Brampton Factor: Public sector woes

Although technology has long been touted the saving grace of government services, it has yet to prove true. What is needed, says Martin Brampton, is some more original thinking.

As Gordon Brown heads for 10 Downing Street it is worth having another look at his old claim that IT expenditures would drive down government costs - especially with Richard Granger, the leader of the troubled NHS IT programme, heading for the public sector exit door.

Departing PM Tony Blair has never tired of telling us that we must modernise pretty much everything. It has never been clear what sort of change constitutes modernity as opposed to backsliding. How do we recognise the right sort of change?

It is perhaps surprising that implementing almost any kind of IT system still seems to automatically count as modernisation. Sixty years after the first rudimentary attempts to apply data processing to elections, one might have expected IT to have become old hat. After all, nuclear energy has grown up over a similar period and has moved steadily from technological wonderment to its present tarnished image. Maybe the ever-changing character of IT has allowed it to retain an image of modernity.

One problem about the claims made by Blair and Brown is the results just aren't there. Of course it would be churlish to deny that the huge increase in health spending has resulted in improvements. Despite that, there are critical factors that do not look good. The obvious one is productivity, which evidence suggests is falling in the public sector.

In education, the area for which Tony Blair made the most extravagant claims, the government's own Office for National Statistics tells us that measurement is very difficult but summarises: "Education productivity has been falling since 1995 but less markedly since 2002."

This tells us the education system is becoming less effective in its use of resources.

The picture is much the same in another key area, the health service. Although NHS output has increased, the Office for National Statistics estimates productivity in the NHS has fallen by up to 1 per cent per year since 1997. The OECD has confirmed that in its view NHS productivity fell between 1998-9 and 2002-3. Now, it might be that NHS productivity will rise sharply when current IT developments are completed but this seems unlikely.

Across the whole of government, a leaked report from the Treasury and the Downing Street Strategy Unit (first published by the Sunday Times in 2004) suggested public sector productivity had fallen by 10 per cent since 1997.

One consideration against huge public IT projects should have been obvious long ago, although it continues to be ignored. The planned departure of Richard Granger points up the issue of big projects outlasting any of the people holding responsibility. While it may be unreasonable to expect someone like Granger to commit to more than five years in a post, the civil service has long had a problem with moving project managers more quickly than projects are completed.

It will be only natural for Granger's successor to quickly stake out a position where any problems arising in the huge and troubled project can be blamed on people who have left. That will naturally be disputed and by the time the project is completed, it will be impossible to find anyone who can be held responsible for its deficiencies. And all the evidence suggests the project will fail to deliver benefits commensurate with the immense costs.

Amidst all these concerns, the government displays the well known human weakness of clinging to favourite beliefs, come what may. There have been people who have believed, usually for religious reasons, that the end of the world is imminent. They have sometimes gone to the top of a mountain to await the final cataclysm. When it does not take place, far from returning with their beliefs shattered, they typically return delighted at having been graciously saved before settling down to figure out a new date for the end of the world.

But it is alarming to find we are governed on principles of this kind. The demonstrable failure of repeated government initiatives is claimed to be because we have not gone far enough or because people are unwilling to embrace modernisation. Such excuses are wearing thin. And constantly holding up the private sector as a paragon of virtue is less than convincing. Studies show IT investment in business causes an immediate downturn in productivity which is only offset through organisational change.

However, the kinds of organisational change favoured by business have doubtful relevance to government. One increasingly obvious factor is that the way business is organised is leading to the extreme enrichment of a small but privileged group of people. The great majority are not seeing any benefit at all from growth in economies even over long periods - and significant minorities are worse off. This hardly seems an appropriate model for government to follow.

Another factor is the perception that companies are treating customers worse and worse. This has long been evident through individual experiences but a recent Economist article by Matthew Vincent points out that the stock market performance of companies noted for poor service is better than average. British Gas and Carphone Warehouse are cited as examples. Again, this is hardly the ideal model for government.

The specific conclusion seems to be the obvious one that IT is not a magic bullet that will solve all the problems of government inefficiency. Despite lessons regularly repeated over many years, public IT projects still fail to be kept within the management capabilities available. And the general conclusion must be that we are long overdue for some altogether more original thinking about how to improve public services while keeping their cost at bearable levels. Unfortunately, there is no sign of it.