Blog: Talk to the Hand (MT) - RSA

Blog: Talk to the hand

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One of the more uncomfortable experiences I had as a Government advisor came in meetings when it was clear that well informed and well paid civil servants were self-censoring in the face of political determination. As the minister (or Prime Minister) described the policy they wanted to unveil, or the commitment they wanted to make, you could see the officials wrestling with the need to provide a reality check but all too often deciding it was better to nod sagely than look career-threateningly unhelpful.

I say this because there seems to have been lots of this kind of thing going on in Whitehall right now. The case study in the front pages is of Kids Company where until very late on it is clear that a lot of officials (across successive Governments) swallowed back or supressed their severe doubts as the millions of pounds kept flowing. There are several post mortems being conducted about the Kids Company scandal (if you think ‘scandal’ is too big a word just think what a better run organisation could have done with those millions), but will they get to the core of the matter? This is why knowledge among Whitehall officials was unable to challenge prejudice and self-interest among ministers and their advisors.

This isn’t the only example. Last December I rather lost it on BBC Newsnight. The focus for my indignation was the Autumn Statement. ‘How is it’ I asked ‘that the Chancellor has been able to announce an eye watering austerity plan which not a single serious economist believes he should – and more fundamentally – can deliver?’. Being, generally speaking, inclined to be sympathetic to politicians I felt anxious about my outburst: I’m sure Mr Osborne doesn’t give a monkey’s about my opinion (by the way, on City Devolution I am a big fan), but if the Chancellor ended up delivering on his statement I would have felt honour bound to admit my mistake.

But I needn’t have worried. Just three months later, in this year's March budget, Mr Osborne shifted to a less extreme plan (although still incredibly tough) and then in July things softened a little more. The current plan is for a much smaller surplus to be achieved, and achieved a year later, than the Autumn Statement promised. Now, with the NHS at breaking point and the need to soften the tax credit blow, I expect the Autumn Statement in November to reveal a further adjustment (either through raising more tax or again shifting the timescale and ambition for achieving a surplus).

Given that my outspoken views on TV reflected the more sober assessment of just about every independent expert, we can be certain that at some point in the build up to that 2014 Autumn Statement that officials either swallowed their concerns or were simply shouted down. 

Another obvious example of political aspirations trumping objective analysis would be the Big Society, but as that Downing Street project was so large and fuzzy it might be better to focus on something related but more specific; the sorry tale of social investment. Social entrepreneur David Floyd, the chair of the Alternative Commission on Social Investment - its powerful final report was published last March but was not widely reported - has a pithy quote about this;

The idea that there are enough organisations underserved by our mainstream financial services to enable the creation of an entire new market to be met by socially motivated investors and for all this to stack up financially seems too good to be true. That is because it is not true.

Contrast this with David Cameron’s vision of social investment in 2012:

This is a self- sustaining independent market that’s going to build the big society.

But social investment as it is currently understood is both conceptually incoherent and largely impractical. That idea that social investment, offering market comparable returns, would significantly replace public sector grants or philanthropy for non-profit organisations is fanciful. Thus a national social investment market which the Boston Consulting Group predicted would reach a billion pounds by 2016 (does anyone ever hold these consultants to account?) is in fact a few tens of millions at most. And it is questionable if even that sum is genuinely social investment as the purists would define it. 

Social investment could have an important role in the future of welfare and regeneration but only as part of major system reform to public service funding mechanisms and in the context of substantial central and local government pump priming. As you may have noticed, neither of these conditions apply. So, once again, given the demonstrable incoherence of the Government’s social investment ambitions why was there no official reading the Prime Minister’s speech (or similar hype from many other ministers), and politely quoting Thomas Huxley; ‘I hate to ruin a beautiful hypothesis with an ugly fact but….’.

When I was working in Downing Street, the Cabinet Office was conducting capability assessments of Government departments. It was a good idea but my (unheeded) critique was that they didn’t explore what was often the critical fault line damaging departmental effectiveness – the relationship between politicians and senior officials.

If I was assessing departments today I’d start by asking every Permanent Secretary to give me examples of occasions on which, on the basis of their authority and expertise as independent advisors, officials persuaded a minister not to do or say something which the politician really wanted to do or say.

To be fair, the whole point about such occasions is that we wouldn’t have heard about them. But perhaps in the context of so many examples of terrible ideas going unchallenged the Civil Service should occasionally circulate a samizdat document entitled ‘stupid stuff Whitehall stopped’.

I’m sure the list would be entertaining and enlightening. I wonder whether it would be nearly long enough.  

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  • Social Investment as an idea predates the Big Society quite considerably - I think the social investment task force was set up in 1999 or 2000. It had quite a specific remit which was to develop a new approach to finance for social enterprises. For many years the charitable sector was incredibly resistant to social investment which always puzzled me - after all, it wasn't intended for them, but for SE's - and part of the raison d'etre of social enterprises initially was the market failure of charities. When the Blair and Brown governments started to try and put some weight - and resources - behind social enterprise, then the charitable infrastructure organisations, smellling money and already well used to presenting whichever face a funder wanted, shouldered thenselves to the front of the queue for money which they were ill-equipped to spend constructivelyfor social enterprises - and so it came about. Social enterprise was hamstrung by getting advice from the umbrella groups for the very organisational form which social enterprise was created to oppose.

    By extension the same thing has happened with social investment. Of course there is lots wrong with the industry just now - but one thing which is never discussed is that social investment was developed to finance social businesses, not charities - and its no surprise when it's found to be not fit for purpose when charities try to shoehorn it into their existing organisational form and profiles. It has worked when charities have undertaken reforms necessary to become "investable" - which is different from "investment ready". Kids Company of course never went for social investment - because the first question they would have asked is - what difference do you make? Something the charity would never have wanted anyone to scrutinise too closely.  

  • Excellent piece. The change to have "name blind" recruitment at below-SCS level should be extended to outset policy advice and gateway impact assessments. 

    You hit the nail on the head with you point on career-limiting honesty - with an increased number of external appointments at SCS level this has become more of a problem. 

  • "Thus a national social investment market which the Boston Consulting Group predicted would reach a trillion pounds by 2016 (does anyone ever hold these consultants to account?) is in fact a few tens of millions at most."

    I think you'll find it predicted a billion pounds of potential demand Matthew (not a trillion). Happy to debate you on the contents whenever you like!

    You can read The First Billion here for yourself (the clue's in the title)

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