Levelling up from a government that won’t let go of centralised power

Last week Michael Gove, Britain’s cabinet minister for “levelling up”, published a white paper to set out government strategy, building on what had hitherto been not much more than a slogan. It attracted predictable howls of derision, not all of which were deserved. If it is disappointing it is because it presents no real sign of challenge to Britain’s highly centralised political culture.

The good points about the strategy are its ambition, and is aim to make levelling up, or equalising geographic opportunities, a central priority across all government departments. There are two main areas of public criticism. Firstly that there is not much public money attached to the transformation process. Secondly that it advances the idea of political devolution within England only a fraction. I have some sympathy with the government on the first count. It is clear that the problem of regional inequalities has deep causes, and it is not just a question spreading public investment more equally. And yet this all most people want to talk about. We need to move the conversation on. The second criticism is much more pertinent. The Economist suggests that the policy is reminiscent of the Labour government led by Tony Blair and Gordon Brown from 1997 to 2010: the introduction of regional mayors to provide a new, more local focus for policy coordination, combined with a lot of centrally designed targets and centrally controlled pots of money for local bodies to bid for. Serious devolution would entail local revenue-raising powers, something that is clearly still as much anathema to Whitehall now as it was back then.

I will come back to why I think that matters. But first I want to take issue with the way that government policymakers, and many of those that critique them, like the journalists at The Economist, are thinking about regional development. And that centres around productivity. To them the central problem is low productivity in English regions outside the South East, and Wales – the picture is a bit more complicated in Scotland. By this they mean a concentration of better-paid jobs and profitable businesses in the South East. That is fine as far as it goes, but their suggestion is that this needs to be corrected by making regional businesses more efficient and productive. But what if the main problem is that more productive businesses (i.e. the most profitable ones, or those with best-paid employees) are attracted to the South East. If you improve the productivity of a business in Yorkshire, say, you may find that all that happens is that it moves to near London, or outside the UK altogether, or at least the more profitable elements of it. Often this happens through the business selling out, especially hi-tech businesses.

Regular readers of this blog will know that I have huge reservations about the way most economists think about productivity. They are guilty of a fallacy of composition, by assuming that the way you manage an individual business is analogous to the way you run the whole productive side of an economy. This is ironic because economists love to complain that the public suffer from a similar fallacy about household budgets and the national budget. An economy contains a wide variety of businesses with different rates of productivity, as economists measure it. Some are more susceptible to productivity improvement than others. Some are positively inimical to productivity (consider status goods, for example). As productive businesses become yet more productive the resources released tend to move to less productive businesses. This is well-known to economists as the Baumol Effect (or Baumol’s Cost Disease), which doesn’t stop them from ignoring it.

So the key question to me is not why regional businesses are relatively unproductive, but why well-paid jobs tend to gravitate to London and its environs. Political connections are surely part of the answer. Decisions over the allocation of vast public resources are made there, to say nothing of decisions on laws and regulations, and taxes. Physical proximity makes a big difference to the political influence you can wield. That is why countries with more devolved decision-making (my favourite example is Switzerland – but the same applies to Germany) have more equal regional productivity, and why small, independent countries often perform better than non-central regions in large countries. Yorkshire isn’t physically or culturally very far from Denmark or the Netherlands after all, but income per head does not bear comparison. The Irish Republic has overtaken the initially more developed Northern Ireland. The government’s proposed reforms will do very little to change London’s gravitational pull. Regional politicians still will have to travel there to bid for the new funds on offer, employing London consultants to hone their bids to match the fashionable ideas and buzz words that hold sway there.

Still, that can’t be everything. The British regions have suffered enormously from the collapse of old industries, devastated by the march of technology and globalisation. There may be interventions that can push back against this tide. Universities are amongst the few bright spots of regional development. The South East has very strong universities, especially if you include Oxford and Cambridge, which are on the edge of the Midlands, but no monopoly. Perhaps more regional centres can be established for medical research, surely a promising avenue for the country, based on these universities and local NHS institutions. Better intra-regional transport would surely help. Better transport links to London, on the other hand, are more ambiguous in their impact. But such initiatives would be easier to get off the ground if local leaders were not constantly having to appeal to London for permission to proceed, but something could still be done.

An interesting question is whether the green economy can be used to promote regional development. Renewable energy has a strong regional element, but its impact on jobs looks quite limited, especially compared to the old fossil fuel industries. Can a change in focus in agriculture, to turn the land into a carbon sink, generate a healthier rural economy? This must surely be a critical part of any zero carbon strategy. This is interesting because it might entail a reversal of agricultural productivity, as conventionally measured anyway, as some of the interventions could be more labour intensive. Agricultural productivity has always been a prime driver of economic development, as workers are released from the land to work in factories. But we are now appreciating its huge hidden costs. There would be a rather wonderful symmetry if the development of a more sustainable post-industrial economy involved reducing nominal agricultural productivity. It is not incompatible with improving wellbeing, though attitudes to the consumption of “stuff” and, indeed, meat, would have to change. It entails placing a financial value on environmental assets.

Such ideas seem far away from current government thinking, though some ideas on agricultural finance are starting to move in that direction, and have also been promoted by Mr Gove. It is one of the few positive possibilities arising from Brexit, as agricultural reform in the EU proceeds at a snail’s pace.

Meanwhile some good-old fashioned “levelling-down” should not be ruled out. This means taxing excess wealth and high incomes harder, and using this to make investments in regional infrastructure. That, at least, is something Britain’s highly centralised government infrastructure is well-designed for.

British policing needs to learn from the Army

At long last London’s Mayor, Sadiq Khan, forced out Dame Cressida Dick, the Commissioner of the Metropolitan Police. I called on him to do so some time ago – but that doesn’t stop it looking like an act of political grandstanding.The important bit comes next.

My main criticism of the Met (and many other of Britain’s police forces) is bad management, which has led to the organisation being “institutionally stupid”, as I put it. In other words an organisation composed of perfectly intelligent people who somehow keep doing stupid things. Institutional stupidity is, of course, very common. It is marked by an over-emphasis on procedure over initiative, and a strong desire to protect the institution’s reputation at all costs. It often goes alongside a culture of bullying and excessive centralisation of decision-making. Examples of stupidity at the Met are legion. The two that stand out to me are the Operation Midland investigation into child sex abuse, and the Met’s response to the Morgan enquiry into the serial failures of an old murder investigation. In Operation Midland vast resources were expended following up the allegations of a very shaky witness, which damaged the reputations of several highly respectable people. A few simple enquiries could have ended the whole thing very quickly. The Morgan enquiry accused the Met of “institutional corruption” because of its continual obstruction right up to senior level. “Corruption” was probably the wrong word to use, but the obstructionism was no less shameful for that – and it remains unacknowledged by police management. Redolent as these episodes are of management failure, they were not enough to do for Dame Cressida: her term was extended last year.

In the end the shocking results of an enquiry into police behaviour at Charing Cross police station were too much. It revealed a flourishing culture of racist, homophobic and misogynistic banter that the more naive of us thought had been stamped on ages ago. Many were shocked that nine of the fourteen officers involved are still serving. Personally I wasn’t particularly upset by that – corrective action needs to focus first and foremost on management. Junior police officers landed in the middle of a rampant canteen culture tolerated by management are in a very difficult position, and it should not be up to them to bring it to a halt. While the incident itself may not be as serious as some of the other failures – on the basis that this could have been a rogue clique – I can appreciate its role as a last straw. Like the killing of George Floyd in America two years ago, the deeply shocking thing about it is how little attitudes have changed amongst many policemen even after decades of kerfuffle and reform. It serves to show just how ineffective our attempts to deal with the problem have been.

The Mayor has focused on police culture, and especially discriminatory attitudes. That is important, but, in my view, secondary to changing the management culture. The discrimination culture is much easier to fix if the management is respected and effective. If you focus too much on discrimination at the expense of proper management, the whole process can be discredited as the police fall down on the task of protecting people. Ordinary policemen will simply suggest that effectiveness is being sacrificed to political correctness. This seems to have happened in at least some places in America following the Floyd outrage.

Is it possible to change the culture of such a large organisation with such strong internal bonds among its members? It’s easy to see how policemen feel an “us against them” attitude. They are expected to deal with things the rest of society won’t touch; they put their lives in danger – and all they get for this is abuse, most often. Change is clearly difficult, but not impossible. An example where change has been successful is in the British Army. The Army used by notorious for institutional stupidity. Discipline and orders were considered more important than responding to situations intelligently. But the demands of modern warfare forced change. Army leaders were chastened to see how much more effective the German Army was at “middle management” level than their own in World War Two, especially in the early years – and they started to pick up on German doctrines that encouraged initiative at junior levels, and learning from mistakes. The Army is far from perfect – bullying remains a problem – but its transformation over the years has been dramatic.

A lot hangs on Dame Cressida’s replacement. The new leader has to understand the management problem – something I don’t think Dame Cressida ever did – but also inspire respect amongst members of the force. There is an enormous amount to be said for appointing an outsider – though there are risks to this. Somebody from outside the UK has been suggested – though problems of management in policing are hardly confined to Britain. My suggestion would be to look for an inspirational leader in the Army.

The choice rests with the Home Secretary, Priti Patel, in consultation with Mr Khan. Neither individual has shown much understanding of effective management and leadership. Ms Patel has been dogged by accusations of bullying, and makes promises that can’t be delivered. Mr Khan showed impressive focus in his political career, right up to his election as Mayor, but has practically sunk without trace once he got there. Still, they both have a strong incentive to get this right: let us hope they make a good choice.

Why won’t Britain’s politicians take police reform seriously?

I have written a number of times about the British police, and been highly critical of its senior management – “institutionally stupid” being my verdict. The specific cases that have provoked me were Operation Midland, the Daniel Morgan affair, the harassment of a female back police officer and, most recently, the Plymouth shootings (which, unlike the others, did not involve the Metropolitan Police, the country’s top force). Now the Met is being heavily criticised after one if its officers was sentenced for raping and killing a member of the public, Sarah Everard, after arresting her. And yet on each of these occasions the police respond with nothing much more than “stuff happens” and “lessons will be learned”, and carried on much as before. And Labour and Conservative politicians have backed them up. We have to ask why.

The Everard case is particularly chilling to me as the false arrest took place very near where I used to live, on a stretch of road that I often used, by car, bus and on foot. It is almost always busy, and it is well-lit at night. It was another attack perpetrated by a man on a woman, simply because of her sex. It is an extreme example of a serious societal problem, that does not seem to be getting better, in spite of more liberal education. At the other end of the scale, a recent study showed that sexual harassment is at epidemic levels at secondary schools and sixth-forms – a problem that seems to be much worse than it was a generation ago. Murders of women by men they don’t know as they go about their daily life are still quite rare – but only after most women are advised to be “sensible” and take precautions over their own safety that men largely don’t bother with.

The response from senior police officers, and the ministers they are accountable to, has been underwhelming in the Everard case. Advice on how people might avoid false arrest by lone officers comes across as victim-blaming. Ms Everard should have been more “streetwise”, it is suggested. Could the perpetrator have been identified as a risk beforehand? Again the response so far has been pretty defensive. Alleged offences of indecent exposure committed by him beforehand were “minor”; vetting procedure had turned up “no evidence”. It’s all just too difficult. The man was a “bad apple” – a lazy way of expressing that it just one of those things that happens once in a while, like rotten apples. Lazy because, as Guardian columnist Marina Hyde points out, the actual proverb is that “one bad apple can spoil the whole barrel” – and there is plenty of evidence of bad apples in the police being left to do just that.

What are the management failures here? The first has been a complete failure to judge the public mood over such an enormity. Something more that the normal institutional defensiveness was surely called for. Beyond that are questions about the vetting of recruits, the management of misogynistic attitudes in the force and the prioritisation of crimes against women. There is also the question of how the police dealt with the indecent exposure incidents. These are all related to each other. Without understanding the evidence more clearly – and which of the various stories floating around are true – I find it hard to form a clear view myself. But it has been known for a long time that there are cultural problems within the force, and nothing much ever appears to be done about it. We are often assured that things are getting better, so reminders that the problems are still rampant are shocking. However it is also clear that police attitudes reflect those of large parts of wider society.

And so to the question I started with. Why don’t the politicians try to take control and act against police deficiencies? So far all the serious ones have rallied round the Met Commissioner, Cressida Dick. That includes Conservative ministers, and also Sir Keir Starmer, the Labour leader, and Sadiq Khan, the Labour Mayor of London, who, unlike Sir Keir, actually has the political authority to act. It seems that, to them taking on the police creates more problems than it solves.

The first question is over the position of Ms Dick. Her fingerprints are on many of the serious management problems that I have written about, if not as Commissioner, then in her earlier career. And yet the politicians have stood behind her, and extended her contract only recently. They may well know something I don’t – that she is, contrary to appearances, the best hope for making progress behind the scenes. She certainly recently had the support of my fellow Lib Dem blogger David Boyle. And the dismal truth is that there probably are few, if any, serving senior officers with the grasp to take on what needs to be done. It is an institutional problem. It clearly calls for an outsider to take charge – and that has been heavily resisted in the past.

Which highlights the wider problem – taking on police culture is likely to make things worse in the short term. This can be seen from the case of George Floyd in the US. His murder last year was in its way even more shocking than the Everard murder. It was in full public view and carried out by a policeman on duty, with the support of his colleagues. The outrage it provoked was extreme, and many politicians did attempt to act. But crime rates rose, and there was a political backlash – fears over changes to policing were among the reasons that Donald Trump and the Republicans did inexpertly well at the presidential and Congressional elections.

The Labour and Conservatives have identified law and order as a central issue in winning over the white, older, working class and lower middle class voters they feel are critical to their success. So they tone done criticism of the police, and trust that the outrage will blow over before the next general election. And the public continues to be let down by institutional failings in our police forces.

The NHS makes Britain a high-tax nation. Tories need to get over it

The most significant political development here in Britain in the last week was the government’s announcement that it is going to raise National Insurance by 3% of income (1.5% each to be paid by employer and employee) to pay for additional short-term costs in the NHS and longer term costs of social care. Alongside it were announced a sketch for the future public funding of social care. This is a reversal for the Conservatives, who had promised not to raise rates of Income Tax, NI or VAT, which has caused consternation among many Tories. They see their dreams of Britain being a lower-tax country ebbing away.

With this new tax the proportion of national income taken as tax will be historically high – though I read differing stories of just how much. When I first started to work calculating PAYE and such in a small accountant’s office in 1976, the basic rate of income tax was 35%, and the top rate was 83%. On top of that “unearned income” was subject to a 15% surcharge, which could take the top rate up to 98%. Then there was National Insurance – admittedly at a much lower rate and capped so that it did not apply to higher levels of income. Corporation Tax was 52%. VAT was only 10% (or 8% on some goods I can’t quite remember), compared to 20% now – but I find it very hard to believe that the country is even close to raising as much tax relative to income as it was then. Maybe I’m missing something. It was a signal achievement of Margaret Thatcher’s government (1979 to 1990) that it cut these rates drastically without destroying the nation’s finances.

That achievement seems to have fostered an illusion amongst many Conservatives – that lower tax rates pay for themselves by creating economic growth – and the effect would be doubly beneficial if wasteful public spending could be cut too. They could point to successful countries with lower rates of tax: such as the USA and Japan – whereas many European countries were regarded as basket cases, suffering from excessive tax. Such people, often styled as “economic liberals”, dominated the Conservative/Lib Dem coalition of 2010 to 2015, and David Cameron’s majority Conservative government that briefly succeeded it. These governments drove forward a period of austerity, in which many areas of public spending were cut drastically, and spending on other areas, such as the NHS, failed to keep up with increased demand. Taxes did not fall so much, though. Personal tax allowances were raised – but tax collection was tightened up. This period should have awakened Tories to the fact that big tax cuts are off the political agenda in the UK. It required huge amounts of political capital just to stand still on the tax and spend equation.

At the heart of this reality is the National Health Service. Unlike most developed countries, the bulk of Britain’s health care is supplied for free through this nationalised utility. This must be funded by taxes (or if you are a follower of Modern Monetary Theory, taxes are required to ensure that the spending is not inflationary). Private health services exist alongside the NHS, but in most cases a wall is placed between the two. You cannot top up your NHS care with private money. Such are the egalitarian principles behind the NHS.

When the NHS was set up in 1949 it was widely thought that health services were like any other utility – such as the drains. Demand would be contained at a particular level when health needs were met – few people become intentionally ill after all. This has never happened. Health care has extended its reach as new conditions come within its scope, and new treatments become available.

All this is generally understood. But what economic liberals often fail to grasp is that if some perfect market mechanism could be found to supply medical services, backed by a perfect social insurance system, then the overall demand for medical care would be very high. In other words people would choose to spend on health services over and above other sorts of consumption. The consumer appeal of reducing pain and extending life has a strong competitive appeal. It is unknowable how much this hypothetical level of demand is – but to get some idea of how high it could be, look at the USA – where healthcare costs 18% of national income, notwithstanding high levels of unmet demand. In Britain the ratio is about 10%, with a lower income per head. So Britons get to spend 8% more of their income than Americans on other things. But other things they probably don’t want as much as better healthcare. They just have no good way of using their income to achieve this because of the way the NHS is structured, and because their political leaders have imposed such a draconian cap on costs. The NHS tops international league tables for value for money – but not for health outcomes. That is not the right way round. In one view the design of the NHS means that demand for health care is exaggerated, because it is free at the point of delivery. In practice the NHS acts as a constraint on demand, because it makes it hard for consumers to use their own money to get what they want.

Other health systems are better at drawing in private money to supplement taxpayer funding. This is done by not imposing a segregation between public and private systems – typically by using an insurance system underwritten by the state. Well-working examples include Australia and the Netherlands (America, on the other hand, is a horrible mess). Alas this not an option for the United Kingdom. The NHS and its egalitarian principles are a national religion that no politician dare touch. Since all health systems have serious drawbacks alongside their advantages, it surely makes sense to try and make the NHS system work better, rather than replace it with something new.

But making the NHS work properly means ramping up the level of funding so that it is closer to the level of “natural” demand, alongside taxes and fees that distribute costs fairly, reflecting that it is a form of insurance. To his credit Labour Prime Minister Tony Blair understood this when, in the early 2000s, he decided to just that, reversing many years of constrained spending. To balance this he and his Chancellor, Gordon Brown, raised National Insurance. At one level this makes sense. This tax is the closest we get to an insurance premium, paid while people are in work, and drawn down in retirement – alongside taxes on tobacco and alcohol, two big drivers of healthcare demand. However the Treasury hates the idea of hypothecated taxes, and there has been no attempt to fund the NHS actuarially. National Insurance is lost in general taxation. Alas Messrs Blair and Brown fatally misread the economy and cut income tax at the same time, all the way down to 20% for the basic rate. That was because of buoyant capital receipts from Britain’s booming capital markets. That income evaporated in the financial crisis of 2007 to 2009. Beyond a little tinkering with top rates, it has been considered toxic to raise income tax rates since Mr Blair promised not to do so before he was first elected in 1997. That is unfortunate because it is clear this tax that should be raised, rather than NI, as it would take money from better-off pensioners (people like me, in fact) who have not done so badly from the austerity years, but who can expect to be using NHS services more.

This problem will come back to haunt this government, or, more likely, its successor. The extra 3% on NI may be enough to keep the NHS going for now, but it surely cannot do the job on social care as well. The wider economy may give governments more time, through growth and with greater scope for budget deficits than the Treasury is assuming. In the long run though, the NHS means that the UK will be pushing its way up the league table of higher tax countries. Conservatives need to get used to that fact.

Asking the wrong questions on the Plymouth shootings

On 12 August a gunman in a working class district of Plymouth killed five people: his mother and four others who were in the wrong place at the wrong time, before killing himself; two others are seriously injured. The community’s first thoughts, rightly, are for the victims and their loved ones. But questions must be asked about whether this episode could have been prevented. And here the early signs of the discussion are not encouraging. It is hard to see how Britain’s public services will get much better while politicians, senior managers and commentators all look at problems in the wrong way.

What is clear from the evidence that has emerged so far, however, is that this is indeed a failure of public service. The shooter used a licensed firearm; there was ample evidence that he was not a fit person to possess such a deadly weapon, and local people had expressed their concerns about his state of mind. The dots could easily have been joined and the weapon removed from his possession, as it had been temporarily previously. In fact the intervention could have been even simpler: by not returning the weapon to him a month or so ago.

And yet the senior politicians and public servants involved may be shocked at the loss of life, but they look unworried by accusations of failure. This is what the writer Douglas Adams called the SEP field in his Hitchhiker’s Guide to the Galaxy, which confers complete invisibility. SEP stands for Somebody Else’s Problem. In this case it stems from the way we assume that all organisations should be run, and especially public ones: through a system of written policies and procedures. Lawyers love this. To see if anybody is culpable if something goes wrong, all you have to do is check whether individuals followed the written procedures. Workers and managers like this for the same reason: follow the procedures and you should not be blamed if anything goes wrong. If something does go wrong even though everybody has followed procedures, then the call goes out to amend those procedures – and the public can be told that lessons have been learned. It is a wonderful system that rejects any notion of common sense and leadership, but it is no way to run an efficient and effective organisation. That depends on managers pulling together information from various sources and making decisions to further the interests of the society, or their employers. Procedures can help them to do this, but they can also get in the way, and they are often absent for the particular circumstances of the here and now. It is then that leadership kicks in – and the critical organisational thing here is whether managers have the scope to gather the information they need and the authority to act. This was clearly not the case for those overseeing public safety in Plymouth. But nobody is likely to be talking about it.

Commentary on this incident began badly. One of the main topics was whether the shooter should have been categorised as a terrorist. This matters so far as the various procedural routines that public servants follow, but is a red herring if you think that the main problem was a lack of local leadership. The conversation quickly moved on to the procedures for granting and renewing firearms licences, and the need to trawl social media postings. Absent from this discussion, as usual, is any question over resources and prioritisation. Apparently licences were being waved through because the police managers had decided that other areas were a priority. Police resources are stretched, so I would not like to second-guess that decision. Might the requirement to look at social media simply incur a whole lot of pointless trawling and arbitrary decisions about what is relevant? It would take a courageous public servant to suggest as much in the wake of this tragedy. Furthermore it still leaves those who were worried about the shooter’s state of mind with nobody to talk to.

There is in fact a clear organisational solution to the management of threats like this: neighbourhood policing. In London the police did try this a number of years ago, though only after prodding from politicians, and they quietly gutted it when political attention moved on. I had a little experience of it while helping one of our ward campaigns in the early 2000s. A team of half a dozen police officers and PCSOs were given responsibility for a local authority ward (about 15,000 residents in that case). They made it their business to meet regularly with local people, gathering information about their concerns and intelligence about who was doing what. They then took the initiative to try and head off threats to public order – organising youth activities, for example. In this case at least it would have given somebody the chance to put together the disparate pieces of information that pointed to a threat. The technique is popular in America, but it has failed to get much traction here. Police chiefs clearly think that it is an inefficient use of resources. They prefer to invest in specialist squads and things like heavily armed SWAT teams. Doubtless this follows modern management fashion, which emphasises focus and prioritisation. But a lot of the police’s job is risk management, which does not respond well to such thinking (“prioritising risk management” is an oxymoron: risk lurks in the areas you do not prioritise). But the problem isn’t just the police; it is the whole system of political management and public services. If there was more political accountability at ward level, the police would have to respond to it. Instead being a ward councillor is usually an undemanding first step for budding politicians, or a sinecure for status-seeking political activists. As with most of the country’s political representation, most contests are uncompetitive, with one party dominating. Councillors’ political careers depend more on managing their party connections rather than being accountable to the public.

Added to this is a persistent idea that an efficient organisation requires functional specialisation, which leads to what my management training referred to process fragmentation. Crafting a solution to a problem, such as somebody having mental health issues, often requires the involvement of several specialists, each of who can veto a solution. An official looking at a problem instead sees several problems, most of which are not his or her responsibility – the SEP field again. This can be compounded when people use data protection as an excuse not to share information. This is at the root of many public service failures – though not necessarily this one.

All this leads to a cycle of public service failure. Bad things happen; changes are made; things get no better because people ask the wrong questions. We content ourselves with the thought that things could be worse, and life goes on. We should demand better.

The information gap – the big issue of our age

I felt a brief pang of sympathy for former Prime Minister David Cameron last week, as he endured grandstanding “questions” from MPs over his lobbying on behalf of Greensill Capital. He probably really did think that what he was suggesting on that company’s behalf would be helpful to the government. But nobody cares about that; they just wanted the masochistic pleasure of giving him a beating. Such is politics. There is a deeper issue, though.

That issue is what I call the “information gap”. Governments do not have the information they need to use their resources efficiently on our behalf. We don’t get the right sort of help when we need it; lots of people get help they do not need. The government’s aid to businesses to help survive the covid lockdown was a case in point. Many needy businesses were unable to comply with the conditions and received no help. But many fraudulent companies were also set up to make claims, costing the state many millions, so it is thought. Greensill’s business was to lend money to businesses against outstanding invoices. Could this have helped close this information gap? Probably not, but it surely merited a closer look. It is not clear that the Treasury ever gave it that look. Mr Cameron does not seem to have been given any clear reason why they considered his suggestion unsuitable. There turned out to be good reasons to turn Greensill down, but Mr Cameron wasn’t wrong to put the question.

The information gap is nothing new. It arises whenever a large, centrally-managed organisation has to interact with the world beyond the direct experience of the core group of 100 or so people that run it. We might call it “Empire Syndrome”. The classic way to deal with it is for the elite to create an arbitrary set of rules for outlying officials to follow, and simply to shrug when this leads to bad outcomes – call this the “Imperial Method”. Conscientious officials try to optimise these rules to minimise bad outcomes and get some sort of positive return. Other officials don’t care – they just derive pleasure from the exercise of arbitrary authority and the status that this confers. The alternative solution is to allow local officials broad discretion to exercise their judgement based on the achievement of broad objectives. This brings problems of its own. Discretion is a opportunity for corruption; also it allows power centres to build up and undermine the authority of the central elite.

The imperial method is deeply ingrained into our psyche. Most people assume this is the way things should be done. You can see this from how annoyed people are getting with the government’s regulations on foreign travel. Nobody is asking whether it is wrong to expect anybody to offer advice that is going to be applicable in all circumstances. As a school governor there was an expectation that you would create files of detailed policies approve them, even to run a primary school of 200 pupils. When Chair of Governors I learned not to spend too much time on these, although developing a policy can be a good way of thinking through problems in advance. As an operations manager for a department of over 100 people I remember being advised by a lawyer that management-by-policy was what you had to do: you create rules and people follow them, and that way you could manage risks of legal liability. I tried to do this but soon gave up. The rules never could keep up with the world as you encountered it, and they soon became so complicated that nobody could master them, especially if you kept updating them. In the face of the real world you had to be more flexible – discretion and honest two-way communication between the levels of management were the key.

Interestingly, one part of our state services complex has actually thought about this problem and developed a solution: the military. The Prussian army and then Germans were the pioneers in the 19th Century. They developed a system of discretion and honest communication to govern their operations. In many ways this operated against their authoritarian culture, but the system improved over time. By the time of the Second World War it had developed into a highly effective system which meant that man for man the German Army was most effective in the world, alas for humanity, until Hitler undermined it toward the end. It has been widely copied since, notably by the British and US armed forces. Which is one of the reasons why these institutions are now held in such high regard by the public. But the system requires immense discipline and a very strong culture of working towards common objectives.

Back in the 1990s it became fashionable for large businesses to develop analogous systems to run their businesses. This included reducing the number of layers of management and empowering junior and middle managers. It never caught on in the public sector, and by the 2000s central authority and management pyramids became the norm again everywhere. I’m not quite sure why this was, but I suspect that senior officials feared that they would be blamed for bad decisions made in junior ranks, as the public and politicians are only too happy to do.

New technology may also have played a role. Developers of information systems offered their own automated way of closing the information gap, by baking the rules into control systems. This started with workflow technology, which can be used to empower workers by making more information available to them, but instead became used for tying them down, including the measurement of toilet breaks. The process of “de-skilling” began. This had a dire effect on the public sector, as de-skilling became the basis of many an outsourcing contract, causing catastrophic loss of effectiveness. But this was but the start of a journey; the technologists started to talk about the Holy Grail – the use of Artificial Intelligence to intermediate between organisations and the public, so that you wouldn’t need people at all. AI is powerful technology, with many important uses, but it cannot possibly as effective as a skilled professional in helping people solve complex personal problems. Many, if not most, AI applications are pre-destined to fail.

Unfortunately too many people believe that technology can solve the information gap by itself. The Chinese Communist Party seems to have embarked on this road. Providing the data that the state needs to make its systems work means a steady erosion of privacy; ensuring its consistency means standardisation; maintaining confidence in the system means the suppression of honest communications. And so on. Ultimately the Imperial Method means that people have to conform to the needs of the state, rather than the other way around. This is truly the road to serfdom.

But the answers are not too difficult to find. Free markets will find appropriate solutions for most of our needs if we are alert to excessive market power by large businesses. State services need to be mediated by empowered professionals held accountable by people who understand the challenges they face. Countries like Britain, with a strong public service culture, can do this. There are examples of excellent public service – the two primary schools where I had the privilege to be governor are undoubtedly among them. Technology can empower other than enslave.

Too few people appreciate this in government, or amongst those holding them to account. But as public service systems fail, perhaps understanding will grow. There is now a growing consensus that the Test and Trace system for coronavirus was approached in completely the wrong way, and should have been localised from the start. If more aid to businesses had been intermediated at local level then perhaps more businesses could have survived and more frauds stopped.

Organisations like Greensill were never going to be the answer. But the more important question is whether the Treasury ever really cared about the problem.

Learning to live with Brexit means looking to the future

Like a rather surprising number of Remainers, Brexit has been like a bereavement for me. Before the referendum in 2016 few people would admit to an emotional attachment to the European Union (indeed this was one of the reasons Leave won), but I was among them. I can date that attachment to attendance at a rally in Westminster Hall in 1975, when the keynote speaker was Ted Heath, my first political hero, when I was 17. Or perhaps it was before then, when I identified as “European” when living in Jamaica, in order to distinguish myself from the many Americans I was at school with (while doubtless trying to stay ay arms length from Britain’s colonial legacy). Whatever the origins, I have been following the classic five steps of bereavement since the referendum.

Compared to many Remainers I went through Denial and Anger pretty quickly, but then I got stuck for years on Negotiation. This partly revolved around pressing for a new referendum, and thinking about how that should be conducted – though as time went by I became more sceptical that this was the right way to go. But mainly I got drawn into discussion about the terms of withdrawal and the future relationship. This was a furious paddling to try and stave off the inevitable next stage: Depression, which duly struck with the December 2019 General Election result. I turned away from the whole subject and busied myself with other things. But I can now confidently say that I have reached Acceptance. Acceptance does not mean that the pain has stopped: there will be pangs every time I get stuck in a passport queue when ravelling in the EU, and with every young friend or relative that complains that their opportunities are blighted as they can only find work into Union with difficulty. But I can than talk or think about the EU without trying to roll back time.

The breakthrough moment came last summer, when the EU agreed a post-pandemic aid programme which involved the creation of shared debt. This was a massive breakthrough in the evolution of the union. The deal itself, as usual, will not live up to the hopes placed on it, but the union is now better placed to deal with the challenges facing it. I quickly realised that this deal would have been much harder to reach if Britain had been a member. We had become paranoid about taking on debt from other EU countries – the idea of EU solidarity had so little currency. Whether or not a small majority of Britons were now in favour of British membership at any time, the country was irretrievably divided and it became increasingly difficult for the country to be a constructive member. Both John Major and Tony Blair found this, after starting their premierships wishing for Britain “to be at the heart of Europe”; they failed and subsequent premiers did not even try. The EU is actually better off without us, even though our departure has weakened it in many ways. If Britain is to rejoin, it has to be wholeheartedly, with a referendum majority of much more than 52%, and with prospective membership of the Euro agreed and understood. That will not happen in my lifetime, or not without some catastrophe changing people’s outlook, which I do not wish on my fellow countrymen. I have got over it.

So how does an ardent Remainer like me cope with Britain’s new status? I think there are two key rules. The first is to look to the future, and not to refight the battles of the past. It is very tempting to say “told-you so” as one promise after another of Leave campaigners comes to naught. But it doesn’t help; we can’t turn the clock back. And anyway, we need to understand that Remain campaigners got things wrong too, if not quite so egregiously. The second key rule is to be more realistic and critical of the European Union itself. It is useless to try and sell it to the British public, and we must understand what opportunities Brexit presents, even when we are acutely aware of the costs. In fact if Britain does things better than the EU, it will provide healthy competition that might guide it to a better place.

In this spirit, one of the most important things to understand is that the Union, and especially the Single Market, is a neoliberal project. It is based on the promotion of free trade and competition, and it aims to limit government interference in commerce. It is ironic that many Conservative Brexiteers are ardent neoliberals, and think that Brexit opens up opportunities for Britain to pursue more neoliberal policies. I differ from most people on the political left in thinking that neoliberalism is not necessarily a bad thing. This week’s Economist has an article which suggests that Britain’s economic progress in the 1980s up to the Great Financial Crisis was more down to EU membership than the liberalisation pursued by Mrs Thatcher’s government. It makes the case by tracking total factor productivity of the three countries that joined the EU (or European Common Market as we then called it) in 1973, i.e. Britain, Denmark and Ireland, compared the original six members (France, Germany, Italy and the Benelux countries). This had been in steady decline until 1970, flattened in the 1970s and then rose steadily until the mid 2000s. Mrs Thatcher did not rule Denmark or Ireland, so but the county’s economic performance was no better. This is false dichotomy. A large part of the economic benefit of joining the union arose from the Single Market reforms, which were Mrs Thatcher’s gift to the EU, and probably her most enduring political achievement. The Single Market was not a conspiracy to inflict pointless bureaucracy on British industry – it was in fact the opposite: to free intra-union trade (and movement of people and capital) from unproductive bureaucracy. We are learning this the hard way. It is a neoliberal project par excellence.

The Economist suggests that outside the EU, Britain might again suffer from “British Disease”, as our markets become less competitive. But where I agree with the left is that neoliberalism has little to offer most developed world economies in 2021, and certainly not Britain’s. Our future economic wellbeing is much less dependent on free trade with other countries, and state intervention is going to be much more important. Free markets are still critical, but they are not enough. Furthermore, conventional economic measurements, such as gross income (i.e. such measures as GDP) and productivity, are an unreliable guide to wellbeing.

The Conservative plan to use Brexit to drive through neoliberal reforms is doomed. If they succeed in implementing them, which they will find hard, they will deliver disappointing results with Britain outside the Single Market. There will doubtless be opportunities in some industrial sectors, but for each these there will be other sectors ruined by Brexit. Last month the Economist painted a depressing picture for the outlook for the British chemical industry. Brexit may not be as dire for Britain’s short-term economy as many predicted (though the jury is still out on that one), but medium term the outlook for GDP and other conventional economic measures is poor. But I have just said that does not matter so much. Instead we should be focusing on national wellbeing, and here there are possibilities that may be improved by Brexit, or at least not harmed. To get this sort of thinking started I will suggest three.

The first is environmentally sustainable agriculture and fisheries. We need to look at these industries not from the old-fashioned point of view of extracting the maximum quantitive output from our land and sea, but to restore those natural resources to health. Marginal agricultural land should be rewarded; alternatives need to be found to the mass use of environmentally damaging pesticides and fertilisers. We need more marine conservation zones and a war on destructive industrial fisheries. We can do this much more easily outside the EU’s management structures.

The second, and more economically significant, area for development should be the health economy. The overall importance of health to the economy is growing, but it is not an industry that takes well to conventional economic measurements. Often less is more (healthier people require fewer medical interventions; more effective medical interventions often require more economic inputs a balance that is often seems to lead to reduced productivity). We need to develop better ways of managing public health, as well as more effective interventions. Britain has advantages here, especially those that arise from a single national health service, and the way it can draw medical data together. Covid-19 has shown the good and the bad of British health services. The country has led the world in developing vaccines and other medical interventions, but public health services have been chaotic, and central government interventions ineffective – though the country’s armed services have shown some rare organisational effectiveness. The country has palpable strengths, but the whole area needs to be rethought.

And the third area for focus is developing of opportunities for people with weak paper qualifications. This should be easier now that access to our labour markets from less developed corners of the EU (and the rest of the world) is being reduced. As a good liberal I support freedom of movement, especially within Europe, but the main benefits are for those with good qualifications. But keeping foreign labour out is far from sufficient for improving the prospects for people already here. This needs much more focus than it is getting – pushing more people in badly-paid and insecure jobs is not the answer, but it is where neoliberal policies will take us. One idea on the left that I would like to be given more time and thought is a government job guarantee. I think this has more promise for national wellbeing than the much more fashionable Universal Basic Income.

I need to make one further point. These ideas, and others which make wellbeing their focus rather than aggregate income, require a much higher level of government competence than we have ever seen in this country (except maybe in the days of Victorian metropolitan development). The British government is far too centralised to be effective (a criticism I would lay against the French one too, also shown up by the pandemic response), and it is made worse by excessive faith in management consultants and outsourcers. There are pockets of excellence in British public life (much of the education system, aspects of the NHS, and the operational side of the armed forces, though not its procurement side). But something big needs to change.

The current government is ill-equipped to take advantage of the opportunities that now present themselves. They should be challenged not for promoting Brexit, but for mismanaging it.

It’s all about R. Lockdown critics don’t understand exponential mathematics

Quite early in the Covid-19 outbreak, policymakers told us that the critical thing to understand about managing the disease was something they called “R”. This is the reproduction rate: the average number of other people that anybody that catches the virus will infect. If it less than 1.0 the epidemic will fade away. More than one and the disease spreads exponentially. Discussion of R then dropped from view, with people focusing more on the absolute level of infection (usually given as cases per 100k). That’s a shame because R is central to understanding what has just happened here in UK, which also applies to most of the rest of Europe with small variations.

In those the dark days of March, R was a horrific 2-3. That meant the disease was spreading very rapidly through the population. For a moment people thought that might not be such a problem: that herd immunity would develop, and the disease would slow down as the number of potential carriers was diminished. But there are two major problems with this. The first is that if the disease spreads rapidly, then health services (and other infrastructure) become overwhelmed, and there s substantial collateral damage. And that is exactly what happened in the Spring. Hospitals started to fill up, requiring them to clear beds; people with other conditions suffered, and Covid-infected people were pushed into care homes to make room for others, with appalling results. The death rate across the country shot up, and not just because people were dying from Covid, though frightening numbers were. The second problem with the herd immunity strategy was that nobody knew whether, or for how long, catching the disease would confer immunity. It was quite an interesting example, incidentally, of how basing decisions on evidence is not quite as robust as it seems. What do you believe in the absence of evidence? In Britain people believed, absent evidence, that face masks were useless and that you would get long term immunity by catching the disease. There is no rhyme or reason to it being that way round. Too often people who ask where the evidence is are just sticking to their prejudices.

I digress. The only sensible response to an R of over 2 was strict lockdown, which was implemented in Britain on 23 March. This was remarkably successful (it is puzzling why some people suggest that it wasn’t). R came down to about 0.7, and the disease was beaten back to manageable levels in most places. But what next? The government eagerly implemented a general relaxation, while maintaining a certain number of rules on social distancing. By this time few people were talking about R, and it was hard to know what aim of it all was. I think it was felt that the relaxation would take the R back up to 1.0, but no further, thus keeping the virus at manageable levels. It is probable that a lot of faith was being put in the Track and Trace system to contain outbreaks as they occurred. And yet the system they built was not designed to achieve that level of rigour, which needs tough local leadership and timely data, both of which were practically designed out of the system from the start. The result was that R crept up to about 1.5. Much better than before, but also pretty useless in terms of managing the disease. If R is over 1, then the disease will rise up to overwhelming levels much more quickly than people will intuit, because of the exponential way in which the disease spreads.

The government’s next strategy was one of local local lockdowns. The hope was that these would reduce R to below 1 in areas were the prevalence had become high. Over the last few weeks two problems have emerged, though. First is that even with these stricter measures R is above 1, and health services are under imminent threat. Second is that R is rising scarily everywhere else, and to beyond 2 in some places. That meant that most of the rest of the country wasn’t in fact that far behind the hotspots. Just what was going on here will probably not be known for some time. Perhaps people in Tier 3 of the lockdown system felt bolshy because they were being singled out, and did not apply themselves properly to lockdown. Perhaps people in Tier 1 felt they could relax because they weren’t in trouble yet. Anyway, it is very clear that the regional response strategy has failed. And so we are back to national lockdown.

But schools an universities are still open, and weariness is creeping in as businesses fail and savings run out. The death rate is much lower than before (the rate of excess deaths remains negligible) and this is being used to suggest that we should just “live with” the virus. Some conservative newspapers (the Telegraph and Mail in particular) opposing lockdown, even though their recommendations would sentence many of their readers, more vulnerable than the average, to an untimely and horrible death, or perhaps just a long-term deterioration of health. Such critics have failed to understand the logic of R. It is not about choosing an acceptable level of disease and freezing it there: it is about stopping the disease before it overwhelms.

So how on earth do you live with the disease and retain a semblance of normal life? The only proven way is the Asian one (there are many variations, shown by China, South Korea, Taiwan, Japan and Australia and New Zealand). This requires the disease to be stamped out, mainly through strict lockdown, for inward travel to be heavily restricted, and for any outbreaks to be stamped on hard. For some reason Europeans, and not just the British, seem unable to do this (even the Germans are struggling). It’s even worse for the Americans. Asians, and interesting this includes Antipodeans of European heritage, seem much happier to comply with busybody regulations. Not all Asians of course: Indians struggle, as do Indonesians, Philipinos and a number of others.

Absent the Asian approach, thoughts turn to the use technologies that are not yet available. Vaccines may not be the silver bullet they are for diseases like polio, but they could still throw enough sand in the wheels of transmission to stop R getting above one. Mass testing, talked up by the Prime Minister Boris Johnson, offers ways of identifying infected people so that they can be isolated. That raises all sorts of questions.

Locally I have found the most informative source about the progress of the virus comes from the government’s interactive map. I have watched the infection rate steadily go up, with white ares (very low infections) moving to green, and green going moving to blue (over 100 per 100k); in my local patch it is 171. We’re keeping our heads down.

It’s all very depressing. The most important thing to understand about the spread of infectious diseases is that it is exponential. None of the lockdown critics I have heard or read seem to grasp that. And only a few understand that the critical thing isn’t the death rate but the stress on public infrastructure, including, but not limited to, hospitals. In the end it’s all about R.

Why localism is key to test and trace

Sometimes you have to keep banging away about something. For some time I have been complaining that the government’s system for providing tests for Covid-19, and then for its approach to contact tracing, suffers from a fundamental flaw of process design. I see this being occasionally mentioned by others, but the idea hasn’t caught on. So I will say it again.

This is relevant because the testing regime seems to be in a state of complete dysfunction. The government is not being transparent about what is going wrong, a an issue which is not unrelated, so I’m having to join some dots, based on a flood of anecdotal evidence from people at different levels in the system that have popped up on the news. The system has been overwhelmed by a surge in demand. Whether or not this should have been foreseen is one question, but taking a step back and looking at the outcome prompts another. This excess demand seems to have caused the whole system to fail, so that while testing capacity is very high (the government claims it is higher than in most other countries), all, or most, of the tests are taking far too long to return results, which completely undermines their usefulness. I have heard experts suggest that if results take longer than 48 hours to be returned, then they are of little practical use. That sounds about right. Results seem to be taking much longer than this in the official system, or at least that which serves most users (I think hospitals are linked to a different one, which might be working a bit better). The problem seems to be at “Lighthouse” labs where samples are analysed. The government suggests that this is just a numbers game: these labs have a capacity and demand is in excess of it, leading to delays – which is perfectly plausible explanation and doubtless at least part of the problem. There are other stories of staffing issues as these labs are losing temporary workers as the university terms start, and finding them hard to replace.

How to manage this? The first response is to stop people taking tests through the booking system, by telling them that they are unavailable, or only available hundreds of miles away. One story is that the only way that people living in the London suburb of Twickenham can get a test locally, rather than one in Aberdeen (in the north east of Scotland), is to say that they are living in Aberdeen. This is causing an immense amount of distress, which is feeding back in complaints to MPs. The government is now trying to impose some form of prioritisation on tests to give this more rationality. But that will be hard going, with goodwill in short supply. There is a least one new Lighthouse lab in the pipeline, and the government doubtless is placing its hopes on this. Alas any relief is unlikely to last for long. The whole thing gets much worse when the need for contact tracing is brought into the picture, where similar problems are emerging, though not, excess demand. The whole damn system is flawed.

What’s gone wrong? The designers of the government system are bewitched by the idea of scale economies. The unit cost of a large scale system operating at full capacity is generally very low. And because covid tests are basically quite standard, at first sight the building of such high volume facilities looks like a sensible way forward. When the government suggested that the system would be “world-beating”, this is doubtless what lay behind it, as many countries have gone for a much more artisanal approach. But that is only one aspect of process design. The problem comes from how you manage the whole process from end to end (i.e. from the moment somebody decides that they need a test to the moment they get the result). The more steps there are in the process, and the more disconnected their management, the less efficient the whole becomes. This can seem quite paradoxical. Each part of the system can seem to be operating well, but the whole can be dysfunctional, and doesn’t seem to be anybody’s fault. The problem is compounded by the the government’s preference for the use of mass-sampling facilities. People are sent to drive-in centres that are able to process large volumes. But these are often idle and simply make the whole process more disconnected. The symptoms of such a disconnected “silo” based process design are very familiar. Bottlenecks, queues, delays, lost files, and all the while managers working frantically hard at their own little section in the knowledge the the problems are all somebody else’s fault. And managers blaming users for making unreasonable demands. There is so much at stake in the overall design that nobody dares point out that it might be better to scrap the whole thing and start again. Instead they work on fixes that ameliorate the worst problems but make the whole process more cumbersome. In this case designing systems to prioritise demand.

What’s the alternative? It is to create local facilities that do the whole job end to end, or as much as possible. Best of all is if the testing function can be integrated with a similarly localised system of contact tracing, all accountable to a local director of public health, part of local government. Where possible staff should be able to cover multiple jobs, rather than specialising in just small parts of it. This is more or less how it works in Germany, among other places. Such a system cannot solve all problems. It may not be able to overcome shortages in critical supplies (reagents for tests, and so on), though managers are more empowered to find work-arounds. How would it cope with excess demand, as is happening at the moment? It is superior in several ways. Firstly because managers are likely to have a better overview of the whole system, problems are more likely to be foreseen. Secondly bottlenecks are more easily fixed. It is easier to recruit two or three extra staff in a local centre than a couple of hundred in a centralised facility. And where there are problems, they will not bring the entire country to a halt. And finally communication with the end user is likely to be far superior, as they are much closer to a knowledgeable, human interface.

These principles have been well-understood since the 1990s (when I used them to reorganise processing operations that I was managing). Alas the government, and those it appoints as advisers, are far too wedded to the imperial silo-based model and seem incapable of understanding that they are dealing with poor systems design rather than a few teething difficulties. Doubtless the silo approach works well in some contexts. But not here. But quite why the lessons of the 1990s are so widely forgotten in 2020 remains something of a mystery to me – my guess is that managers and politicians have been distracted and beguiled by new technology.

Henry Ford’s shadow: from France 1944 to Covid-19

A Sherman tank of the US Third Army in WW2

In September 1944 the US Third Army under General George Patton approached the Eastern French city of Nancy. Its vehicles, notably Sherman tanks, had driven there under their own power after landing in Normandy in July. And not by the most direct route: the army pushed south from Normandy before turning east. This journey of hundreds of miles, with rail networks unavailable, had taken a very low toll on the army’s vehicles, including the Shermans. The Germans were organising a counterattack. But their Panther tanks had to make the trip mostly by rail, subject to Allied air attacks, and a third of their strength broke down while driving the 30 or so miles from the railhead to the jump-off point.

This was a triumph of US engineering and industrial organisation. The Panthers had a much better gun and thicker armour than the Sherman, but that was no use if they couldn’t make it to where they were needed. American industrial superiority was repeated everywhere: air, land and sea. Robust, well-designed weapons were put into combat in overwhelming numbers. The Germans produced clever designs in all these fields, but their artisanal industrial organisation led to unreliability, limited production capacity, and often, as in the case of the Panther, designs that were hard to fix when they went wrong. The Americans outshone their German and Japanese enemies and their British allies. Only the Soviet Union could compare. The Russians could not match the Americans’ production quality or sophistication, but their designs were robust and factory output reached the battlefields in vast numbers. They didn’t need to last long when they got there. Only for lorries did the Soviets crave those vehicles made in Detroit.

It is often assumed that the way the Americans and Russians outproduced their enemies was just a matter of scale and resources. But that is not so: superior industrial organisation was necessary for those nations to respond with the speed that they did to the German and Japanese onslaughts. They also needed strong military organisation and tactics: and both nations also had these, though the German methods continued to outshine both until mid-1944. But the lessons of military organisation were quickly forgotten when the war ended, whereas industrial organisation was needed to win the peace. It is no wonder that the way their industry won the war so dominated public policy in America and the Soviet Union, and in Britain too, as it tried unsuccessfully to emulate American prowess.

And what was the American method, successfully used also by the Russians? It was the production-line, developed in the motor industry by Henry Ford. Its key features were the use of standardised designs (“Any color as long as it is black”), simplified as far as possible, high technical specialism in the workforce, segregating human tasks so that minimal skill was needed, and a highly centralised, hierarchical command and control structure. And above all it celebrated economies of scale, the expectation of which became the standard for business and political elites Small was regarded as necessarily inefficient. It is an approach suited to those with an imperial frame of mind, so it is not hard to see why it was popular with Russia’s Communist leaders, and even in post-imperial but backward-looking Britain. It is interesting that it took such hold in democratic America, but the scale of that country invited imperial thinking too amongst it is business leaders.

But the Henry Ford method has weaknesses. It is slow to respond to change, and becomes very inefficient where a feedback loop is needed between user and supplier, or any area where complexity is built-in. Bottlenecks, delays and queues become routine. Furthermore organisations built around the production-line mindset, especially outside the urgencies of wartime, become ossified, divided into fiefdoms that fail to cooperate. But leaders remain locked into its thinking. When things go wrong, the management response is to tinker, by adding bureaucratic controls that slow things down and promises that lessons have been learned that always disappoint in their results. That the Henry Ford method was failing first became apparent when Japanese manufacturing started to outcompete American and British firms in the 1960s and 70s. At first this was put down to “cheating”: underpaid workers doing excessive hours, and so on. But then managers started to realise that the Japanese had been adapting their manufacturing techniques using an idea referred to as “Total Quality Management” (TQM), which involved much more delegated decision-making, and organisation-undermining cross-departmental teams. This realisation came too late for most of British manufacturing industry, with the motor industry weighed down by mediocre management and bad industrial relations, often driven by demarcation disputes, a common outgrowth of Fordism. The new ideas were beyond the imagination of management and union leaders alike. America embraced the new ideas more successfully, notably by Jac Welch’s General Electric in the early 1990s.

But the world was moving on, as Baumol’s law started to diminish manufacturing industry’s economic importance, just as it had done to agriculture a century before. Service industry became critical, and services are less easy to fit into a standardised mould. At first management thinkers adapted their manufacturing techniques, arguing that services were just another product. But by the mid 1990s thinking had moved on to an idea that was centred on a service mindset, where manufacturing products were seen as just another service. This was Business Process Reengineering (BPR). The user experience became central to business organisation, delegated decision-making critical, and layers of hierarchical management were dismantled. This was catching on just as I was taking responsibility for a mediocrely performing organisation administering savings plans. I used it to reorganise everything, doubling productivity and improving quality of output too (actually, that was linked). This was a heady time in management thinking, with optimistic “both and”, and “win-win” ideas taking hold. In Britain the most eye-catching business using BPR was Virgin Atlantic, offering a superior travelling experience at a reasonable cost. It even infected Tony Blair’s New Labour, who took on the heady optimism of leading business people, with the idea of “Stakeholder Capitalism”. Mr Blair’s subsequent period in office showed that he had no idea about what all this actually meant, however.

But then things turned darker. The rise of the internet was the most eye-catching aspect of this: but there is no reason that this should have undermined BPR thinking. A bigger issue was the rise of cheap labour in Asia, which new technology could help tie into longer supply chains. Meanwhile managers were bewitched by the idea of “Shareholder Value”, which quickly pushed away the fuzzier and more inclusive thinking of Stakeholder Capitalism. This legitimised management and shareholder greed and corporate empire-building.. The customer experience was given lip service but not priority. Ryanair replaced Virgin as the airline success story.

And Henry Ford made a comeback, with a twist. That was that businesses embraced outsourcing (Ford wanted his organisation to do everything itself), which improved communications technology now enabled. But hierarchical management, standardisation, deskilled work (preferably done by robots) and economies of scale reestablished themselves in the way managers thought about organising work. New technology, it was thought, could make up for Fordism’s defects (more recently with high hopes being placed on artificial intelligence). Conservative ministers in Britain accepted this without question as the remade public services by reorganising and outsourcing to firms that embraced the new Fordism.

Which brings us to Covid-19. A lot of the way Britain has organised itself to meet the challenge reflects Henry Ford thinking. This particularly applies to testing, but also to PPE procurement and the contact tracing system, which has been outsourced to one of the usual large-scale suppliers. And the weaknesses of the Henry Ford approach have become evident. Queues, delays, bottlenecks; promises made by management that cannot be kept; bureaucracy being added in to try and make a broken system work better.

But some countries never fell for Henry Ford ideology. Service efficiency is legendary in Switzerland partly because they never embraced large-scale thinking, and they know instinctively how organise and delegate decisions so there are no delays and queues. Germany stuck with its artisanal, delegated approach, with much of its modern industrial prowess driven by medium-sized companies, which Forders would dismiss as being sub-scale. In German Covid contact-tracing is done by small local and professional multi-functional teams who carry out their own tests; in Britain newly recruited tracers helplessly sit by their computers waiting for referrals to come through, while their German counterparts are kept busy, using local knowledge to solve problems. British political and business elites fail to comprehend. It is probably too much to hope that Henry Ford’s ghost will be one of the casualties of Coronavirus.