Examination of Witnesses (Questions 40
THURSDAY 25 OCTOBER 2001
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
(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
(Mr Edmonds) Yes, if the public services are involved
in those scams, then of course considerable and rapid action should
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
(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
(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.
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?
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
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
(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.
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 servicethat is
probably a bad wordthe 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 caseswe think in the overwhelming
number of casesnot 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 benefitsas there clearly have been
in one or two placesand 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 questionI
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 citywhich I
do not represent, I was just reading about itactually 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.
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 scepticalputting it at its lowestthat 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