Examination of Witnesses (Questions 374-379)
INSTITUTE OF
DIRECTORS
13 JULY 2004
Q374 Chairman: Good morning, Professor
Norton. I think in your previous incarnation when you came before
us you were a civil servant, is that right?
Professor Norton: Yes. I spent
seven years as a civil servant. I came into the Civil Service
in 1993 to run the Radio Communications Agency of DTI through
an open competition. At the end of that I had regulator's curse
and could not return, so I did a number of things, including drafting
a paper with Peter Mandelson about competitiveness and then I
led the team in the then PIU. After that I was still two years
away from returning to the industry, so I went to IoD.
Q375 Chairman: You have got a lot to
answer for then! The 1998 White Paper had the objective of attributing
to Government the objective of closing the performance gap. It
also made the point that it could not be left to the market alone
but Government had a role to play. Could you give us an assessment
as to what your view of the Government's performance has been
and the extent to which you might say mistakes have been made
or they have not addressed properly the necessary approaches required
to bridge the gap?
Professor Norton: I would say
we are about halfway there. If you look at the figures coming
out in the US—and I would stress, they made a big effort
to measure these in the late 1990s which is something we probably
have not done as well on as we should—the estimate there
is about 1% incremental growth in productivity. IoD's estimate
for the UK is about half a per cent per annum incremental growth
in productivity. That is probably rather better than our Continental
European cousins are doing but not quite as good as the US. I
think we would point to a number of structural issues that are
going on in which we are better than Europe but probably not quite
as good as the US. Good ICT is a necessary but not sufficient
condition. The other things that hinder its diffusion through
the economy we would suggest are in the fields of tax, regulation,
investment, skills: all things that are very familiar to this
Committee after your evidence over the last six or seven months.
Certainly from our point of view, we believe the UK is doing better
than many of our Continental European colleagues for that reason.
We are better structurally, we do have more labour mobility and
we are more innovative in our tax approach and so on but probably
not to the same degree as the US and I am sure you found this
on your trip to the US recently.
Q376 Chairman: You drew up the targets.
If your hand had still been near one of the tillers because I
realise there are a number of boats in this flotilla, how do you
think you could have avoided and maybe moved closer to the 1%
than perhaps we have done?
Professor Norton: I think we have
underestimated the role and I underestimated the role in 1999
of Government as an exemplar. We should have pursued that more
in the UK. There is one critical thing with hindsight we should
have done and that is we should have pressed for a redefinition
of the role of projects as stated in the Treasury's Green Book.
In my lexicon there is no such thing as an ICT project either
in the public or the private sector, there are only business change
projects which are facilitated by new IT and network systems.
The cost of implementing those systems through to outcomes is
dominated by people cost and not by ICT cost. If we had suggested
in 1999 to the Treasury that you had to define a project in broad
business change terms and any department putting up such a project
had to show its budget provision and its plans for people change,
I think we would be a lot further forward. So I hold my hands
up.
Q377 Chairman: Let me put it the other
way. You go to the Treasury and you put it in the terms that you
have put it, would the costs perhaps not be prohibitive? Would
they not be frightened by the fact that they could be blamed for
agreeing to a department making a step change? One is conscious
of the innate small "c" conservatism of the Treasury
in financial and other matters related to change that they themselves
have not thought up.
Professor Norton: It is all of
the above, Chairman, and I have been trying for some time to make
that representation. All I would say is that the cost of failure
is much, much higher. I honestly believe that one of the areas
where we are deficient with respect to the US, for example, would
be this understanding that projects actually involve people as
well as technology. The private sector is not immune here but
has learned that lesson perhaps rather quicker than the public
sector. Why it matters so much is that every time there is a perceived
public sector failure it damages the perception of these technologies,
it damages the perception of the agenda and so on.
Q378 Chairman: You mean the kind of passport
fiasco that we have experienced in the recent past?
Professor Norton: Yes.
Q379 Chairman: Let us bring it up-to-date.
Yesterday the Chancellor told how we have got ICT in place in
the DWP and in other government departments and so we will now
be entering a cull of staff as a consequence of this. Do you think
this is a realistic approach? He is now justifying after the event
cuts that he has to make. I am not necessarily putting it in the
context of the reason for the cuts, I am merely saying that he
is suggesting he now has an opportunity to cut in ways which prior
to this might not have been a justification for the project in
itself.
Professor Norton: Chairman, I
have never been a believer, either in the public or the private
sectors, in the process of decimation, pushing every tenth person
off a bridge. I would much rather look at fundamental reform of
the process. Let me take tax as an example. I was at a meeting
sponsored by the European Commission some months ago about the
future of e-government and I talked with the Finnish equivalent
of our e-envoy who happens to be in the Ministry of Finance and
he explained to me how they had reformed the Finnish tax system.
In Finland your tax return is sent to you online. It is already
filled in with all the information the Government knows about
you. So there is a culture of trust there as opposed to our system
where they want to cross-check everything. You have got three
weeks to comment on it and if you do not comment on it then it
is deemed to be correct. You can correct it online and it is then
submitted. A chunk of the resources they have freed up from the
ludicrous amounts of cross-checking have been redeployed into
the spot checks to keep the process honest. Fundamental reform
of the process frees up a huge number of civil servants and it
also vastly reduces the cost of the IT systems, at least according
to the Finnish e-envoy. He quoted a figure of one hundredth the
UK cost: I know the population is smaller but it is not 100 times
smaller.
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