Andy Burnham has expressed a desire to “rewire” the economy; however, he has since appeared to slow progress, postponing many reforms until the 2030s. Key initiatives, such as local government restructuring and a comprehensive reform of the criticized water industry, are currently stalled. Similarly, crucial changes in social care and welfare will be left for the next government to address.
This postponement is somewhat justifiable given the complexity of the issues at hand. Additionally, plans from the left to replace the term “rewire” with “renationalise” have sparked concerns about reverting to outdated policies reminiscent of the 1970s. Nonetheless, there is an abundance of knowledge available now that could facilitate meaningful reforms aimed at restoring public trust ahead of the 2029 elections.
Success can be achieved through indirect approaches, with customer satisfaction serving as the primary benchmark. Without focusing on this goal, the prospects for successful reform may be diminished.
Economist Sir John Kay, affiliated with St John’s College, Oxford, and a former leader at the Institute for Fiscal Studies, emphasizes the importance of organizations remembering their core purpose: serving their customers. In the private sector, prioritizing customer satisfaction often leads to increased profits, while in the public sector, it can result in cost savings.
In his book, “Obliquity,” Kay illustrates how companies that focused solely on shareholder value ultimately failed, while those dedicated to creating the best products achieved sustainable success.
Just as the fixation on shareholder value led to the downfall of many once-thriving companies, an overreliance on rigid protocols in the public sector can result in ineffective outcomes and wasted resources.
This is currently evident in the National Health Service (NHS), where patient satisfaction is improving concerning GP and hospital visits. Although the new appointment booking system has its challenges, many patients are experiencing quicker access to doctors, particularly for GP and outpatient services.
However, failures within the NHS are also apparent, particularly with management cover-ups regarding rising mortality rates in maternity units.
Neither the successes nor the failures within the health service can be solely attributed to its regulatory framework. Regulation often adds unnecessary costs and, historically, has been shown to hinder productive behavior. This is due to private providers and managers finding ways to manipulate the system or because it stifles innovation.
One recent initiative by the Environment Agency involved funding for the planting of half a million trees by local councils and mayors. While this appears to be a positive development, it raises questions when considering that National Highways, the primary road construction agency in England, had previously planted 850,000 saplings along a widened stretch of the A14, only to find that three-quarters of them had perished by an internal review three years later.
These instances reflect broader issues in how public sector departments and agencies operate. An emphasis on regulation breeds a tick-box mentality, asking, “Did you follow the protocol? If yes, everything is acceptable.”
Notable figures in government, such as former Bank of England deputy governor Sir Jon Cunliffe and members of the House of Lords industry and regulators committee, advocate for increased oversight as a solution.
Kay provides numerous examples of organizations that thrived because their boards prioritized delivering exceptional service or products over merely rewarding shareholders. These companies enjoyed growth without making profits or market share their primary focus.
Boeing, for instance, excelled until it became fixated on achieving quarterly profit targets. Similarly, ICI, once the largest industrial firm in the UK, diminished after it shifted its focus to maximizing stock market value.
Management consultant John Seddon, whose Vanguard consulting firm has implemented the Toyota production system, supports Kay’s insights on what constitutes a successful organization. Seddon complements this analysis with practical systems approaches, such as those that have led to international acclaim for Portsmouth city council’s housing department for its repairs service.
Seddon has witnessed numerous public sector management initiatives, from grand strategies to straightforward benchmarking against private sector services, all of which have failed to enhance service quality.
While Seddon does not advocate for the complete elimination of regulation, he believes that implementing regulations based on an organization’s ability to fulfill its purpose can prevent the chronic issue of regulators lagging behind events and responding only after problems arise.
He asserts, “A clear statement of purpose will empower regulators to impose sanctions immediately when an organization undermines its intended purpose.”
Seddon concludes that it is crucial to free public servants from the prevailing culture of suspicion and distrust fostered by current regulatory methods, which undermine their professionalism and position them as part of the problem rather than as proactive solution creators.
Burnham’s team should prioritize the practical achievements of public sector organizations rather than allowing ownership debates to take precedence. The evidence for effective reform is readily available, and they need look no further to find it.
