The TaxPayers' Alliance - Better Government

OECD statistics provide new evidence for the inefficiency of the NHS

The OECD's new Health at a Glance statistics paint a picture of the poor value for money we get from the NHS.  We spend almost exactly the OECD average amount on healthcare.  The OECD average is $2,759 PPP wheras the UK's is $2,724 PPP.

However, we don't get average amounts of a number of key healthcare inputs:

• Acute beds per 1000 people, the OECD average is 3.9 but in the UK we only have 3.1.  This feeds into higher occupancy rates with 84 per cent of UK beds occupied against 75 per cent in the wider OECD.  These high occupancy rates contribute to high rates of hospital infection.
• Practicing doctors per 1000 people, the OECD average is 3.0 but in the UK we only have 2.4.  This relatively low number of doctors means that they are stretched which will make seeing a specialist more difficult and could leave doctors overworked leading to a lower standard of care.  This feeds into lower doctor consultations per capita, the OECD average if 6.8 but in the UK we only get 5.1.

We do have slightly more nurses than the OECD average, 9.1 per 1000 people in the UK against 8.9 in the OECD but the difference is slight and could represent a greater tendency to have nurses perform tasks that would be performed by a doctor in another country.

Relatively low numbers of doctors and shortages of beds aren't created by a lack of resources but by inefficiency.  They contribute to low healthcare standards.  Mortality rates within 30 days of a patient has being admitted to hospital following a heart attack are 11.8 in the UK against 10.2 in the wider OECD.  This rate is particularly crucial as heart disease is the biggest killer in most industrialised countries.

Germany defends its carmakers

The BBC reports fury in Germany at EU proposals to restrict emissions from new cars:

"German Chancellor Angela Merkel has opposed European Union (EU) plans to cut pollution from new cars, saying it was "not economically favourable".

She said the move would burden Germany and its carmakers disproportionately."

It would be easy to get up on a high-horse about double standards and a German government unwilling to pay the price for action to meet international targets to cut emissions that they've been so active in pushing for.  That would be a mistake, though.

The German government should be defending the German national interest.  A democratic government should look out for the interests of its constituents.  In fact, we should be asking very serious questions about why our government cares so little about our own interests.

There are two key examples here.

The first example is the Emissions Trading Scheme where countries were allowed to allocate themselves emissions allowances.  This way of doing things obviously encouraged every country to set the highest allowance they could.  Every country then did just that except for the UK.  We set tough limits and Open Europe found (PDF) that we ended up paying £470 million in subsidy to other European states.  No emissions were cut at all.

The second example is the EU Landfill Directive which was obviously going to hit disproportionately at Britain as we recycle less than other European states.  Hated bin taxes are blamed on the European Union but our Government never seriously opposed the Directive that makes them necessary.

With our overly centralised politics public services monopolise the national debate and squeeze out foreign policy.  As few votes are at stake politicians attend to their own foreign policy agendas rather than the priorities of the public.  Being popular at international conferences makes them feel good but leaves us worse off.  It would be better if our politics was a little more German in this regard, if we learnt from L'exception Francaise.

Neonatal care is being wrecked by too many targets, not too few

The Guardian reports today on a National Audit Office report that criticises botched reforms to neonatal care:

"Scores of premature babies may be dying unnecessarily across England because the NHS mismanaged a reform of neonatal units in 2003, parliament's spending watchdog reveals today."

Most of the Guardian's account speaks for itself but this section needs some attention:

"Jacqui Smith, when health minister in 2003, said she agreed with recommendations from the British Association for Perinatal Medicine for minimum staffing ratios. But the government did not order NHS trusts to implement them.

The NAO says there was "confusion" over whether staffing ratios were mandatory, making it difficult for unit managers to convince NHS trusts they needed more staff."

This might be taken to suggest that a lack of targets and other central intervention was the problem.  The NHS Trusts were waiting around for the Health Minister to tell them what to do and without the wisdom of the Department of Health things went wrong.

The truth is that too much central intervention, not too little, is the problem.  When you have so many targets and so little local discretion - as pay, drugs, funding and IT expenditure and a host of management decisions are made centrally - anything that isn't made a target is ignored.  Local decision making can always go wrong but biasing decisions towards prioritising outcomes that central Government is able to, and gets around to, making a target will lead to worse decisions overall.  That is the case here: the target culture is to blame for making a target necessary.

They're busy with lightbulbs

The bureaucratic procedure attached to the simple act of clearing up a broken lightbulb is more important than it might seem.  It is important because it demonstrates just how unwieldy the procedures are becoming in too much of the public sector for even the most basic of task.  All this, as the Times is quite right to note, means far less time to do the vitally important real work they are supposed to be doing:

"So how many government ministers does it take to unmask the identity of a lavish donor, or to rescue Northern Rock, or sign an EU treaty at the same time as other EU leaders, or to ensure discs containing confidential details of millions of Britons don't get lost? Answer: Are you crazy? Do you imagine that MPs have time for all that when so many lightbulbs need changing?"

A lethal dogma

We already have not just a two-tiered health service but a many tiered one.  The top tier is occupied by the roughly 13 per cent of the population who have private medical insurance.  The other tiers are composed of the various sections of the population who get very different results from the NHS.  A recent Civitas study exposed how the middle class are able to play the system and get better results than the poor.  With all that in mind it is pretty clear that a dogmatic insistence that everyone treated by the NHS occupy some nominal single tier is a bit of a joke.

Unfortunately, a report in the Sunday Times set out how that joke isn't proving terribly funny for Colette Mills, a former nurse.  Her local NHS Trust uses Taxol to treat breast cancer but she thinks that her chances would be a lot better with Avastin.  She is willing to pay for the drug and any costs to the hospital associated with using it, about £4,000 in total, but is not able to afford the £10 to £15,000 cost of treating her condition entirely privately.  That would mean paying for nurses' time, blood tests, scans and the countless other costs associated with cancer treatment.

So, let's get this straight: the hospital she is being treated at will treat private patients with Avastin, will treat NHS patients for free but won't let an NHS patient pay a little extra for a drug that might save her life.  All because "co-payments would risk creating a two-tier health service and be in direct contravention with the principles and values of the NHS".  Are those principles worth people's lives?

A two-tier system will necessarily exist in any rationed healthcare system.  You'll never be able to provide all the healthcare people can use, to everyone, at any time.  That will always leave some people, who are able to pay, wanting to buy more.  Even if you ban private treatment people can still go abroad.

With that in mind making it artificially difficult to move up a tier doesn't strengthen the principle of a universal NHS.  All it does is mean that a lot of ordinary people can't get drugs reserved for the super-rich.  One can believe that the NHS should provide Avastin itself.  However, so long as it doesn't it is fundamentally inhumane to make it unreasonably difficult for people to move up a tier when their survival is at stake.  To risk Colette Mills' death in a vain hunt for an illusory principle.

Care for cancer patients in Britain expensive and poor quality

Researchers at the Karolinska Institute in Sweden have taken a look at the amounts spent on cancer care in the UK and have found that the Department of Health's picture of low cancer survival rates but low costs isn't quite accurate.  The Department of Health's analysis apparently fails to include spending by cancer care charities like Marie Curie Cancer Care.  OECD data suggests that the UK spends £143, compared to the £80 that the Department of Health claims.

While the Swedish researchers acknowledge that UK cancer spending "is a very muddy picture" where precise and reliable figures are hard to come by this is another nail in the coffin of the "spend more and the health service will work itself out" approach.  The numbers released by the Karolinska Institute suggest that the UK spends 36 per cent more on cancer care than Germany.  Despite that additional spending in the UK a German man diagnosed with cancer has a 25 per cent higher chance of surviving five years and a German woman a 26 per cent higher chance of surviving that long compared to UK patients.

Professor Karol Sikora, advisor to the World Health Organisation who uncovered these figures, offers some recommendations on how to improve the situation:

"I think we should involve the independent sector and get systems that are more efficient and we should be looking at how things are done in America and Europe - there are simply no waiting lists there.

People in Europe cannot understand waiting for cancer treatment.

That is one thing that bedevils healthcare in the UK. No-one waits 31 days for radiotherapy in Europe yet that is our new target here. Most people currently wait much longer.

There is no reason why we can move from a target driven culture to a highly efficient system with no waiting lists with the money we are currently spending on cancer in the UK."

It is the uniquely centralised, politicised and monopolistic fashion in which healthcare is organised in the UK which leaves so many paying such a tragically high price for poor healthcare performance.  As Professor Sikora says we can learn lessons from other nations in Europe who do things differently.

Crozier vs. Garnier

During the research for a project I'm working on I found myself looking through GlaxoSmithKline's accounts.  Remembering the debate over the Public Sector Rich List I got curious and wondered just how much JP Garnier - the reputedly well-paid boss at a big private company like GSK - gets paid.  The figure is $5,413,000.  That's a lot of money, not bad if you can get it.  However, GSK are really massive and, after you've converted it to pounds, wondered how much more it was than the £1,256,000 that Crozier takes home in total remuneration.

I've done those calculations.  They are entirely reliable with the proviso that the exchange rate is today's rather than last year's.  Royal Mail revenue and operating profit figures are from their accounts:

(click to enlarge)

What that shows is that Royal Mail pay Crozier more compared to their profit and revenue than GSK pay Garnier.  Adam Crozier is, at least compared to JP Garnier, well paid even relative to the scale of the company he is running.  Even at the very top end the public sector now pays really well.

Given that public sector organisations don't depend on success in the market to attract customers or strong financial results to attract shareholders there is no reason to assume these salaries are likely to be justified.

The police pay deal

If this were simply another case of public sector workers complaining about a poor deal from the Government because they weren't going to get another inflation-busting pay increase the TaxPayers' Alliance wouldn't be particularly sympathetic.  Public sector workers have had a pretty good deal over the last decade and most have very little to complain about.  Taxpayers have to foot the bill and are hard pressed as it is.

However, the debate currently going on over the police deal isn’t really about the money.  The police themselves will tell you - if you push them on the subject - that they're pretty reasonably paid.  Their deal is tough but in the harder economic conditions we're facing at the moment a lot of people are having to tighten their belt.  This dispute isn't about pay restraint but about the way the Government went about securing pay restraint.

Essentially, the police pay deal is negotiated each year but often isn't negotiated in time.  When that happens the pay is backdated so that the torturously slow process doesn't leave officers out of pocket.  This year was particularly difficult and, in the end, went to arbitration.  That means an external body taking over and, after both sides have made their case, deciding on what the final deal will be.  The body in question is ACAS and their decision is binding upon the police - they have to accept it - but not legally binding on the government.  The arbitration is not legally binding on the government but is clearly, in some sense, morally binding if the arbitration is not completely meaningless.  The arbitration did not go the Government's way and they've responded by refusing to pay the backdated pay which means that the police will only get their rise for nine instead of twelve months this year.  They understandably see this as a huge breach of confidence.

The way to avoid disputes like this isn’t to throw ever higher salaries at public sector workers.  A deal that was financially identical but reached in a less dubious manner would not have gotten the police nearly so wound up.  Instead we need to address the real problem which is that ministers without the management experience to run an organisation on the scale of the police service – Jacqui Smith was a teacher – made a complete mess of the negotiating process.

The police are quite reasonably paid but they see other public workers striking, the government backing down and those workers getting more generous deals.  The classic example was the Warwick Agreement where they backed down on essential reforms to public sector pensions.  At the same time their morale is sapped by targets that prevent them getting on with their job.  Just today it was discovered that the police now spend barely one hour in seven on the beat deterring crime - "incident-related paperwork" is keeping them busy.  The present crisis is a result of these problems and the mishandling of the negotiations.  It is right that the Government should try to control public sector pay but it will take good management, which centralised politics cannot provide, to do this without compromising services.

Building a world class Northampton

The world of quangos' is one ripe for ridicule. Unfortunately, the jokes are often expensive ones. Much has already been written on the excesses of some quangos, the massive public expenditure that supports them (nearly £120 billion) and the bizarreness of some of their remits. What is not always considered is the considerable amount of overlap and replication that exists between quangos housed in different departments.

A case in point is the West Northamptonshire Development Corporation (WNDC). West Northamptonshire of course deserves funds for regeneration as much as any other worthy region, but does it really deserve its own dedicated quango, funded by the Department of Communities and Local Government to the tune of £15 million?

Taken alone, the WNDC may seem reasonable. But consider that the region already receives considerable financial attention from the regeneration orientated English Partnership Quango (also part of the Dept. of Communities and Local Government), the East Midlands Development Agency (a quango under the Dept. of Trade and Industry) and Culture East Midlands (a quango located in the Dept. of Culture,
Media and Sport), not to mention through the development programmes of local authorities, and the case for a dedicated WNDC seems slim.

That case goes from slim to ridiculous when it emerges that Micheal Hayes, the WNDC's cheif executive, enjoys a salary of £115,000, and two other directors take salaries in excess of £70,000. Quango websites are always a good gauge for whether the quango has a real substantive raison d'etre:

'WNDC is developing a framework that will set out how the regeneration of West Northamptonshire will be achieved. In an era of profound and lasting change, West Northamptonshire will only prosper if it embraces its position within the global economy...'

The WNDC apparently exists to identify 'the drivers of change that provide the context for action' and to 'locate the priorities for action... to ensure West Northamptonshire makes the most of the opportunities and challenges arising from change'.

In amongst such management-speak there is a link to the WNDC's 'Task'. Revealingly, it leads to page with nothing on it but the words 'coming soon'.   

Wasting children's time

When discussing the education system's poor performance it is common to focus on the costs to the economy, the children concerned and their chance of making their way in the world or even the waste of taxpayers' money thrown at an underperforming system.  However, the education system's failure also wastes huge amounts of the pupil's time.  Take this story, from the Telegraph:

"Children are making virtually no progress in mathematics in the first three years of secondary education, a major study showed yesterday.

Even the brightest pupils struggle between the ages of 11 and 14 as they "plateau" after leaving primary school.

Some children may even be going backwards - raising fresh concerns over the way they are taught."

Now, I have it on good authority than an 11 to 14 year old will have 4 to 5 hours of Maths in each school week.  A school year has around 34 weeks in it.  That means that wasting three years of education means that each pupil is wasting around 459 hours; perhaps parents worrying about their children wasting time in front of the television have chosen the wrong target for their ire?

Our education system needs real reform so that we can end this waste.

3Rs setback

The Times reports that the government is to overhaul the primary school curriculum after progress in English, Maths and Science stalled.  Earlier this week the PISA reported that we are falling down international rankings and poor performance is starting to show up even in the Government's own tests; debased by teaching to the test and relaxed standards.

"The review, the first big overhaul of primary teaching and learning since 2000, comes as this year’s Key Stage 2 test results show that nearly three in ten 11-year-olds failed to meet expected standards for their age in English, maths and science by the time they left for secondary school this summer."

That means three in ten students are going to secondary school already behind.  Without the basic literacy and numeracy skills they should already be equipped with when they leave primary school they'll struggle to keep up with the secondary school curriculum.  The secondary schools themselves are rarely good enough to enable pupils who have fallen behind to catch-up.

This failure will translate into low-skilled adults, Britain has (PDF) the second highest proportion of low-skilled workers in the OECD - roughly twice that in Germany or the US, who will be left behind in an increasingly skills dependent economy.  As well as letting down the individuals concerned we also undermine the future competitiveness of our economy.  Real reform of education cannot wait.

Public Services Keep Failing

In the news today there are two more stories of dismal public sector failure.  Despite countless billions in extra spending within both the education system and the health service we are slipping down the international rankings for educational attainment and primary healthcare service standards are declining.  The Telegraph's leader captures the reasons for this widespread failure well:

"Only the dismantling of centrally dictated, government-monopoly structures will switch control of public-service priorities from the producer to the consumer, and provide the responsive, high-quality services that modern Britons have a right to expect."

There are a number of issues here:

1. Centralisation:  While the NHS does contain 152 Primary Care Trusts and innumerable other local bodies these are not independent local healthcare providers.  Important decisions from the selection of drugs to the allocation of resources within the NHS are made centrally.  All the Trusts are subject to targets and other impositions from above.  The Trusts are still best understood as outposts of a monolithic NHS.  The attempt to run such a huge organisation, the third largest - in terms of number of staff - in the world, as a single bureaucracy is doomed to failure.  Centralised decision making can't take account of local knowledge and differing circumstances.
2. Political management:  This ensures that ultimate control of these services lies with politicians who invariably lack management experience and subject knowledge.  The structural problems with these services are compounded by inexperienced leadership.  Services aren't under the control of local staff and genuinely accountable to their users but instead under the control of a politician with a very limited understanding of what people need and how it can be supplied to them.
3. Monopolies:  Monopoly suppliers have no competition, no threat of customer loss or bankruptcy.  Customers have no choice and no redress.  Monopolies therefore remove the basic tools of management and kill the need to innovate, improve and reduce costs.  Hence politicians set up the Competition Commission to protect the public from business - but not from themselves and their civil servants.

Yet another report into Britain's failing education system

Launching a new report into childrens' educational attainment yesterday, OECD Secretary-General Angel Gurría emphasized the importance of education for the development of people and society: "Effective and innovative education policies open enormous opportunities for individuals....In the highly competitive globalised economy of today, quality education is one of the most valuable assets that a society and an individual can have".

So it is depressing – even more so because it is unsurprising - to see that the UK has been found to have fallen behind other countries in its levels of educational achievement. The new study, compiled by the Programme for International Student Assessment (PISA-an arm of the OECD), looked at the educational attainment among 15 year olds in 57 countries. Since 2000, the UK cohort was found to have fallen from 8th to 24th in maths; from 7th to 17th in reading; and in science, an area in which the UK as a whole excels, they fell from 4th to 14th. Taken as a whole the findings constitute - as a reporter on the Today programme put it this morning - a discernable slip for the UK from a premier league of industrialised countries to a first division.

Coming, as this report does, on the back of another which found reading standards among primary school children to have slipped in recent years, it seems that the government’s policy of ‘spend and meddle’ has been entirely fruitless. It hasn’t, it seems, even kept us at our previous position; we have fallen back, rather than improved. Between 1995 and 2004, driven by the mantra of 'education, education, education', UK Government spending on education has increased by 75%, while education spending across the OECD as a whole has only increased by 39%. Why has this surge in spending in the UK not delivered?

A close look at those countries who enjoy excellent and improving levels of educational attainment – South Korea and Finland in particular - reveals that it is not money that improves education, but the correct policy. The British government's education policy has been misdirected from the start, entrenching problems which will take years to undo. South Korea and Finland pay less per pupil than in the UK, limit places at teaching colleges to foster genuine competition, provide well equipped specialist schools for those in need of them, and critically, devolve much of the responsibility for planning how children should be taught down to schools themselves. We have instead created a glut of second rate teachers competing for places in overcrowded schools which labour under the intense micromanagement of a bloated Department of Education and Skills. Shackled and sick it is no wonder our educational system is failing to deliver. What it needs is not more or new government policy though, but simply less government involvement altogether.

Political management and the Nimrod

The replacement for the Nimrod spy plane, the Nimrod MRA4, was ordered in 1996.  Since then we have had five defence secretaries.  Michael Portillo, Des Browne, John Reid, Geoff Hoon and George Robertson.  They've been in post for less than three years each.  During that time the project to replace the Nimrod has suffered repeated delays.  The plane should have been in service by April 2003.  It is now forecast to arrive in September 2010 despite increases in its budget - there are even suggestions it could take till 2012.  All this we already knew thanks to the National Audit Office MoD Major Projects Report (PDF).

Now we find out that the MoD has not just failed to keep the project on track but has also failed to effectively maintain the existing fleet of Nimrod MR2 planes.  The Telegraph reports that:

"The Board investigation identified what Mr Browne admitted were key "failings":

Fuel may have leaked because ageing rubber seals cracked and withered. Despite advice from the manufacturers, the MoD had not been routinely removing and inspecting seals, because engineers were worried about having to replace them. BAe, the plane's manufacturer advised as long ago as 1985 that such inflight over-flows were possible, but no action was taken.

Another cause of the fuel leak could have been an overflow from the plane's fuel tanks.

After a heat-pipe malfunction on another Nimrod in 2004 melted fuel seals, the MoD rejected an RAF request to fit a warning system to the plane. And only after the inquiry into XV230 identified the cooling system as a possible problem were the cooling units of all Nimrods turned off.

The BOI found a "fire suppressant" could have given the XV230 crew a chance of surviving. In 2004, the MoD rejected advice from the plane's manufacturer to install such a system."

All of these maintenance failures, and the lack of a replacement that we have to hope will fix these problems, have their roots in the short-termism of political management by generalist ministers only in post for a few short years each.  Each defence secretary, knowing that they will likely have moved on before the effects of today's maintenance become clear, will focus on more immediate - but often less vital - concerns.  Their priorities will necessarily dictate the priorities of the rest of the MoD's staff.

 

Many of the mistakes that created the current crisis were probably made by earlier defence secretaries, and not Des Browne, but none of them have stuck around long enough to take responsibility.  Who would go to John Reid or Geoff Hoon now and take them to task for the steady falling to pieces of the Nimrod?

It would be wrong to confine our judgement to particular individuals, whether politicians, civil servants or contractors.  They all worked with the confines and pressures of the job presented to them.  The confusion and myopia of our system of government is the real cause of the failure to provide a reliable spy plane.  Fourteen servicemen and their families have paid a terrible price for that failure.

Beyond Control

Does anyone really believe this stuff?

So the ex-head of HMRC who resigned just a fortnight ago over the data discs disaster, is still in Whitehall, working now at the Cabinet Office. And Paul Gray is still on his £200k pa salary.

Even better, he's now leading a project on "developing civil servant skills". The man who presided over such jaw-dropping sloppiness among his own staff that they routinely post everyone's bank details on Facebook, is now developing the same skills right across Whitehall.

It is inconceivable this would happen in the private sector: can anyone imagine Tesco sacking its Finance Director for losing all its Club Card customer data, and then getting him back to train staff?

And it's not even the first time we've seen this at HMRC. Paul Gray's predecessor, Sir David Varney, "resigned" abruptly in July 2006 (see this blog). We never did get to the bottom of that, but he too simply moved to another Whitehall job, advising on "transformational government" at the Treasury.

It's exactly the same right across Whitehall. Failure in a senior post is no bar to advancement.

There's the notorious case of Sir John Gieve (see many previous blogs, eg here and here), who "led" the Home Office into total dysfunction, got "moved" from there, only to pop up as Deputy Governor of the Bank of England- where he has since presided over the Northern Crock fiasco.

Taxpayers will also recall the case of Sir Nigel Crisp, ex CEO of the NHS, who... er, "retired" suddenly at the height of the NHS funding crisis in March 2006, and re-emerged one month later as Baron Crisp. He continues to rule over us from the red benches.

The NHS is notorious for re-employing senior managers who've only just been expensively paid off. For example, in October it was reported that:

"Derek Smith, the chief executive of Hammersmith Hospitals NHS Trust is understood to have received a payout worth more than £300,000 when he was made redundant in June. Just two months later it was announced he would take over as interim chief executive at University Hospitals of Leicester with a £100,000 salary."

What on earth is going on?

Well, some of it is no more than the gibbering incompetence we have to expect from government. But more fundamentally, it reflects the fact that these Big Government operations are impossible to manage. They are beyond control, and in reality, everyone now knows it.

Whatever they may say about reform and "transformational government", surely none of Brown's battered demoralised cabinet still believe it can be delivered. Not really. And none of the old-time mandarins ever believed it.

Tescos starts with the huge advantage of having customers. Their management is forced to do the right thing because the customers are the ones with the money. Simple as that.

But as we know, the public sector isn't set up on such a rational, results driven basis. To get its money, it must serve not real world customers, but dunderhead flip-flopping grandstanding politicos. Hence those huge centralised departments reporting to here today gone tomorrow luminaries like Alan Johnson and Peter Hain.

Nobody can manage a set-up like that. It's designed for failure, and nobody's really surprised when it comes about.

Paul Gray wasn't really responsible for HMRC's missing data discs, any more than his predecessor was responsible for the fraud and error now endemic in our tax system. Or any more than Baron Crisp was reponsible for our crisis-ridden NHS. Or Johnston McNeill was responsible for the fiasco at the Rural Payments Agency.

Of course, they must be fired when they fail. But it's not really their fault they can't manage the unmanageable. Without the customer imperative driving him in the right direction, it's unlikely Tesco Terry himself would do a whole lot better (see this blog for the ludicrous attempts to manage HMRC better).

The real problem is Big Government. It's beyond control.

And the only real solution is massive downsizing, decentralisation, and privatisation.