody-minded resistance. You must have more of an analysis on it than that. What drives the resistance?
  (Mr Edmonds) I have tried to explain what is driving it. Why do the Government want to hold on to their PSBR definition? Because there is a feeling that if they change the PSBR definition, there will be a worry in the City that the prudent policies which have been followed since 1997 are being changed. That is the way it is being put to me and I am sure it is being put to many of you. That is the worry. I do not describe that as bloody-minded. I do not think it right, but that was your description not mine. It is a wrong policy. It has come from this particular genesis and it needs to be changed. If it is changed at root, that is the PSBR thing, then a lot of other happy consequences will follow from it. I do not describe that as bloody-minded: I just think it is wrong.

  46. What is your prescription for bringing about that change?
  (Mr Edmonds) Perhaps if the Government had discussions with those groups of people who the Government think are going to be desperately frightened by this change, they might well find that no-one is actually going to be frightened at all. A proper explanation of changes in accounting measures will be accepted generally across the financial world. So often in Government a decision is made and it is very difficult to review it afterwards without people feeling that they are losing face somehow.

Mr Lyons

  47. If the Public Sector Borrowing Requirement is the problem as you describe it and then you go on to say that the problem is that they do not want the City to know the extent of public expenditure, is there not a slight contradiction in that the City are asked to facilitate the financing of most PFI schemes and PPP schemes in some way?
  (Mr Edmonds) Yes.

  48. So they know; they do know already.
  (Mr Edmonds) Yes, and that is why, if there were a proper debate, the people who are alleged to be about to be frightened and to be going to do all sorts of terrible things in the market, will in my view not do anything of the sort. If this is a change which is properly explained, properly discussed, it can come about without any great difficulty at all. We are only talking about a move towards a way of doing things which is the accepted norm throughout most of the European Union. This is not revolutionary stuff, but there is a deep worry in the Treasury that a change of this nature will frighten the City. As you say, why should it? No more money is going to be spent, is it?

Mr Trend

  49. May I go back to this question of the public service ethos? You have used phrases like "corruption of the spirit", talking about how people who had pride in being a public servant are now more apologetic about it. These things resonate with me and there has been a fundamental change in perhaps 20, perhaps 50 years. It is a long time change in British society. You find younger people today who have no real concept of what you are talking about when you bring this up; it is particularly true of voluntary organisations where there was part of the same public spirit, including political parties which are now very low in numbers. Can you give me some sense of why you think this has happened? Is this to do with Government action? Is this to do with battles with the trade unions? Is it to do with a change in society? Is it to do with a more materialistic outlook? What has caused this corruption of the spirit?
  (Mr Edmonds) The temptation is to get intensely political but I shall not do that. You would not expect me to do that. Well, you might expect it but I shall not.

  50. I am hoping you will not.
  (Mr Edmonds) If you look at the speeches made by leading politicians over the last 20 years, you will find many, many examples where public service work is regarded as not of much value at all. There is a general dismissive attitude towards the public services, public service management services which public servants deliver. Part of this was due to the arguments about privatisation in the 1980s where if you are arguing that industries in the public sector are now going to be run in the private sector, you have to say why and the argument is that it is going to be more efficient there. I shall not draw any conclusions from that. It has had a very nasty cumulative effect. How do you correct that? There are examples all around. Talk to a paramedic team who have to deal with motorway accidents. Are they doing this for the money? Come on now. Talk to firefighters. Are they doing this for the money? Come on now. Talk to teachers. Are they doing this for the money? Come on. Talk to many senior local government officers, a much disregarded group. Are they doing this for the money? Talk to civil servants. Are they doing this for the money? I talked to a retired civil servant two days ago about the public service ethos and he said that they just thought they were doing a job which was valuable and they knew they were not going to become very rich. It is possible to do it and one of the tiny bits of good which has come out of those desperate events on 11 September might be that people will look at public servants rather differently now than they did in the past.

  51. I am not saying that the classic public service ethos has disappeared for good. Interestingly in the earlier exchange about whether somebody working in the care sector, either in the public or the private, is motivated by the same ethical values is a difficult question, there is some evidence to suggest in the report of the commission on public/private partnerships that patients were quicker to recognise the dedication of NHS nurses than those in the private sector. There is still evidence that the public as a whole think that there is something more virtuous about doing this in a public context than in a private one. I cannot help feeling that in general terms the whole debate has moved on. You rightly identified the 1980s because before the 1980s people regarded gas and electricity and telephony as public services which nobody would do nowadays I imagine. In some of the language Mick Graham used about the profit motive there is still the suspicion that there is this polarisation in the minds of the union between a profit motive and a public service. It has been pointed out to us that your mission statement still says that to improve the quality of life for your members and families is your most important purpose. Is this a comfortable position in an ever-changing increasingly fast changing world?
  (Mr Edmonds) In my few introductory remarks, I made the point that we do know a bit about employment in the private sector, as we know about employment in the public sector and there is a difference. Particularly when you are delivering labour intensive personal services, there is a difference in the way that can be done. There is no doubt that if you have a for-profit organisation, then inevitably the for-profit organisation keeps looking for ways of maximising that profit. That might not necessarily be the best way of maximising the quality of the service. In very many cases which we can quote, it seems to work in exactly the opposite direction. There are differences here. That is not to say that in every public service organisation the high standards we all look for are necessarily in place. We all know that is not the case, but there are problems. There are problems of lack of flexibility, there are the difficulties of over-specifying and narrowing the focus, the lack of response and so on. I think we should have gone in a different direction and we should have talked much more all the time about the satisfaction of the aspirations of the resident, the citizen, the parent, the student, the patient. That is what we should be concentrating on. I am a bit sceptical that if you have that as your main objective, the best way of doing that is through private sector companies. I do not think it is.

  52. May I take you back to what you said about Mr Byers earlier? In my mind this is an example of a rather simple juxtaposition. You juxtaposed the profit on the railway system with safety on the railway system. We all understand that. The position as a whole is very much more complex than that.
  (Mr Edmonds) He did.

  53. You did, I think.
  (Mr Edmonds) No; I referred to the fact that he did.

  54. May I ask then what you think about Mr Byers' current plans? We have stopped talking about joined-up government on this Committee interestingly in this Parliament. It was the rage in the last Parliament. Now in terms of Railtrack we have stopped talking about the third way as well but I should like to reintroduce the concept. Mr Byers appears to have found a third way between nationalisation and a private company, profit-motivated companies. What do you think of his model of a not-for-profit company?
  (Mr Edmonds) With respect, I have not ducked one question so far but I am going to duck this one. I do not know enough about it. I just do not know enough about it.

  55. We thought you could help us.
  (Mr Edmonds) I hoped someone would help me in this direction. It seems to be a rapidly evolving plan, is one way of putting it.

Mr Liddell-Grainger

  56. May I take you back a bit on the cost of public services? You are advocating more public ownership of public services. Surely one of the most important things for Government is to balance the books and make sure that the Treasury can provide enough money to cover public service, etcetera. I do not think anybody would disagree that the cost of public service in this country is going up all the time. We have seen successive governments putting money in to inefficient public services. Are you advocating we go back to nationalisation of public service—that is probably a bad word—the complete control of public services lock, stock and barrel?
  (Mr Edmonds) All I am saying is that the introduction of private companies into the public services, as we are talking about them today, particularly local government and the Health Service, has in most cases—we think in the overwhelming number of cases—not produced good outcomes. We are saying that Government should think again and we are hoping that your Committee might encourage the Government to think again about this development. There are much more productive ways of trying to improve public services than this particular way where we have a lot of experience over 20 years and we know of all the difficulties. Maybe a different approach is that. I am not talking about renationalisation of all of the privatised utilities or anything like that. I am just talking in this rather narrow way.

  57. Surely that is what you are talking about.
  (Mr Edmonds) Am I?

  58. No disrespect. You are saying that you want it to stop and you are wanting to reverse the trend.
  (Mr Edmonds) What I am actually saying is that we think the Government ought to stop and we ought to have a proper debate on evidence about what has happened, why it has happened, whether there have been benefits—as there clearly have been in one or two places—and whether those benefits are worth the difficulties which are very considerable. If you want me to talk to you about the renationalisation of the gas industry, I should be delighted to do so. At the end of the 1980s before gas was privatised, the customer satisfaction level was so high it was almost impossible to chart. Within five years of privatisation, the satisfaction level of the customer was so low it was almost impossible to chart. We had strange things where senior managers in the gas industry were getting very large increases in pay, the number of people delivering the service was going down. We now have the curious situation, as a result of that privatisation, where the training which was undertaken by the public body throughout the period since the late 1940s, stopped because they were looking for shareholder value and they were the only people who were training. We now have half of the skilled gas workers in this country going to retire in the next five years with no substantial plans for replacing them. You asked me the question, so I am answering it.

  59. The reason I was asking the question—I accept what you say about the gas . . . Let us move on. There was a recent referendum in Bristol where voters have chosen an option to freeze the level of tax, which would cut public services. Do you not think that it is going to be very difficult to go back having got this far when local voters in a city—which I do not represent, I was just reading about it—actually do not want any increases in local taxation whatsoever.
  (Mr Edmonds) Was that in 1999? It is a mixed pattern. We all make our decisions about these matters.[2] What people worry about is that they might pay extra tax and it will not go in the direction they wanted to go. There is very, very strong evidence that people in this country want an improvement in public services. There is very strong evidence that they are highly sceptical—putting it at its lowest—that private sector companies will manage that improvement. What everybody in the public services has to do, including certainly the trade unions, is to deliver. We have to convince the Government. We have to convince the British people generally, that the extra money which is being allocated will be spent in a way which will register real improvements in public services and we are prepared to meet that challenge. In Wales Rhodri Morgan made this challenge to public service workers. He said, "If you do it in a way that produces improvements we will stick with you. If you do not, you will have to take the consequences". That is a very challenging argument and in Wales we have accepted the challenge. We shall accept it in England as well.

2   Note by witness: Local voters in Watford voted in favour of an increase in council tax for improved services in a similar vote. Back

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