Leaving aside their general incompetence, bad advisors, dodgy donors, hooray Henry Metrocentricity and extreme reluctance to clarify, much less detail, any sensible policies, even the New Tories should have been able to savage the field of half-dead sheep that passes for the incumbent UK government. Part of the reason is demographics – Britain’s ‘much-admired’ first past the post voting system has been comprehensively gerrymandered so as to make it very difficult indeed for the party which gets a popular majority to ensure a working majority of seats. This has worked in favour of the Tories in the past, so no sympathy there. To ensure a landslide along the lines of the Labour 1997 victory, the Tories would need to be looking at a 15 point opinion poll lead at this stage. This time last year, it was trending that way. So whatever could be the matter?

It’s the economy, stupid. Or rather, the bubble economy which constitutes the UK public sector. Under New Labour, it now accounts for 6.1 million jobs out of 21.6 million full time workers, representing 28 percent of the UK workforce, the vast majority of which must be assumed to be ‘natural’ Labour voters. In addition, there are 7.1 million part time workers, many of whom either work in the public sector and participate in McJob schemes. That’s not to count the 2.3 million higher education students and 176,000 academics who teach them. The vast majority of these cadres wouldn’t be considered natural Tories. – nor have the Tories given them any reason to change their collective minds – but now they aren’t so sure of their masters’ intentions either. Proposed Labour cuts in the Higher Education budgets will definitely reduce jobs and the number of student places, plus a growing wave of discontent amongst workers in areas of the civil service, Network Rail and (privatised) British Airways, may mean that a significant number will lose faith in the ‘devil you know’ nostrum and punish the incumbents.

Moreover, despite the recession and clear evidence that the sporran is empty, Gordon’s job creation schemes, designed to massage grisly employment figures, have continued apace. Overall unemployment rose by 54,000 in the three months to January 2010, but this was mitigated by 20,000 new jobs in the NHS – 1.3 million employees – alone. Employment in the private sector fell by 61,000 in the last quarter of 2009 alone. Nobody can seriously believe that this version of Maoist economics can lead anywhere but to the IMF.

Voter turnout in the 2001 and 2005 General Elections was 59.4 and 61.4 percent respectively, compared to 77.7 and 71.4 percent in 1992 and 1997. John Major’s Tories won with a vastly-reduced majority in recession conditions mainly because Neil Kinnock’s ‘nearly-new’ Labour failed to convince the electorate that they represented a viable alternative. Five years later, the outgoing Major administration left Tony Blair and Gordon Brown with a budget surplus at a time of unprecedented global economic growth. Having put the budget back on an even keel, Major lost, apparently, because he couldn’t drum up the necessary ‘feelgood factor.’ From 1997-2001, after a four year period of pretending to adhere to the ‘golden mean,’ Gordon set about taxing, spending and consequently wrecking the exchequor just in time for a global economic downturn.

With the stakes as high as they are, I predict that the 2010 percentage voter turnout will be as high as in 1997. It would require epic numbers of turkeys to vote for Christmas for the pink-tinged Cameronites to secure anything like a landslide on a Blairite scale, given that from 2001 to the present time, the much-trumpeted growth in UK jobs has been driven by the public sector, so whatever goes down, we are unlikely to see a landslide. But public sector workers will need to weigh up as to what degree the inevitable budget cuts which will follow the election will be more savage under the Tories than under Labour. Meanwhile, those in the private sector know that taxes will rise whoever sits astride the woolsack. They won’t vote Labour.

So I’ll stick my neck out and say that, despite the unconvincing Tory arguments, most voters are going to wake up on polling day, survey the mess and vote for anyone but Gordon. The Tories will win a reasonable working majority, show their true colours and set about vigorously dismantling New Labour’s constituency, the public sector, partly because of the imperative to reduce the obese deficit and partly because that’s what they are ideologically inclined to do. This will be a shame, since it employs a lot of hardworking people who work for the public good, who deserved better leadership than they got under the Great Helmsman.

Thus the next election, which should be about the environment, sustainability, public sector reform, a fairer society, education, training, infrastructure and health will be won by the Tories on the feelbad factor, and Britain’s half-assed stab at the Middle Way will be history.

John J Kelly

Few would argue that Quality, Service, Value are the cornerstones of a happy, prosperous and competitive economy. It is not good enough to explain the recent painful economic downturn on global macroeconomic conditions and wait for the upturn. No amount of economic or political smoke and mirrors will save a company, much less an economy, from the inevitable consequences of charging too much for indifferent products and services, produced wastefully. A high cost economy with diminishing competitive advantages cannot afford a £130 -160 billion budget deficit, growing at a rate of £11 billion per month.

The CQI is committed to opening a transparent debate as to whether UK Plc wishes to reaffirm its commitment to quality or continue as a casino economy with a few beacon enterprises but a static domestic manufacturing sector and an increasingly outsourced service sector. Politicians acknowledge that cuts in public spending will be necessary to make inroads into this unsustainable deficit, mitigated by improvements in efficiency and productivity. But this begs the question as to why this didn’t happen earlier. The answer is that quality management, in its absolute sense, took a back seat when cash was king.

Public sector net debt has risen from 50 – 60% of UK GDP since 1999 and public spending now accounts for over 43% of the UK national budget, or £13,000 for every adult UK citizen. Unless radical inroads are made to the cost of providing services – or radical cuts - the UK’s credit rating will be downgraded. This will not only affect the government’s ability to borrow,  but will impact on every business left standing.  Only a concerted, nationwide drive towards reducing costs – not reducing the numbers of people in work, by the way – waste reduction but, above all, realistic, sustained continuous improvement, in the way we work, in private and public sectors, will reduce the deficit between what we make and what we consume and enable us to export our surplus, competitively, thus creating jobs. Failure to do so will cripple our economy. This much is self-evident.

The CQI argues that the alternative to slash-and-burn is a root and branch revisiting of the Quality ethos. This in itself begs the question as to how and why we lost sight of these principles. One fundamental reason is that there is a fundamental semantic disconnect between the consumer perception of Quality and its technical application. Consumers value quality. Companies demand it from suppliers, but a significant number of businesses associate the term with quality assurance, compliance and conformance, which they regard as costing time, money and complexity whilst creating little added value. Standards and targets are important – the opposite is no consistency and no goals - but the first is an audit function and the second is an aspiration. The earliest formal definition of Quality states that:

Total quality control is an effective system for integrating the quality development, quality maintenance, and quality improvement efforts of the various groups in an organization so as to enable production and service at the most economical levels which allow full customer satisfaction. (A.V. Feigenbaum, 1956, Harvard Business Review).

The logic is simple and incontrovertible. Development, maintenance and improvement efforts are the basis of sustainability. Maintenance is relatively easy. Development should be a continous effort, but analysis of successive business cycles have shown that Quality is all-too-often a crisis driven initiative. Step changes in waste reduction, increased productivity, more satisfied customers and higher profits are often followed by a period of maintenance, characterised by audit and target-setting. But without holistic continuous improvement, entropy is inevitable and the root causes re-emerge. At this point the patient blames the medicine and fires the doctor and reaches for a new panacea.

Quality -or whatever you want to call it -  means making and doing things well and then working out how to do things better, at prices people can afford. There is no quick fix or magic potion – quite the reverse. We need to realign the ‘Q’ word and all its powerful nested values, tools and techniques, and rally our workforce around the slogan ‘making things better makes everything better.’ Customers need to be assured by the value and pleasure they derive from buying and using the best products and services that money can buy, not by adherence to international norms and standards. Workers need to be proud to deliver these goods, confident that in doing so, their careers and futures are assured. Anything less is simply not Quality. This much I know.

John J. Kelly

Mandy is worried about wonky cross dressing.

Yesterday, unlike ‘Lord’ Mandelson, I saw George Osborne deliver his case for the Tories as the party of ‘Progressive Politics” at centre-left Demos think tank HQ. The hounhymns were confounded. Phil Collins – no, not the former drummer of progressive rock group Genesis but the former speechwriter for failed prog rock singer, Tony (Ugly Rumours) Blair – introduced Osborne’s speech as the latest attempt at Tory ‘wordgrab.’ He concluded by thanking Boy George and telling him that he’d be pleased to relay his advice on policy to the Labour war room. Later, on national TV news, a rattled ‘Lord’ Mandelson, snidely referring to Osborne as his ‘old friend,’ accused him of ‘political cross dressing’ and called the whole schtick a ‘sick joke.’ Today, the ever-loyal Guardian published Mandelson’s ‘withering’ response as its lead story, but not the Osborne speech, together with a shrill, biased commentary from a Guardianista (middle) class warrior called Allegra Stratton. Outside wonkworld, nobody cares much about who ‘owns’ the right to be called ‘progressive,’ so why was Mandy so outraged? Surely political stereotype identity theft can’t bother an unelected peer, returning to run the country after a subsidised holiday as a guest of the Rothschilds  - don’t worry, citizens, the Business Secretary didn’t talk business, he and his fellow guests apparently sat around talking about the ‘celebrities they knew.’ Besides, we all know that his week-long stay on the Russian oligarch’s yacht last year had absolutely nothing to do with Deripaska’s purchase, then dumping, of LDV Vans. He’s bigger than that, as his contempt for democratic process clearly demonstrates.

Mandelson would never resort to cross dressing for political or any other purpose. After all, he's Gordon's willy.

No, Mandy was pissed off because Boy George has had the temerity to come back from the dead. As the architect, with Blair, of the highly effective vote winning strategy of stealing the middle class centre from the Tories with pinkwashed versions of Thatcherite ideology, he has every reason to fear its use as a weapon of mass destruction against his own beleaguered, corrupt and morally bankrupt regime. It was doubly galling that the latest body blow was delivered by the whippersnapper to whom he gave a lesson in realpolitik in the Deripaska ‘Yachtgate’ incident (Thus passim) almost exactly a year ago. Many observers, including myself, saw Osborne as the weakest link in the Cameron front line. Yesterday he gave a credible account of himself and pulled off a tricky piece of wonky jiggerypokery with aplomb. Besides, the Tories are the stupid party. This was all too . . . .freaky, man . . . .

Demos, home of much of the New Labour “Third Way” malarky, deserves much of the credit for the New Tory legerdemain. Under its latest director, liberal Blairite Richard Reeves, it  launched the Progressive Conservatism Project in January this year. Osborne’s ‘Third Way’ proposes a ‘progressive’ review of the role of government in the funding and delivery of education, healthcare and other costly social services. He argued that the choice facing the next UK government, faced with public sector spending of between 56-60% of GDP and rising, lies with cutting services and/or dramatically improving efficiencies. Labour claim they will not cut public spending, and neither will they reform their statist intervention in just about everything. The Tory solution involves identifying large savings by further privatisations, this time of the education sector, and proposing that alternative private sector or  ’third sector’ social entrepreneurs will thus be able to maintain or improve existing standards, which have fallen under Labour despite huge financial outlay, at lower cost.

A third way love-in before Tony became a neocon hag and Bill discovered girls and cigars.

Osborne cited Bill Clinton, Jean Crétien and Paul Martin (Canadian Liberals) and Göran Persson (Sweden) as examples of left-leaning centrists whose reforms transformed public finance deficits, whilst (allegedly) improving the state provision of public services. He correctly pointed to the fact that Labour has tried (with mixed success) to introduce a mixed economy in the provision of state education through its Academy schools (favoured by Tory shadow education secretary, Michael Gove, also present yesterday). The New Tory wonks thus turned the tables on (Old) New Labour: if they criticise the part-privatisation/academy opt out choice in education, they stymie some of their own policy. Likewise if they object to private finance initiatives. Moreover, Clinton, Martin and the saintly Swedes were and are poster boys of liberal centrist Blairites. Were it not for Mandy’s pantomime hissiness, conspiracy theorists might conclude that the New Tories were natural inheritors of the Blair project and that they were in this thing together.

While it is hardly progressive for the Tories to advocate prising away the dead hand of the state and to advocate more privatisation, by Tory standards, it is progressive to do so under the banner of an ideological duty of care to society and preservation of the welfare state (in contrast to Thatcher’s ‘there is no such thing as society’). Osborne is right about one thing: under Labour, state spending has recklessly ballooned out of control. We hear nothing about Gordon Brown’s celebrated ‘golden mean,’ whereby balanced expenditure would deliver prosperity allied to economic progress. But it would be truly progressive to question whether privatisation has indeed delivered real benefits to the population at large, as opposed to getting large items of capital expenditure off the treasury balance sheets. Thatcher and Reagan, whom Osborne cited as true progressives at the end of his speech, left legacies of huge budget deficits and social carnage in the form of institutionalised unemployment. Whoever inherits the record deficit left by Brown and his crossdressing puppetmaster will not only inherit a mountain of unemployment, but will also exacerbate the problem by taking a scythe to the bloated public sector. During Persson’s reforms Swedish unemployment soared to 16%, for example.

All of which leaves Demos wonks with plenty of work to do over the next few months. Make sure they aren’t passing your ideas over the fence, though, boy George.

John J Kelly

On the National Express, there’s a jolly hostess, selling crisps and tea. She’ll provide you with drinks and theatrical winks for a sky-high fee. We’re going where the air is free. Tomorrow belongs to me. Lyrics from ‘National Express,’ by The Divine Comedy.

First, let me apologise for foolishly assuming that National Express, the (privatised) UK bus company, chaired until last week by well-connected Richard Bowker, was clever enough to engineer a de facto merger with Virgin Trains/Stagecoach (Thus passim) and thus recreate a large part of the old subsidised British Rail monopoly under the guise of privatisation. I also apologise for stating the National Express was profitable: it was, until it grossly overbid for the UK’s East Coast Railway franchise. With decent rolling stock a clear run from London to Edinburgh and beyond, taking in Peterborough, Leeds, York, Newcastle along the route, even National Express should have been able to make money. But recession hit passenger numbers on the jewel in the crown of the UK rail network, and as we all know, the name of the game in privatisation is short term gain for no pain. Under pressure to defend a takeover bid from a rival, First Connect, Bowker went cap in hand, revolver in the other hand, to the government, proposing that unless the franchise terms were renegociated and more subsidies provided, National Express would need to walk away from the franchise.

In his previous guise as Chairman of the Strategic Rail Authority (not strategic and with no authority) he had seen the ploy work time and time again, especially when practised by his old boss, ‘Sir’ Richard Branson, part owner of Virgin Rail. But this time he ran out of track. Labour’s new Transport Minister, ‘Lord’ Andrew Adonis, was in no mood for handing out second chances, especially fresh from the horror of allegedly spending the last six months travelling around Britain by train (probably First Class). He threatened National Express with the loss of its remaining two franchises if it walked away from the East Coast then took the initiative last week and announced that the government would temporarily renationalise while arrangements were made to re-tender. His argument, that a rail franchise was not just for Christmas, is hard to counter. But National Express couldn’t believe what it was hearing. Its website is still in a state of shock:

“Following reports in the media about National Express East Coast, we would like to ensure all our customers have the correct information. National Express East Coast is continuing to run the East Coast business and we will continue to operate all of our services to current timetables. Despite suggestions that the Government is taking over the running of East Coast today, this is absolutely NOT true.”

“Further comments that the National Express Group has “financial problems” which have led to it “defaulting” on its commitments to East Coast are also NOT true.”

These are serious allegations. If these reports are ‘not true’ then National Express are accusing the government and Transport Minister of misleading and lying to the public – Adonis made his announcements on national radio last week. Moreover, Bowker resigned the day before the announcement, and is moving to a job in the Gulf. Incredibly, National Express claim his departure was entirely coincidental.

The truth is that the government has weighed up the potential damage of propping up yet another privatised lame duck and has decided that renationalisation will win more votes. In the current climate, they may have made the right call. Moreover, as the song from the Divine Comedy illustrates, National Express is hardly a benchmark of operating excellence. Whether in public or private hands, poor service, high prices and abuse of quasi-monopoly conditions – British rail fares are amongst the highest in the world, despite burgeoning demand – are a recipe for failure. The Tories engineered the rail privatisation disaster. To its credit, Labour saved the system from collapse by renationalising Network Rail, the infrastructure provider, in 1992. But Bowker, Branson, Souter and uncle Tom Cobbley have filled every orifice with public cash subsidies for marginal service improvements in the intervening 16 years. Adonis called it right. If someone would call the bluff of the larcenous utility companies, Labour might be in with a fighting chance of turning public opinion round. A public utility franchise is not just for Christmas.

John J Kelly

The folly of industrialisation began in the private sector. Advances in telephony led companies to centralise telephone work in call centres, taking advantage of lower labour costs; first building call centres in low-wage areas of the UK and latterly outsourcing them to lower-cost economies. The result, most often, was an unanticipated rise in the volume of calls. Instead of seeing this as a signal, managers responded by adding more resources and further specialising work (hence the growth in IVR – ‘press one for this and two for that’). Similarly, the allure of further ‘back-office’ economies – optimising use of resources by de-coupling the customer from the service itself – led them to create IT-dominated designs which sorted and routed work through processes dominated by service-levels and standard times. Again, the volume of work grew. Again the signal was ignored and similar tactics, further specialisation and outsourcing obviated any understanding of the real problem.

Service industrialisation represents the pursuit of lower costs through economies of scale. Yet higher costs ensue. The most evident cause is ‘failure demand’ – demand caused by a failure to do something or do something right for the customer, who then has to call again, creating extra work. In industrialised financial services organisations 40 to 60% of all work coming in may be failure demand. In police forces and local authorities it is usually higher.

Failure demand is an easy concept to understand – if we delivered services that worked, we would have less demand and thus more capacity – but to the wrong mind-set it becomes a ‘lever’ to reduce costs. Hence NI 14: ‘avoidable contact’, guidance for which obliges local authorities to measure and report it for publication in a national league table. This is management by fear, which encourages managers to engage their ingenuity in under-reporting; no one is engaged in solving the problem.

 Removing failure demand requires understanding and eliminating its causes. And these lie in industrialisation. Managing workers’ activity, standardising work, increasing specialisation and outsourcing on the basis of activity costs are the primary causes. Advice UK has documented the disastrous effects of these designs in the public sector, where the failure of DWP and HMRC to provide primary service throws high levels of knock-on failure demand into local authorities, RSLs, advice agencies, legal services and the courts. It is a lesson on the folly of managing costs.

It has been impossible to obtain evidence of the impact of back-office initiatives in local authorities, usually on grounds of commercial confidentiality. Yet we see regular controversy in the media, and informal sources provide evidence of heavy investment – £6m in one county – with no return. Claims for improvement usually cite lower transaction costs, which may be true, but are irrelevant, because the true costs of service are in end-to-end flow, not transactions.

Private-sector organisations that have learned this lesson design their services against customer demand. They ‘smarten up’ rather than ‘dumb down‘ putting workers in control of a system designed to serve customers and requiring managers to work on the system. This means getting rid of all arbitrary measures (targets and budget-based measures) and instead deriving measures from the purpose of the service from the customers’ point of view. The consequences are large improvements in productivity (400% is not unusual), massive improvements in service and transformation of employee morale.

Local authorities that have pioneered this approach in the public sector (for example Stroud) achieve improvements that make Gershon targets look derisory. Ironically, Stroud appeared in an Audit Commission report promoting greater use of back offices (Stroud has none): the Commission, like the authors of the Treasury report, won’t let evidence get in the way of their narrative and ideology.

The Conservative Party promises to sweep away the bureaucracy of public-sector control. It is an urgent necessity. The current push for further industrialisation should be halted and reviews of the current debacles should provide knowledge to prevent further failure. Stopping doing the wrong thing will save a fortune, but we also need policies that encourage people to do the right thing. That in turn will require that responsibility for performance is given to local leaders. Free from the need to comply they will have the opportunity to innovate.

John Seddon is author of: “Systems Thinking in the Public Sector: the failure of the reform regime and a manifesto for a better way”, Triarchy Press, 2008. www.thesystemsthinkingreview.co.uk