The New Darien: Part One – the new elite misrule

by | 12 Dec 2023

The Scottish Budget is set to be brutal and we need to look carefully at why Scotland struggles to get value for its public expenditure. When we do we find the mismanagement of Scotland. Again.

Someone wrote to me describing the current public finance situation in Scotland as ‘Darien II’, a repeat of the elite misrule of Scotland which led to a nation on its knees (the Darien scheme involved Scotland’s elite getting more than a little carried away with themselves and investing massively in a bad idea which virtually bankrupted the country). The scale of the crisis approaching Scotland’s public services is bad enough to merit the (imperfect) comparison.

On 19 December there will be a Scottish Budget widely expected to be the most brutal of the devolution era. I will be using up unused annual leave so will mercifully miss it. But I don’t want Scotland to get the impression that this is all inevitable, so in a three-part series I want to explain why things are so bad and how to fix them.

In Part One I’ll explain the outlines of why we are in this position. In Part Two I’ll explain what that looks like in practice. And in Part Three I’ll suggest how Scotland can reverse out of this nightmare scenario.

First, let me tell you what I’m not going to cover here. We exist in a devolved Britain and we have a funding envelope based on the whims of a UK Government, which is a tax-cutting, public service-starving Tory government. This limits investment in Scotland substantially. And we live in one of the most unequal countries in the developed world as a result of economic management by both Tory and Labour Governments over a 40 year period. The costs of failure demand resulting from this are enormous.

Scotland can’t invest like a Nordic country against these constraints, but that is not the whole picture, and I want to focus on what we can control. What absolutely is in the control of the Scottish Government and its civil service is competence and waste in the money which it does have to spend.

This is where the Darien analogy comes in; in this instance the ‘elite’ is not the wealthy merchant class but the wealthy senior managers who run the public sector. To give you an idea of the scale of the problem, since devolution the number of public employees working directly for government has increased from about 150,000 to 245,000.

That is a two-thirds increase in head count. You will be aware that we do not have two-thirds more teachers, doctors or police. None of this is really that easy to measure in Scotland because we don’t have a central statistics agency and instead we’re reliant on sources such as Public Health Scotland which is very clearly running propaganda for the government, not properly measuring it.

Not all of that increase represents a larger overall workforce; some of it is the reallocation of headcount because of rounds of centralisation (taking things not directly under government control into direct government control). So let me give you another measure – the number of civil servants working directly for government ministers, which has increased from 14,025 to 26,050 in that period. That’s an 85 per cent rise.

What politicians want is permanent good news, massaged statistics, cover-ups when things go wrong and to be told their bad ideas are good ideas

Again, this is a little complicated because tax and social security were devolved in this period, but that very much didn’t almost double the total number of civil servants. (Of course, the social security civil servants have barely been able to deliver anything yet.)

On the other hand, what this disguises is the rise in the number of non-frontline workers across all our public sector. Go and have a look at any public sector entity and trace back its staff. You will find big teams of people doing things like ‘innovating’ or ‘change managing’ or ‘operationalising’ – and that’s if you can work out what they do at all. If you want to join one of these teams you’ll need a degree in marketing, admin or PR.

This looks worrying like part of a deal. Both Thatcher and Blair reformed the civil service in ways that incentivised delivering exactly what politicians want. That might sound like a good idea, but it isn’t, because what politicians want is permanent good news, massaged statistics, cover-ups when things go wrong and to be told their bad ideas are good ideas.

What we have in Scotland is a senior civil service which expands and rewards itself with a culture of bonuses, revolving doors, outsourcing to corporate contacts (to which the revolving door leads) and much more. In return they provide PR for politicians. If an international league table casts Scottish education in a bad light you can be sure that within days a Government-controlled agency will pump out stats that show the opposite – something to say in time for First Minister’s Questions.

The political empire and the bureaucratic empire are supposed to be checks and balances on each other, but that’s not how they operate. They are mutually reinforcing, one empowered to expand its empire, the other protected from the consequence of its actions.

Scotland won’t go bankrupt, like Scotland didn’t go bankrupt during the original Darien scheme. But like that debacle, this is going to cost us dearly in other ways

This is a recipe for disaster. Everyone involved knows that no-one will pay a price for failure, so no-one really cares. If a civil servant screws up, a Minister will protect them, and if a Minister screws up, the civil service will provide them with some kind of alibi. This has had a substantial dumbing-down effect on both sides of that relationship.

The big tell-tale is the lack of ‘requests for Ministerial Direction’. This is the old method that civil servants used when politicians were about to make a major mistake. What it meant was that the civil servant demanded that a government minister formally write and sign an instruction to the civil service to proceed with a policy against civil service advice. That is no longer done in Scotland, and everyone knows it isn’t done.

Instead civil servants run around ‘painting the roses red’ for ministers and chopping the heads off those who object. Civil servants should have been warning the Scottish Government again and again over some of the decisions it was making which have exacerbated the budget shortfall. That seems not to have happened.

In fact with an emaciated media and an often juvenile inter-party politics, it sometimes feels like Audit Scotland is alone in trying to hold things to account – and it has been issuing coded warnings about this for quite a while now.

This is the cocktail of waste and incompetence which has led us to where we are. I am very clearly not coming from the Daily Mail ‘public employees are a bad thing’ school of thought. I’m coming from the ‘frontline workers are why we have public services so anything which directs resources away from them is a big mistake’ school of thought.

And what is the scale of that waste? It’s hard to measure, because it is experienced as an ever-proliferating series of individual outcomes each of which is bad but each of which alone is generally insufficient to really cause major alarm. That’s part of the problem; it is cumulative rather than a single big-bang event.

But let me give you an estimate. All I can do is take evidence from some sectors and extrapolate it across. When I’m talking to senior public sector workers I always tend to ask them for their estimate of how much is being wasted. The picture is quite consistent. My guess is that the waste in the public sector is in the order of £3 billion to £5 billion.

No, not all of that is necessarily avoided; big bureaucracies always have waste built in. But a very large chunk of it could be, and certainly enough to offset the budget cuts we can expect next week.

Scotland won’t go bankrupt, like Scotland didn’t go bankrupt during the original Darien scheme. But like that debacle, this is going to cost us dearly in other ways. There has to be change.

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