Select Committee on Public Administration Minutes of Evidence


Examination of Witnesses (Questions 380-399)

SIR STEVEN ROBSON, MR JONATHAN BAUME AND MR JACK DROMEY

THURSDAY 29 NOVEMBER 2001

Chairman

  380. Yes; and so that the public service as we know it, and as we have known it, with the attributes that we have heard about, you want fundamentally to change, you want to bring far more providers in, you want competition, and all that. This is your model, is it not?
  (Sir Steven Robson) Yes.

  381. Now how would that work in the Health Service?
  (Sir Steven Robson) It seems to me that you can produce diversity and choice in the Health Service while still maintaining the fundamental characteristics of the NHS, which I take to be a comprehensive Health Service, universal in its availability and free at the point of use. So, within that model, one can, for example, see the totality of an integrated local health delivery system, from primary care through to the hospitals, being provided by a private sector entity, in an area, alongside the current state provision, and people having the possibility of choosing which of those ways they want to go, not paying at the point of use but still being financed through general taxation.

  382. You think that would be sensible, do you, to set up parallel health services?
  (Sir Steven Robson) It is not parallel health services, and I think that is part of the problem that we face; it is different providers within the framework of universality, comprehensiveness and free at the point of use. Let us face it, there are differences; for example, the state does not produce the drugs used in the Health Service, the private sector provides those, so why cannot the private sector provide the hospital services too. I think, if one stood back from this, if a proposition came before the Houses of Parliament that Safeways, let us say, should take over all food retailing in the country, I imagine, I hope anyhow, that you would all find this most unacceptable; an even more appalling prospect would be a proposition that the old Ministry of Agriculture should take over and run all farms in the country. But that is actually, in the health sector, the situation that we are prepared to tolerate, a situation of monopoly supply that we would not dream of tolerating in food retail or in farming. I would put to you that, actually, health is at least as important as food retailing, and arguably more important, and if we are not prepared to tolerate that in food retailing why on earth should we be prepared to tolerate it in health.

  383. But do we not have examples of when we break up an integrated public service, presumably you had a hand in privatising the railways, it did not produce these wonderful outcomes that you are describing to us?
  (Sir Steven Robson) We can talk about rail privatisation, if you like, but it does seem, to me, if one looks elsewhere in the public sector, where monopolies have been broken up, gas and electricity spring to mind, the consumer has actually prospered very well, that the reduction in the cost of gas and electricity since privatisation is something of the order of 30 per cent, in both cases, and people are still getting good supply and there is a proliferation of providers, and the regulators are closing down their offices.

  384. I am sorry to go on, but why does the argument that because it is possible to privatise one kind of activity, for what may be very good reasons, therefore we should privatise every kind of public activity and break them up and have competition?
  (Sir Steven Robson) I am not suggesting we should privatise every public activity. You raised Railtrack, so I was offering a couple of other examples. What I am saying is, there is a fundamental problem with monopolies, wherever they are in the economy, they do not work in the interests of customers, whoever they happen to be, and that is sort of a well-known proposition, and an awful lot of effort is put into trying to avoid monopoly power, in all sorts of sectors of the economy. We have monopoly power and the problems that go with it in the public sector, and I think that part of the way of improving the public sector is to try to reduce those monopoly powers by introducing diversity and choice.

  385. Let me give you an example there. I am sorry just to go on, but this is so fascinating. Just to take the Health Service again, we know, whatever else the Health Service has got wrong with it, and many things are wrong with it, heaven knows, it actually is the most efficient organisation that is delivering health care in the world, in a sense, it is overefficient, it suffers from overcapacity. Now I cannot just get my mind around the idea of setting up a competitive model for health care, so we have double lots of managers, double lots of surgeons, double lots of nurses, so that, somehow, because we need to have mythical choice, we shall achieve choice, but look at what we have lost?
  (Sir Steven Robson) First of all, the proposition that this is a very efficient Health Service rather ignores the fact that it is a very ineffective Health Service, it is ranked 19th in the world, by the World Health Organisation, do not have breast cancer or lung cancer in the UK, do not want to go to your doctor in the UK, do not want to go to Accident and Emergency in the UK, do not want to have a non-urgent operation in the UK; you would be a lot better off doing all of those things in continental Europe. So I think you can overegg the proposition that this is an excellent Health Service. One is not saying that you duplicate everything, what we are saying is let us give the customers of the Health Service some choice in where they are treated, the ways in which that treatment is delivered, and if they find that it is better to go to one area rather than another let us build on that area and let us not build on the other area. But one is not saying suddenly you duplicate everything, one is simply saying, of the existing organisation, let us have some of it organised one way, delivering one way, let us have some of it delivering another way, and, this is the key part of it, let us have the user of the Health Service having the freedom to choose.

Annette Brooke

  386. If I could just come in for a moment, actually, on your supermarket example, which worried me incredibly. Sometimes I choose to go to a very low-cost supermarket, and I enjoy buying something in a cheap packet, and so on; but when I actually want my Health Service, I do not want the choice between cheap and basic, I want the best. I just find that a really worrying analogy. We are not looking at choice of quality, as you would be with supermarkets, and whether it is up-market, down-market?
  (Sir Steven Robson) I am sure you do want to have the best, but that is why, it seems to me, an organisation which has within it the ability for you to choose where to go, and therefore encourages people to provide a service which will attract your choice, is likely to be one that provides the best.
  (Mr Baume) I am sorry, can I just chip in here. I think what this debate is missing is, and I will go back 20 years, but we could start having arguments about the previous Labour Governments, in the seventies, that the NHS was starved of resources, just as, for at least the back end of the Conservative years, the railways were deliberately starved of investment. Political decisions were taken, and you can argue that the railways before privatisation did an amazing job in making an efficient use of the limited resources that were available, and there has certainly been no lack of investment since privatisation. If you then look at the NHS, and I have just started working my way through the Wanless Report, so I have not got all the way through that, but if you look at the funding that has been delivered into the NHS, and if you actually step back and look at the organisational structures within which the NHS has operated the last ten years, you see an organisational nightmare in front of you. We represented managers in the NHS, at senior Trust level, from the early 1990s, and it has been one series of structural reorganisations after another. Markets were created in the early 1990s on a wing and a prayer, frankly, it was several years before you got central direction from the Department of Health as to how those were supposed to operate; actually, we had far too few managers to deliver what was being required in the internal commissioning. If you look at the position now, I think there has been an acknowledgement now, across the political spectrum, certainly over the last few days, that we are seriously underinvesting in health in this country, and have done for many years, and you can actually say, frankly, that the NHS is doing a pretty amazing job in the circumstances within which many of the practitioners within the NHS find themselves working. There is a lot more to be done within the NHS, but the fact has been that, even over the last four or five years, we have had—at the moment, Alan Milburn is reorganising the structures that Frank Dobson put in place—we have had Leninist, we have had an almost Stalinist structure. Over the last few years, in the NHS, there is very little that happens on the ground that is not directed from Richmond House. I think, finally, in the agenda for change, there is an acknowledgement that this cannot continue. Yes, there is room for diversity in the NHS, but there is nothing within the current structures of the NHS that prevent it. There have been political decisions taken to operate in a particular way. There is a very legitimate debate to have about structures, and structures matter, because they are the frameworks within which people, hospital by hospital, Trust by Trust, GP surgery by GP surgery, actually try to deliver. What we do need is some continuity and an ability for those administering the NHS, as well as, obviously, the people at the sharp end who are delivering the health care in the surgeries or in hospitals, just to get on with the job, and people have not been allowed to do that, coupled with underinvestment. As I say, I think the NHS does an amazing job in the circumstances, but there is tremendous room for improvement, which I think everybody accepts.
  (Sir Steven Robson) Can I say just one thing about the NHS, which is that this is an organisation of roughly a million people, and one of Jonathan's points, which I very much agree with, is that there has been a lack of management, in many areas of the NHS. I must say, I do wonder whether an organisation of a million people is manageable at all. I do not know of an example anywhere in the world of an organisation of this size, or even approaching this size, which is successfully managed.

  387. This is why you are a Leninist, is it not, this is why you want to rush it out?
  (Sir Steven Robson) I do not see why I am a Leninist. This is totally different. You can carry on with your existing model, but there still is, it seems to me, even if you do that, this question of, is there actually a management team that can grapple with an organisation of this size.

  Chairman: Okay; we have had Lenin and Stalin, let us bring Trotsky in.

Mr Prentice

  388. Just for the record, Tony, New Labour is a Leninist party, it is a vanguard party where policy is decided by the few for the many. My question is to Steve Robson. I am interested in your unpacking the NHS, the cleaners, the surgeons, the nurses, and so on; are there parts of the NHS that you would not privatise?
  (Sir Steven Robson) Frankly, I am not sure that the unpacking is really a terribly sensible way forward; that is a political decision. Essentially, there has been a political decision that people in white coats stay in the NHS and people not in white coats can be contracted out, that is a kind of political line in the sand, if you like.

  389. I thought you were telling us, you see, that people in white coats should be employed by the private sector?
  (Sir Steven Robson) What I am saying is, actually, a more sensible model would be to take the delivery unit, which is, let us say, the GP practice in primary care, or the hospital, at the hospital level, and look at that as a total entity, rather than take a slice of the cleaners out, and ask somebody else to run a hospital in its totality, white coats and all.

  390. Why do we not hand the whole shooting-match over to BUPA and say,—
  (Sir Steven Robson) It is just a monopoly, is it not?

  391. I see; you would just be transferring a public sector monopoly to a private sector monopoly. I see. And what about this public sector ethos that you described as a bit of a fantasy; it would not give you any problems at all, if NHS core functions were transferred to the private sector, would it?
  (Sir Steven Robson) My 30 years has not given me a sense that there is this thing called the public sector ethos that makes me worried about that prospect. What worries me is the prospect of people working in environments where they lack objectives, where they lack good incentives and where they lack good management, and those are the things that I am trying to address.

  392. Jack Dromey told us a few seconds ago about the role of the state; is there anything that should not be, or could not be, privatised which is regarded as a state function at the moment?
  (Sir Steven Robson) There is obviously a range of things which are state functions. What are the core activities of state; they are things like income redistribution, regulation, setting the parameters of the economy, such as interest rates, which, clearly, are intrinsic to the activities of the state.

  393. So there are some things that properly should not be privatised?
  (Sir Steven Robson) What we are talking fundamentally about here is what is the best way to deliver public services in the UK, what is the best way to get people getting the quality and level of service which they want and which the taxpayer can afford, and all I am saying is that I do not think monopoly provision is the answer to that.

  394. What about National Air Traffic Services, which was a monopoly provider in the public sector, that has now been transferred to a "not for profit" private company?
  (Sir Steven Robson) We shall have to see how it gets on; it is an interesting experiment.

  395. An interesting experiment. When people get into an aircraft, they would like some reassurance that they are going to arrive safely, and you describe that as an interesting experiment?
  (Sir Steven Robson) It is an interesting experiment to transfer it into this "not for profit" trust. But I think the proposition which you seem to be heading for, that safety can only be addressed satisfactorily within the context of state provision, is not one that I would accept, and presumably it means that you never fly on British Airways.

  396. What about privatising the police force?
  (Sir Steven Robson) I think, privatising the police force would not be high on my agenda.

  Mr Prentice: But why not?

  Chairman: It is a monopoly provider.

Mr Prentice

  397. We spend millions on the police force?
  (Sir Steven Robson) It is a monopoly provider, but there are areas which, it seems to me, are in greater need of being addressed than the police force.

  398. Just sticking with the police force, because we spend a fortune on law and order and the police force, would you unpack, my word again, the police force and just retain the core police functions with the state and maybe contract out these peripheral functions, traffic management, and so on?
  (Sir Steven Robson) I have never really looked in depth at how the police force works, so I cannot really answer that; but traffic management, in the form of traffic wardens, you probably could, I think, if that is what you mean by traffic management.
  (Mr Dromey) Just very briefly. By the way, I am fascinated with this notion of the potential privatisation of the police force, and presumably inherent in that is choice; so, in the unlikely event that I commit a crime, therefore I will reject being arrested by the Metropolitan Police in favour of McDonalds.

Chairman

  399. Yes, you will have a choice of provider?
  (Mr Dromey) Yes, indeed. I look forward to that. I have two other points. Carrying the Leninist metaphor one step further, you can learn valuable lessons from the best of the private sector, as to how you run things well, but you must not, on the one hand, believe that you then lift the private sector model, lock, stock and barrel, into the running of the public sector, or, on the other hand, learn the wrong lessons that sometimes the private sector themselves have moved on from. Specifically, what does that mean, in the context of the National Health Service. I think that the Government has got to look very seriously at this notion that you can have a command economy management approach, because I think that can be the enemy of good management and innovation. Finally, on this question, that I referred to earlier on, about the wider public interest factors that are required to be taken into account. Steve made the point about people in white coats; well, I suspect other people in white coats may be, in years to come, taking away those who ignore these important factors, and we will do a note perhaps for the Committee on this, after today. We have got to move beyond an ideological debate to face some very real problems. So, for example, in the contract state, do we repeat the mistakes of history, in terms of the damage that can be done to public interest, by price-fixing and cartels. Secondly, you need to take account of the importance, in terms of public service provision, of control and flexibility, and what that means in terms of continuity, security of supply, and the ability to move resources onto non-defined work without getting engaged in contract games. Thirdly, you need to look at, in a very practical way, what has actually been the implications of Steve's position, over the last 20 and 25 years. They range, in terms of the people we represent, on the one hand, from this reality, which is, for example, it was said by the then Minister of State for Housing, Nick Raynsford, that if you were to wind up every direct labour organisation in Britain, typically, the private sector does not replicate the high standards of training in those DLOs, and that would have very serious consequences, ultimately, for the skill base of the economy, to, on the other hand, this debate that has been raging of late, but rightly so, about, if you go down this path of the mass transfer to the private sector, what does that then mean in terms of the impact on the next generation of public servants, employed by the private sector, in what has been called the two-tier labour market. So the Government cannot say, "we want to close the gender gap," then to see tens of thousands of part-time women workers, new starters, being taken on on inferior rates of pay. Government cannot say, "we want good two-tier pension arrangements to ensure security and dignity in retirement," only to see, typically, for example, building maintenance workers, skilled craft workers, new starters, coming in on money purchase schemes, so that they are inferior to the occupational pension schemes in the sectors from which their colleagues have transferred. And Government cannot say, "what we want to do is build strong local economies", if the next generation of public servants, working in the way Steve would like them to work, have, many of them, poorer rates of pay and inferior pensions, because, typically, the public sector is the biggest local employer, with all that will then mean in terms of the impact on the economy. So we will do a note after today, Chair, on this, but, crucially, we believe that there has been a wider range of public interest issues that have been ignored in this debate, and that when you talk about what works you have got to look at not just what works at a snapshot in time but what works, taking account of the broader and longer-term public interest issues. What we must not do in the public sector is to make the mistake that this country made in the private sector in years gone by, which is to be absurdly short-termist and not to think through the long-term implications of what we do.


 
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