Wednesday, 11 February 2015

Why Simple Simon has no penny

“ANY intelligent fool can invent further complications, but it takes a genius to attain simplicity.” 

So wrote E.F. Schumacher (“Small is Beautiful”) without even seeing former health minister Lansley prove his first point.

“Complexity theory”, a branch of mathematics, contains an essential truth not just of biological and physical science but also of human organisation: from underlying simplicity emerges, naturally, complexity both beautiful and functional. But no government minister ever created the human eye or a butterfly’s wing.   

Politicians, civil servants and management consultants get it wrong by making complexity their starting point. Our over-complicated NHS – a multiply-fractured structure – exemplifies this blight on public life.

The main political parties are complexity-addicts. The motive is primarily financial, exploiting the false distinction between ‘private’ and ‘public’ money. False because money is, simply, money.

A small local example. The Lyme Regis Medical Centre building is largely owned by two former practice GPs, now just private landlords. NHS Property Services rents their building with taxpayer’s money. In turn, NHS England has a five-year contract, around £8.5million of public funds, with Virgin Care (a private business) to provide community medical services there. This pays for the GPs, nurses, health visitors, therapists and administrators, their equipment, and the other necessities of public medical care. But some goes to Virgin’s regional and national offices and shareholder dividends – all private.

The medical centre is part of the Dorset Clinical Commissioning Group that’s paying £2.75million of public money to private consultants McKinsey for advice. A shrewd McKinsey employee might invest some of this in Virgin shares to gain a continuing private slice of taxpayer cash. Follow a £5 note through this system and say when it’s ‘public’ and when it’s ‘private’!

The NHS alone multiplies such examples many times. Consider, for instance, the shortage of nurses, impacting on hospitals like Axminster, made worse by private nursing agencies costing hospital trusts much more than directly-employed staff. 

Political irresponsibility

Complex, fragmented organisation isn’t just expensive and confusing for us – it also undermines teamwork. Can directly-employed nurses, agency nurses, outsourced caterers and cleaning staff all work easily as a unit on the ward? More broadly, ‘bed-blocking‘ in large hospitals creates queues of waiting ambulances (thus reducing availability for which the ambulance service is blamed) while beds that could unblock the RD&E are closed in Axminster – because the RD&E, Axminster and the ambulances are separate trusts with isolated budgets.      

How to explain this nonsense? It’s political irresponsibility. Inventing complicated systems that only insiders understand excludes the uncomprehending rest of us, shielding those in charge from informed criticism – we can only grumble, disengage and despair. But – back to the money – it gets worse.

Many hospital trusts’ financial problems flow from the Private Finance Initiative (PFI), started under John Major and exploding (ironically) under Blair and Brown. Instead of government investing public money in the capital cost of a hospital or school, for example, the financing, design, construction, and long-term operation of the building is contracted to one or more private companies (say, a construction and a facility management firm) backed by banks, insurance companies or hedge funds – often foreign-owned.

Essentially, it’s a very expensive national mortgage. Private investors put up the cash, then over 25 years or so are repaid by the taxpayer. The Daily Telegraph (hardly a socialist tract) told of a PFI company’s 53 per cent profit margin last year (a successful FTSE 100 company might make six per cent) with its founder/chief executive’s pay and dividends at £8.6million. A hospital in Bromley, it reported, will cost the NHS £1.2billion, over 10 times what it’s worth, while for an empty Belfast school taxpayers will lose £370,000 a year until 2027.

Who would hand their mortgage provider control over decisions and costs for their home equipment purchases and maintenance, when we hear of the school charged £302 for an electric socket, five times the value of the equipment it wanted to connect?

So why these complicated schemes that emasculate the powers of hospital trusts or school governors, destroy accountability, and pass long-term costs to our children and grandchildren – along with student debt and working out how to deal with spent nuclear fuel?

Simple. Investing public money up front shows in Treasury accounts, so the annual budget deficit looks even bigger. With PFI the capital cost doesn’t appear and, neater still, nor do the capital ‘debts’ incurred for the nation. Government borrowing initially would have been at lower interest than for PFI investors, so the public money needed to repay them over time is all the greater. But a Chancellor avoids a tax rise and looks prudent; future generations must pay for his cynical confidence trick.

It’s not as if the ‘risk’, that favoured capitalist defence, is shifted from ‘public’ to ‘private’ – last month the private company running Hinchingbrooke Hospital walked out of the contract they didn’t like. So who picks up the pieces? Or compare the widespread reluctance to pay the Living Wage: why bother, when Income Support will step in? How convenient, this risk-free version of ‘market forces’ reliant on socialism!

I heard you murmur “railways”? Did you mean the private rail companies, heavily subsidised by public money, with mind-bending contractual arrangements and silly fines to impose on Railtrack (also subsidised) if their trains are delayed? Government wants passengers (‘private’) to pay more of the costs of railways, and taxpayers (‘public’) to pay less. Most passengers are taxpayers: but privatised costs come from Joe Public’s private wallet, not from his tax bill. Isn’t the money the same colour? 

So too with ‘the cuts’, falling most heavily on local government and making it the public scapegoat for austerity. No matter that central government is grotesquely extravagant (think abandoned IT projects): ministers can hypocritically lecture local government about yet more ‘efficiency savings’. How about efficiency savings in Whitehall? 

What to do? There’s no ‘Simple Party’ in the General Election. Maybe it’s time for real anger? Or perhaps focus near to home. Our own town council has become more complicated, wasteful and incomprehensible since 2011. ‘Think globally, act locally.’ Yes, that could be a start.

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