#37. Politics – a new template, part 3

CORPORATISM – THE PUBLIC AND POLITICAL DIMENSION

Welcome to part 3 of my mini-series looking at the current state of British politics and governance.

In contrast to the traditional division of politics into “Right” and “Left”, I have explained (in part 1) that the really important distinction is that between “Libertarianism” and “Corporatism”. A pretty modest move to the Right in British politics has been dwarfed by the rise of Corporatism, to which many of the ills of British politics, society and the economy can be traced.

After an examination of the role of private corporations (in part 2), my focus here is on Corporatism in the public sector and in the conduct of government. However bad you think private Corporatism may be, I can assure you that the public sector and political versions are even worse.

The public sector presents a conundrum. On the one hand, the public services ought to be highly effective. On the other, the quality of service often falls far below what we should be entitled to expect, sometimes catastrophically so. Why is this?

Resourcing does not seem to explain this conundrum. Despite recent budgetary constraints, spending on public services (of £411bn) remains 16% higher now, in real terms, than ten years ago*. The public services employ 5.3 million people, and a further 1.1 million probably work for the State indirectly via out-sourcing. The vast majority of these people are dedicated and hard-working. The public sector, then, seems to be resourced and staffed sufficiently to deliver public services of the highest quality.

The reality is rather different.

Whilst there have undoubtedly been grave policy failings by governments of both parties, Corporatism is the compelling explanation for most problems with the public services. In the public sector, as indeed in much of the private sector, the rise of Corporatism has resulted in services being run for the benefit of those who manage them, not those who use their services or pay for them through taxation.

Let’s recap what we would expect to see when an institution becomes Corporatist. First, we would expect a combination of internal loyalty and external defensiveness, in which mistakes can all too easily be covered up and accountability undermined. Second, and resulting from the absence of sanctions for failure, we would expect a deterioration in management quality. Third, we would expect excessive growth, especially in bureaucratic functions. Fourth, we would expect outsiders (which in this instance means the public) to be treated with arrogance and disdain.

The National Health Service (NHS) exemplifies many of the shortcomings of Corporatism. For a start, the expansion in numbers of managers has been extreme, helped by the fragmentation of the model from central command to a proliferation of “Trusts”, each, inevitably, with its highly-paid management cadre. Most GP practices now have well-remunerated “practice managers”, an unnecessary development which drains resources without improving patient care. The cost of administering the NHS has become colossal, at about £15bn, or 14% of the entire budget. Research seems to show a steady deterioration in value for taxpayer money, with measured output falling ever further adrift of government funding.

In short, the NHS seems increasingly to be run for the benefit of its managers, rather than for the benefit of taxpayers and patients.

The second big Corporatist characteristic exhibited by the NHS is lack of accountability. The Stafford hospital scandal, in which as many as 1,200 patients may have died unnecessarily, shows this at its worst. Given the scale of this tragedy, one might have expected individuals to be punished, certainly with loss of jobs and quite possibly with removal of generous state pensions as well, yet no senior heads rolled after a series of extremely expensive investigations.

In other words, the Corporate body turned in on itself, defending its own interests rather than pursuing the public good, which surely called for exemplary sanctions. Later, it emerged that it was common practice in the NHS to use “gagging clauses” and other methods to stifle “whistle-blowers”, a classic instance of Corporatist internal loyalty to the organisation triumphing over broader patient and taxpayer interests.

Another chilling example of Corporatist excess in the public services is provided by the horrifying revelations from Rotherham, where an estimated 1,400 women, most of them children, have been raped, intimidated and otherwise abused since 1997. The reports of this abuse by the victims and their parents were ignored by the authorities, and little or nothing was done about the perpetrators of these horrors. A State which can prosecute a handful of well-known people over offences committed decades ago has seemed powerless – indeed, frankly dismissive – of the industrial-scale sexual exploitation of huge numbers of vulnerable girls. The main reason for this seems to be that the system wishes to prevent its own failings being exposed to public scrutiny.

Although some individuals (to their great credit) have resigned, no-one has yet been sacked, or stripped of their pension. Without wishing to seem vindictive, the public is entitled to feel that failures of the magnitude of Stafford and Rotherham should be met with suitably severe sanctions, and the lack of a suitably punitive response causes considerable public disquiet. Where, in the absence of exemplary punishment, is the deterrent to the repetition of these disasters?

The way in which complaints by victims of the Rotherham tragedy, and by their parents, were ignored typifies, albeit in extreme form, the arrogance which is so often engendered by Corporatism. H.M. Revenue and Customs (HMRC) famously asserted that it had “nothing to apologise for” after millions of taxpayers’ affairs were mishandled. Taken together, arrogance and a lack of accountability are an unpleasant combination.

The shocking aspect of events like Stafford and Rotherham is less that they happen at all than that they are hard-wired into the Corporatist system. Where accountability is weak, failures are almost certain to recur.

What ought to happen when things go wrong is that failures should be investigated thoroughly and sanctions should be imposed on individuals responsible, sending a clear message that mistakes are unacceptable.

Instead, what actually happens is that the organisations involved immediately adopt an insular, defensive posture, play down errors (sometimes to the point of outright denial) and make the claim – a ritual one in most of these situations – that matters are now improving. To any outside observer, it may seem self-evident that the public service involved – be it the NHS, a local authority, social services or the police – has failed woefully, yet no sanctions ever seem to be imposed on those responsible.

We could, of course, examine numerous other public sector disasters – the NHS IT programme; the Border Agency, immigration and yet another costly State IT mess; the West Coast rail bidding fiasco; the top-heavy staffing of many departments; enormous over-runs on procurement projects; and an increasingly arrogant treatment of service users – but the explanations almost always follow along the same lines. Failure happens because of a Corporatist culture in which accountability is easily avoided.

The two basic lessons to be drawn from this depressing litany are obvious. First, the instinctive response of the Corporatist public sector is almost always one of “circling the wagons”. This typically involves denying responsibility; drawing heavily on internal loyalties; suppressing (and sometimes gagging) whistle-blowers; blaming someone or something else (often the supposed parsimony of the Treasury); indeed, doing anything rather than come clean about what has gone wrong, and why.

The second instinctive response – or, rather, lack of one – is a characteristic failure to apportion responsibility. To be sure, individuals in low-ranking positions may sometimes be punished, but the higher (and even middle) levels of the administrative machine are invariably shielded from any consequences. Indeed, these people not only escape sanctions but their career paths often seem to be unaffected. Much of this leaves the public angry, baffled or resigned, and reinforces the feeling that there is a clear “us and them” division where accountability is concerned.

This necessarily prompts one question above all – why do politicians fail to respond? Why, after tragedies like Stafford and Rotherham, do ministers seem to fail to pin responsibility where it belongs? Why do senior civil servants so often seem to emerge unscathed from disasters which, logic suggests, ought to have serious consequences? For that matter, why aren’t ministers themselves apportioned at least some of the blame when their departments’ affairs go horribly wrong?

The explanation for this lies in the fact that politics, no less than the public services, has become Corporatist. The failure to tackle senior level accountability in the public services can be bracketed with government’s complicity in the largesse of “corporate welfare”, which, as we have seen, currently stands at about £85bn annually.

The creeping tide of Corporatism in politics and government can be tracked pretty closely by anyone who is prepared to look at how politics has changed over five or six decades, and particularly since the 1990s.

In the 1950s, membership of political parties was in the range 5 to 8 million, depending largely upon how one treats affiliate membership through unions. Labour, at least, was a pretty democratic party, taking policy votes at Conference and vesting considerable power in the National Executive. Both parties had vibrant local organisations, whose privileges included selection of candidates for Parliament. Additional checks to the executive included independently-minded MPs, the considerable power vested in the Cabinet, and the substantial independence exercised by senior civil servants.

Since then, much of this has changed, in ways which empower the executive and create fertile ground for Corporatism. Party membership has fallen to pretty derisory levels as the powers of local organisations (and, at the same time, of local authorities) have been taken over by the centre. Candidate selection has largely been taken over by the centre, and party conferences have been transformed from decision-making gatherings into exercises in content-free presentation.

The famous “sofa government” techniques employed by Tony Blair (and not reversed by his successors) has turned Cabinet into a rubber stamp for decisions made by the Prime Minister and his immediate coterie, with media strategists (“spin doctors”) now having considerably more influence than Cabinet ministers. Civil servants have found their influence undermined by the proliferation of “political advisors” and other outsiders drafted in to the bureaucracy. When the message becomes more important than the substance, the first resort is almost always to denial when failures occur.

These trends, bolstered of course by Britain’s constitutional shortcomings, have resulted in an ever more monolithic state. The “first past the post” (FPTP) electoral system entrenches existing parties and makes it difficult for new parties to challenge the incumbents. The absence of an American-style separation between the legislature and the executive leads to inadequate legislative scrutiny, whilst the lack of a written constitution has smoothed the way for the weakening of essential rights, most notably the right of free speech. There has been a steady increase in the tendency to stifle free speech whenever it conflicts with the officially-sanctioned orthodoxy.

All of these weaknesses are linked to increasing Corporatism – in government, in the public services and in business. A characteristic product of Corporatism is a division into Insiders and Outsiders, or “us and them”, and this has become a distinctive feature of British governance.

The overall picture can all too often seem to be a division between the general public on the one hand and, on the other, a “directorate” of political, administrative and business leaders. This directorate, seemingly interlinked by the “revolving doors” between government and business, has become fenced in behind barriers which protect its power and wealth, freeing it both from the economic hardship and accountability experienced by the general public.

In the concluding part of this series, I’ll look at what might be done to bridge this gap.

 

*In 2013-14, total government spending of £714bn comprised public services expenditures of £411bn as well as interest expense of £48bn, pension costs of £143bn and welfare spending of £112bn. The sum spent on public services in 2003-04 was £277bn, equivalent to £353bn at 2013-14 values.

9 thoughts on “#37. Politics – a new template, part 3

  1. A comment taken from a the Guardian website:
    “Its definitely a first world problem when so many of us surf the net to make it look like we’re doing work.I used to download eBooks and copy and paste them into word documents so they looked formal and work related. I read Glamorama by Bret Easton Ellis, Jane Eyre, Villette, a Don DeLillo novel, The tenant of Wildfell Hall and Wuthering Heights all whilst working in the public sector is pretty reasonably paid jobs.”

    Parkinson’s Law alive and well in modern UK.

  2. A sorry picture you paint, Dr Tim. It’s good to see someone joining all the dots, when often enough I find it hard to see the wood for the trees, so pervasive is this malaise. I look forward to reading about your proposed solutions.

    Adam with a capital “A”. 😉

  3. Tim,
    These big political and state organisations are unaccountable because we cannot remove ourselves as customers from them, and the link between choosing a service and paying for it has been broken.

    I believe all taxes should be painfully visible. First of all, all purchase taxes should be shown on the receipt as in the USA. Every time you fill up a car with petrol, buy a pint, shop at the supermarket, pay an electricity bill it should show total taxes. Next all taxes on income, including Employers National Insurance should be shown on the payslips. Add to this an expansion of Osborne’s idea of personal statements on state spending to show how much money has been borrowed in your name and in each of your children’s names, and I think we will have a lot more accountability.

    Then I believe that if a greater proportion of taxes were raised where they are spent, there would be greater accountability. I recently read that Croydon would like to invest billions redeveloping key zones, but that the additional taxes raised from a more desirable location in the form of stamp duty and business rates would all go to central government. Why bother?

    Council tax only pays for a minority of local council services. Imagine if council tax (before exemptions) was more like £6,000, but to compensate taxes on income were lower. This local tax would pay for the majority of local services, with only the balancing top up coming centrally. There would be more pressure on councillors to show that their Child Safety Officers etc. were doing a good job.

    Before the centralised welfare state, local parishes and charities looked after people that they were likely to know and understand. Those who paid in knew those who distributed it out and put pressure on them to be careful. The modern central welfare state is more caring and complete of course, but at the big cost of anonymity and a ‘big pot of someone else’s money’ paying for it.

    In your Perfect Storm paper in 2009 you pointed out, “Perhaps the single biggest contributory factor to the subprime fiasco was the breaking of the link between borrower and lender. Whereas, traditionally, banks assessed the viability of the borrower in terms of long-term repayment, the creation of bundled MBSs (mortgage backed securities) severed this link.”

    Wherever the link is broken – between lender and borrower, between tax payer and recipient, between food buyer and CAP farmers, between shareholder and management, between party voters and the executive, we will continue to find corporatism grow

    • Transparency is a great solvent, which is why power elites so dislike it. It is also imperative if a market economy is to function effectively.

      I remember the efforts that the H of C made to prevent publication of MP expenses figures – I mention this because there was NO legitimate reason for denying the public access to this information. I also remember Damian Green being arrested simply for receiving information which, whilst damaging to the then government, was of no security or other significance at all. I think the arrest of Mr Green was an outrage.

      One point that I was aiming to make was that we tend to assume that spending more on a public service necessarily improves it – actually, of course, that’s not necessarily true. Since I published this article, the NHS has admitted that it needs to save £2bn annually.

      I’m compiling part 4 now. Combatting corporatism is possible, but it will not be easy.

    • Hi Tim, I just read an interesting turn of phrase that reflects back on your earlier writing, “Perhaps the single biggest contributory factor to the subprime fiasco was the breaking of the link between borrower and lender.” It is that economics is broken without its oikos (Greek for family). I read it here http://blogs.telegraph.co.uk/news/danielhannan/100290085/what-does-it-mean-to-be-conservative/
      Hannan similarly points out from time to time that democracy struggles in Europe because there is no collective ‘demos’ in Europe that binds us all.

      Perhaps we can combat Corporatism better if we resist globalism where the Corporates have the advantage. More local democracy and more self sufficient (less global borrowing from strangers) economy.

  4. Thank you again, Dr Tim.
    I am much impressed by your coherent joining of the dots to present an accurate big picture.
    May I recommend 2 sources I have found informative :
    Book : Pawns in the Game, by William Guy Carr.
    Video on youtube : Bill Still The Money Masters
    3.5 hours.
    I’m most keen to read your solutions.
    For me, the problems condense to size & lack of accountability.
    The solutions, then, for me, involve downsizing, of banks in particular, of Govt & corporations.
    & the introduction of local accountability.
    In short, a move 180 Deg away from globalisation.

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