Daily Archives: March 14, 2011

How corruption entered public service

In modern times the British Civil Service has been remarkably free from corruption (local government is a different matter), a fact made all the more surprising because of the truly colossal amount of money it disposes of each year – government spending for the financial year 2011/12 will be around £700 billion. There are two reasons for this. The first is the hard-won tradition of public service which in which the Civil Service as an apolitical institution and as such serves no political ideology or party but provides politicians of all stamps with disinterested advice and executes their policies. This tradition has been underpinned by the lifelong working careers which public servants, especially senior ones, have commonly had. Of course, that was merely the ideal and, as with any human institution, the reality fell some way short of the ideal. Nonetheless, such sentiments and conventions have affected the behaviour of public servants for the better, especially in the area of honesty.

The second reason for a lack of corruption has been the direct provision of most the services provided by central government. This has meant that the number of large central government contracts offered to private business has been small in relation to the money spent on the direct provision of public service in all its aspects. In such circumstances serious fraud becomes difficult going on impossible for most civil servants because they do not have access to large amounts of taxpayers’ money. (Where they do have access, for example in the Inland Revenue, in most instances there are strict accounting procedures which make the embezzlement of large amounts of cash  extremely difficult). Moreover, where there are few government  contracts, most civil servants are not in a position where someone  would find it fruitful to bribe them because they have nothing to sell.

Unsurprisingly, where serious corruption amongst public servants employed by central government has occurred in the past, it has been overwhelmingly in those areas where large government contracts exist, most notably in Defence Procurement and building contracts. It is a reasonable assumption that the more public contracts offered to private companies, the greater the corruption will be simply because the opportunity for corruption increases.

The Thatcher and Major Governments began the attack on these two anti-corruption pillars of public service – the public service tradition and direct provision – by appointing people from outside the civil service to senior posts within the civil service, introducing private enterprise culture to public bodies (for example, the NHS “single market”), privatisation and by increasing the use of private finance and contractors in public services. But what they did pales before the Blair and Brown Governments, which showed a truly obsessive drive to replace direct public provision with private money and private firms. Literally nothing seems to be off  limits, with public provision as disparate as the Prison Service and logistical support for the NHS being treated as suitable.

The Blair Government also did two things the Thatcher and Major Governments did not do. First it  radically altered the terms of employment of new civil servants, especially with regard to their retirement age (raised to 65 for new entrants as opposed to 60) and ever less generous pensions for new entrants, .  (http://www.bbc.co.uk/news/business-11446835) . This  undermined  the unspoken pact between government and civil servants that relatively poor pay was balanced by a relatively generous pension and created tensions between long serving civil servants (on the  old generous terms) and newer entrants (on less generous terms). Second, the Blair Government  classified “special advisers” i.e., political advisors, as civil servants, the most notable of whom was Blair’s Press Spokesman, Alistair Campbell. These people have been given authority over career civil servants. The Brown Government continued the practices of Blair.

The Coalition Government is attempting to go much further. It has  announced that  it wishes to switch from using the Retail Price Index (RPI) to the generally lower Consumer Price Index (CPI) for inflation uprating, increase employees’ pension contributions, raise  the civil service retirement age further in line with the proposed age increase in the state pension and base all future civil servant pensions not on the final salary but an average of pay  throughout a civil service career.  The Coalition has also frozen civil service pay for two years. Most dramatically, the Government is also intending massive reductions in national public service employment.

All this change is undermining the British public service culture. The appointment of special advisors as civil servants is destroying the apolitical nature of the civil service. The idea of a career civil servant is falling into disuse because no one can be sure what is next to be privatised or where a department may be moved to. The morale of civil servants is generally depressed. All of that translates into less commitment to the job, on average less time in a job and probably the employment of fewer able and trustworthy people as civil servants because the more able and trustworthy are now less willing to come into public service and standards have had to be lowered to recruit sufficient staff.

The weakening of the public service ethos and the probable lowering of the quality of the people employed is likely to have increased the number of civil servants willing to behave corruptly if the opportunity arises is increasing at the very time that the opportunities for corruption are multiplying because of the large number of private companies being given government contracts. Put those two circumstances together and it is odds on that civil service corruption has increased substantially. What is applicable to national politicians and civil servants applies to other public servants, at both the national and local government level, and politicians below the national level.

In theory competitive tendering for public contracts should be a guard against corrupt practices. The problem is that in most instances the number of firms tendering will be small. Quite often there will be only two bidders. On occasion the process lapses into farce and only one firm will bid. This happened in the London borough of Camden where a £62.5 million contract for renovating an estate called Chalcots attracted only one bidder, a consortium going under the name of United House. The council’s housing director Neil Litherland claimed bizarrely that talking to just one bidder would lead to “better uses of [council] resources by reducing the negotiation and evaluation period” (Camden New Journal 12 12 2002). There are good reasons why the number of bidders is often small. First, the size of the operations and their frequently unusual nature (often there is no comparable private sector work) means that there will only be a few private companies able to plausibly bid for a contract. Second, the bidding process is very expensive both in terms of money and time, especially management time. These two entirely rational and legitimate reasons for a paucity of bidders build great opportunities for corruption into the system of bidding. Where there are, say, only four companies capable of undertaking work in a particular area such as social housing, they can act as a cartel and effectively deal out public contracts amongst themselves by agreeing who will put in the highest bid for any contract. An Office of Fair Trading investigation resulted in a report in 2009 which found such contract fixing widespread in public construction projects. (http://www.oft.gov.uk/news-and-updates/press/2009/135-09)

Corruption is more than people receiving money in brown envelopes or  material benefits in kind such as expensive holidays. It is also the  granting of jobs years down the line, directorships for politicians and civil servants who have controlled the granting of Government contracts or who have used their influence to progress things such as planning applications.

The current rules regarding ministers and public servants taking posts in private industry are so lax as to be next to meaningless – they can take up posts after a year or two, regardless of how closely the private sector job is linked to their previous post. Moreover, the definition of which private industry posts are sensitive enough to demand even that slight obeisance to common decency is open to an elastic interpretation by those supposedly enforcing the rules if the secret view of politicians and senior public servants is that the rules are simply a public fig-leaf to cover their indecency. In effect, successive governments have legalised corruption and of course the more government contracts offered to private business the more opportunity there is for this type of “legalised” corruption.

Corruption can also be the giving of an honour or public service appointment in return for corrupt behaviour. For example, a contract could be granted to a private contractor corruptly through a conspiracy between the contractor, a cabinet minister and a senior public servant near retirement. The public servant corruptly facilitates the granting of the contract, retires and is rewarded with a quango sinecure. Again, the increase in contracts offers greater scope for such corruption.

That which is corrupting national politicians and the Civil Service is also evident in other public bodies, both national and local.

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