A culture war for the public sector
In the eighties a culture war was fought over who ran companies. Was it the unions or management? At times, during the miners’ strike, it seemed like an actual war. Management won, but their victory applied only to the private sector. The public sector remained just as it was, but starved of funds. The labour government raised pay and replaced crumbling infrastructure but the extra money did little other than make it pleasant again to work in the public sector. Meanwhile, private pension provision changed to reflect more realistic investment returns, but public sector pensions didn’t – a prospect we now know is unsustainable. The defining question for the next generation will be ‘Who runs the public sector’?
My first experience of the public sector was as an auditor in a rural district council in Scotland. A public sector general strike had been called and when I turned up for work I expected the clerical staff wouldn’t be there. What I found however was that neither was the finance director! She was on strike too.
That job showed me that things are different in the public sector. They employed two people to open the mail: one person to open the mail and another person to look into the envelopes their colleague had just emptied to check they were empty. When it’s the public’s money, extra layers of accountability apply. I also witnessed, because I had to audit it, a journal voucher for 2p. Preparing, authorising and processing it would have cost the council more than 2p but, when it’s the public’s money, every penny counts.
My next experience in the public sector was being invited on to the Finance and General Purposes Committee of the University of Bedfordshire. I turned up to my first meeting and was amazed. Boy, could these people run a meeting! There was a thoughtful and comprehensive agenda, detailed minutes of the previous meeting, and long papers for each item on the agenda, available over a week in advance. Although I worked for a blue-chip company at the time, our meetings were not like that. And the conduct of the meeting itself was so polite. People addressed the chairman as ‘chair’. They waited politely for their turn to speak, there was very little interrupting, and after people stopped speaking someone generally thanked them for a ‘helpful’ intervention.
My next set of public sector experiences was of a much more ‘earthy’ nature. It was of organisations under financial pressure – a research institute and a hospital – where it was my job to help them attain financial stability. Now up close and personal, I discovered there are some excellent, decisive, capable people in the public sector. I had previously had a strong prejudice this was not the case. I met some exceptional, dedicated people and it was a pleasure working with them.
One of the persistent characteristics I’ve observed with all projects in the public sector is the large number of people you have looking over your shoulder. Compared with the commercial world, there is a large group of stakeholders with a direct or indirect interest in the outcome of your project and keeping them all informed is critical to your success.
Workers in the public sector are no better or worse than workers in private companies. Management however is notably worse. Unions have been given too much respect. What management skill does exist is highly constrained by there being too many stakeholders and governance layers involved in decision-making. These are solvable problems. Not so easily solved is how to align incentives. The difficulty with the public sector is there is not a strong enough link between effort and reward. If the private sector is more productive than the public sector, it is the cumulative effect of a closer alignment of hard work and financial reward. The effect need only be small to become significant over time.
So the battleground over which the culture war will be fought is how to get private sector productivity into the public sector without turning everything over to the free market. The answer must lie in making national and local government procurement organisations only. Running things is not government’s core competency. Let private companies run things. Government should be regulator, procurer and investor; not manager.