Opinion

The New Darien: Part Two – what waste looks like

by | 13 Dec 2023

The second of three articles on Scotland's public spending crisis looks at the ways in which elite misrule manifests itself, and demonstrates why it is that we waste so much money.

In Part One of this series I explained the general problem which is undermining Scotland’s budget – the barely-accountable sprawling empire of political masters, civil servants, agencies, working groups, consultants, advisory boards and all the rest which run Scotland pretty well as they wish, never stopping to pay any price for failure.

But that’s just the overall picture. You need to break down its consequences to get a picture of why things are going so badly for Scotland’s public spending. Yes, waste exists everywhere. Yes, the UK Government has its own penchant for waste. But this is a Scottish problem and it is us who need to get our act together.

The following is a series of key examples, neither comprehensive in each example itself nor across them all. But they give a better understanding of the shape of the problem.

Incompetent negotiation

Generally, politicians don’t devise negotiation strategies, they indicate what they want to get out of negotiations and task civil servants to devise the strategy. In Scotland, both sides of that equation are substandard. Time and again we discover dreadfully negotiated deals which either cost Scotland dear or may do.

You’ve got trams, or the Tata Steel guarantee, or the Gupta aluminium guarantee, or ScotWind, or the nature of the ferry-building contracts – there are far too many to reference here. But supreme above them all is the negotiation over the Fiscal Framework.

You can get a (reasonably) quick primer here or a detailed explanation here, but basically Scotland got massively turned over in negotiations – twice. The outcome is costing at least hundreds of millions of pounds every year, and that is likely to get worse. The civil service appears to be incapable of negotiating effectively, and the Scottish Government appears to be incapable of directing them.

Get-rich-quick

It is really difficult to explain this using examples because there are so many. Let me put it like this; an academic blows the whistle to me on a concerning discrepancy he finds in a major public agency, a discrepancy which looks, how shall I put it?, not legal and designed to increase the wealth of its senior directors.

He flags this up to the sponsoring civil servant who looks at it and instructs him to ‘disappear’ all paperwork relating to this (he was working on a contract). He appeals this to a Minister, who makes it all go away. I get hold of the accounts of the organisation and pass them (without comment) to an accountant friend to see if everything looks above board.

She indicates that it would take some serious investigation to find out exactly what is happening, but that it very much looks to her like it is very much not above board. Everything and everyone concerned remains in place. People got bonuses.

I cannot emphasise enough that you can multiply these little examples 100 fold. No-one polices agencies on a week-by-week basis except Ministers, and for a long time Ministers have been operating on the basis that nothing makes a problem go away faster than giving an agency a big bung of money to provide positive PR for a Minister. There are hundreds of millions of pounds wasted this way, and it rarely improves public service.

Managerialism

This is perhaps the biggest problem of them all, or at least it is the problem that begets the other problems. In the 1980s a new ideology was introduced to government – New Public Management. If only public services were managed like the private sector (rather than by people who understand those services), the ‘dynamism’ of the private sector will infuse the public sector.

Except what this really means is a host of mediocre middle managers you’ve never heard of being well paid to do generic management school stuff. That means set targets, create performance indicators to monitor progress to targets, an elaborate process of commissioning and procurement (to a private sector company which often gives the official an even better paid job in return) and buckets of jargon.

The real impact of this has not been to improve public service but to overwhelm them with pointless bureaucracy. You’re no longer treating patients to make them better but to improve the scores on your paperwork. It is the paperwork which is the real purpose of the service now. People exist to complete paperwork so people who don’t know their job can manage them. It is a god-awful waste of everyone’s time.

If you’re part of the in-crowd with the public sector elite you will not find it hard to get into a relationship with taxpayers’ money that keeps you in the manner to which you are accustomed while also allowing you to rake it in as a consultant

Clinetelism

A friend runs a small manufacturing business which is successful but has a very seasonal sales profile. She needs capital to build up stock for the Christmas period. It’s purely a cash flow problem of about £7,000 and she presents evidence on this.

She contacts Scottish Enterprise. They give her £6,000 – but she can only spend it on a Scottish Enterprise-approved consultant (who was previously a staff member at Scottish Enterprise). That consultant looks at the business for four weeks and produces a report which says ‘this is a robust business which has a £7,000 cash flow issue at this time of the year’. End of support.

If you’re part of the in-crowd with the public sector elite you will not find it hard to get into a relationship with taxpayers’ money that keeps you in the manner to which you are accustomed while also allowing you to rake it in as a consultant as the line between the private and public sector blurs and starts to disappear. Everyone is pals with everyone else, and they spend a lot of time shuffling public money to each other.

Bad policy

This should be obvious, but people don’t pay attention to it. You can blame Government Ministers, you can blame civil Servants or you can blame them both, but what isn’t in dispute is that the Scottish Government is very bad at making policy. It all goes wrong, almost every time.

I’ve explained this in more detail elsewhere, but the Scottish Government doesn’t seem able to make competent policy. Let’s take today (at the time of writing) as a random example. Last week Patrick Harvie was telling everyone they had to get air source heat pumps. He didn’t mention anything about holding off to see if you were going to be one of the ‘third’ of households who were going to get district heating.

So I wrote an article for the Herald to explain that we shouldn’t be relying on air source heat pumps at all and that we need universal district heating systems. Today we’re told that that will constitute a third of heat load. Except that’s not what the government’s own plan says – it says eight per cent.

We work very closely with district heating experts and literally none of them think the Scottish Government’s plans as they stand are going to lead to even the eight per cent. They are literally just saying things and making things up as they go depending on what is in the newspapers.

It may be a small example, but if we’re giving £10,000 grants to people for air source heat pumps they will not need because policy is being made up on the hoof, and that’s just today, you’ll get an immediate sense of how much waste incompetent policy-making is causing.

Painting roses red

There is a second problem with bad policy-making, which is ‘performance policy’. On a regular basis a senior politician will say something which the civil service then has to ‘make true’. The cost of ‘making things true’ is substantial.

For me the most teeth-grinding example is ‘the Promise’. In an act of utter self-obsession, Sturgeon announced at an SNP conference that she was making a personal ‘promise’ to children in care that they would all be loved. She even had a group of them bussed in and given big hearts which they were prompted to stand up and hold in the air at the relevant point in her speech.

Except you cannot effectively define love in this context, never mind legislate for it. Worse, not a single piece of the world’s academic literature on care outcomes for young people says it is anything to do with love (what makes the difference is ‘secure attachment’, the reliable presence of a person to support the child).

But once something is said it must be made true, so an agency called (sorry, my teeth are hurting again) ‘the Promise’ is set up to run around doing sweet FA except promoting a former First Minister’s whim. Abolish the whole thing now and no-one would notice.

I can do this for weeks – the three years I spent on a ‘stakeholder group’ to try and give some substance to the substance-free idea that Sturgeon was going to run a ‘Universal Basic Income’ pilot which everyone acknowledged was impossible at the first meeting was an expensive charade.

From care homes to recycling to electric car charging to policy development, there is nothing government does that doesn’t enrich a corporation

Privatisation and revolving doors

The idea that the Scottish Government is left of centre is often hard to sustain. It has outsourced so much to the private sector and has made so many bad deals with big corporates that the idea should be challenged more often.

Except it’s not the government; this is the civil service. At senior levels in the civil service everyone is networked with the big corporate and banking interests which will provide those civil servants with lucrative board positions shortly after they retire. Those corporates are sure getting their money’s worth. From care homes to recycling to electric car charging to policy development, there is nothing government does that doesn’t enrich a corporation.

I spoke to the director of a significant Scottish company recently. He can get funding from everywhere in the world – except Scottish Enterprise. It is in an exclusive relationship with global business. The guy I spoke to doesn’t have enough lucrative board places to entice their interest.

And don’t start me on the Scottish Futures Trust (the ‘buy three hospitals, get one’ agency) or public procurement. This is costing Scotland a fortune.

Grant confetti

This is easily dealt with – the Scottish Government makes potential critics dance for money (and buys vague credibility for not credible statements) by throwing around minor grant funds. Five million here, ten million there – announce the fund, make everyone bid and then relax in the knowledge that in Scotland no-one follows the money.

Well, as best as I can, I do. A £10 million fund to tackle loneliness? Every penny of it goes to big city centre corporate charities. None goes to existing community networks. The ending violence against teachers fund? At £178 per school, its barely even worth administering it.

On and on we get these pots of money which exist not to improve Scotland but to improve the image of politicians. Count the number of these grant funds that are announced and try and add them up in your head if you want to get a scale of the waste. It’s hundreds of millions.

Expensive popularity

Another example of the costs of spending public money to boost the reputation of politicians comes from the endless unplanned, ad hoc expenditure. Here it isn’t even so much about whether an idea is good or not, it’s about how it is implemented. Ideas good or bad come flooding out before anyone has added them up.

Let me give you three. First, there is ‘the binmen are striking, it’s the Edinburgh Festival and it’s making me look bad so just give them whatever they want’. It’s not that I don’t want refuse collectors better paid, its that when that decision was made it created a precedent which was bound to cascade across pay deals.

The former First Minister interrupted pay negotiations multiple times to be seen to achieve a settlement. It seems the Scottish Government didn’t add all of this up, and before they had, a new First Minister had announced a Council Tax freeze, the cost of which he hadn’t worked out.

Or let’s take an undoubtedly good initiative – the Scottish Child Payment. This can be transformative. Then again, it would have been more transformative in 2015 which then-Social Security Minister Alex Neil proposed it only to have Nicola Sturgeon veto it as too expensive. It is, after all, a very expensive policy.

Which makes introducing it, taking the plaudits and then resigning to leave someone else the headache of paying for it a little less than deserving of plaudits. I’m not saying any or all of these decisions were decisions that shouldn’t have been made (well, the Council Tax freeze shouldn’t). I’m saying they shouldn’t have been made in an ad hoc way but as part of a total budget negotiation.

But they weren’t. And now the Scottish Government is sitting round a table trying to work out what to cut and who to fire to make this all work. It would all be so much easier if it wasn’t for the £3 billion to £5 billion above that was wasted.

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