Tag Archives: public service

The Great Charity Scam

Most people when faced with the word charity attached to an institution are inclined to be well disposed to the organisation regardless of what the charity is supposed to do.  If it is a popular area of work, such as medical research or the provision of services to disabled children, rationality goes out of the window.  Hardly anyone questions how the money is spent or how much of it actually goes to the people the charity are supposedly helping. Even fewer ask where charities get their money from, the public commonly  subscribing to the  benign but erroneous assumption that it is collected largely from money put into collecting boxes or donations made by the living or the dead directly to charities. There is a further commonly believed  fantasy that those collecting for charities are  unpaid volunteers cheerfully giving their time out of  pure altruism, a fantasy which quite incredibly often extends to  that  persistent nuisance known as  “chuggers”  who aggressively buttonhole  people in the street.

The truth is a great deal more complex and murkier than the general public imagines.  The most dramatic subversion of charities comes in the form of national and local governments directing taxpayers’ money to charities to perform work which would otherwise be undertaken either directly by the public body or through the employment of a private enterprise contractor.  The charities who accept  public money – and the vast majority of the larger ones do – become no more than subcontractors  to  government.

The extent of  public funding is massive:  In 2010 the Charities Commission (which oversees charities in England and Wales) concluded  “that almost a quarter of the large charities consider public sector funding to be their most important source of income. (http://www.independent.co.uk/news/uk/politics/government-cutbacks-could-wipe-out-25-per-cent-of-charities-1926155.html). In February 2010 ‘ Cardiff University’s school of social sciences on behalf of the public services union Unison predicted that many charities will go bust” [because of coalition cuts in funding]’ and concluded  that ‘More than half of charities’ income now comes from government contracts to deliver public services.’  (ibid).

The use of charities to provide public services  fits in with the Coalition Government’s  drive to subcontract public provision. This means that all three major British political parties officially support the use of charities as government subcontractors, albeit  half-heartedly by the LibDems. Whoever is in power for the foreseeable future, it is a fair bet that the relationship between charities and the Government will broaden and deepen.

As for fundraising from the public, “chuggers”  are paid, a basic and sometimes  bonuses.   They work for fundraising firms who receive payments from a charity for every recruited donor. (http://www.pfra.org.uk/face-to-face_fundraising/do_you_object_to_chuggers/they_are_paid/).  Many of the larger charities run regular raffles. My experience of these is that once a raffle a raffle has been entered  they will not only send  details of all future raffles but in many cases send out second letters urging entry into the raffle if an entry has not been received a few weeks before the closing date. I  have also been positively bombarded with requests, both by letter and email, for  donations not only from charities to which  I have donated , but also from  charities to  which I have never contributed .   This can only mean charities sell on donors details to other charities and quite probably to private business.

The other prime problem with  charities, even large ones, is the fact that they are often very inefficient. The poorly run ones spend a great deal on administration.  They spend inordinate  amounts  on advertising. They hoard money rather than spend it. They manage their money poorly. They fail to modernise their services. Their accounts are inadequate. The idea that charities will be more efficient than direct public provision  is simply laughable. Not only do they suffer from the structural ills of public service they lack any proper  public accountability. Charities are audited each year, but that audit is much less demanding than the audit required of large public companies. Moreover, their frequent failure to keep adequate records makes  any audit of the use of public money very difficult. It would also be a very  expensive job to monitor their spending of public  money meaningfully.

Take the case of Scope, the charity previously known as the Spastics Society, which aids those with cerebral palsy.  It is a mainstream charity of just the sort to attract public sympathy in large measure. The first thing to note is that it changed its name in 1994 from something everyone could immediately understand – the Spastics Society- to something which most people would not have a clue about. The charity had allowed itself to be seduced by the marketing sirens.  It is difficult to imagine this confusion did not have some effect on fundraising.

In January 2006 Scope announced it was shutting 50 of its shops because it had a predicted £310 million deficit. (Daily Telegraph 13/01/2006). The Telegraph account went on to disclose that Scope’s last accounts showed that it was budgeting to spend £35.6 million more than it received in the financial year 2006/7, that there was a hole in its pension fund and that its buildings suffer widespread dilapidation through lack of investment.  I think most people who think about it would be somewhat disturbed by the idea that a charity had a pension fund of any size and that a substantial part of their donations are going to fund it. Charities in the public mind are thought of as institutions where people offer their services either free or at a discounted rate. The idea that their paid employees are just like any other employee does not fit comfortably with the public’s idea of charity.

One of the directors of Scope Jan Hildreth at that time  (he was also a former director-general of the Institute of Directors summed up the mentality of his and many other charities: “Like many charities, the concern of the society has always been its activity and not its finances.”(http://www.telegraph.co.uk/news/uknews/1507717/Scope-to-close-50-charity-shops-as-10m-loss-looms.html). Interestingly  Scope blamed part of its plight on ‘the Government for underfunding services it provides, such as residential and school places.  “It wants our services, but it doesn’t want to pay for them,” the spokesman said. “This is a drain on our coffers.” ‘ (ibid).

To inefficiency add fraud. The National Fraud Authority estimates  internal and external fraud against the charities costs £1.3 billion a year ( http://www.charity-commission.gov.uk/about_us/contacting_us/p_brief_charities_fraud.aspx).

The use of charities as government sub-contractors has other pernicious effects. It allows a government to evade responsibility even more effectively than the employment of private companies does because charities, especially popular ones,  throw up a moral shield. As mentioned above people feel that money spent by a charity is a good in itself. That applies even when it is taxpayers’ money.

Often the public is not even aware that public money has gone to a charity. This means that governments can support unpopular policies, such as those associated with political correctness, without the general public being aware that public money is being used to promote the policies. A  government can also make charitable donation part of their PR because they can  gain kudos from the public by publicising their donations of taxpayers’ money to popular charities.

As the Scope complaint quoted above suggests, governments may also see  charities as a cheap means of public provision. Whether it is or not is another matter – personally I would doubt it because of the widespread incompetence in the charity world.. There is a further objection to the use of charities as publicly funded providers. They have a moral and civic role. The whole point of a charity is that it is the product of the individual will, a conglomeration of the active decisions of those who choose to make a contribution.  It is part of what academics like to call civil society, those institutions which men naturally form in a free society and which fall outside the ambit of the state. Lose or even seriously diminish those institutions and the state determines all, for there is nothing to oppose it or offer an alternative.

Making a charity simply or largely a client of government undermines the very idea of charity. There is every chance that if charities are seen as arms of government, private donations to them will begin to dry up. That in turn would have spending implications for the taxpayer, because although often inefficient,  charities do fund a considerable amount of what would therwise be described as public provision. The taxpayer would end up footing the bill for extra public provision.

State funding also makes charities forget their original role. The  natural tendency for charities who become heavily dependent on public money is to  cease to view their organisation as a charity and see it simply as a business.  There was a good example in the news this week.  The St John’s Ambulance (SJA), a charity which provides medical services at most major public event in Britain and which is much admired by the public has decided to “rationalise” the charity by moving from a system of localism with money raised in an area being spent there to a centralised  treasury which will collect all the money raised throughout the UK  and distribute it as their  central management sees fit.  The volunteers fear that the change will make people less willing to volunteer for unpaid work.  As the SJA has 1,600 paid staff and 40,000 volunteers, the effect  of the change could be dramatic.  (http://www.telegraph.co.uk/health/healthnews/8684165/St-John-Ambulance-abandoning-volunteers-over-restructure-project.html).

The SJA also displays another unpretty trait of modern charities; the expansion of highly paid posts. The proposed SJA  reform will involve  the creation of “ eight regional directors will be created on salaries of £80,000 a year plus benefits to represent London, the south east, south west, East Midlands, West Midlands, East of England, North-West and North East.”  (Ibid).  Salaries exceeding £100.000 for chief executives are common (http://society.guardian.co.uk/salarysurvey/table/0,12406,1042677,00.html).  Sometimes the percentage of donations taken by senior staff is astonishing. Take PACT, a charity run by the wife of Sir Anthony Meyer, with Cherie Blair – a close friend of Lady Meyer – as patron. Here is the Mandrake column in the Telegraph reporting on 25 May 2011 “… all but £9,500 of the money received in donations by Pact, which stands for Parents & Abducted Children Together, was paid to the Chanel-clad Catherine Meyer, who is the chief executive, and to one member of staff.

“Lady Meyer, who is also its president, and her employee were paid a total of £49,586. Lady Meyer received almost 70 per cent of that sum. Pact’s income from donations was £59,056 and it received a further £38,234 in grants…

“We are doing a huge amount of work for very little salary,” she said. “I used to work in the City and earned much more.”

Her husband, and six of Pact’s 11 trustees, added in a letter: “We consider it to be at the low end of the pay scale for chief
executives of charities with a demanding brief. “(http://www.telegraph.co.uk/news/celebritynews/8534133/Cherie-Blair-is-in-no-hurry-to-speak-up-for-charity-boss-Lady-Meyer.html).
The example beautifully demonstrates the inability of those running charities to understand the difference between a business and a charity.

The danger for charities which lose their popular base and become dangerously dependent on public  funding is that they  run the risk of being left stranded when the economic tide goes out.  When, as is happening today, public funding is cut many will find that they cannot fill the gap because they have put too many of their campaigning eggs in one basket.

There is a further serious  problem, namely what is a  legitimate charity? Charity is big business. According to the Charity Commission, as at June 2001 there were 161,978 registered charities in England and Wales with a combined income of £56 billion (http://www.charity-commission.gov.uk/About_us/About_charities/factfigures.aspx).   Is it
really possible that such a vast number of good causes exist which deserve the considerable privileges granted to them by the state?

Take our private schools (many of them bewilderingly for foreigners called public schools).  They are overwhelmingly charities. They also have in most cases a history of one hundred years or more. This means that the profit motive is absent and a quasi public-service (civil society) ethos has had time to evolve. Yet public schools – which get around £100 million tax relief – have always subsidised the education of the poorer middle-class children rather than the education of the truly poor. Why should they have status of a charity?

There are also many questionable cases where the charity exists to fund something which is essentially, even in principle,  a private or sectional interest, for example the Royal Society for the Protection of Birds. Why should the taxpayer subsidise such institutions?

The biggest charitable status bone of contention is political action.  The Charities Commission permits political campaigning  “Yes – any charity can become involved in campaigning and in political activity which further or support its charitable purposes, unless its governing document prohibits it” but bans charities having a political purpose “A charity cannot have a political purpose. Nor can a charity undertake political activity that is not relevant to, and does not have a reasonable likelihood of, supporting the charity’s charitable purposes”  (http://www.charitycommission.gov.uk/publications/cc9.aspx#11).  This is completely impractical. For example, how can  a charity whose purpose is to support immigrants in applications for asylum, fight deportation and so forth not  have a political purpose?  There can also be the complication of  public funding which is a political matter in itself. Take the Immigration Advisory Service (IAS) which is currently insolvent,viz: .

” The Immigration Advisory Service (IAS), the largest provider of publically funded immigration and asylum legal advice,  advised today that it had been placed into administration. The IAS, a registered charity, has been in existence for 35 years, and employs 300 staff at 14 locations across England and Scotland. It is renowned for a large number of important legal precedent cases which have been taken through the Courts, including to the Court of Justice of the European Union and the European Court of Human Rights.

“The Governments reforms include the removal of immigration from the scope of legal aid, and a 10% cut in legal aid fees for refugees seeking asylum within the UK. Immigration accounts for around 60% of IAS’s income. There are few organisations that could cope with the compound effect of removal of immigration from the scope of legal aid and a cut in fees for asylum clients.

“The IAS has been in discussion with the Legal Services Commission (LSC) in an attempt to gain support for a solvent restructure of its operations. IAS had also tried to reach an agreement with LSC for an extended period to repay monies which (in common with many other firms) had been claimed in error, partly, in IAS’s view, due to the complex funding rules in place. The legal aid cuts put IAS in the position of needing to fund any repayment of these monies, from a much reduced income base, and as a result it has not proved possible to reach agreement on a way forward.” (http://www.iasuk.org/home.aspx).  How can that not be an organisation with a political purpose?

Charities epitomise the difficulties of mixing private and public. It is true that as non-profit making bodies they share some of the ethos of public service and the profit motive is absent, but their entanglement with government has utterly undermined their charitable status and moral stature.   How do we return them to  their proper purpose? Charitable status should only be granted to those who raise their own money. Paid fundraisers should be banned.  Limits should be put on the amounts spent on administration and advertising.  Charities should only be registered which undertake their entire work in the UK. Those currently registered which are inherently political should have their charitable status removed.  Only  those with a purpose which could potentially benefit anyone should be registered.  Examples would be those dealing with medical research or care of the old.

Impractical? A recipe for chaos? No. Much of what charities now do is what government should be doing. Governments would have to do their duty and either employ what are now charities as simple  subcontractors without charitable status or make other arrangements. A great deal of the rest is simple political action under the guise of charity or the subsidy of of particular  interests without any wider social benefit.  Some charities such as the IAS are directly opposed to the UK’s interests.  A radical review is required of what should constitute  a charity.

Why public service broadcasting (PSB) matters

We all know what comes from rampant and unrestrained commercial activity: a worship of Mammon to the exclusion of everything except the feeding of company directors’ and financiers egos and greed. In broadcasting, unrestrained commerce equals a low grade, populist cultural diet heavily polluted with advertising. Many supporters of PSB think that is a case of ’nuff said’.  Were it only that easy.

The fact that commercial broadcasters left to their own devices do tend to go for the lowest common cultural denominator is not a knockdown justification for PSB but an expression of opinion, a projection of taste. That is so even in the areas where PSB would seem to be most obviously valuable such as the provision of news and current affairs programming. Sadly, there is no necessary reason why such programmes made by PSB providers should be more or less biased than those provided by commercial broadcasters. Indeed, it could be plausibly argued that PSB political coverage is more naturally susceptible to bias than that of commercial broadcasters because PSB is ultimately funded from a single source, government,  through direct funding (the World Service), hypothecated charges (the BBC) or the profits of quasi-commercial undertakings funded by  state granted revenues,  whereas private broadcasters at least have a diversity of vested interests to satisfy.

It might be thought a weakness to admit that support for PSB is a value judgement, but it is never a weakness to start from a point of intellectual honesty. Far worse to pretend that PSB is an objective good whose value  is beyond discussion or the need for justification, because then the argument switches to defending the ultimately indefensible rather than the real issue, namely, how does the person who supports PSB come to their value judgement?

If they wish to be taken seriously, the supporters of PSB must make the intellectually honest case for PSB. To do that they must answer two questions: (1) what is wrong with the public exercising its own choice by voting with its subscriptions to unregulated private broadcasters? And  (2) in what sense is the world better off  with PSB than without it? But before I turn to those questions some ground needs to be prepared.

What do we mean by PSB?

We all know what PSB is don’t we? Actually,  no.  It is one of those phrases that seems comfortingly solid but which often causes people to stumble embarrassingly when pressed for a description of what it means. A reasonable general definition would be any broadcasting that is in some way formally influenced by the state. That covers the obvious, publicly-funded broadcasters such as the BBC, to the less obvious, for example news and current affairs programmes bound by a legal obligation to provide “balance” and licence requirements which demand a certain volume of programming deemed to be in the general public interest, such as drama.

Free-to-air broadcasting funded in part or whole by private donations (such as exists in the USA in the form of the Pacifica Foundation) is often described as PSB. In as far as such broadcasting is directly influenced by the state in the manner described above it is PSB. But imagine a broadcaster entirely funded by donations and unregulated. Such a broadcaster might produce programming which is similar to that which a full-blown PSB state funded broadcaster such as the BBC produces, that is, programmes which no commercial broadcaster would produce either at all or in sufficient quantity. This might seem at first glance to be evidence of PSB. However, those who make donations are in reality paying subscriptions, for by making donations they are determining the type of programming the broadcaster will produce. In principle, that is no different from anyone who subscribes to any commercial channel. It is not PSB but merely a coincidence of programming.

What counts as PSB programming?

State regulation and funding equals PSB, right? Wrong. A state funded broadcaster could go for the lowest common denominator. But that would not be PSB. It would merely be the state providing the same as the market can provide.

There is nothing in principle to stop a fully state-funded broadcaster pumping out exactly the same sort of programming diet as the most grossly commercial station. Indeed, a cynical government might well see it as a modern version of ‘bread and circuses’ to keep the masses distracted from misgovernment or as a mass audience platform for government propaganda, with the propaganda slipped into the programming.

PSB has to be more than simply state provision and regulation. It must do something that neither unfettered commercial companies nor self-serving governments will do. The question is what? The general answer is to produce socially necessary and valuable programmes which will not otherwise be produced at all or in sufficient quantity. Like every other form of public provision, PSB exists and has existed to provide what the market will not provide.

What is “necessary and valuable”? The need for wide-ranging and honest news and current affairs can be taken as read in a democracy. Clearly no commercial broadcaster will provide unbiased news unless it is closely constrained by law to do so (think Fox TV in the USA) . At the very least the commercial broadcaster will find ways to avoid stories that damage its advertisers or shareholders. Consequently, there is an objective case to be made for PSB in the field of news and current affairs, provided safeguards are put in place to prevent either government interference or the capture of the broadcaster by those with a particular ideology. (Sadly, while the censorship of the state is constantly under scrutiny by the media, censorship by those who control the media is routinely ignored. The latter is perhaps even more insidious than state censorship, because it is not acknowledged, and responsibility for it is diffused.)

“Highbrow” programming such as serious drama, music, history and science has been (with news and current affairs) the staple legal requirements that governments have imposed upon commercial broadcasters. They have been taken as self-evident goods, but are they? Why should “highbrow” be given a privileged position? An analogy with formal education can be made. Why do we insist on education for all? The utilitarian answer is to equip everyone for employment in an advanced society. But that is not the full story. Few would argue that some education is necessary for all, but even the education we provide up to the age of 16 goes far beyond what is required for most jobs, for which a firm grasp of the three Rs will suffice. Why do we teach every child history, Eng Lit and world geography? What need do most have for a grasp of the natural sciences? We also fund non-academic activities such as sport, art and music. Beyond the age of sixteen we continue to educate to degree level very large numbers of people in subjects which they will never directly use in their working lives. (Whether the education has its desired effect in many cases is a separate issue. The intent is what matters here.)

Part of the reason we do this is to provide a range of abilities and experience to fill the multifarious occupations available in a modern industrial state. But we also provide the education we do because it is believed that it both civilises the individual and better equips the person to understand at least enough of matters in general to make basic participation in the democratic process meaningful. (These ends may not be realised or even be sincerely meant by those who expound them. That does not matter. They are what is claimed for education. Few would openly gainsay them.) By extension it can be claimed that PSB has an equivalent role to that of formal education.

Variety and quality is not enough

The problem with the argument deriving from the need for variety and quality is that a very rich diet of every kind of broadcast fare is now available from commercial or public access sources because satellite, cable and the Web offer material on virtually anything – and that which they do not provide can be found on discrete static media such as DVD. Does this expansion of broadcast opportunities and data access make PSB redundant or will it do so in the foreseeable future? The free marketeer would say yes, but there is more to PSB than simply the provision of a wide range of material. To begin with PSB can give a national focus. The need for a broadcaster such as the BBC to provide national programming is especially important at a time when commercial broadcasting is being split ever more and the constraints on what is shown are being loosened. The question of national focus is especially pressing in the field of news and current affairs.

We already have Sky effectively outside the control of the British people. With the recent relaxation of the ownership and monopoly rules for British terrestrial free-to-air broadcasters, it is quite conceivable that within a few years most, or even all, the major commercial broadcasters will be owned wholly or in large part by foreigners, especially Americans. Past experience both here and abroad suggests that with that will come a relaxation of the requirements for commercial broadcasters to provide either a certain percentage of PSB programming, or programming which is produced in Britain.

There is also the problem of information overload. A vast range of material may be available but its very size and variety is of itself a problem. Human beings generally say ‘yes’ when they are asked whether they want more choice, but this is a lie. What human beings are emotionally and intellectually equipped for is some choice but not too much. Give someone the choice of six books on a subject and they can probably handle it. Give them one hundred choices and not only will they not be able to make a meaningful choice, the sheer volume of choices may well cripple their ability to choose at all. I think most people will recognise this as a fact, for the simple reason they will feel that way themselves when confronted with many choices. For those who do not accept it, I suggest they reflect on the fact that the large majority of British people still choose most of their viewing from a small number of broadcasters, even when they have the opportunity to choose from a much wider catalogue of broadcast material.

In the case of the BBC it performs another useful role, namely, it is broadcasting without the profit motive constantly poking its greedy little nose into the public’s face through the pathological use of adverts. The BBC offers a haven of comparative calm, a reminder that there is more to life than economic relationships. An absence of adverts may have other benefits. Their constant intrusion makes the presentation of extended argument or evidence difficult, and in the case of drama disrupts the flow of the action: to a substantial degree adverts shape  programmes. There is also the question of production values. The BBC’s, especially in radio, are generally substantially higher than the commercial alternatives (think Talk Sport). This is primarily a consequence of not being driven by commercial pressures.

Finally, although there is great variety available nowadays elsewhere, it is dubious whether any commercial broadcaster, even one forced to produce some PSB programming by the state, would be required to (or even be able to) undertake some of the really big enterprises, especially drama and documentaries, which the BBC periodically tackles. It is also certain that no single commercial programmer would be able to even approach the sheer volume and range of programmes provided by the BBC.

Why should everyone pay?

For the same reason they all pay for state education, defence and the NHS. It is part of the normal social fabric of an efficient and advanced state. There are many instances of public provision where a majority pay but a minority of necessity benefit: social housing, high-cost medical treatment such as organ transplants and university education. (Even with the vastly expanded university population, now around 43 per cent of those under 28, a majority of the population will never attend.)

PSB is on firmer moral ground than any of the examples given above because everyone can freely access PSB if they so choose.

Is it reasonable for the state to interfere with the market?

The state interferes with the market all the time. It does so because all experience shows that private provision is never enough to meet a general need – whether PSB meets a general need is arguable, but if it is accepted that it does, then state action is necessary to provide it. In fact, the term “free market” is a complete misnomer. It is really a state-controlled market. The natural end of a truly free market is monopoly or at least greatly reduced competition resulting in oligopoly. All so-called free market societies recognise this by passing anti-monopoly laws. Hence, the “free market” is in fact a market controlled by the state in the most fundamental   way  to prevent its natural workings which is a movement to monopoly or at least greatly reduced competition.  It is one of the great propaganda triumphs of history that “free markets” have been successfully sold as being what happens naturally. Free marketeers invariably justify themselves by chanting “the market gives the people what they want”. The actuality is rather different because the viewer merely chooses between what is offered. That is a different matter from choosing what they would ideally want. As an instrument for providing what people want, let alone need, the market is wholly inadequate. A Tesco arrives in an area, kills off the opposition and everyone has to go to Tesco. That does not mean they prefer Tesco.

Can PSB survive in Britain?

At present the omens are not auspicious, with the relaxation of the commercial broadcasting ownership rules and the ever-expanding media choices open to the public. It may well be that within the foreseeable future the licence fee the BBC currently enjoys becomes practically impossible as the readily identifiable stand-alone TV ceases to be.

But there are also good reasons why it may survive. PSB is ultimately a political matter. It is very convenient for politicians to have a national broadcaster with a mass audience to carry their message. Such a broadcaster will become ever more useful as the commercial market continues to fragment and expand. Politicians may also see in PSB a means of cementing national unity in an increasingly uncertain and fluid world. But if it is to survive as PSB in the true sense it must not be dominated by a class or ideology. Rather, it must carry the population as a whole with it. Consequently, it should not be unremittingly highbrow, but all programmes should aim to be  of high quality. What should the supporters of PSB do? Present the honest subjective case for PSB and be prepared to argue it against all comers.

Japan and The Big Society

The response of   Japan to the triple  disaster of a massive  earthquake, gigantic  tsunami and nuclear  power failure  has been surprising. One of the most advanced industrialised states  and the third largest economy in the world has struggled desperately to deal with what is admittedly a dramatic and unusually devastating multiple disaster .  Not only has there been no clear resolution of the  nuclear power station problem  after several weeks, but the response to the distress of those who have lost their homes and all the conveniences of a modern state has been strangely inadequate.  People have been left with not only no homes or power, but without food and clean water.  In the worst affected areas even the legendary honesty and social discipline of the Japanese has begun to break down with looting. (http://www.telegraph.co.uk/news/worldnews/asia/japan/japan-earthquake-and-tsunami-in/8395153/Japan-earthquake-Looting-reported-by-desperate-survivors.html)

Is the inadequacy of the Japanese response simply a result of the scale of the disaster or is there something within Japanese society which has caused the lack of  useful response?   The scale should certainly not be underestimated because the tsunami alone damaged hundreds of miles of coastline to a reported depth of ten miles in some places and the toll of those dead is officially put at 10,000 and the missing at 17,000 as of  25 3 2011 (http://www.telegraph.co.uk/news/worldnews/asia/japan/8405619/Japan-earthquake-death-toll-passes-10000.html).  Moreover, the on-going problem of the damaged nuclear plant must be  a tremendous distraction for the Japanese government. Nonetheless, it does seem rather odd to the outsider that the response to the provision of basic necessities to the dispossessed has been so slow and patchy. It argues for at best a lack of reasonable planning for civil disasters of which there is a high probability. Japan is part of the Pacific “ring-of-fire” earthquake zone and tsunamis are a regular feature of the area. It might be argued that building nuclear power stations in a notorious  earthquake zone   is not the brightest thing to do, but Japan has little by way of natural energy resources so it is possible to see  why they have done it. What is less easy to see is why they should have built stations close to the coast with the obvious danger of a tsunami following an earthquake or even a tsunami overwhelming the station on its own.  

If there was a serious  lack of civil disaster planning why would that be?   After all, the Japanese are famously good at paying attention to detail and behaving in a disciplined social manner.   Perhaps the answer lies in the very social cohesion which has meant that  the development of  the state has been much more restricted than it is in most developed countries.  Japan has a population of 125 million, approximately twice the size of that of  Britain.   The Japanese budget for the present year is  less than £700 billion (http://www.reuters.com/article/2010/12/24/us-japan-economy-idUSTRE6BN0FQ20101224?pageNumber=1). The British Government’s projected  spend for the coming financial year is £710 billion (http://www.telegraph.co.uk/finance/budget/8403115/Budget-2011-graphic-Spending-income-tax-shortfall.html).  Japan spends less than the UK on public provision despite have a population twice as large. This means that the proportion of public spending is very low compared with most developed economies, the Japanese GDP being around £3.2 trillion of which the state spends  less than 25% .  Compare that with UK public spending which is pushing 50% of GDP.  

The surprisingly  low level of  Japanese public spending in itself means that the capacity of the state to deal with major disasters is severely limited.   This difficulty is amplified by the very high Japanese National Debt  which is approximately twice GDP.  Servicing this takes up a good deal of the Japanese government’s budget.   Money for public projects is in short supply and  it is a moot point whether Japan can be said to have a welfare state (http://www.onejerusalem.com/2007/10/14/japan-no-welfare-state/). If you fall out of work or ill in Japan and you are without the support of your family or friends, you can rapidly become  destitute.

Why is Japanese state spending so low?  Most probably it is  a continuation of traditional Japanese social relationships where support comes from  not only family and friends, but the general neighbourhood  and,  in the case of large Japanese companies at least, the organisation of  a person’s life around the place of employment. There is nothing abnormal about such development because it is precisely what happened in other industrialised countries before the state grew large.  Moreover, for many Japanese after  1945 the security offered by a fully-fledged welfare state was  largely substituted  by the giant Japanese companies who offered a job-for-life and  organised an employee’s life around the  business.  Although the job-for-life  culture has suffered considerable degradation in the past twenty years,  it stood in the way of the expansion of the state.

There is an important lesson for Britain and other developed states here. Japanese society is organised broadly as Cameron’s Big Society is supposed to be organised, with the state standing back and individuals forming a nexus of social-help. The problems this creates are only too obvious.  Japan has insufficient state capacity to deal with dramas such as it is currently experiencing or to provide for those who fall by the economic wayside. More generally, the insecurity which prolonged economic weakness produces – Japan has arguably been in recession for twenty years – will tend to make people less and less willing to think of the common good  if the support mechanisms they rely on are  informal and local.  

There is no question that there is often considerable waste in public spending . However, too little public spending is a greater evil than too much (provided the spending does not overwhelm the economy)   because too little leaves no spare capacity  to deal with either chronic problems such as long term unemployment or sudden disasters such as earthquakes or tsunamis.

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.

How should we decide what public servants are paid?

Over the past twenty years a new problem has grown around  public service pay at both national and regional level. The introduction of so-called business-methods into public service has resulted in the employment of people who are not career public servants in senior public service jobs.  These people have been commonly employed on fixed term contracts with considerably higher remuneration than career public servants have enjoyed.  That in turn has caused career public servants to seek similar pay and fixed term contracts instead of being employed on a normal contract of employment which meant that someone was employed until such time as they reached retirement age, proved incompetent or their job vanished. This inflation of pay at the top has caused the pay of public servants below the top level, especially those immediately below, to be pulled up in order to maintain differentials.  

The other difficulty is that fixed term contracts have often resulted in massive pay-offs to get rid of people who either fall out with the politicians they report to or who are simply incompetent. 

That these developments have  run completely out of control can be seen from the following report: “ Phil Dolan, 54, received £569,000 of taxpayers’ money in salary, pension and redundancy payments after leaving his post as chief executive of South Somerset district council. He is now acting as a consultant for other local authorities.

 Two other executives at the tiny council also received more than £300,000 each in salary, pension and severance payments last year.

 It means every resident of the district paid the equivalent of £7 in council tax last year just to fund the three men’s pay packages. Taken together, the payments represent the most dramatic example of local government largesse yet to be exposed. (Daily Telegraph 18 2 2011) http://www.telegraph.co.uk/news/newstopics/politics/8334915/The-council-fat-cat-earning-570000.html

If public pay is to be brought under control and made fair and reasonable in the eyes of the general public, fixed term contracts need to be outlawed in public service and senior public service pay brought back to the levels of twenty years ago.  Fixed term contracts do not, as their supporters claim save money by making it easier to get rid of people. If public servants were on ordinary contracts of employment, un less they successfully alleged racial or sexual discrimination before an Employment Tribunal, all they would be eligible for if they were sacked unreasonably would be ££68,400.  (In theory, a sacked person could take the matter to an ordinary court but  the cost of that together with the likelihood of costs being awarded against the plaintiff if they lost make this unlikely). The settlements received by senior public servants on fixed term contracts commonly dwarf the Employment Tribunal maximum. That being so, as a matter of simple arithmetic it would pay to move away from fixed term contracts.

 Senior public servants would doubtless resist cuts in pay by trotting out the argument that public servants running large departments or councils deserve remuneration equivalent to that of those running large public companies. It is a bogus argument. Those running private companies have to both raise the money to keep the enterprise going and decide how spend the money: senior public servants have an assured revenue stream and merely have the task of deciding how the money is spent.

That is senior public servants. What about public service pay in general? Consider this press report: “Tube drivers, who now earn £31,300 for a 36-hour week, along with six weeks’ holiday a year, a final-salary pension and free travel for their families….The Tube drivers’ salary is almost twice as much as a nurse or an ambulance worker gets for working longer hours on more complex jobs. It is half as much again as a bus driver, who works 50 hours a week, a firefighter, who works a 42-hour week, or a police officer, who works a 40-hour week – each of them doing very stressful work for the payment they get.” The Evening Standard commenting on a prospective tube strike 02.10.02

Driving an underground train on a partially automated system cannot realistically be considered as more skilled, dangerous and stressful than that of a firefighter. Most people would say the Tube driver had the easier job by far. But is the firefighter’s job more stressful than that of a bus driver who has day in day out to deal not merely with London traffic but in many cases has to take fares as well? And what of a nurse or ambulance crews? Is the emotional distress they suffer more of a burden than the fear a firefighter may feel when going into a fire? Going outside public service jobs, a trawlerman’s job is considerably more dangerous than that of a firefighter’s and the ordinary crew member will not earn as much as an Underground driver. In short, comparability is a minefield.

All our experience shows that “fair” job evaluation never works because no one engaged in the employment evaluated can ever objectively agree on their place in the job hierarchy. Hence, even where deals are struck, dissatisfaction soon breaks out again about “comparability”. As for the public, the pay and conditions arrangements of public service workers are generally so opaque that most people can make neither head nor tail of them. The result is an unstable situation which satisfies no one for long and leads to the general public having an unrealistic conception of what public employees earn, both by underestimating and overestimating pay.

Even in a society where there is a strong natural commitment to public provision, as was the case in the quarter century after WW2, the public servant has a vested interest in working to retain public  confidence. Unless the taxpayers generally continue to think that the money being spent is worthwhile, there will come a time when a government will be elected, as happened in 1979, which will substantially reduce government expenditure and the opportunities for public service. Worse, circumstances can arise as they have done now, where not only the government but also the main opposition party are hostile to direct public provision. Therefore, it is especially important at the present time for public servants to persuade the public that they are both necessary and giving value for money. The best way of doing this is to arrive at a pay structure which is both simple for the public to understand and constructed in such a way to ensure that pay and conditions are adjusted automatically by reference to an objective standard to keep them in line with wages and conditions in private business.

What is needed are criteria based on broad similarities, which the general public can understand and support. Most jobs are much the same in terms of the general demands they make on people – stress, responsibility, intellectual effort and special knowledge or skill. Moreover, those jobs which demand more than the norm also fall into readily identifiable categories. (Anyone who doubts this should try an experiment. Produce a list of twelve disparate jobs of the same general status – all non-management or all management and so on – and which have no emotional plus or minus against them in the public mind – exclude nurses, estate agents etc. Then get people to assess their worth in terms of wages. Most people will judge the value of the jobs to be similar).

Public service jobs are even more readily categorised than the totality of occupations in a society because the range of work in public service is much more limited. In a way the civil service already recognises this because the standard civil service grades cover an  immense variety of job titles. The civil service division of grades into administrative/executive/clerical provide a starting point for the broad criteria mentioned above. These could then be augmented with categories based on danger, stress, responsibility etc. If recruitment becomes a problem in a particular area, the problem can be solved by raising pay through re-grading.

The second problem with public pay is keeping it up to a realistic level. Previous attempts a pay formulae have not been linked to the average male wage and that has been the primary cause of their failure. It has meant that periodically public sector workers have fallen behind private sector workers as governments run into financial trouble.

What is required for all public service jobs is a formula which uses the average male worker’s earnings as a baseline, with the various public service grades being a percentage of the average male worker’s earnings – the percentage could be less or more than 100% depending on the grade of the job. Such a system would mean regular upgrading of pay and avoid the demands for very large percentage increases when pay falls behind.

Should pension entitlements, holiday entitlements and security of employment be taken into account when calculating public sector pay? Only to the extent that they differ from the arrangements of large private corporations. Historically large private companies have offered non-salary benefits very similar to that enjoyed by public servants. That is changing, in particular final salary pensions are rapidly becoming extinct in private business, and any grading of public service jobs should reflect any difference which arises between public and private in the future. However, care must be taken to avoid a situation where public servants cease seeing public service as a secure career. Most of what Government does benefits from having career employees because continuity is a great deal in administrative work, which forms the great bulk of public service employment.

The third major problem is national pay. This is perhaps the most sacred of cows of public service workers and unions, but there is no logic or fairness in such arrangements. If everyone in the NHS receives the same pay for the same job regardless of where they are living, there is in reality no national pay because of the considerable regional differences in cost of living. There are parts of the UK where, for example, teachers earn below substantially below the local average and others where they earn well above the local average. Hence, we have regional pay but quite perniciously the lowest pay is paid inthe highest cost areas. The consequence is that there are often staff shortages in the higher cost of living areas and the quality of staff employed in such areas may be below the standard required simply because no one else can be recruited at the pay levels. The answer is to introduce regional RPIs (Retail Price Indices) – which would include housing costs – and vary wages according to those.

Regional RPIs would solve much of the present difficulty for public service workers in high cost areas. It would not be politically possible to reduce the pay of existing employees, but it could be held static in the lowest cost areas and differential increases given in other areas until regional pay was established. For example, suppose area A is the cheapest area and area Z is the most expensive. Area A gets no increase until its pay level reaches that which matches its Regional RPI, while Area Z immediately gets an increase which raises its pay level to that required by its Regional RPI. Ditto for all areas between A and Z. If their pay is beyond that required by their regional RPI, it remains pegged until pay and cost of living equalise: if below their Regional RPI, they get a rise to match it. As time goes on, the higher pay of the higher cost areas will be balanced by the lower pay of the lower cost areas. There would be no massive extra ongoing expenditure as eventually the lower and higher pay levels would broadly cancel each other out. However, there would be an initial cost because no one will have their pay immediately reduced while some will have it increased substantially.

Much of the problem of regional cost variations could be obviated if the cost of housing was substantially reduced. Government can take the lead by making more housing available in the areas in which it is scarce – see section for detailed suggestions. In particular, a ready supply of housing both to let and buy at reasonable prices would largely overcome the problem of the young who have yet to buy. A middle-aged person who brought their home 20 years before requires far less to live comfortably than someone trying to buy their first property. The latter have near insuperable problems in many places. For example, in inner London, an income of £50,000 would not be enough to buy the most basic family home because a three bedroom property  would be in excess of £300,000 in even the cheapest areas.

The cost of any re-grading could also be offset by reducing the numbers of public servants in some areas. This would naturally meet with resistance from public servants, but if it is done without compulsory redundancies – and it could be – the objection to it is not strong. Staff can be redeployed to other posts and new recruitment to the remaining departments reduced to accommodate them. Attention has to be paid to the age structure of a workforce – no large organisation wantsto find itself in the position of having a sizeable proportion of its staff retiring at the same time – but with an employer as large and diverse as the Government, this should not be an insuperable problem.

Why not simply have wages set by what the market will bear in any particular place? If there is a shortage of nurses in London why not pay them £30,000 if that is what it takes, but only £10,000 if that is a competitive wage in, say, Cornwall? That begs the question of the quality of the recruits you attract and their long term retention. You may get enough recruits at the low rate but they may be of poor quality. There is also the question of motivation once employed. Poor motivation equals less efficient working. Pay should be high enough to avoid those two evils. If higher wages produce greater motivation and ability in the staff employed, the number of staff could be reduced.

The great advantage of adopting a system of broad definitions – tying pay to the average full time wage and Regional RPIs – is that it would be both stable and largely self adjusting. Problems could arise where recruitment becomes an issue. Then, as mentioned above, re-grading might have to occur to raise pay in a particular area of work or region.

All the Public Service Unions and many public servants will instinctively reject what I have suggested because such things as national pay scales and the preservation of jobs are part of the emotional scenery in public service. But public servants do not have a right to determine how many people will be employed by the Government and they should always remember that a public servant must have a necessary and useful function to maintain public support.

What public servants do have is a right to a decent living wage for what they do and to reasonable working conditions which includes the assured opportunity for a career and staffing adequate to carry out the tasks Government sets them. If they start from those two premises they have a much greater chance of achieving their ends than they have in merely maintaining the status quo.

 Above all, it should never be forgotten by the public servant that the taxpayer is the paymaster for all government spending. A statement of the blindingly obvious perhaps, but one which tends to be glossed over by governments who speak as though they are spending their own money  when they talk of “an extra £3 billion for the NHS” or “£200 million to  take crime off the streets”. Public money is not unlimited nor is the level of public spending without consequences for the general economic health of the country.

Most public servants know that there are pluses and minuses in public service and that moving to private employment has its disadvantages as well as being very difficult in areas where private business is not thick on the ground. There is also the example of public sector employees who have had their jobs privatised. They have frequently found that their new conditions of work are inferior to those they enjoyed when in public service. Public servants also know in their heart of hearts that security of employment is still considerably greater in public service than in private business. Consequently, the government has a strong card to play if they choose to play it, namely, continued security of employment in return for the radical changes described above.

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