Saturday, 22 October 2011

It's all John's fault

This year, our government plans to spend £710 billion. That’s the figure that was published by Her Majesty’s Treasury when the Chancellor presented his Budget last March.

£710 billion. It’s a lot of money. Where does it come from?

£158 billion of it is our income tax and another £101 billion is the take from national insurance. It’s our money coming out of our pay packets. The government gets its cut when we earn money and when we spend it – they expect to collect £100 billion in VAT this year and a further £46 billion in excise duties on cigarettes, alcohol and road tax. They get another £26 billion out of us from Council Tax, and £73 billion from businesses, in the form of corporation tax and business rates.

When the figures don’t add up, when there’s a budget deficit, the government borrows money to close the gap, leaving us with new debts to pay off. £50 billion of the £710 billion above goes straight out of the door on interest payments. This year they’re planning to borrow another £121 billion.

All this money is public money. It is spent for us, on our behalf, by Whitehall. By civil servants. By officials.

Public money deserves to be spent extra wisely. How good are Whitehall at deciding how to spend it? How much public money is wasted? And how could the waste be reduced?

Examples of waste
Dial 999 and ask for the fire brigade, and you’ll be put through to one of 46 fire control centres around the country. When he was Deputy Prime Minister, John Prescott, now Lord Prescott, decided that instead of having 46 local control centres for fire brigades in England, there should be just nine regional centres.

That was his policy, the project to bring it about was called “FiReControl” and he was told by his officials that it would cost between 100 and 120 million pounds.

In the event, according to the National Audit Office, the “minimum that will be wasted as a result of the failure to deliver the project” is £469 million. The Public Accounts Committee weren’t impressed either:
The Department's ambitious vision of abolishing 46 local fire and rescue control rooms around the country and replacing them with nine state of the art regional control centres ended in complete failure. The taxpayer has lost nearly half a billion pounds and eight of the completed regional control centres remain as empty and costly white elephants ...

No one has been held to account for this project failure, one of the worst we have seen for many years, and the careers of most of the senior staff responsible have carried on as if nothing had gone wrong at all and the consultants and contractor continue to work on many other government projects.
Public Servant magazine tell us that “not only did nobody tell Prescott what was happening” but, quoting him talking about his officials:
"... they actually met, according to the committee, and said 'We don't need to tell the minister because it's going alright, we think we're getting it back on track', that's [the decision] they came to ...”
By convention, the only person who is to blame for this failure is John Prescott. Not the officials who decided not to tell him about the problems with FiReControl. Not the bankers. Not the consultants and not the contractors. Not the lawyers and not the accountants. Just John Prescott.

The Public Accounts Committee report came out in September 2011. It was a bumper month.

£469 million may seem like quite a lot of our money to go up in smoke, but what about £6,000 million? That same September, the Times newspaper carried a leader on NPfIT, the National Programme for IT, an NHS computerisation project which has been running for nearly ten years now. “The history of the NHS computer system is one of criminal incompetence and irresponsibility” say the Times, and:
The Cabinet Office’s major projects group has reviewed the National Programme for IT and decided, unequivocally, that it is not fit to provide the services that the NHS needs. It has concluded that the programme “cannot deliver to its original intent”: a damning indictment of a decade in which £6 billion of taxpayers’ money was spent with precious little to show for it.
The Department of Health agree that this is not a healthy situation and that some of what the Cabinet Office say is correct, but as with FiReControl no-one is accountable. And in this case the project hasn’t even been cancelled – there are plans to spend another £5 billion on NPfIT, taking the total to about £11 billion of public money. Our money. With “precious little to show for it”.

Let’s take a holiday from all these big numbers and consider a smaller one –  £53.74.

For the five years between May 1995 and May 2000, a 10-year adult passport in the UK cost £18. By September 2010, the price had gone up to £77.50, more than four times as much.

If the price of a 10-year adult passport had merely kept pace with RPI inflation, in September 2010 it would have been £23.76. It would not have been £77.50. There is a £53.74 difference. There’s our holiday number. £53.74. Every time we buy a passport, we are over-paying by £53.74. Or so it appears.

What used to be known as the Passport Office is now “IPS”, the Identity & Passport Service. You can ask IPS to explain what this extra £53.74 is spent on. They can’t tell you. You can ask the Treasury, the Home Office and the National Audit Office, too. Still no answer.

Figures released by IPS show the cost of passports broken down into several categories. According to Alastair Bridges, the Executive Director of Finance at IPS, the combined cost of running the passport application system and of producing passports doubled between May 2000 and June 2010 from about £21 per passport to £42. Why? No explanation. And during the same period, IPS’s overhead/administration cost more than doubled from just under £7 per passport to just over £16. How? No explanation.

Sarah Rapson, Chief Executive of IPS, confirms that IPS produce about five-and-a-half million passports per annum. If they were all 10-year adult passports and if the public is being over-charged by £53.74 per passport, then that would be £296 million a year going on holiday and never coming back. Money for which the public gets no value. Waste.

Competition
When you get prices increasing out of control, the natural reaction is to call for open markets and competition. What Whitehall needs, people say, is private sector methods of procurement and competition among suppliers. That will stop the public’s hard-earned money being wasted.

True. But not exactly news. Whitehall already uses private sector methods and has done for at least 30 years. Senior positions in Whitehall are occupied by personnel recruited from the private sector. And public contracts are put out to competitive tender.

For example, between 1999 and 2009 the private sector company Siemens were paid by IPS to develop and maintain the UK passport application system. Their 10-year contract was originally estimated to be worth between 80 and 100 million pounds. In the end, IPS paid Siemens £365 million, three or four times the original estimate. That’s obviously a terrible over-run. So when the Siemens contract ended, did IPS negotiate a new price something more like the original 80 to 100 million pounds? No. After a competition, they let the contract to another private sector company, Computer Sciences Corporation (CSC), for £385 million. The price is relentlessly ratcheting up. With nothing to show for the increase.

So something is missing in the way market disciplines have been introduced to Whitehall. They aren’t working. Some ingredients must have been omitted from the recipe. Whitehall has been reformed to some extent, and yet the wastage persists. Costs have gone up and at the same time the promised efficiency benefits have not materialised.

How else can we explain FiReControl and NPfIT, for example? Not to mention the £292 million of public money wasted on IPS’s ID cards scheme. Or the escalating costs of the passport application system.

Where does the money go?
Follow the money. Where’s it all going?

PA Consulting, the management consultants, were paid £42 million to advise on FiReControl. This very expensive advice doesn’t seem to have helped very much, with £469 million reduced to ashes.

PA also advised the Identity & Passport Service on ID cards. And on the procurement of passports. We don’t know how much PA Consulting were paid for their work on ID cards and passports. But one way and another, ID cards cost us £292 million and there’s nothing to show for it. And arguably we’re wasting something like £296 million a year on passports.

PA’s involvement in these three projects has not been obviously beneficial.

On the other hand, they did win a gold award from the Management Consultancies Association for their work on passports:
The winning project involved working with the IPS to procure a new passport provider. This complex and high-profile project required a redesigned passport which met the new international regulations for travel documentation, with enhanced security features to keep ahead of the threat of counterfeiting and the capability to store additional biometric information.

The team supported IPS and managed the £400m procurement process from start to finish. The process was completed four months earlier than scheduled and below budget. The quality and security of the passport exceeded expectations and the new passport service will generate savings in excess of £160 million (30% savings against the anticipated contract value) over the term of the contract.

Kevin Sheehan, Director of Integrity and Security at the IPS, said of the project: "This procurement has delivered a fantastic outcome for IPS by delivering a superior passport at exceptional value for money. This project exemplifies the benefit of co-operative working through bringing together IPS's world-class passport knowledge with PA's procurement expertise."
If, as PA say, they “managed the £400m procurement process from start to finish”, what were IPS doing?

Should PA have revealed that they made “30% savings against the anticipated contract value”? That’s valuable commercial information that would normally be kept confidential. Isn’t it utterly irresponsible to blow their own trumpet like this? It’s an invitation to suppliers to bid high next time.

And if, as Kevin Sheehan says, IPS have “world-class passport knowledge”, why did they need PA? We've been issuing passports since the Safe Conducts Act of 1414 – what do PA know about passports that the Crown doesn't?

The British public may be over-paying for passports by something like £296 million a year. Every year. Is that what Mr Sheehan means by “exceptional value for money”?

Computer Sciences Corporation is another destination for our income tax pounds and our national insurance pounds.

CSC won the contract for IPS’s new passport application system. They also have a contract with the UK Border Agency to conduct security checks on applicants for UK visas in India and Pakistan. And they are one of the two prime contractors on the NHS’s £11 billion National Programme for IT, the other being BT. NPfIT, remember, is the health system in which the Times detects “criminal incompetence and irresponsibility”.

CSC are trying to computerise health trusts in England using a software package called “Lorenzo”. They're having some trouble.

Lorenzo doesn’t work. We know that because that is the verdict of CSC’s own in-house delivery assurance review team, who said as early as 2008:
We could not deliver the solution set that we had contracted with the NHS ... the contract was a loser and CSC should have recognised a loss in 2008 ... The project is on a death march ...
Now that these internal reports have come to light, CSC’s shareholders feel deceived about the company’s prospects. CSC currently face a class action, brought by some of their major investors, headed by the Ontario Teachers’ Pension Plan.

Things aren’t going well for CSC. They’ve just had a run-in with the US Armed Services Board who have docked them $250 million. The SEC are investigating their accounting practices. And here in the UK, Pennine Care NHS Health Trust have refused to accept Lorenzo. A successful installation of Lorenzo at Pennine was a milestone on CSC’s deployment plan. Failure leaves CSC technically in breach of their NPfIT contract.

And what is the response from the custodians of our money? Thanks to the Guardian, we know the answer:
Ministers are considering offering one of the NHS's worst-performing IT contractors financial help to keep the company from ditching a troublesome software package which is "not fit for purpose", according to Cabinet Office documents.

The plan to offer the US group Computer Sciences Corporation (CSC) one last chance to fix the software risks a furious backlash over "payments for failure", in the latest twist to a fiasco that has generated years of delays at considerable cost to the health service.

The move comes despite the Department of Health last week declaring that the £11.4bn National Programme for IT, started in 2002 under Labour, was to be scrapped because it was "not fit to provide the modern IT services that the NHS needs".
Who makes these decisions?
Who decided that PA Consulting should be paid £42 million to advise on FiReControl? How much were PA Consulting paid to advise the Home Office on ID cards? What passport procurement skills do PA Consulting possess that the Home Office don’t? How do Computer Sciences Corporation keep their contract with the NHS? How much are they paid to collect Indian and Pakistani fingerprints for the UK Border Agency? How can it cost £385 million for CSC to maintain a passport application system that we the public had just spent £365 million on and which seemed to be working?

Some quite extraordinary decisions are being taken. Who by?

The strange thing is that often, we don’t know.

The permanent secretary at the Office of the Deputy Prime Minister when the FiReControl project started life was Dame Mavis McDonald DCB. She was succeeded by Sir Peter Housden KCB. The prime contractor on FiReControl was Cassidian, a subsidiary of EADS, the aircraft company. Consultancy advice was provided by PA Consulting. None of these names appears in the Public Accounts Committee report. Not one.

No-one imagines that it was John Prescott’s job to negotiate the contracts with Cassidian and PA Consulting or to attend the progress meetings or to sign the cheques. That was the job of his officials. Dame Mavis and Sir Peter wasted £469 million of our money. Two people most readers will never have heard of.

We will spend £126 billion on healthcare in England this year. The man in charge of that budget must be one of the most powerful people in the world. Most readers will never have heard of Sir David Nicholson KCB CBE but he is the chief executive of the National Health Service and he is the man who wants to continue to pay Computer Sciences Corporation for Lorenzo, the software package they can't give away for free to the health trusts.

Sir David has seen off the criticisms of the Public Administration Select Committee, the Public Accounts Committee and the National Audit Office and he has emasculated the Cabinet Office, whose always limited authority must now be diluted to near-homeopathic concentrations. He has effectively been accused by the Times of “criminal incompetence and irresponsibility”. He still has his job.

The man in charge at the Identity & Passport Service while hundreds of millions of our pounds were wasted on ID cards was James Hall. He is also the man who signed the £385 million contract with Computer Sciences Corporation to re-write a passport application system that already worked. IPS is an executive agency of the Home Office. The permanent secretary at the Home Office throughout James Hall’s tenure at IPS was Sir David Normington GCB. Now you know. But you didn’t know before, did you.

The complete failure of the ID cards scheme and the spectacular inflation of passport costs did nothing to dent Sir David’s career prospects when he retired from the Home Office. His KCB was uprated to a GCB and he is now our First Civil Service Commissioner.

Which means that, among other things, he will help to choose the successor to Sir Gus O’Donnell GCB, who has been the £710 billion man, the head of the Home Civil Service, since 2005.

Lord Adonis is Director of the Institute for Government. politics.co.uk interviewed him in September 2011 and said:
The IfG's work extends beyond being a school for ministers. Adonis is very animated when he starts talking about the institutional weaknesses of the civil service. Not that there's anything wrong with individuals, he emphasises. "My criticisms are about the machine," he insists. "My own view is that the civil service is full of brilliant people who are terribly managed."

One of the biggest problems the IfG isn't keeping quiet about is the "laughably" named 'permanent civil service'. People change jobs because of a merry-go-round culture which makes no sense, Adonis argues. He says he had six directors of the academies programme in the eight years he was engaged with it. It's not a problem that's going away, either: since the general election ten of the 16 departments of state have had changes in their permanent secretary. "The machine really is very badly run."
The home civil service was in need of reform when Sir Gus took over six-and-a-half years ago. It still is now. He will retire at the end of the year. The Prime Minister has promised him a life peerage. And he will go out to a fanfare of plaudits, many of them no doubt deserved. But he leaves behind a home civil service which can still incinerate billions of pounds of our money with impunity.

Openness and accountability
You know all about Sir Stelios Haji-Ioannou and his successful airline, EasyJet. And Michael O'Leary, the Ryanair man. And Sir Richard Branson. These people run big companies. But nothing like as big as the UK public sector’s annual turnover of £710 billion.

Perhaps if Whitehall officials were as much in the news as, say, airline operators, we wouldn’t have so much of our money wasted. Is that one of the missing ingredients? Would competition start to work properly if there was more openness?

Rupert Murdoch has to take his medicine in public. He is hugely criticised in all the newspapers, on radio and on TV. He faces select committees. And he faces angry shareholders. He is accountable and he is being held to account.

Far from taking any medicine, far from being accountable for his failings, Sir Peter Housden KCB has gone on smoothly from the debacle of FiReControl to become permanent secretary to the Scottish government. (A rather clumsy permanent secretary, as it happens, but that's by the by. Good luck Scotland.)

Sir Peter, incidentally, was one of Sir Gus O'Donnell's first appointments after he became head of the home civil service. Sir David Nicholson was another.

Whitehall argue that they couldn’t do their job properly if they had to operate in the glare of publicity all the time. Sir Stelios seems to manage. So do Mr O’Leary and Sir Richard.

Our officials enjoy almost complete secrecy at the moment but that doesn’t stop a lot of our money being wasted. Secrecy doesn’t help them to do their job properly, as they pretend. Perhaps openness would.

The UK Border Agency operate their eBorders initiative without much interference from the media. eBorders is one of UKBA’s strategies to protect the UK’s borders.

In November 2007, Raytheon Systems Ltd, whose US parent company is the manufacturer of the Cruise missile, were appointed as prime contractors on eBorders.

In July 2010 the FT informed us:
May sacks Raytheon from e-borders contract
Raytheon has been removed from its lead role overseeing a £750m project to provide a secure border control system for the UK after the British government said it had “no confidence” in the US defence and security company. 

The decision by Theresa May, home secretary, to end Raytheon’s involvement will cause delays in the e-borders project, part of government attempts to control immigration and improve security against terrorists.

However, officials said the tough approach taken by ministers showed that the coalition government was far less willing than its Labour predecessor to put up with poor performance or delays on big contracts.
And then in August 2011, Raytheon sued the British government for over £500 million. Guess who’ll pay the bill if Raytheon win. Again, it’s hardly a testament to the efficacy of secrecy.

Horizon scanning
When the House of Commons Science and Technology Committee reviewed the Identity & Passport Service's plans for ID cards they declared themselves to be "concerned", "surprised", "regretful", "sceptical" and "incredulous" at their "confusion", "inconsistency" and "lack of clarity". Water off a duck's back, IPS carried on regardless. No mere politicians were going to stand in their way.

Ten times in their report, the Committee recommend that IPS should undertake "horizon scanning" activities. Good advice.

Which we should take. What is coming up on the horizon?

We need to keep an eye on NPfIT, the zombie project that just won't die until Sir David Nicholson has spent all the £11 billion he feels that he is entitled to.

We need to keep an eye on IPS's passport application system. James Hall has been replaced by Sarah Rapson. Will she be any better?

And there are three new projects which threaten to go the way of FiReControl and the ID cards scheme:

1. HMRC's RTI – Her Majesty's Revenue & Customs want Real-Time Information (RTI) on all wages and salaries.

2. DWP's UC – the Department of Work and Pensions want to introduce Universal Credit (UC), a simplification of the current labyrinthine benefits systems. UC depends on RTI. The success of RTI is not guaranteed.

3. The Cabinet Office's G-Cloud – the Cabinet Office want to centralise and standardise and consolidate all departmental computing into just a dozen or so gigantic data centres in which all our data will be shared between departments. At the same time they want all interaction with the public sector to be "digital by default", to take place in a government cloud, a G-Cloud, meaning that all public services will be applied for over the web.

Each of these projects will cost billions. Each of these projects could go wrong and the money be wasted.

Who are the Whitehall personnel involved? Who are the consultants? Who are the contractors? What is the budget? What are the consequences of failure for the Whitehall personnel, the consultants and the contractors?

In the main, we can't answer a single one of these questions. Sir Gus O'Donnell's ancien régime persists and will continue to do so as long as we remain uninterested in how Whitehall spends our money.

Conclusion
• We’re entrusting £710 billion to Whitehall this year alone. We want, need, deserve and pay for competent public administration.

• Whitehall officials need to operate more openly and more accountably.

• The spirit of public service would suggest that Whitehall should stoutly defend the public interest, but too often officials behave cravenly, as if they are beholden to their consultants and contractors.

• The doctrine of ministerial responsibility needs to be changed, the power of politicians is clearly very limited – we can’t afford to carry on this charade in which we pretend that everything is John Prescott’s fault.

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Updated 12.9.2014
'Poison pill' privatisation contracts could cost £300m-£400m to cancel

'Unprecedented' clauses guarantee firms 10 years of profits even if new government scraps controversial probation contracts

Taxpayers will face a £300m-£400m penalty if controversial probation privatisation contracts are cancelled after next May's general election under an "unprecedented" clause that guarantees bidders their expected profits over the 10-year life of the contract ...
More material for the next edition of Messrs Bacon and Hope's book, Conundrum: Why every government gets things wrong and what we can do about it. And for the next edition of Messrs King and Crewe's The Blunders of Our Governments.

How do markets work? Whitehall are still having trouble with that question. They're still on probation. Meanwhile, we pay.


Updated 16.9.14

Sir Peter Housden appears twice in the post above. First for his FiReControl achievements which cost us all £469 million. And then for his curious take on the independence of the civil service – he was accused of "a clear breach of civil service impartiality" by favouring the Scottish National Party.

That was back in 2011. The case was examined by Sir-Gus-now-Lord O'Donnell, Cabinet Secretary at the time and the man who appointed Sir Peter in the first place. Case dismissed.

Three years later, what do we read? Scotland's most senior civil servant 'intimidated bosses’ over referendum.

It's a bit late but perhaps Sir Gus would care to review the case?


Updated 16.2.15

Has Whitehall's record of waste improved in the three-and-a-bit years since the post above was written?

The Taxpayers' Alliance identify £5.1 billion of waste in 2013-14, £3 billion of it in the Ministry of Defence.

Whitehall's response to the demands for better value for taxpayers' money, more accountability and greater openness is to try to have the Public Accounts Committee closed down.

It's all John's fault

This year, our government plans to spend £710 billion. That’s the figure that was published by Her Majesty’s Treasury when the Chancellor presented his Budget last March.

£710 billion. It’s a lot of money. Where does it come from?

£158 billion of it is our income tax and another £101 billion is the take from national insurance. It’s our money coming out of our pay packets. The government gets its cut when we earn money and when we spend it – they expect to collect £100 billion in VAT this year and a further £46 billion in excise duties on cigarettes, alcohol and road tax. They get another £26 billion out of us from Council Tax, and £73 billion from businesses, in the form of corporation tax and business rates.

When the figures don’t add up, when there’s a budget deficit, the government borrows money to close the gap, leaving us with new debts to pay off. £50 billion of the £710 billion above goes straight out of the door on interest payments. This year they’re planning to borrow another £121 billion.

All this money is public money. It is spent for us, on our behalf, by Whitehall. By civil servants. By officials.

Public money deserves to be spent extra wisely. How good are Whitehall at deciding how to spend it? How much public money is wasted? And how could the waste be reduced?

Friday, 14 October 2011

WrinklesInTheMatrix: Francis Maude 1

There it is, right on the gov.uk website, Rt Hon Francis Maude MP, Cabinet Office minister, his biography, under Directorships:
His other jobs outside politics include non-executive director of ASDA Group, director at Salomon Brothers, and managing director of Morgan Stanley & Co.
Let's make sure we've got that right. Catechism:
Q What was Francis Maude's job at Morgan Stanley?
A He was managing director.

Q Who was managing director of Morgan Stanley?
A Francis Maude was.

Q Where was Francis Maude managing director?
A Morgan Stanley.
Now here's a wrinkle – there is no managing director of Morgan Stanley.

There might be a CEO or a COO but not a managing director, Americans don't have them, they don't figure in the corporate governance taxonomy.

Managing Director is a title they give, at least in investment banks, to the staff allowed to meet clients, it looks good on the business card, trumps the British usage of mere Director and opens doors at some of the more unwary prospective clients but it emphatically does not mean that the bearer has anything whatever to do with managing or directing the bank. Far too junior for that.

Managing Director is quite a common title, as the Wall Street Journal told us on 27 January 2011:
Morgan Stanley Names Fresh Class of Managing Directors
Morgan Stanley has appointed 232 managing directors, the highest total for the investment bank since 2007.

Morgan Stanley announced the list Thursday, a week after it posted a 35% increase in fourth-quarter profit amid revenue growth across its wealth-management, asset-management, and investment-banking businesses. The firm named 212 managing directors in December 2009, 133 for 2008 and 241 in 2007.
Any doubt about this, just ask Jeremy Heywood, our Cabinet Secretary-"elect" – according to the Annual Report and Accounts 2010-11 for the Cabinet Office, p.63, he was there, too, at Morgan Stanley, and he was just a managing director.

There's something of a pattern emerging. Do they have a problem round at the Cabinet Office, telling the truth and behaving responsibly? Something in the water perhaps?

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Updated 9.12.14

Earlier this year, on 9 January 2014, Mr Maude gave an interview to the Huffington Post:
Noting the success of the gov.uk site, a portal that brings the government billions in revenue from countries such as New Zealand that have paid for the source code, Maude said ...
That's not how they see it in New Zealand:




How did the former Managing Director of Morgan Stanley (please see above) come to make this billion pound mistake?

WrinklesInTheMatrix: Francis Maude 1

There it is, right on the gov.uk website, Rt Hon Francis Maude MP, Cabinet Office minister, his biography, under Directorships:
His other jobs outside politics include non-executive director of ASDA Group, director at Salomon Brothers, and managing director of Morgan Stanley & Co.
Let's make sure we've got that right. Catechism:
Q What was Francis Maude's job at Morgan Stanley?
A He was managing director.

Q Who was managing director of Morgan Stanley?
A Francis Maude was.

Q Where was Francis Maude managing director?
A Morgan Stanley.
Now here's a wrinkle – there is no managing director of Morgan Stanley.

WrinklesInTheMatrix: Oliver Letwin 1

Rt Hon Oliver Letwin MP, Minister of State at the Cabinet Office, has been caught by the Daily Mirror throwing state secrets in a rubbish bin in the park:
David Cameron's right-hand man Oliver Letwin has been caught dumping secret papers in park waste bins.

The PM's blundering policy adviser was seen on five separate days throwing away sensitive correspondence on terrorism, national security and constituents' private details.
Now here's a wrinkle – four years ago, Mr Letwin said in the Times that:
Cameron Conservatism puts no faith in central direction and control. Instead, it seeks to identify social and environmental responsibilities that participants in the free market are likely to neglect, and then establish frameworks that will lead people and organisations to act of their own volition in ways that will improve society by increasing general wellbeing.
The suggestion then was that Mr Letwin was just the man to establish the framework within which people would behave responsibly. Now it seems perhaps that he isn't.

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Psychological note: Everyone including Tony Blair had a good laugh at Mr Letwin's "sociocentric frameworks" and "econocentric paradigms" but his article was actually a bit serious and had something to do with "nudging", i.e. getting people to behave properly without passing laws all the time, an unimpeachable objective which somehow becomes sinister in his hands.

Obituary: his article was also intimately linked with the death of the Conservative party.

WrinklesInTheMatrix: Oliver Letwin 1

Rt Hon Oliver Letwin MP, Minister of State at the Cabinet Office, has been caught by the Daily Mirror throwing state secrets in a rubbish bin in the park:
David Cameron's right-hand man Oliver Letwin has been caught dumping secret papers in park waste bins.

The PM's blundering policy adviser was seen on five separate days throwing away sensitive correspondence on terrorism, national security and constituents' private details.
Now here's a wrinkle – four years ago, Mr Letwin said in the Times that:
Cameron Conservatism puts no faith in central direction and control. Instead, it seeks to identify social and environmental responsibilities that participants in the free market are likely to neglect, and then establish frameworks that will lead people and organisations to act of their own volition in ways that will improve society by increasing general wellbeing.
The suggestion then was that Mr Letwin was just the man to establish the framework within which people would behave responsibly. Now it seems perhaps that he isn't.

----------

Psychological note: Everyone including Tony Blair had a good laugh at Mr Letwin's "sociocentric frameworks" and "econocentric paradigms" but his article was actually a bit serious and had something to do with "nudging", i.e. getting people to behave properly without passing laws all the time, an unimpeachable objective which somehow becomes sinister in his hands.

Obituary: his article was also intimately linked with the death of the Conservative party.

WrinklesInTheMatrix: Ian Watmore 1

Eight days after the publication of Whose bust is it anyway?, Sir Gus O'Donnell announced that he would stand down as Cabinet Secretary at the end of the year. According to the Telegraph, so it must be true, Sir Gus's job as permanent secretary at the Cabinet Office is to be taken by Ian Watmore:
His third job as permanent secretary at the Cabinet Office will go to Ian Watmore, a former chief executive of the Football Association who is currently chief operating officer of the Whitehall efficiency group in the Cabinet Office.
Now here's a wrinkle – eight months earlier, on 1 February 2011, Mr Watmore appeared in front of the Public Administration Select Committee (PASC) to give evidence in the Committee's enquiry into good governance and civil service reform. At Q154 he was asked by the Chair to identify himself and said:
I am Ian Watmore, Permanent Secretary at the Cabinet Office ...
Does Mr Watmore have second sight? If so, what else can he tell us about the future?

WrinklesInTheMatrix: Ian Watmore 1

Eight days after the publication of Whose bust is it anyway?, Sir Gus O'Donnell announced that he would stand down as Cabinet Secretary at the end of the year. According to the Telegraph, so it must be true, Sir Gus's job as permanent secretary at the Cabinet Office is to be taken by Ian Watmore:
His third job as permanent secretary at the Cabinet Office will go to Ian Watmore, a former chief executive of the Football Association who is currently chief operating officer of the Whitehall efficiency group in the Cabinet Office.
Now here's a wrinkle – eight months earlier, on 1 February 2011, Mr Watmore appeared in front of the Public Administration Select Committee (PASC) to give evidence in the Committee's enquiry into good governance and civil service reform. At Q154 he was asked by the Chair to identify himself and said:
I am Ian Watmore, Permanent Secretary at the Cabinet Office ...
Does Mr Watmore have second sight? If so, what else can he tell us about the future?

Wednesday, 12 October 2011

Less for more

First Katie worked for James and Ian. Then Ian left and so did Katie. When James left as well, Katie stopped working for Ian and went to work for James. Then James left and Sarah took over. There was no room for Katie so she went back to working for Ian. Until Christine left and now Katie finds herself working for David. Or is it the other way around? Will Ian's will prevail? Just how much are we paying CSC? And for what? How did the Daily Mail get themselves suckered? And where does Andrew come into it?

All of that and more – including Sir Anthony Blunt – in the latest edition of the long-running programme, Whitehall in control ...

Like a lot of people in Whitehall, Katie Davis used to be a partner at Accenture.

She left in 2005 to join the Cabinet Office, home also to Ian Watmore at the time. Mr Watmore, of course, is a former managing director of Accenture.

In 2007 she moved to the Identity & Passport Service (IPS), where she was appointed Executive Director of Strategy. After three years of her strategy, IPS imploded. They left their offices at Globe House and retreated to the Home Office mother ship in Marsham St. The Chief Executive, James Hall, previously a managing partner of Accenture, retired and was replaced by Sarah Rapson, never worked for Accenture, ex-American Express, MBA from the London Business School.

Five directors of the IPS board were cleared out at the same time and so it came to pass that Katie found herself back in the Cabinet Office with the title Executive Director, Operational Excellence, working for Ian Watmore's Efficiency & Reform Group (ERG, previously OGC). The quiet life of operational excellence there beckoned but was soon rudely interrupted when Christine left.

Christine Connelly was the Chief Information Officer at the Department of Health. She was for years the most articulate and impassioned supporter of NPfIT, the NHS's £11 billion+ National Programme for IT. In June 2011, she resigned.

There had been a few problems.

By this stage in the career of NPfIT, there were only two contractors left. Accenture had pulled out with losses of over $450 million. Fujitsu also had pulled out, and are still thinking of suing HMG for £700 million. Leaving only BT and CSC.

CSC – Computer Sciences Corporation – are an American software house. They took over Accenture's NPfIT contracts. As part of the deal, they inherited iSoft, the software house that developed Lorenzo, the package on which NPfIT depends.

iSoft got into financial problems. The market took a dim view of their habit of booking profits based on nothing more than vague promises that someone might at some stage in the future possibly buy a copy of Lorenzo or not. CSC had to take them over to keep them afloat.

Lorenzo continued to perform badly, causing CSC to miss certain important milestones in their delivery plan for NPfIT. What with that, and a minor misunderstanding in the US with the Armed Services Board which cost them $250 million, their shareholders were getting edgy and CSC asked Christine Connelly to sign a contract guaranteeing them £3 billion. They also offered a discount. How about we take 25% off the price, CSC asked, but only deliver 50% of the services?

Less for more. An attractive proposition as anyone would agree.

At least, Christine Connelly thought it was attractive and she was minded to sign. Not so fast, said Richard Bacon MP, a hero. Not so fast, said Rt Hon Margaret Hodge MBE MP, a hero. Not so fast, said, Ian Watmore, Chief Operating Officer of ERG, whose motto, devised by Lord Brown of Madingley, Chairman of ERG and previously Chairman of BP and the Gulf of Mexico, is "more for less".

Even David Cameron asked Ms Connelly to stay her hand. For months, it looked as though, with the support of her boss, Sir David Nicholson, Chief Executive of the NHS, she was going to tell the lot of them to take a running jump. A power which, it may come as a surprise to those who believe we live in a polity where politicians control Whitehall, she had. Then she was gone.

Had Ian Watmore at last managed to assert his authority over the Department of Health? Who knows. But one way and another, Christine Connelly was replaced by Katie Davis.

That was back in June. On 22 September 2011, the Daily Mail carried this front page headline:
£12bn NHS computer system is scrapped... and it's all YOUR money that Labour poured down the drain
Their heart was in the right place but the story was false. The Department of Health agree that NPfIT has a few problems (mutt) but according to Sir David Nicholson, to paraphrase, we all owe our very existence to the genius of NPfIT (jeff), which will go on. And on. Until we've spent all the money we're entitled to. And then we may need some more. Firm up on that one later.

This is Sir Gus O'Donnell's Whitehall. He has been head of the home civil service since 2005. He leaves at the end of the year. We shall miss his deft organisational powers. Public administration in the UK may never be the same again. With any luck. GOD retires from top job – to be replaced by a new trinity, as they say in yesterday's Times newspaper.

Talking of which, when the Times look at NPfIT, they say:
The history of the NHS computer system is one of criminal incompetence and irresponsibility
Whereas when Sir David looks at it, he says:
We spent about 20% of that resource [the £11.4bn projected total spend on the NPfIT] on the acute sector. The other 80% is providing services that literally mean life and death to patients today, and have done for the last period.

So the Spine, and all those things, provides really, really important services for our patients. If you are going to talk about the totality of the [NPfIT] system … you have to accept that 80% of that programme has been delivered.
Sir Anthony Blunt was the world expert on Poussin. Standing in front of an obvious fake once, he declared it to be authentic. Why? Perhaps Sir David Nicholson could tell us.

The quotation immediately above is due to Tony Collins, the award-winning investigative journalist, one of the few people on the planet who know what's going on NPfIT-wise, and a hero. Andrew Lansley? Admittedly Secretary of State for Health but, when it comes right down to it, just a politician. Not sure. Katie Davis?  At least she's sort of a mandarin and a former Executive Director of Operational Excellence, but even so – not sure.

The sun never sets on Sir David's empire. Now a group of American investors are suing CSC in a class action. They clearly don't think Lorenzo is kosher either, any more than Richard Bacon, Margaret Hodge et al. Somehow, mysteriously, the shareholders have got hold of internal CSC reports going back to May 2008 saying that Lorenzo could never meet the NHS's requirements and that the package is on a "death march".

Not the sort of march you want a health service to be on. But then what has any of this £11 billion of public money got to do with health?

Less for more

First Katie worked for James and Ian. Then Ian left and so did Katie. When James left as well, Katie stopped working for Ian and went to work for James. Then James left and Sarah took over. There was no room for Katie so she went back to working for Ian. Until Christine left and now Katie finds herself working for David. Or is it the other way around? Will Ian's will prevail? Just how much are we paying CSC? And for what? How did the Daily Mail get themselves suckered? And where does Andrew come into it?

All of that and more – including Sir Anthony Blunt – in the latest edition of the long-running programme, Whitehall in control ...

Sunday, 9 October 2011

Efficiency and reform, Whitehall-style

Take a look at this CV:
Managing Director (age 42) of the UK arm of a global management consultancy – Chief Information Officer of the UK government – Head of Tony Blair’s Delivery Unit – Permanent Secretary at the Department of Innovation Universities and Skills – Chief Executive of the Football Association – Permanent Secretary at the Cabinet Office – Chief Operating Officer (age 52) of the Efficiency & Reform Group – and it’s not over yet.
Enviable. By any lights, that is a successful career.

Or is it?

In 2000, Ian Watmore was the Managing Director of Accenture UK. Take a step back. Before having a Managing Director, Accenture UK used to have a Managing Partner, James Hall.

Now take a step forwards. When Tony Blair and Whitehall decided in 2002 that the National Health Service should be computerised from end to end, a new project was born, NPfIT, the National Programme for IT.

NPfIT looks like costing over £11 billion+ of public money. Watmore and Hall negotiated contracts which would have seen Accenture running the NHS in two of the five regions into which NPfIT divides England and Wales. The course was set for Accenture to earn billions.

Their cause was further favoured when, in 2004, Ian Watmore left to become the UK government’s Chief Information Officer. As far as Accenture is concerned, there’s nothing so useful as having your alumni occupying influential positions in the government machine.

And in 2006, more of the same. James Hall left Accenture to become Chief Executive of the Identity & Passport Service, placing him at the head of the Home Office’s £6 billion National Identity Scheme, the cocktail of ID cards, ePassports and biometric visas/residence permits so beloved of Tony Blair and Whitehall.

In the event, how much of the projected £17 billion+ harvest did Accenture reap?

None. The National Identity Scheme expired worthless in 2010. And earlier, in 2006, we had already learnt that Accenture’s NHS losses grow as NPfIT delays mount:
Accenture, the leading management and technology consulting firm, announced a provision for a further $450 million of losses against its contract to deploy IT systems on behalf of the English NHS.
Leaving his previous employers with a bill for $450 million+ makes something of a dent in Ian Watmore's CV. But let's draw a line in the sand and move on to his next employers, the Cabinet Office.

In 2005, Sir Gus O’Donnell became Cabinet Secretary. He wasn’t asked to lead on national security. That job was given to Sir David Omand. Sir Gus was asked by Tony Blair to concentrate instead on delivering “joined up government”.

The result was a November 2005 Cabinet Office paper, Transformational Government Enabled by Technology, written in the unmistakable language of the management consultant:
To lead the transformation of groups of services to customers, especially for those which cut across organisational boundaries, the Government will appoint Customer Group Directors, each reporting to one Minister responsible for that customer group. Key responsibilities of a Customer Group Director will be to sponsor customer insight and research into the needs of that customer group; to lead the design of services including overall channel planning, joining-up of presentation and delivery, branding and communication, and service improvements; to track and communicate performance against customer related targets; and to represent the interests of their customers as necessary in existing inter-departmental governance and in the governance of this strategy.
In English, Transformational Government meant sacking all the frontline public servants and replacing them with computers. It meant issuing everyone in the UK with an electronic ID. And it meant that all the big departments of state would share their data. That way, the Whitehall computers could deliver the right benefits to the right people (or “customers”).

There are any number of reasons why Transformational Government could never work. One of them is that the big departments of state have no intention of sharing their data. Ian Watmore could call all the meetings he liked at which the Home Office was meant to lie down with DWP and HMRC and the Department for Children Schools and Families and the Department of Health but, as the BBC’s File on 4 told us, they simply didn’t turn up. The writ of the Cabinet Office does not run wide.

Nothing ever came of Transformational Government. But once again Ian Watmore had moved on before his employers found out, becoming in January 2006 Head of Tony Blair’s Delivery Unit. There are no known deliveries made there by Mr Watmore and no known innovations introduced as a result of his subsequent tenure at the Department of Innovation Universities and Skills.

There followed an embarrassing nine months or so as Chief Executive of the Football Association. After which, Human Resources at Whitehall found Ian Watmore's CV once again on their desk. What transferable skills of his could they possibly find attractive?

A good question. Whatever the answer was, Ian Watmore was reinstalled, this time as Permanent Secretary at the Cabinet Office. Among others, he now enjoys the title of “the Government’s Chief Operating Officer”.

And all those failed projects? Zombies, all.

They’re all climbing out of their graves now, sightless and rotting, lurching around Whitehall and threatening to devour public money by the billion. The transformation or reform of Whitehall is to be based on a lot of schemes that have already failed. That, supposedly, is the way to improve efficiency.

NPfIT limps on. Giant data centres are to be built at which all departmental data will be shared. There is to be a Civil Registration Act and everyone will be bar coded through a resurrected Identity Assurance service. Access to public services will be “digital by default”. Frontline public servants will go, to be replaced by G-Cloud – the Government Cloud – i.e. the web.

What does Francis Maude, Cabinet Office Minister, know of the difficulties of ensuring security over the web? Or David Cameron – what does he know? Or for that matter, Sir Gus O'Donnell.

It doesn’t matter. Whitehall wants a G-Cloud and Ian Watmore is the man to deliver it – just look at his CV.

And we the public will pay for it. In every sense.

----------

Updated 16.4.16

The generally excellent Charles Moore has an article in today's Telegraph newspaper, Beware the incestuous, unaccountable empire-building of civil servants.

It's a curate's egg.

One of the less impressive passages reads as follows:
Now that Sir David [Normington] is retiring, his job is being split again. The leading candidate to replace him as First Civil Service Commissioner is Ian Watmore. And guess what Mr Watmore did until, rather against his will, he left in 2012? He was a civil servant – permanent secretary of the Cabinet Office. And guess who wants him to be the First Commissioner? Sir Jeremy Heywood, the Cabinet Secretary. Mr Watmore left because the then Cabinet Office Minister, Francis Maude, was not satisfied that he was doing the job he asked of him. It is a fair bet that a returning Mr Watmore would be able to exact the subtle, carefully meditated revenge against elected people at which mandarins excel.
Mr Moore seems to assume that Ian Watmore is a life-long civil servant. He isn't. Please see above. He came into the civil service from a very senior job in the private sector. And that bit about Ian Watmore exacting "the subtle, carefully meditated revenge against elected people at which mandarins excel" just doesn't ring true – you'd lose your bet.

Efficiency and reform, Whitehall-style

Take a look at this CV:
Managing Director (age 42) of the UK arm of a global management consultancy – Chief Information Officer of the UK government – Head of Tony Blair’s Delivery Unit – Permanent Secretary at the Department of Innovation Universities and Skills – Chief Executive of the Football Association – Permanent Secretary at the Cabinet Office – Chief Operating Officer (age 52) of the Efficiency & Reform Group – and it’s not over yet.
Enviable. By any lights, that is a successful career.

Or is it?

Monday, 3 October 2011

Whose bust is it anyway?

In 1970, when Augustine Thomas O’Donnell started his economics degree at Warwick, Ed Balls was three years old.

Three years for his undergraduate degree and two years for his MPhil at Oxford – then it was off to Glasgow for Gus, for a four-year stint as an economics lecturer. That gets us to 1979, at which point Ed Balls is 12 and Gus is recruited as a Treasury economist.

He puts in six years in the UK and then fetches up at our embassy in Washington, where he is First Secretary of the economics division for four years, before being brought back to the UK to act as press secretary to John Major for five years, one of them at No.11 and four at No.10. At the end of which, it’s 1994 and and the 27 year-old Ed Balls is an economic advisor to Gordon Brown.

There’s a three-year gap after which Gus becomes our man at the IMF and the World Bank. He is the United Kingdom’s Executive Director to both of them.

Back from Washington, he is appointed both Director of the UK’s macroeconomic policy and Head of the government economics service – every economist in HMG reports to Gus. By 1999, he is responsible for the UK's fiscal policy, international development and EMU and in 2002 Sir Gus O’Donnell, waggishly known as “GOD”, becomes Permanent Secretary to the Treasury.

Labour have been in power for five years by then with Gordon Brown and Ed Balls at the Treasury. Does Sir Gus agree with their policy?

We know the answer to that one. In 2002, he co-edited a book with Ed Balls, congratulating Gordon Brown on eliminating boom and bust, Reforming Britain's Economic and Financial Policy: Towards Greater Economic Stability. A year later saw another book edited by the two of them and Joe Grice, again congratulating Gordon Brown, this time for Microeconomic Reform in Britain: Delivering Opportunities for All.

The end of boom and bust? Opportunities for all? Perhaps, like history in 1989, economics had ended. As Francis Fukuyama almost said: “What we may be witnessing is not just the end of economic cycles, or the passing of artificial economic constraints, but the end of economics as such”.

And so it seemed for a few years, but by the late spring of 2007 the debt markets had seized up. Our regulators – the Bank of England, the FSA and the Treasury – did nothing. Then in October that year, Northern Rock hit the buffers. Our regulators did nothing. And a year later, having run off the end of a cliff, Lehman Brothers made the mistake of looking down, its little feet stopped turning, and economics was back.

Did Sir Gus agree with Gordon and Ed that you can build an economy on nothing but debt, just as long as you’ve got absolutely masses of the stuff? Or was it the other way around? Did Gordon and Ed agree with GOD's economic dispositions?

Sir Gus was so senior, so experienced, so well-connected, so highly regarded. If he had disagreed with his political masters, he could easily have sabotaged their policy. Whitehall are good at that. He could even have resigned. But he didn’t.

Ed Balls had been a very bright economics student at Oxford and Harvard. Gordon Brown hadn’t.

There are quite a lot of very bright economics students at Oxford and Harvard. There is only one GOD.

Journalists give the credit for Labour’s economic policy 1994-2010 to Gordon Brown, but journalists often write or broadcast what they’re told if it makes a good story to suit a political objective. We have no trouble believing that Tony Blair knew nothing about economics. Why do we believe that Gordon Brown did?

Ask yourself that, and each time you look for an answer, you come back to GOD. GOD, who undoubtedly could argue an economic case, in the UK and on the world stage. GOD, who had command of all the troops. And not just the economists. By 2005, Sir Gus was Cabinet Secretary. He was head of the whole home civil service. He was GOD. He still is.

In fifty years time, will historians include Sir Gus O’Donnell along with Gordon Brown and Ed Balls in the team that caused a generation’s-worth of damage to the British economy? Will the honours be shared? Or will Brown and Balls look like minor players, like most politicians in government, manipulated by a disproportionately powerful and consistently incompetent Whitehall? Have we been looking under the wrong stone? Will it by then be GOD's bust alone?

Whose bust is it anyway?

In 1970, when Augustine Thomas O’Donnell started his economics degree at Warwick, Ed Balls was three years old.