WHATEVER HAPPENED to joined-up government? One of New Labour’s favourite mantras when it came to power, it dropped out of the lexicon in the second term. This is perhaps understandable, since there is precious little of it about. But that, too, is not surprising, because the management methods the government favours make joined-up anything almost impossible to achieve.
Joining things up implies looking at elements of a problem as part of a whole – a system. Since ultimately everything is part of other bigger systems, systems thinking poses problems of delineation (at what level to tackle the issue) andof measurement (how best to measure performance of a system, the NHS, say).
But if concentrating on parts of the problem initially seems easier, it always ends in tears, adversely affecting the system as a whole, raising costs and making it harder and harder for managers to see the link between causes and effects.
A perfect example in microcosm: according to a Nuffield Review, students going to university increasingly struggle with work that requires them to think independently or make connections between narrow areas of study – when called upon to show joined-up thinking, in other words. Because of excessive emphasis on modular courses, results and league tables, students are taught to pass exams, not to think for themselves.
‘Learners who may have achieved academic success by such means at A-level… are increasingly coming into higher education expecting to be told the answers,’ the review says. Passing exams has become the unspoken purpose of the system. Ministers boast that results are improving but ignore the purpose of the system as a whole: preparing students for adult life as thinking, connecting beings.
Again, from a systems viewpoint, there is no mystery about the state of the NHS. How can the organisation be simultaneously meeting all its performance targets and in financial crisis, despite absorbing record amounts of money? Because, in the absence of a systems view of improvement, performance goals can be met only at the expense of missing others, in this case financial ones. The lack of overall systems improvement has been disguised by the high spending. But now that is tailing off, better financial and operating performance can only be achieved through method, which the NHS doesn’t have.
NHS trusts have become good at ‘passing exams’ (hitting targets and pass ing inspections), but the casualty is the system as a whole. Some interesting systems work is going on within the NHS at the level of individual trusts, with encouraging results, but these are exceptions, in part because it involves downplaying, at least temporarily, the targets that are the chief feature of the regime, as well as the cause of the failings.
The third, even more devastating, example of failure to see things in joined-up terms is pensions. Leave aside for the moment the unintended results of the Chancellor’s decision to do away with the advanced corporation tax break, thus triggering the initial panic. That pales into insignificance compared with the consequences of the regulatory and other changes that, in the name of greater precision, have caused companies to calculate pension liabilities in terms of the yields on long-dated gilts. This simple change has set in motion a classic case of Goodhart’s Law.
To remind you, Charles Goodhart was a chief adviser to the Bank of England who observed that as soon as governments tried to regulate a category of financial assets, it could no longer be relied on as an economic indicator because the institutions just invented new kinds of assets. In other words, the minute a measure is used to manage by, it ceases to be useful as a measure. It can be one or the other, but not both. Turning gilts in effect into both target and measure was asking for trouble, which has duly arrived. Supposedly to reduce risk and match assets more closely with liabilities, companies have sold equities and poured money into gilts, which has had the perverse effect of raising prices and depressing yields, nominally increasing, not decreasing, their pension deficits.
The only systems that really turn government on are IT ones, whose importance it vastly over estimates. Organisations are remodelled around flashy IT systems that usually institutionalise the disjointed present arrangements, optimising parts of the system at the expense of the whole. One example is the 100 or so shared-service operations being planned to carry out the public sector’s routine back-office functions on a smaller scale are call-centres mandated to take customer calls for the police, ambulances and other services. The idea was that people answering phones would clear others to do real work. But without system measurements, this just moves work from one place to another, adding a layer of cost in the process.
New Labour was right in 1997 that joining up public-sector management was its biggest challenge. Unfortunately, in 2006, it still is.
The Observer, 26 February 2006