British Government competence is becoming a matter of increasing concern to its people. Doubts crept in over the conduct of the Iraq and Afghan wars, failures in major IT schemes and a Home Office widely regarded as ‘not fit for purpose’ (in its own Secretary of State's words). But problems are now appearing as a cascade rather than as the occasional expensive error of judgement.

It is time to consider why this is happening now. It is not ‘accidental’ but directly derivative from the Government’s (and, particularly, New Labour’s) management style - and from the conditions of a State struggling to cope with the new globalisation under the conditions of a free market and of a free and extending media. 

Riding the Global Tiger - Why States Fail

State managerialism (which, in truth, started with John Major's Conservative administration) has emphasized rule through a combination of targets and top-down management designed primarily to get ‘value for money’ (actually to cut costs to avoid increases in taxation). Latterly, it has had to make use of relatively cheap migrant labour to deliver increasing demands for welfare service and economic growth, without upsetting the trades unions.

A system of regulation and inspection was supposed to keep the system together. Unfortunately, the cost-cutting tendency eliminated much of the inspectorate class, leaving the public to police themselves with the occasional well-publicised draconian punishment intended to frighten most into compliance.

Like all grand systems, this one has foundered on human nature. Bureaucratic timidity in enforcement has resulted in irritating headlines about 'political correctness' but far more important is the discovery by the public that there are many work-arounds if you do not want to be bothered with the rules. Enforcement is a joke. Pressure of targets means that you get punished more for failing to meet them than failing to fulfil the essence of the service.

Good law-abiding people continue to disadvantage themselves competitively by obeying the rules - the rest just do not bother, gambling fairly rationally that most times in most places they will 'get away with it'. 

The most obvious areas of breakdown are where the State tries to cut costs in service provision by taking on private sector support that it does not have the resources to monitor - and about which it has failed to undertake any due diligence.

The bureaucrats are inexperienced in service procurement (boxes are ticked and judgements not encouraged) and they are under pressure to deliver specific services on weak resources. The pressure on social services staff nationally is a mental health scandal in itself.

There have been a number of recent investigations or inquiries into the use of the private sector for security and immigration control which have uncovered serious human rights abuses. These have shocked the investigators and the public.

They are probably the thin end of a wedge. The next major scandal is going to be in the care home sector where local authorities' pay ridiculously low sums for care in private homes without sufficient scrutiny. This is asking for trouble as we move towards a serious credit crisis.

Ninety have already died from target-driven management failures to control a deadly microbe at our local hospital. The police keep fulfilling targets on paper and yet the public see a material degradation of the human environment. Criminals no longer rob houses because it is easier to rob bank accounts through identity theft and credit card fraud.

Local governance is not much better than national governance. Our own town is a particularly bad example and recorded by us and others ‘as it happens’ (as private citizens) in a Facebook Group. The reality is that the State bureaucracy at all levels is in a state of near melt-down.

Anxiety now centres on Northern Rock (where £900 of every British person’s tax contribution is ‘invested’ as loan) and on the latest lost records scandal which follows a pattern of other losses of data where laptops and CDs have gone missing. 

The Latest Disaster - At The Heart of Middle Class Anxieties

This greatest and latest political disaster yet (dwarfing even Northern Rock) was revealed yesterday when the personal bank details and family information of 25m citizens was lost ‘in the post’ in what is generally recognized as gross incompetence by HM Revenue & Customs.  This is a Department also under fire in the business sector for delays in small business VAT registration arising out of a badly planned attempt to deal with the loss of tax revenue.

It won’t please the South East that both the Northern Rock and the lost child benefit information appear, wholly coincidentally, to have emerged as problems out of the North East.

But forgetting the possible role of a Labour heartland’s complacent political culture, why should this general crisis have emerged now? For several reasons that the political class find it difficult to face without asking some very serious questions about what use they are at all - and that way political madness lies ...

The first is that the quality of thinking inside the bureaucracy is low because it operates to out-dated nineteenth century procedures that were designed to stop petty corruption. Formal rules and best practice kill any chance of creative and entrepreneurial solutions to the rapid succession of problems created in a global free market economy and by a free population. 

Either the system has to break in order to be remoulded or it has to try to claw back power and talent from the market and the people. I would prefer the former but there will be growing pressure for the latter - what we might call the 'Putin option' - as the system degrades.

The second is that this system is under unprecedented strain because the lifting of exchange controls by Margaret Thatcher and the creation of an intellectually far more adept private sector has flooded the State with massive problems related to the managing of unstable and rapid economic growth.  None of our politicians and few of our bureaucrats truly understand what is going on.

The third is that the rules remain multiple, rigid and complex but the world outside is moving too fast to be regulated.  The Regulatory State as adequate replacement for the Planning State was a flawed concept from the very beginning.

The system may regulate but the bureaucracy has to keep turning a blind eye to small technical infringements just to cope. Its pattern (and US Treasury and US Justice are no better) is to avoid questions about the general social climate of law enforcement and concentrate on changing behaviour through winning big cases that send a signal through the system.

This Government and this State unfortunately believes that if you write something down it is real - a mistake no one in business would make. A whole generation of public service managers has survived by hiding behind rules created to preserve an illusion of authority.

The constant writing and redrafting of rules and regulations is merely a means of ‘covering one’s a**e’ against internal criticism and political scrutiny - you show the critic the rule and the critic walks away. The rule can then be sidelined in order to deliver the target demanded by the same person who demands the rule. It is a failure of politics.

Systems Failure

Above all, what we are looking at is the failure of the modern State to cope with the consequences of the radical social and economic changes introduced in the 1980s - and which are about to be introduced more widely across Europe under the continued extension of the Single Market. The EU is in a similar state of disorder.

Political decisions are also having their effect alongside bureaucratic practice. The most obvious problem is that Governments do not feel able to raise taxes. They are trying to provide public services on the cheap without reining in their ambitions in regard to either foreign policy or welfare. We are back to the guns and butter debate with a vengeance, but welfarism itself also requires another debate about whether it is a service for taxpayers or a safety net for the disadvantaged.

Low taxation designed to encourage capital accumulation and investment also creates demand for cheap labour but there has been no provision for the planning of the movement of peoples, either as effects on the indigenous population or in services for the migrants. Another headline failure of Government has been to count accurately the numbers actually in situ in Middle English towns.

Migrant services thus appear to suck dry benefits attributable to taxpayers who expect a traditional welfare state. Migrants cut into housing provision with no countervailing investment from the State. Rather late in the day, the Government appears to have rediscovered planning as a virtue, albeit over the heads of the indigenous electorate, but only in this highly restricted area of land use and only because energy security and housing needs are reaching crisis point.

The ‘market’ might work in theory in these areas of public provision, but only (and this is the problem not just in the UK but globally) in a way that undermines the fabric of the environment.  Market provision free rides on the taxpayer-funded infrastructure and the results creates deep cultural ‘unease’.

If you think the UK has it bad, you should look into the working class communities of the emerging world like those in Morocco. Ordinary Moroccans are feeling similar free market pressures and asking similar questions about the appropriate balance between wealth and traditional culture, about the conduct of the very wealthy and about 'lost values'. If Islamism is on the rise, then look to post Cold War economic modernisation without adequate state planning for the infrastructure surrounding free market enterprise as a cause.

After two decades of the Thatcher-Blair experiment in governance, you have a global system under deep strain. It is just that, in the UK, the crisis appears as a decline rather than as the teething problems of modernisation.

The British State is now making serious mistakes that are disruptive and costly to its citizens. Voters are aware of being wealthier but are also aware of the breakdown in the indigenous infrastructure that they have taken for granted.  Corrective action that might come from increased State spending is not permitted because the taxpayer now distrusts the competence and even goodwill of the democratic State.

Political Effects

What are the political effects likely to be? Well, first of all, this is serious stuff.  The public will tut-tut about failures to deliver the right equipment to soldiers in Iraq or the treatment of migrants or delays in VAT-registration, but Northern Rock and the latest incompetency over the lost discs cut right into the world of middle class fears about the safety of savings, inflation, mortgage rates and identity theft.

ID cards, where the Government probably had an edge over critics in terms of popularity by appealing precisely to this middle class anxiety over identity theft, may be an early victim. Few will now believe that Government is either competent or honest enough to handle the project.

The public has, it is true, not understood the causes of the crisis in State-community relations. It also does not yet understand that, although there are peculiar reasons why New Labour’s managerialism is a significant factor in these failures, the core problems would remain the same under an administration led by any of the three main parties.

The political class as a whole shares the same basic attitudes to taxation, investment, economic growth and planning if only because the economic benefits have (until now) been clear to see. The costs could always be blamed on someone else or be regarded as minor and unfortunate (like the Farepak collapse) - but not now.

What we are more likely to see in the short term is some shuffling of the deck chairs on the Titanic (our favourite metaphor for elite reactions to the current crisis in globalisation). State incompetence will be seen as an issue of New Labour competence instead of systemic failure. We may have two or three years more of the blind leading the blind before the penny drops. 

To his credit, Blair recognized that public service provision was beset by serious competence issues but his was not the sort of mind to concentrate on the detail of solutions or reconsider some of the basic mantras of New Labour that had contributed to the growing crisis.

The nearest recent political analogy that we have is the effect on the voters of the mini-recession caused by the withdrawal by the Major Government from the ERM. This definitely contributed to the arrival of New Labour in 1997.

In this case, however, there is no one single observable policy failure undermining faith in the Government of the day. Instead, we have a series of errors where the public cannot always see the connections but which give a general picture of a Government (rather than a State) out of control of events.

The beneficiaries are thus likely to be the two main opposition parties. Unless there is a revolution in Government thinking and methodology over the next eighteen months or two years, New Labour’s period of attempting to ride the tiger of globalization may be at an end by the end of 2010.

However, before predicting a complete loss of control for New Labour, we should go back to the thought that the opposition parties all still hold broadly to the model that has got the State into this mess in the first place. Cameron has shifted the Tory Party further into the Thatcher-Blair consensus and the Liberal Democrats are about to do the same by electing Nick Clegg (if the polls are right).

The choice for the electorate (given that they have minimal choice between systems rather than between managers of the existing ramshackle system) is which manager and not which system. In this situation, the ‘wisdom of crowds’ may just decide to stay with New Labour because the alternatives are not alternatives at all.