Privatise the Civil Service

Whitehall is hopeless. It has its irreductible purpose, but most of its failure could be reduced by privatising its operations. Bear with me on this one.

It is not ideological but practical. I have seen how things work and do not work on both sides of the fence. I have spent most of my time in commercial, value-creating work. The latter works and innovates because it is a dog-eat-dog world in which you innovate or perish. In the civil service you do not innovate if you can avoid it, because you will be criticised for departing from protocols established for good reason or, which is worse, for taking an unapproved risk. A failure to innovate though is more than a risk: it is a certain failure. Every commercial business knows this.

Work stuck in a Whitehall process is a promise of failure that would not be tolerated for a moment in the business world. Engaging competing private firms to do the work taps into the fervour of constant improvement which marks the private professional sphere. This is the very opposite of Whitehall practice.

A commercial company does not employ in-house all its own professional needs: if it needs an accountant or a solicitor or an architect, it will go to any one of the innumerable firms out there who provide the service. Those independent professional firms are exposed to the best, and worst practice in the market and they shape their own practices accordingly. They need to provide the best service in order to keep their client, and to be tip-top efficient to keep their fees down for the same reason. If they do not keep up and keep their fees down, the client will disinstruct them and find someone better.

Firms vary in their specialities too:  one architect may be good at restaurants but clueless about office buildings, but there is always an office-building specialist to go to; one solicitor may be the best in the game at negotiating leases but no so hot on corporate financing, but there are other firms who can do that.

In the professions, they can see what others are doing, and many professional magazines circulate with recommendations, updates and market intelligence.  Regulation is by consent, and there to ensure qualifications, honesty and professionalism, not to impose uniformity.  All this ensures that in these professions, efficiency is maximised and prices kept below inflation, and that there is always someone who can do anything.

Think of the contrast with the Civil Service: it is a monopoly, with no active motivation to make changes in practice. Improvements and innovations are made on occasion, on the Adam Smith basis of workers innovating to reduce their workload, but this is a passive approach. It has no rivals with which to make comparisons and take lessons: if a Whitehall desk-wallah does look, for example, at the way things are done in Ottawa or Dublin or Melbourne, he might choose to take it as a lesson, but is not compelled to do so to keep his practice going.

Imagine what could be done if instead of a monolithic, nationalised civil service, jobs were put out to professional firms of administrators. The precedents for this are not promising: the Civil Service are hopeless at procurement and squirt contracts at giant accountancy firms without considering their costs or suitability. If instead there were firms specifically qualified to do administrative work, they could compete at high street level, as other professions do. A minister wants a policy considered?  Go to a big firm of administration consultants.  He wants a technical regulation reformed or a new one written? Go to a high street solicitor with that specialisation (and if there are none now, there soon will be).

Even major policies could best be carried through by those with a financial interest in getting them right, rather than those with a personal or career interest in retarding them: how many initiatives trumpeted by ministers in the last 12 years have founded in the corridors or Whitehall through timidity, indolence or bloodymindedness?  Many, many of them. Those which are most ground-breaking or distasteful-but-necessary can be done by outside professionals.

There was a time when the permanent civil service was small. The whole of India was run by a relatively small staff. Bureaucracy though breeds bureaucracy and justifies its own expansion, and builds a protective wall against its own redundancy, ably assisted by politician’s pledges of bribes to the electorate.

Defend the good intent of hardworking civil servants if you will, but the system is inherently bad. We know that our monolithic health service becomes more and more inefficient because there is no need for it to be anything better, while abroad systems of competing hospitals get better. We know that if any business becomes a monopoly it becomes stodgy, wasteful and arrogant. Why assume that administrators would be any different?

It could be different though.  Open the field to nimble, competing professionals finding their own solutions, eager to please to keep the business and eager to achieve fast outcomes at less costs for the same reason, and all those things we complain about in Whitehall will be gone.

The problem is; government is a monopsony, a single buyer, with little interest in efficiency.

See also


Author: AlexanderTheHog

A humble scribbler who out of my lean and low ability will lend something to Master Hobbes