Too small to fail

Perhaps this blog ought to be called ‘Too Small to Succeed: Too Important to Fail’.    The saga of the small District Councils the sustainability of which has been called into question by cuts in Government grants rumbles on. 

I wrote a few weeks ago about West Somerset, the nation’s smallest District  Council which has revealed that its finances are unsustainable in the long term because the pressures for growth on its expenditure cannot be matched by an increase in income.   This is the problem for the whole of local government in microcosm unless grants one day start to increase again, although some lucky authorities with growing Council Tax and Business Rates tax bases may escape the ultimate consequences.   The smallest Districts are hit first because their overheads are highest in proportion to overall spend.

 

Since what may become known as the ‘West Somerset Question’ was posed, the Government has come up with its chosen solution, which it is reported is to suggest West Somerset become a commissioning Council, outsourcing provision of services to others and reducing its overhead costs to a minimum.

This kind of things works- up to a point.  Clearly larger providers, such as neighbouring authorities or the private sector  can spread costs more easily and arguably the private sector has more acumen and more leverage when it comes to reducing costs.    But this can only be a temporary solution if austerity continues because it does not address the fundamental issue of growth in demand outstripping growth in income. 

Which underlines the problem, not just for small Districts but for all local authorities, that the often expounded solutions such as outsourcing and shared services in themselves do not do much more than buy time. There are limits to what even the most enterprising provider can do to keep making services more and more efficient.  Two other downsides to arms length provision- the cost of contract management and a risk of loss of democratic accountability are worth mentioning in passing and perhaps we will return to them in the future. 

Economists make the point that service industries, being people based, find it difficult to become more productive other than by managing access channels and moving to greater self-service.   Thus the doctor no longer visits you; you visit the doctor, and the bank offers better terms on investments if you agree to manage the account online.   Productivity improvements in services come from redesigning processes and asking people to do more for themselves.   This is the way forward, in my view, but in the public sector there is a limit to the pace at which this kind of change can be accomplished, the main blockers being ‘The Two V’s’ –the vulnerable… and votes.  

That doesn’t mean arms length providers are not worth considering, of course, because bringing in commercial expertise and the capacity to innovate can help find the longer term solutions, but simply changing the name of the provider is not going to be enough.

Just because a local authority is small in size doesn’t mean that is not vital to its community, and it would be shame if local authorities were forced to become less local in order to become more efficient.  Chubby Cat’s initial suggestion for the small Districts, which was to provide extra grants subject to the small authorities showing they had taken certain efficiency measures has been scotched by Government.  No more money.  Instead we have a solution which kicks the can down the road again – perhaps far enough for the economy to recover and bail us all out. Let us hope so. 

The public sector is built on moral foundations

With resources dwindling, the moral questions behind public spending and taxation have been thrown into sharp relief.   It must always be remembered that the post war consensus known of Butskellism, which has been a feature of most of Britain’s history over the last fifty or sixty years, was formed in an environment of relative prosperity.   As we move through a period of austerity the moral differences between left and right become more evident.

In the last couple of weeks, for example, we have heard the Public Accounts Committee talk about the morality of companies avoiding tax and, just last week, Chancellor George Osborne told Councils that putting up Council Tax is morally unacceptable.  The inference that all politicians who advocate the opposite position are therefore immoral represents a raising of the stakes in political rhetoric.  Will the next General Election campaign be about politicians trying to out-moralise each other?

This is an awkward one for public servants, who are supposed to be politically neutral.  Would George Osborne have me question my own morality before I advise politicians to put up taxes, or am I entitled to set the moral issues aside and think solely about the cash? 

With all that in mind perhaps public servants should be thinking more about the moral side to public provision and how we pay for it.  To help us, the psychologist Jonathan Haidt and his team believe they have discovered the foundations of human morality. Inherited from man’s earliest ancestors who lived for generation after generation in extended family groups,  these are the psychological traits that supported this way of life and are still the basis on which human cultures are built.

The six foundations, wickedly paraphrased for the sake of this blog, are;  care for others; a sense of fairness, a desire for liberty, group loyalty, respect for authority and a sense or purity or sanctity. 

Without going into too much detail (there is a great deal of good stuff on the internet for those who are interested),  genes that support these traits have survived in the gene pool because they help human beings work together and optimise survival rates.  Groups that didn’t look after each other, that turned in on themselves too easily and that weren’t competitive enough with their neighbours dies out.  Hence the moral foundations exist, Haidt believes, in every human population anywhere in the world.

Of course the moral foundations are only genetic tendencies, and like all other such tendencies, they are shaped and moulded by culture, religion, upbringing, experience and, last but not least, freedom of choice for the individual.  

This is important because, fairly evidently, there are moral dilemmas implicit in the moral foundations. Group loyalty and care for others, for example, works best when the people we are called upon to care for are inside the group.   A strong commitment to group loyalty also explains why we have a tendency to be antagonistic towards people different from ourselves, to a point that often descends into violence.   But going to war sooner or later kicks up the dilemma of when to stop trying to kill the other side and when to show mercy and compassion to the wounded and displaced.  Culture and religion attempt to solve these dilemmas and not surprisingly they are solved in different ways in different populations.

One of Haidt’s fascinating pieces of work around the moral foundations studied how people with different political views take different practical attitudes to the six moral foundations.  ‘Conservatives’  tend to have more respect for authority, greater group loyalty and a greater sense of what is pure than ‘liberals’,  for whom care for others and fairness tend to trump everything else.

But the implication of this is that the stuff of politics is not in the moral foundations of the human species, which are universal, but the way cultures and individuals interpret them.

It seems that pretty much everything the public sector spends money on, and hence for which we pay our taxes, appears to have a basis in one or more of the moral foundations.  Economists may justify public expenditure in terms of  such matters as market failure and the need for public goods, but these are not the kind of things people think about when they pay their taxes.   It is likely that the broad consensus we have over what things we are prepared to give up some of our earnings to pay for is based on some fundamental agreement amongst ourselves over what is morally right.

I am not yet sure what the implications for moral foundations theory might be for the public sector, but I am pretty sure that if the theory turns out to be true they are there to be found.  There has already been a piece of work designed to help charities use moral foundations to improve giving.

I will continue to permit myself a wry smile from the sidelines when I hear politicians talk about morality., but if this debate leads us all to give more consideration to moral questions then it won’t be a bad thing.

Merry Christmas to all my readers!

The morality of taxation is a taxing issue

The economic news in the UK before this week’s Autumn Statement was about the morality of tax avoidance by companies.    Chair of the Public Accounts Committee, Margaret Hodge, was widely quoted, coming down particularly hard on what she called ‘completely and utterly immoral’  tax avoidance schemes.

As a seasoned politician Hodge is well aware of the value of a sound bite, but her full comments were measured and realistic, suggesting that Government should be more aggressive in testing the law, negotiate harder where this was called for, simplify the tax laws and make sure there is more transparency in the tax dealings of companies.

Nevertheless the idea of the ‘moral company’ is worth reflecting upon.      

After all, the limited liability joint stock company is not an institution that has well conceived if morality is the goal. The whole principle of the beast is that people get to take risks with other people’s money while limiting their personal liability, while the investors in the business get to take a morally ambiguous arms length position in relation to the decisions of its management. 

Allow for the fact that the shareholders in most traded companies are largely other companies and it isn’t hard to see why moral judgements as part of company decision making might be hard to achieve.

On the question of tax avoidance, a company’s management has a duty to optimise shareholder value, so it is hardly going to volunteer to pay taxes if it doesn’t need to pay them.  At the same time, shareholders, if they choose, can turn a blind eye to what the management may be doing.

But let’s put it another way.  Let’s say a Finance Director of a major listed company is in his private life a deeply moral man; he aims always to do the best thing, fastidiously teaches his children right from wrong, does a lot of work for charity, may even by a pillar of his religious community.   Let’s say that he does not leave his morality at the door when he comes to work but he also tries to live by his personal standards in all his professional dealings.

Let’s also assume that he has a simple choice – a certain amount of the revenue his firm makes either goes to government in taxes or it is paid to shareholders as a dividend. 

Which is the moral choice?  Pay the money to the Government where, let us say, it will go entirely towards building a better society for us all, or repay the investors for the risk they have taken – some would say the faith they have shown- in financing the company?  On the face of it are they not both deserving causes? 

Of course I realise there will be plenty of people who take exception to this over-simplification but what I think it demonstrates is that what is moral in relation to commercial decision-making probably depends on your point of view.  Do we have a shared view of morality in relation to these complicated issues?

Margaret Hodge is right when she imputes responsibility for resolving the puzzle to the Government.  The Government is elected among other things to reflect society’s view of moral boundaries and its job is to make the case for taxing large corporations,  to make the tax laws as watertight as possible and to demonstrate transparently that the tax revenues raised- along with all other tax revenues – are used, if you like, for ‘moral’ purposes.

But companies also need to demonstrate that they work to high moral standards as most people would recognise them, and perhaps a bit more transparency in the dealings of public companies – an extension of the Freedom of Information Act in relation to the private sector's dealings with the public sector,  for example- would not be a bad thing.    

Planning for the Apocalypse

A couple of weeks ago, I wrote about the case of West Somerset, England’s smallest District Council which, an LGA report says, will inevitably become financially unviable within a few years.  

The problem for West Somerset is that its capacity to raise additional cash in the teeth of further funding cuts is not sufficient to meet the growing costs of services.  No doubt there are people at CLG who would call this ‘apocalyptic’ but every time one picks up a paper these days, the end of austerity seems to be another year away. In those circumstances, sooner or later an authority is going to run out of wriggle room.

It begs an interesting question that we may need to broach more than once over the coming years; what happens if a local authority goes bust?

This is my view – and the disclaimer is that I am not a lawyer, and neither have I had the time to research the law at length, just to confirm one or two things I thought I already knew.   This is what I think.

The most likely way for a Council to get into financial hot water is to be unable to set a balanced budget.   Unless an unforeseen disaster occurs which leaves a local authority with unaffordable additional costs (in which case the emergency funding arrangements called the Bellwin scheme may well kick in),  local authorities are unlikely to become insolvent in the way businesses do.

There is no such thing as bankruptcy or administration for local authorities but if authorities get to the stage where they start to run out of cash and are sued by their creditors,  things will have gone seriously wrong with the alarm system. It’s much more likely that officers of the Council or its auditors will see the situation coming and warn that the Council is unable to set a legal budget. The threat should  normally be visible at least a year or two ahead.

If that happens, the chief finance officer is duty bound to issue a warning notice to the Council and for a period, until that warning notice is dealt with, all major spending decisions are on hold.

Imagining a situation in which the authority is unable to solve the problem itself, the threat of the commissioners is a sanction that gets mentioned from time to time. As far as I can see, Eric Pickles has no power to take over an authority just because it is in financial difficulties.  Indeed, this is a sensible way for the law to be framed because it could become an easy way out for local authorities to spend all the money and then throw the problem at Minsters to sort out.

The Secretary of State does have powers, on the other hand, to take over the running of services if the Council is failing to perform.    But is it sensible to wait for the impact of financial ruin to bite before intervening? 

If there is nothing the Council can do within the law to correct the financial position, which would be the case if the authority is financially unviable, then it probably won’t be long before everybody ends up in a room at the Department for Communities and Local Government, and the solution will come down to good old realpolitik- the English constitution at its best. 

But even this would be a failure in relation to authorities like West Somerset, whose problems have been highlighted several years in advance of impending doom, with plenty of time for Government – and it does come down to Government - to address the problem.

If the past is anything to go by, perhaps the answer for authorities like West Somerset lies in the local government finance system, with its seemingly endless capacity for tweaking, to produce the desired outcome.  The Isles of Scilly and the Corporation of London already have special grant arrangements because of their challenging size.  One possible solution is that small Councils will be given extra funding in some way, and that could likely be linked to some strings, such as a requirement to share certain costs with neighbouring authorities.

Of course, this interesting thought experiment leaves out several important groups of stakeholders, the authority’s staff, its contractors, and last but far from least, its residents and service users. The potential impact on these largely innocent bystanders underlines the importance of forward planning and West Somerset should be praised for doing its job in that respect. 

Innovation: For the Light Bulb There Was No Light Bulb Moment

Everyone in the public sector is looking for innovation, but where should we look?

The ‘adjacent possible’  sounds like a dreadful bit of jargon, but actually means exactly what it says.   It describes the place at the boundary between what we do now and an imaginable but as yet unachievable future. 

To take an illustration, Homo sapiens evolved about two hundred thousand years before the light bulb was invented.  Now, the light bulb would undoubtedly have been a particularly useful tool for our ancestors who spent a lot time in caves.  If the brains of Stone Age men were identical to ours, why didn’t they come up with the light-bulb?

The answer seems fairly obvious.  In order to build a light bulb, humans first had to understand electricity, that it existed and what it was, then how to harness it and then how to generate it at will.   Actually making a light bulb then depends upon knowledge and skill in a wide range of difficult technological processes – the ability to construct small, air tight glass vessels and fill them with gas, skills in making delicate metal filaments and so on. 

For the light bulb, Michael Faraday’s experiments in generating electricity in the 1820s and 1830s provided the spark for a period of innovation. In the space of twenty years in the mid nineteenth century, several different working versions of a light bulb were produced and a few were developed into models that could be mass-produced.  At last, probably a few hundred millennia after a human being first thought ‘Hey, wouldn’t it be cool if……’ ,  we reached the point where we could flick a switch and instantaneously light up a dark space.

This week, when the last typewriter was manufactured in the UK, it emerged that the first patent for a typewriter was filed in 1714, a full hundred and fifty years before someone managed to build one.  A similar story can be told for the computer. 

The lesson is that both the light bulb and the typewriter had to move into the adjacent possible before they became reality.

The adjacent possible is easiest to describe in terms of science and technology- things we can see- but it applies to everything, not least culture, ideas and (importantly for innovation in the public sector) politics.  

The notion of the adjacent possible is one of those simple and seemingly obvious ideas that turns out also to be more useful than it first appears. The more you think about it, the more you realise how useful it is.

For example, when looking for innovation it is vital to understand the adjacent possible.  The chap who envisioned the typewriter in the early years of the eighteenth century did a service to mankind, but was no help to anyone in 1714.  The experimenters and theorists who preceded Faraday set the foundations for what he achieved in the field of electro-magnetism, but the invention of the light bulb still had to wait.  

In a crisis, then, there is no point spending a lot of time looking for innovation in the space beyond the adjacent possible, but perhaps there is real innovation to be found in the space that last year was outside the adjacent possible and this year is within it.   What are the new things that make it possible to do things we couldn’t do before?

Because the adjacent possible – and our understanding of it- changes all the time.  Sometimes it is changed for us by a moment of individual genius as with Faraday’s experiment,  or it may be changed by collective effort over time as with much cultural change.   The consecration of women bishops into the Church of England, for example, while it has been moved closer, is still just outside the adjacent possible but with one further push – a change of governance or a new argument perhaps- it will surely move into that space before long.

Innovators need to understand how much they can influence the adjacent possible in the short term, a particularly interesting question when it comes to persuading politicians, who may have been elected on a clear manifesto to do one thing, that perhaps the innovative solution to their problem depends upon pursuing a different course. 

The lesson is that innovation can only be accomplished using the tools and resources that exist.   Once again, this indicates that true innovation rarely emerges from a light bulb moment of inspiration, but from hard graft- understanding the difference between what is out there and what is interesting but as yet tantalisingly beyond use.  

The Time Has Come for Finance Business Partnering

According to a recent survey by Deloitte, over 90% of public sector organisations are looking to increase their finance business partnering efforts over the next three years. 

As the public sector struggles with the worst financial crisis for decades, it is self-evident that we need finance folk who can add value to the business as never before. In many ways there has never been a better time to be a finance person in the public sector.

Magically, the shadows are all moving into alignment.  The new generation financial systems are quite capable of doing a lot of the stuff that used to fill the days of accountants, and that frees up a lot of time for finance teams to focus on the wider business.

That involves working with our organisations to understand the financial challenges facing services and devising new and better value ways of delivering them.  We need finance people to know how to encourage innovation,  to be commercially savvy, politically aware and to know how to build relationships and influence others.

I’m optimistic about the capacity of finance people to take this on board, and there are a few things the professional bodies can do to help.   Firstly we need to be clear about what business partnering involves:  it is a sea-change in approach and attitude, requiring us to do different things,  not just a relabeling of management accountants as business partners.  The professional bodies can help by spreading best practice. 

Secondly we need to redesign the way we train and develop accountants around the new model.  Business partners need top notch technical ability to deliver better outcomes as well as good balance of other skills.

And thirdly, and most difficult of all in a profession that remains divided in England between four accounting bodies, we need to break down the barriers between so-called ‘financial accountants’ and ‘management accountants’ and adopt a whole system approach.  Effective business partnering starts with the capture of transactional data and ends with the adopted solution to a problem.  Any step along way, the chain can be broken; at each stage the people managing the process need to ‘get’ business partnering.

All of these things will take time, which we don’t have,  So we also need our existing practitioners to see the challenge and the opportunity.   Fortunately finance people are smart enough and flexible enough to take this on board. It’s up to us to shake off the stuffy image and show our organisations what we can do. 

Small or large, it’s not a good time to be an outlier

This week, within hours of each other, two very different local authorities announced causes for concern about their future financial viability.

West Somerset (know to many from childhood holidays at Minehead) is the smallest District in England in terms of budget and population.  This week the Council published an LGA report that showed that its unavoidable annual budget growth bill of £150,000 dwarfs the maximum it can raise by increasing Council Tax in line with the 2% cap, which is just shy of £40,000.   With grants shrinking this is an arithmetical bind from which there is no escape and all the Council can do, the report acknowledges, is seek to put off the day when it holds up its hands and tells the world it can no longer meet its statutory obligations.   

Birmingham, on the other hand, is England’s largest unitary authority, with a population about 30 times larger than West Somerset.   Its problem is that it has to set aside at least half a billion pounds – and probably more- to cover equal pay claims from some of its women workers, backdated for several years.  Arguably the scale of Birmingham’s operations have contributed to the extent it unwittingly breached the Equal Pay Act.   There is much more Birmingham can do to balance the books than West Somerset can, but unless it is allowed to capitalise current these liabilities , it will have to find considerable additional savings this year on top of those brought about through austerity. 

As readers will know,  Chubby Cat frowns upon public sector bodies putting off for tomorrow what it should really be paying for today (or yesterday), but in this case the effect on current service users of mistakes made in the past would be very unfair unless the cost is managed over a longer period.

Part of the problem, of course, is the local government finance system does not deal very well with authorities at the extremes,   It is difficult to devise a system that doesn’t result in outlier authorities ending up with either too little or too much.     When the pieces of the system are being thrown up into the air,  as they are at the moment, the risks for organisations multiply.  From next year, market factors will decide some of the distribution of funding between local authorities and the system will become less easy to manage.  

Only the week before last an elected Member expressed to me his concern that more than one local authority would go bust as a result of austerity,  I intend to return to this issue in the future,  in particular the question of what happens next if such an eventuality arises. 

In the meantime it is enough to note that perhaps at the moment it is best to be medium sized. 

Random acts of localism risk damaging services

This week I found myself discussing localism at one of the UK’s local government representative bodies.  I think they found me slightly off message.

Localism is a major thrust of government policy, of course, enshrined in the Coalition agreement.   Accordingly the Government has devolved a lot of decision making to local councils over the last two and half years, not least responsibility for delivering a bigger than average share of the austerity package.

After thirty-something years in local government I am a convinced localist. I believe there are some decisions that should be made as close to communities as possible, and if possible by and within communities themselves.   It follows, I think, that we have to be prepared to accept some of what the media calls ‘the postcode lottery’ – although if local democracy works properly, ‘lottery’ is not the right word for it.  Postcode Fair and Transparent Local Decision Making doesn’t make for such good headlines though, does it?

There is also a strong argument that local government in England has become too reliant on central government and some transfer of responsibility down the line, along with clear accountability is not a bad thing. 

Where local government needs to be careful is around the growing idea – you might call it ‘radical localism’ - that localism is good for its own sake.  The reason is that along with the power and responsibility, devolved decision making comes a big slug of risk handed down from central to local government which local communities need to be able to take on and manage.

In English local government over the years we have had a ‘new burdens protocol’, which is supposed to make sure that newly devolved responsibilities are properly funded.  No surprise that austerity has seen that largely discontinued.   The new ‘Council Tax Support Scheme’ duty that now falls on Councils, which replaces the national Council Tax Benefit scheme, comes with a 10% grant cut. 

The outcome of all this risk transfer is extra cost for local authorities. But dealing with risk is not cost free, and when the Secretary of State for Communities and Local Government muses that local authorities have increased their reserves since his party came into power, a big part of the answer, I’m afraid, is government policy.  Risk has to be deal with somewhere within the system and if not by central government, it falls to local government to pick it up. 

That is exactly the opposite of the view of central government as the funder of last resort, and if the government bats problems to local government that are too big for it manage efficiently, then a lot of much needed funding will remain tied up in reserves and contingencies, to the potential detriment of local services. 

Within my own local authority, I have a number in mind which I think will be the level of cash savings we need to make over the first six or seven years of austerity.   I also have it in mind that that number could be 20% bigger if some big risks land, and the larger ones are to do with government policy – such as welfare reform and school places for 2 year olds- rather than directly to do with world economic conditions. 

We need localism, because we need clear accountability over services that respond to peoples’ needs: we need central government because some problems are too big for Councils to handle.   But between the two parts we need a proper localist protocol; a settlement that makes it clear (or at least a lot clearer) who is responsible for what under what circumstances.   Random acts of localism obscure accountability, add to the funding problems of local authorities, and in so doing risk taking more money away from local services than the government intends.  

Making Room for Innovation in the Public Sector

We all want innovation in the public services- it’s an essential recognition that the world in which most of our public provision came into being has gone, perhaps never to return.

Several commentators have drawn attention to Schumpeter’s creative destruction theory and its applicability to the current situation.  Creative destruction is the theory of the market that shows how entrepreneurs displace old-fashioned and unprofitable activity in a process that continually creates new markets and closes off obsolete ones.

We have seen this happening this week with the electrical retailer Comet formally entering administration, frozen out reportedly by internet shopping. In the media’s eyes, Apple has been labelled as the main 'creative destroyer'. 

The theory of creative destruction doesn’t apply perfectly in the public sector, because here it is usually the same organisations who have to do both and creating and the destroying.  As we know it’s a whole lot more difficult to shut down bits of your own organisation- there are psychological, emotional and cultural barriers in play as well as the inevitable costs.

What is more, users of services in the public sector have both a louder voice and a reason for expressing it.  It is unlikely there will be too many placard-waving protesters outside the local branch of Comet, but contrast that with the closure of a local library or leisure centre.    And yet curiously my local branch of Comet always seemed to be so much busier than the library.

Libraries are a good example  of how creative destruction applies – or doesn’t apply – in the public sector.  Local authorities have been reinventing their library ‘offer’ over recent years and in addition to the traditional book lending and reference libraries, many now provide CD and DVD lending, internet access, adult learning and even a café. Some are even getting into lending e-books.  You might say that innovation is not the problem so much as mission creep - which would be fine if local authority budgets were expanding to keep pace but presents a problem when they are not.  

But before I fall a victim to the militant wing of CILIP (for the uninitiated, the Chartered Institute of Library and Information Professionals), let me just say that I am using libraries only as a convenient and familiar example of a wider issue.  

Two years ago, NESTA suggested that the way to creative destruction in public services was to focus on outcomes, changing funding to incentivise delivery of results, reforming procurement and commissioning to deliver outcome-based specifications and introducing lighter touch inspection arrangements to facilitate.   

It cannot be wrong to ask ourselves what exactly we are getting with the services we provide, but none of these solutions address the fundamental issue that ultimately closing things is a matter of political leadership. This week we saw Stoke City Council leader Mohammed Pervez on BBC4 grappling with this problem as he set out to close old peoples’ homes, libraries and the city farm in order to preserve Sure Start children’s centres in his city.   He came across as a serious and concerned politician doing his best with a difficult situation, but he knew as we did that this was just the start of the attrition.  

The point is we can be as innovative as we like in the public services, and we frequently are,  but the logic of the market does not apply in the way it did to poor old Comet.  The problem is learning how to turn off those services that no longer offer value for money while persuading people that it’s the right thing to do.   It is the destructive bit of creation that’s almost the bigger challenge. 

Philosophy for Finance Folk

"Without a continual falsification of the world by means of numbers, mankind could not live"  

Friedrich Nietzsche 

And now the football results....

Word of the Week

My word of the week has been 'febrile'.  When I use it colleagues in the public sector nod.

"The Thick of It" ends .. with food for thought

In the world of risk management, reputation risk seems to be a growth area.   The notion needs to be treated with caution: the first objective in avoiding damage to reputation has to be to manage other risks adequately and try not to get into hot water in the first place.  

We need to be particularly careful in the public sector not to let the management of reputation risk take over. 

The plot of the final series of ‘The Thick of It’, which ended last night, revolved around the case of the unseen Mr Tickell,  a health worker with a history of mental illness who becomes  a media cause celebre when he appears to be bullied out of his hospital-owned tied accommodation.

The spin doctors get hold of Tickell’s medical records and release them to the press to discredit him as a nutter.  In the real world, you would hope that the Government would identify from Tickell’s medical history that he was a vulnerable person who needed to be treated with particular care and sensitivity.  In the story they do the opposite, leading to Tickell’s suicide and career-limiting consequences for officials and politicians alike.  (Did I mention this is a comedy – and a hilarious one?)

The story is about what happens when the management of reputation risk takes over from good governance. 

But reputation risk is real, and while there are people who are prepared to misreport or distort the facts about public services – normally but not exclusively in an attempt to get at the politicians who run them- public bodies will need to be in a position to refute those stories.  More controversially  perhaps, they are also entitled, by honest means, to try and stop things becoming stories in the first place.   The alternative is to accept that public bodies will be permanently hampered by people prepared to bend the facts to get in their way. That cannot be in the public interest.

It is vital that the things our public bodies and politicians do is tested and scrutinised.  The danger – a danger I think to our whole political system – is when the whole conduct of political affairs becomes a battle between media people and spin doctors.   The world depicted in The Thick of It, accurate or not, is a world in which this has happened.   

The Art of the Impossible

In last week’s ‘Observer’  appeared the following quote from Lord Skidelsky, the economic historian and biographer of Keynes;

“"It may be that there is no perfect [economic] model and that the quest for one is an error. Maybe we need different models, different theories, for different situations, and that's the best we can do".

Abso..bloomin..lutely!

There is a long-standing debate about whether economics is a science or a humanity, and an interesting academic debate it is too… (yawn).

But when it comes to dealing with practical problems, surely we have to see economics as a craft, which comes with a box of tools that politicians and officials need to learn how to use skillfully, selecting the right ones for the right job.

We hamper ourselves by throwing away half of the toolbox simply because it doesn’t fit with current ideology, and this is particularly dangerous now at a time when we find ourselves facing unprecedented economic hazards.

It’s as if we hired plumbers on the basis of whether or not they believe in spanners.

Politics used to be the art of the possible, so why do politicians so often seem to go out of their way to make it into the art of the impossible?