Trains hit the buffers

The biggest organizational story in Britain at the moment – the abject chaos on the railways – is one which happens to affect me personally. I use one of the routes on the Govia Thameslink Railway (GTR) network which, along with Northern Trains, introduced massive changes to the timetable on May 20. The time for every single service on the GTR network was changed and in the process some stations saw a larger number of services but, certainly at my station, most of the fast services to London were removed. Thus a service which used to have several trains a day that took 40 to 45 minutes into London now has a few trains with a 50 minute journey time but most scheduled to take 70 minutes.

That would be cause for dissatisfaction, but it is not the cause of the chaos. Rather, from the moment that timetable was introduced it failed disastrously, with almost all the new services cancelled or massively delayed. Journey times rose in some cases to three hours and, of course, where these trains ran they were massively overcrowded. The result was misery, frustration, missed appointments and disrupted lives.

Although GTR put out statements about teething problems being expected, it was very soon clear that what was happening was far worse than that implied. Thus, a week after it all started, an amended timetable was created in which almost all of the faster trains were stripped out. But, even amongst the services left, cancellations and delays abounded. Nor is there even an official timetable to try to plan by – what has been created, and is still the case as I write this, is a service, if one call it that, which changes hour by hour.

Trains are mysteriously announced, apparently randomly, and sometimes run but often are just as mysteriously cancelled. Or they run, but don’t stop at the stations they say they are going to, or terminate at a different station to what was said. Or are delayed for unexplained ‘operational reasons’. Information is minimal, and often incorrect. So a 45 mile journey to London is now an excursion into the unknown that can take hours, often in extremely unpleasant conditions.

It is difficult to overstate how utterly dismal this experience is. People’s lives are completely built around being able to travel to places of work and education and are intricately calibrated around public transport. And whilst for many year the British rail system has been marred by cancellations, delays and overcrowding, what is happening now is on a scale beyond anything that certainly I have ever known before. Nor should it be forgotten what a terrible situation it has put those working on the railways in. It is they who have to bear the brunt of the anger and distress – and, I wouldn’t be surprised, threats and violence - of passengers, yet they are powerless to do anything and don’t even have any accurate information to pass on.

So far as can be ascertained from what has been said in public, the reason all this has happened is that the train companies failed to recruit and train (for the new routes) enough drivers. It is as simple, and as absurd, as that. Given that the timetable changes had been planned for many months, possibly as long as a year, this represents a level of organizational and managerial incompetence on a quite extraordinary scale.

I expect that, eventually, we will learn more about what happened organizationally, but a few things are already obvious. It may not be the case that what has happened is directly attributable to privatization – although there are good reasons for criticising that on general grounds, including the far higher subsidies paid to the private companies than were ever available to British Rail. But it certainly appears that the fragmented structure created by privatization is part of the explanation. This encompasses both the split between responsibility for the network infrastructure and for train operations, and the way that routes are bundled and unbundled together under every-changing franchises (for example, GTR is I think third or possibly fourth company that has run my train service in the last 20 years). This creates co-ordination problems, loss of organizational memory and, I have no doubt, cost-cutting pressures.

At the same time, what is happening now exposes starkly the lack of meaningful accountability. There are calls for the Transport Secretary, Chris Grayling, to resign. He’s a politician with such a track record of incompetence in the various ministerial roles he has held that he is widely dubbed ‘failing Grayling’; indeed he was the Justice Secretary responsible for the disastrous reforms discussed elsewhere on this blog. He has resisted these calls, on the grounds that it is not he, but the rail and train companies that are responsible.

This points up the basic, structural problem of the various ways that political and administrative systems have been increasingly separate over the last 30 years or so (sometimes by privatization, sometimes by the creation of arms’ length agencies, sometimes by sub-contracting) with the State no longer itself providing services. It enables politicians to avoid responsibility, in some sense with justification in that no one seriously thinks that the Minister resigning will, in and of itself, resolve this crisis.

Yet, as Grayling is finding, there are limits to that. As with the supposed transfer of risk to the private sector through PFI projects and outsourcing, when basic services fail people will, ultimately, blame politicians. It may also feed support for rail nationalization, which stood at 60% just before these recent events. And it may add to the public outrage about executive high pay (see pp. 117-118 of my book), given that Charles Horton, the CEO of GTR was paid almost £500M in 2016 despite many service problems even before the present ones.

But none of this will help with the immediate situation that I and tens of thousands of people are currently stuck with, which has made a chaotic mess of our lives.

Windrush, targets and the cultural panic about immigration

The still ongoing Windrush scandal has now claimed the scalp of Home Secretary Amber Rudd, primarily for misleading Parliament by saying that there were no deportation targets when, in fact, there were. The wider picture is that it was these targets which were part of the reason why the Windrush citizens were wrongly identified as illegal immigrants (for those unfamiliar with how and why this happened, see this briefing).

The organizational use of targets and the effects of doing so are widely discussed within organization theory, and figure frequently in the concept of goal displacement discussed in my book (pp. 26-30). In brief, one way that goal displacement arises is when following the target (or, more generally, a rule) becomes an end in itself: that is, as if the purpose of the activity were to meet the target, rather than the target being a means of achieving that purpose. The Windrush scandal is a textbook case: the purpose of the rules was (ostensibly – I’ll come back to this) to remove illegal immigrants. The targets were a means of achieving this.

What happened in practice was that staff sought to meet the target and focussed solely on that. It is easy to envisage how this happened. Under, presumably, great pressure to meet their targets staff would seek any reason to identify someone for deportation. Thus any inexactitude or deficiency of documentation would be ceased on, and there was no incentive at all to try to understand the reasons for it. On the contrary, there was a disincentive to do so: the system was set up to look for reasons to deport more people, not to find reasons not to do so.

The calamity for the Windrush generation was that although they were perfectly legally entitled to live in Britain, they did not have the necessary paperwork to prove it (having not been required in the past to have such paperwork). Thus they appeared to meet the criteria for deportation and were treated accordingly. In the terms discussed in my book, this is an illustration of what happens when instrumental rationality trumps substantive rationality. Following the rules (no paperwork = no right to remain) trumped both ultimate purpose and ethical conduct. In the process, many lives have been destroyed.

Nor was the issue just one of Home Office staff, targets and deportation. Under recently introduced laws, landlords, employers, the NHS and benefits offices were also required to check immigration status. When Windrush people could not do so, they lost their jobs, benefits, homes and healthcare. In this way, too, lives were destroyed. To call it a scandal is to understate things: what has happened is an abomination: an example of the horrific potentials of instrumental rationality (as discussed on p.23 of my book).

But this did not arise simply as a result of organizational incompetence. It grew out of a political and cultural panic about immigration going back many decades. For as long as I can remember there has been a populist meme that “we’re not allowed to talk about immigration” and that “the elite is ignoring the people’s concerns about immigration”. This is nonsense. Again for as long as I can remember immigration has been talked about and complained about.

In recent times it has become common to hear anti-immigration sentiment expressed in terms of ‘of course it wasn’t a problem in the past, it’s just now that the numbers are higher that it’s a problem’. Nonsense, again – it was complained about just as much in the past, and in exactly the same terms, as it is now. Indeed, the treatment of the Windrush generation when they originally arrived is testament to this (in fact, amongst the far Right, the date 21 June 1948 [when the original Windrush ship docked in London] is still used as a code for ‘when Britain ceased to be “racially pure”’).

Moreover, for an equally long time – certainly going back to the 1971 immigration controls (which are directly relevant to Windrush, since it was these which ended the entitlement that they had, but those who had arrived prior to 1971 had been guaranteed the right of permanent residence) – the ‘elite’ have been bending over backwards to address complaints about immigration. Indeed, politicians have quite erroneously endorsed wholly exaggerated complaints about, for example, ‘benefit tourism’ and ‘health tourism’. Indeed, the latter are two of the reasons for the introduction of the rules of which the Windrush generation have fallen foul.

It is out of that fetid soil that the Windrush scandal has developed. And although the public and the press are now up in arms about it – perhaps, it has been argued, because those affected are depicted as ‘the right kind of immigrant’ - they should remember that it was public and press demand that pushed politicians into creating the “hostile environment” that led to it. That represents a major failure of political leadership, for sure, but in a democracy the public also have to accept responsibility for the policies they have sought and endorsed.

That phrase – “hostile environment” – is being justified on the basis that it ostensibly related just to illegal immigrants. But the reality is that it is impossible to separate it from a wider hostility, not least because it created an environment of presumption of guilt of illegality in the absence of proof to the contrary. Indeed, that is precisely what has been revealed by the scandal. Moreover, it has a much longer history than even the post-1948 period.

So, as always, but in this case particularly strikingly, the way that organizations conduct themselves is inseparable from broader political, ideological and cultural issues. The laws that were made, the targets created to enforce them, and the way in which those targets were operationalised may be the immediate focus of the Windrush scandal, but they are the end result of a deeper, older and much darker story.

Your money and your life

The still emerging scandal of the use of Facebook users’ data by Cambridge Analytica for political campaigning has numerous dimensions to it – political, technological, ethical and social. One particular aspect that I find interesting is the idea that users (may) have given their consent to the various ways their data is used by signing up for services. It has apparently long been a truism in the tech world that ‘if the product is free then you are the product’, and on that basis it is claimed that signing up for services is a matter of caveat emptor or ‘buyer beware’ - or should that, in this case, be ‘donor aware’ since the point seems to be that what we should beware of is not buying?

There seems an obvious difficulty with this: how can we make such judgments if we do not know what we are agreeing to? The answer, invariably, is that what is required is greater transparency. However, as Jana Costas and I wrote in our book on secrecy in organizations, using exactly the example of accessing on-line services, transparency is not what it appears to be:

“Indeed, one can even see how increased transparency also entails increased secrecy, as the very proliferation of information makes it easy to hide secrets which get overlooked in the overwhelming torrent of disclosure. For example, consider the ubiquitous ‘terms and conditions’ to which one signs up when using web-based services. These are so detailed and complex that few of us bother to read them, and fewer still will understand them. So we just check the box indicating agreement. If subsequently this causes problems the provider can quite legitimately say that nothing was kept secret and, indeed, that there had been the fullest transparency possible. Yet it is a transparency that obscures rather than reveals.” (Costas & Grey, 2016: 53)

In these circumstances, the idea of a choice being made seems deeply unrealistic. Of course, a ‘hardline’ response would be to say that if people cannot be bothered to read and understand the T&Cs then that is, precisely, their choice. After all, they could simply not sign up to Facebook. In fact, 2.2 billion people worldwide log in to it at least once month, which is getting close to a third of the global population. No one forces them to.

That is true and, personally, I have never had a Facebook account. But it’s increasingly difficult, if not impossible, to exist without signing up to anything at all. It isn’t as if it is just a matter of social media, it is also about the multitude of on-line services that people need to use in some cases including very basic things without which it is impossible to function, including state welfare. The space for an off-line life is becoming very small indeed (generating the new phenomenon of 'cyber insecurity'). No one can, realistically, ‘choose’ to opt out of the entirety of this, even if we have choice about using this or that platform. Nor is it the case (so far as I know) that any on-line provider of anything offers not to collect any data on its users, and that is the case as much for paid for products as for ‘free’ products. Indeed, just browsing websites requires agreement (assumed as given if we continue to browse) to the use of cookies.

Choice and informed decision making in this context are therefore highly precarious, if not meaningless. Apart from the general issue of take-it-or-leave it sign ups to T&Cs, my experience, at least, is that opting out of specific permissions for, for example, receiving marketing materials from companies are often breached. And I frequently receive marketing messages from companies I have never had any contact with which offer the option of unsubscribing – but only if I provide my email address. So I am expected to ‘choose’ to provide data in order to avoid messages that I have never chosen to receive in the first place. Beyond that, my computer and phone are constantly chuntering away doing things that I have no understanding of at all, and constantly nagging me to provide more information about myself (for example my geographical location). There are even cases of phones and other mobile devices continuing to harvest such data despite users having (supposedly) disabled its provision.

Some of these issues are not new in principle. Over 30 years ago I began work on my PhD which was concerned with financial services regulation. Some of the big issues at the time were (as they continue to be) whether people actually understood what they were signing up for when they took out, for example, a life insurance policy, pension, or mortgage. This was all about, in effect, terms and conditions and hidden costs. Associated with this was the question of the sales and marketing tactics used in the industry. And, indeed, in the intervening years we have seen ongoing scandals about the mis-selling of, for example, endowment mortgages and Payment Protection Insurance (PPI) – and, ironically, the subsequent scandals around the pressure selling of PPI compensation claims. The regulation of such matters was, again, primarily conceived of in terms of transparency of information in order to promote ‘informed choice’. Yet this in turn has generated a mass of information which only someone already highly knowledgeable is really in a position to evaluate.

However, the current situation of the mining of on-line data whilst similar in principle is far more extensive in scope. It is all-encompassing in the way that buying a financial product is not, reaching far more deeply into our lives – and also, as the Facebook scandal seems to suggest, into the lives of the people we interact with (that is, Facebook friends). There also seems to be something qualitatively different about the ‘if the product is free then you are the product’ mantra in that whereas it is pretty clear that what, say, a financial advisor is after – your money – what the data wranglers are after seems to be not just your money but your life. 

Reference

Costas, J. & Grey, C. (2016). Secrecy at Work. The Hidden Architecture of Organizational Life. Stanford, CA: Stanford University Press.

Carillion: the Enron moment for public sector outsourcing?

Since the very early days of this blog, I have written several posts about the danger and damage done by public sector outsourcing and it’s also discussed in my book (pp. 88-90 and elsewhere). It is a practice which developed extensively from the 1980s onwards, and was given a particular boost during the New Labour period of ‘high managerialism’, but has by no means diminished since then. Indeed, one might say that it became normalised as the standard way of delivering public services so that what started out as a controversial ideological principle became a routine administrative technique, with its ideological roots concealed from view.

Those ideological roots are worth reflecting on. At one level, they derived from what might be called first phase neo-liberalism, in which it was assumed that markets and private companies were by definition more efficient ways of delivering goods and services of any kind. Such a view was most manifest in outright privatizations, but also informed the outsourcing of services which were either politically impossible to privatize, or which because of their cost structure would not attract any buyers.

This then morphed into a rather more curious second phase of neo-liberalism, whereby it was not markets as such which were lionized but a kind of state sponsored “market managerialism”, to use Martin Parker’s (2002) term. Here, the idea was less about ownership and more about the idea that private sector management methods were a guarantor of ‘efficient’ delivery: the entire distinction of public and private began to be erased. Typically, if not invariably, what that meant in practice was reducing the employment security and pension rights of erstwhile public sector workers re-employed by the new contractors. What was curious about it was that it created a kind of corporate welfare state – not simply in the sense of state services being delivered by corporations but in the sense of corporations being entirely dependent upon payments from the state – the real welfare scroungers, as I put it in a previous post on this blog.

It is highly doubtful whether any of this actually reduced the costs of service delivery in the round. Even if headline delivery costs were reduced, the extra cost of paying shareholders needed to be factored in and, more than that, the changing employment terms of workers created both a bill for tax credits to supplement earnings and contributed greatly to the emergence of a far more precarious and insecure workforce, with multiple economic and political consequences. In fact, a National Audit Office (NAO) report published this week shows Private Finance Initiative (PFI) construction projects are far more expensive than using the public sector.

Moreover, outsourcing was dogged by one failure after another as documented in the posts I have linked to. At the core of the myth of public sector outsourcing is the idea that it transfers risk to the private sector (with this, in turn, justifying the return to shareholders). The reason this is a myth is that, politically, the state always ends up having to deal with the consequences of a failure to deliver public services. This was well-demonstrated by the way that during the 2012 London Olympics the government had to use troops to deliver security when the outsourced contract failed to do so. In the end, the government can’t walk away and is stuck with the risk.

These failures revealed another myth: that is the firms to which services were outsourced did a poor job they would not get any more contracts. But they did, partly because there are only a few firms who can bid for the contracts (which in turn actually exacerbates risk to the government, since if one fails, it has huge consequences) and partly because the over-riding belief that this was the way to administer services had become so normalised. But in any case, each failure could easily be dismissed as a particular episode rather than revealing anything systematic about the entire approach.

Arguably, what has been created is a situation which, perversely, combines the worst stereotypes of both public and private sectors. On the one hand, there is no real competition to provide market discipline; and no public service ethic to provide normative discipline.

And so we come to this week’s news that Carillion has gone into administration. This construction firm holds massive numbers of contracts right across the public sector, including in education, schools, prisons, the military and transport and thus reaching far into the most basic functions of the State. These are precisely the kinds of PFI projects criticised by the NAO report, although that was prepared (albeit not published) before the news of Carillion’s insolvency. But Carillion did far more than build public facilities, it also had contracts to run and maintain them, right down to cleaning.

The Carillion crisis goes far beyond the failure of this or that outsourced service and reveals for perhaps the first time the massive transfer, and therefore vulnerability, of public services and the state as a whole into private hands. And whilst the government have not underwritten the company (if they had, it would presumably have stayed solvent but at great potential public liability) it is already clear that they will have to undertake to provide the services it has been providing or – more likely, at least in the long term – to transfer the outsourced contracts to new providers.

But the story does not end there. Because alongside the central issue of public service outsourcing another part of the business model – typical of the “new capitalism” described in chapter 5 of my book - is the creation of lengthy chains of sub-contractors, and sub-contractors to the sub-contractors. These, much smaller, organizations are likely to suffer considerably from Carillion’s collapse not least because this financialized model partly relies on very slow payments to sub-contractors who will now be on a long list of creditors. Even if they get paid eventually, it may be too late for businesses which are likely to have very tight cash flows to survive. At the other end of the chain, the massive salaries and bonuses of Carillion executives exemplify the huge inequalities which are associated with the new capitalism (pp. 117-118 of my book).

I apologise again to those who have read this blog regularly over the last few years for my recent neglect of it, which is due to the work I have been doing on my Brexit blog. But it is worth nothing that there is a Brexit connection to the Carillion collapse. Back in December 2016, shortly after the Referendum result, Carillion and other outsource giants identified the Brexit vote as impacting adversely upon them. There are many reasons for Carillion’s demise, and the deep flaws in the model of public outsourcing are nothing to do with Brexit. But nothing that happens in Britain now is entirely separable from Brexit, including the Carillion debacle.

At all events, the collapse of Carillion has now brought to the centre of political debate all of the issues that I (and of course many other people, both in academia and politics) have been raising for years now, especially the incoherence of the idea of risk transfer. It may be too early to say that Carillion is a ‘Lehman moment’ for public sector outsourcing, but perhaps it is its ‘Enron moment’.

 

Reference

Parker, M. (2002) Against Management. Cambridge, UK: Polity Press.