The Audit Explosion

Even if Alistair Darling offers an austerity budget, one level of bureaucracy will emerge unscathed

The Observer, Sunday 19 April 2009

If the typical beneficiary of the 1945 Labour government was the common man, who returned from war to be rewarded with the welfare state, and the typical beneficiary of the 1979 Conservative government was the aspiring man, who was freed to buy his home and start his business, the classic beneficiary of the 1997 Labour government must be the form-filling man, who was rewarded with a lavish salary for monitoring and chivvying others.

With a growing national debt threatening to push the country into bankruptcy, he ought to be the target of popular anger. But the public is turning against bureaucrats and its widespread denunciations of “managers” miss the real area of bloated growth. A hospital manager performs as essential a service as a doctor. Without his or her organisational skills, the NHS could not function. A more emblematic Labour figure is Cynthia Bower, a civil servant who has made a career from box-ticking. She failed to spot that hundreds of patients were dying before their time in Stafford Hospital. Nevertheless, the Department of Health promoted her from monitoring the West Midlands’ health service to the £200,000 post at the Care Quality Commission, where she must monitor standards in all the health service.

In “The Audit Explosion”, a prophetic pamphlet written in 1994, Michael Power, an academic authority on accounting, anticipated the Cynthia Bowers of our day. He predicted that the new craze for targets and reviews would “spread a distinct mentality of administrative control” which would undermine trust and encourage the proliferation of empty gestures. The embrace by government of targets and supervisors would bring a “major shift in power from the public to the professional and from teachers, engineers and managers to overseers,” he wrote. Although the form-fillers claimed to deliver transparency and accountability, they were in fact engaged in a “peculiar form of alchemy” that turned workers into “auditees” who did what they had to do to meet a target.

Power’s predictions were mistaken in two respects only: he did not guess – for how could he? – that the one institution Labour would fail to regulate would be the one all its centre-left history told it had to be regulated – the banking industry. And he failed to appreciate the cost of regulating all those other institutions that did not need armies of auditors descending on them.

Putting a price on the form-fillers taxpayers employ strikes me as close to impossible. You would not only have to survey the whole state sector but take into account the huge number of management consultants and IT designers who have been invited in to drink long and deep at the public teat.

All I can do is show the waste in miniature by looking at the probation service, a small branch of the criminal justice system I have covered on and off for years. On paper, probation officers should be able to continue protecting the public and encouraging criminals to go straight. Certainly, their finances will tighten as cuts beckon, but they ought to have plenty of fat to spare because Gordon Brown threw funds at their service in the bubble years. From 2001 to 2007, the probation budget increased by 21% in real terms.

And yet for all his munificence, the number of qualified probation officers declined by 4%. Public money went on managers engaged in constant reorganisations. First, we had Noms (the National Offender Management Service) which the Ministry of Justice sub-divided into Roms (Regional Offender Management Services) and when it deemed that they had not succeeded, it reorganised the Roms into Doms (Directors of Offender Management Services).

Worse than the administrative costs was a disastrous flirtation with computing. As with so many other government departments, the undoubted efficiency savings new technology offered led managers into techno-utopian fantasies. Civil servants at head office dreamt of being able to monitor every prisoner along with the performance of the staff who guarded them.

They demanded more than 800 tweaks to the planned system so they could realise Jeremy Bentham’s dream of panoptic supervision at the press of a button. As they added more demands, the projected costs rose from £234m to £690m. Last month, after the scheme had collapsed under the weight of its own grandiose ambition, Edward Leigh, the chairman of the Public Accounts Committee, observed: “This committee hears of troubled government projects all too frequently, but the litany of failings in this case are in a class of their own.”

Harry Fletcher, of the probation union, Napo, estimates that Labour has wasted about £1bn on botched probation initiatives. Not a large sum when there is talk of the national debt rising to £180bn, I grant you, but as a US senator once quipped: “A billion here, a billion there and pretty soon it adds up to real money.”

With Alistair Darling preparing to anticipate the next Conservative government by announcing an austerity budget, it seems obvious that ministers should look for savings by first cutting managers and IT consultants. I do not think they will because the centralised system they preside over has trapped them. England has no effective local government with tax-raising and spending powers.

Ministers have allowed the explosion in the numbers of form-fillers because they have to pretend they can monitor the delivery of services. Like witch doctors chanting spells, they must recite from efficiency reviews to sustain the electorate’s illusion that government is in control of public services which, in reality, are too big and complicated for the most brilliant bureaucrats in the world to manage from a command post in London.

Cuts may target form-fillers while sparing front-line staff only if they are accompanied by a revolution in government. As there is no prospect of revolution coming, the auditors will survive and prosper long after the Labour government that has pampered them to excess has gone.

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10 Comments to “The Audit Explosion”

  1. Britain in the eighteenth and nineteenth century built the largest empire the world had ever seen AND became the workshop of the world, with a decentralized system in which local government (and, in the empire, the man-on-the-spot, governor, resident, colonel or merchant) made most decisions. The only attempt at centralizing decision-making ended with the heart of the Empire, the thirteen colonies of North America, goin walkies. The British learned from that and made later colonies self-governing as soon as it was practical. Britain in the twentieth century was seized by a demon of centralization – imitating, badly, countries like Prussia and France where centralized government was a tradition – and lost both their empire and their economic prominence. That went to the former Thirteen Colonies – a decentralized federal Union. Meanwhile, France, Germany, Spain and Italy have all decided that their centralized governments do not suit modern conditions and have moved – Italy and Spain most spectacularly – towards federalism and broad local autonomy. Italy is giving, for the first time in its history, broad tax-raising powers to its local authorities, and expanding their range of powers. Someone should explain to New Labour what time of day it is.

  2. The call went out from the Prime Minister that there should be ‘no rewards for failure’ for the individuals who had a hand in the leaving the economy on a cliff’s edge. One would wish this axiom would apply generally rather than just being solely directed at the bankers. But it seems not to be the case.
    A re-reading of The Silence of the Docs will explain all.
    Cynthia Bowers’ promotion (including a wage higher than Gordon Brown’s) is inexplicable. I genuinely mean that. Also, I cannot see how the health secretary can go round the hospital visits he makes, shaking hands with staff or chatting with patients, and not shrink in his suit down into a shoe.

  3. Strange how British managerialists adopted this system of targets shortly after the collapse of the Soviet Union had proven decisively that this just doesn’t work.

    I wonder which outdated bit of academic work will be vulgarised next by business ‘intellectuals’?

  4. In this economic storm unemployment has crossed over the 2 million mark and is likely to go up to or beyond three million at sometime. What sort of numbers would the jobless be if the present was less technological?

  5. Alistair Darling at least kept a straight face throughout his 2009 Bagehot day for the cameras, early on filmed having breakfast and then later in the day at the despatch box. Why write such a thing? Well, when a grin covers much of the face when it logically shouldn’t, it is not good, because you’re either a psycho in some film or other (!) or not very well. Whatever the outcome from last Wednesday, going about it, Darling was as you would like him to be.
    But Gordon Brown? Shortly after the beginning of his premiership he had to take on some sort of advisor who was to keep him out of embarrassing situations, photograph’s, etc. But this Youtube thing, for whom was is it delivered like that? This advisor is on a lot of money. Surely she could say to him after a year: ‘no, no smiles, Gordon, no grinning, it looks bad. Keep the delivery plain, quite solemn – as you did when talking about the terrorist attacks a year ago.’ In short, authoritatively. But then again, maybe she asked him to smile a bit?
    He needs to cut this nonsense out for the remainder of the term, so we don’t have a Prime Minister who will only end up doing these crazy videos for stoners to get high to. Sounds daft, but I’ve already seen some lads mimicking him. I find it regrettable. If the advisor has no cut with Gordon Brown over matters like these or is responsible for them, then she should do some good for the public purse and hand in her notice. Going down fighting is far better than going down grinning.

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