The Greensill scandal

The growing scandal in the UK over corporate lobbing of government – which has implicated the former Prime Minister David Cameron as well as a former civil servant – is a reminder of the uses of bureaucracy and the dangers of its abandonment. Max Weber’s ideal-type bureaucracy is most closely associated with the State civil service, and many of its tenets can be seen in the traditional model of the British Civil Service which emerged from the 1854 Northcote-Trevelyan report (although in more complex ways than some of the received myths – see Greenaway, 2004 for details).

One feature of the Weberian ideal-type which nowadays seems rather quaint is that of the lifetime employment of bureaucrats, which links to the way that in the British system the civil service is a permanent one, existing independently of the government of the day. A virtue of such an approach is that it reduces the incidence of the ‘revolving door’ whereby someone might move between civil service and private sector employment. Of course, lifetime employment was never compulsory, so such moves have always occurred, but they were not the norm and, being rare, could more easily be regulated.

This revolving door (not just for civil servants but for government ministers) is at the heart of the present scandal, but it is much more widespread than that. The particular problem it presents is that the awarding of government contracts, or other favours such as, for example, laxer regulation or favourable planning decisions, is potentially corrupted.

Actually, one aspect of this particular scandal is not even a revolving door but a case in which, it appears, a senior civil servant was working simultaneously as an advisor to a now bankrupt finance company, Greensill Capital, of which he then became a Director after leaving the civil service. This seems to have happened not through oversight or concealment, but with official approval. It was not that the rules were flouted, but that they were followed.

It remains unclear how many similar instances of this there may be, but the more routine ‘revolving door’ cases have become far more common over recent decades because it has become an article of faith since at least the Thatcher governments that private sector expertise is needed to inject competence and dynamism into the supposedly archaic traditional civil service. This has even extended to the extensive use of management consultants not just to deliver policy but to contribute to the making of policy, and not just in the UK (Howlett & Migone, 2013).

At the same time, and for the same reason, the state has been reconfigured so as to be less the provider of public services and more the commissioner of those services from the private sector. This outsourcing, discussed extensively in my book, therefore offers particular opportunities for the award of government contracts, making the revolving door all the more problematic. Again, there are rules in place governing what former civil servants and government ministers may and may not do, but they are fairly lax. So it’s not necessarily a problem of rule-breaking but that the rules themselves are inadequate.

The issue here is not, or not necessarily, an overt corruption involving backhand payments in brown paper envelopes. It is more subtle, and more insidious, than that. It’s partly about conflicts of interest which, whether consciously or unconsciously, shape decisions. It is also about the way that personal networks and contacts – the ‘chumocracy’ – can be the basis for these decisions. So, all too easily, and again it may be both conscious and unconscious, nepotism and patronage creep in, and it flows both ways: ‘I’ll scratch your back if you scratch mine’. This might be to do with individuals (for example, a civil servant anticipating future employment) or organizations (for example a consulting firm which is both advising government but also potentially benefitting from government decisions).

Whilst this isn’t new (and the origins of the Greensill scandal predate the current government) there are reasons to think that it may be more prevalent now. One is that the present Prime Minister has shown, in numerous ways, a cavalier disdain for established norms of conduct, and even for the law (for example in illegally suspending parliament in 2019). He is notoriously dishonest (Oborne, 2021) and exhibits a sense of privileged entitlement which seems to suggest that ‘rules are for the little people’. If, as the saying has it, ‘the fish rots from the head’ then an administration led by such a person may be expected to be tainted.

Related to that, this is a government that is especially resistant to dissent and scrutiny, as shown by its draconian approach to policing protests, hostility to the legal system (‘activist’ lawyers, judicial review) the civil service and 'woke' universities, excessive use of Executive powers (Henry VIII powers, Statutory Instruments), disdain for the ministerial code, resistance to accountability to both the media and parliament, and much more besides. This then becomes the context for an illegal lack of transparency in public procurement with associated accusations of cronyism, assisted by the crisis situation caused by the Covid-19 pandemic which has been used to justify suspending standard rules for such procurement.

What is objectionable about all this isn’t simply the question of whether individuals and companies are lining their pockets – and often already over-filled pockets, at that. It is that they do so at public expense After all, the rationale for bringing private expertise into the civil service, and for outsourcing public services, is supposed to be that this will make more efficient use of public, or taxpayers’, money. Cronyism doesn’t as a matter of logical necessity preclude this – perhaps contracts awarded to cronies are undertaken superbly well – but nor does it require it. It makes it impossible to tell whether ‘value for money’ has been achieved.

Another way of looking at this is the way that the neo-liberal ideology of competitive markets as the most efficient allocator of resources has morphed into a ‘market managerialism’ in which bogus markets are created, with resource allocation being decided managerially by, in this case, politicians and civil servants. It is almost the worst of all worlds in taking the worst features of command economies and combining them with the worst features of capitalist economies.

It might be argued that the very fact that there is currently a scandal means that we shouldn’t worry too much. It shows that there is an accountability in operation. The difficulty with that idea is that we really have no way of knowing whether what has been identified is all that there is to be found, or whether it conceals a hidden iceberg. The only real way to be sure is through a system of formal rules. That entails far more than the often-proposed solution of ‘transparency’ and ‘disclosure’. It is not enough that conflicts of interest be ‘declared’, what matters is that, when declared, they are removed, most obviously by removing an individual from decision making.

That is no easy matter. Much of what is at issue here is extremely difficult to police – late night conversations between friends, for example – and probity requires moral norms as well as procedural rules. Perhaps a different way of putting this is to say that it is not necessarily easy to say where and when ‘decisions’ are made: the meeting room and the written minutes may not tell the whole, or even most, of the story.

So Weberian bureaucracy isn’t by any means the whole answer here. For that matter, we shouldn’t assume that the traditional civil service was free of chumocracy when, no doubt, the ‘old boy network’ was alive and kicking. Similarly, ministers and former ministers of bygone times were not paragons of unalloyed virtue.

But this doesn’t mean that cronyism and more or less overt corruption are simply facts of life. They flourish to a greater or lesser extent according to the particular rules and norms of political administration obtaining in particular places at particular times. Avoiding such problems is always a work in progress, sometimes going in the right direction, sometimes the reverse.

In Britain, at the present time, there is a sense of going in the wrong direction. As Rafael Behr, the Guardian columnist, argues, it is not country “riddled with corruption”, but there is “the stench of decay”. That may have its proximate cause in the particular character of the present Prime Minister and government. But they have been enabled by inheriting a state that had already been hollowed out, and a civil service that had been undermined, by the ‘private good, public bad’ ideology. That gave them a freedom of action that might otherwise been constrained. By the same token, with different ideologies and institutions that freedom of action could be curtailed.

 

The fifth edition of A Very Short, Fairly Interesting and Reasonably Cheap Book about Studying Organizations will be published by SAGE in November 2021.

The coronavirus crisis

This blog has been sadly neglected in recent years, as all my blogging time and energy have been taken up with my Brexit Blog. But the current coronavirus crisis prompts me to return to it, because so much of what is happening in this crisis has an organizational dimension, and some of it relates directly to the themes of the book which this blog accompanies. In this post, I’ll discuss some of them, with the focus on what is happening in the UK but no doubt at least some of it has a wider relevance.

Overall, it’s possible to see many of the chickens of contemporary organization coming home to roost. This is most obvious in the National Health Service where spending as a percentage of GDP effectively flatlined between 2011 and 2019, and per capita is well below that of most other highly developed countries (e.g. France, Germany, Japan, Australia). Crucially, this is against the background of a rapidly ageing population and – as has also been laid bare by the coronavirus pandemic – a social care system that was already in crisis and has been for at least half a decade (as discussed on this blog in May 2016).

The issues here go well beyond those of funding, though. They also relate to managerial apprehensions of the ‘efficient’ use of that funding. In the book (p. 142) I use the specific example of the NHS to discuss this, writing that “one way this has been done is to reduce spare capacity in the system. This in turn has the effect that unusual peaks in demand, such as a major incident or a flu epidemic, swamp the system … the question still remains: efficient for whom? Is spare capacity inefficient from the point of a view of a patient caught up in a demand peak?”

This seems almost prophetic now, as the NHS faces a desperate struggle to obtain the machinery and protective equipment needed to deal with coronavirus, whilst old people dying in care homes are not even included in the official coronavirus mortality statistics. Of course, it would be absurd to argue that any health system could permanently maintain all of the spare capacity needed to deal with so unprecedented crisis. But running a system for years without any spare capacity at all was always bound to lead to disaster.

Similarly, we are now seeing the consequences of the endless restructurings and in particular the dynamic of centralization-localization as the supposedly inefficient bureaucracy of the NHS is subjected to almost yearly reforms. It was such an analysis which led to the fragmentation of the NHS into Clinical Commissioning Groups (CCGs), to break down the ‘monolith’ of the NHS. This was happening even as it was being reported that the problem with NHS procurement was lack of centralization, but under the dogma of ‘post-bureaucracy’ this was ignored (discussed on p. 87 of the book). Fast-forward to the coronavirus crisis and what do we fine? That very quietly the government has taken back central control of procurement from the CCGs to deal with it.

Nor is it only in health care that we see the consequences of the ill-judged managerial reforms and budget cuts of the last decade or more. I wrote on this blog in October 2016 about the crisis that was already underway in prisons. No surprise, then, that coronavirus is sweeping through them now, and there are calls for the early release of at least low-risk offenders and prisoners on remand.

Beyond public service issues, the coronavirus crisis has laid bare the inequalities and insecurities associated with the new capitalism and its associated ‘precariat’ (discussed on p. 118-120 of my book). The supposedly self-employed ‘entrepreneurs’ and zero hours workers of Uberfied business models are by the far the most economically vulnerable to the lockdown of the economy. The gap between this precariat and the salariat (like me) who have continued security as they work from home is more obvious than ever. It falls to government, at least partially, to bear the costs of this – in effect bailing out the employers who have for years benefitted from this ‘flexible’ workforce. As with the financial crisis, what we see is a privatization of profits and a socialization of costs and risks.

Meanwhile, hundreds of thousands who had never expected to now turn to the welfare system and find that it is very far from the generous safety net they had imagined, let alone the scroungers’ paradise that the tabloid press had led them to believe (see also p.120 of book). This is not just a matter of a one-off crisis. Rather, it comes against the background of the middle-calls insecurity which has been underway for some time, and is intimately linked to the demise of middle management and the white-collar underclass that has characterized the new capitalist model (p.123 of book; see also this blog post from February 2015).

Intimately linked to precarious employment is the use of foodbanks (blog post from September 2016) and here, too, coronavirus has had an impact. On the one hand, they face mounting demand as people’s incomes dry up. On the other, staffing and donations are both impacted by the illness, and some foodbanks are having to close down just as they are most needed.

No doubt there are many more examples of how coronavirus is exposing underlying issues within the organization of public services, of work, and of society more generally. The key words are ‘exposing’ and ‘underlying’. In this post I have made frequent reference to what I wrote in my book or on this, accompanying, blog. The message is not meant to be a self-congratulatory ‘I told you so’. Rather, it is intended to show how so much of what is happening grows directly out of things we already knew, or which were already happening.

This is absolutely crucial for otherwise they would just be regarded as ‘crisis’ events and, as such, unusual or short-lived. This in turn would support the idea that once the crisis is over we can and should return to ‘business as usual’. To an extent, this is what happened after the financial crisis. Although many expected that it would lead to a wholesale re-evaluation of how – at the most generic level – we organize, that didn’t really happen. Instead, we saw what Colin Crouch aptly dubbed the strange non-death of neo-liberalism.

Perhaps this time things will be different. The neo-liberal or new capitalist model has been much more challenged by the coronavirus in that it has led to the mobilization of state resources in a way not seen since the Second World War. That ought, at least for a while, to put paid to the innumerable paeans to the superiority of the market for any and every political and economic question. It feels, at least at the moment, as if something quite fundamental has ruptured – although one should be wary in assuming that any such rupture will have predictable, let alone positive, effects. And even should they be positive, it is a tragedy that it will have taken the deaths of so many to demonstrate what was, in so many ways, already obvious.

Legitimate questions

The concept of legitimacy is central to organizations in many ways, most obviously in terms of who has the right to tell others what to do, and what kinds of things this applies to. That is one reason why many books about organization studies – including mine – begin by talking about Max Weber’s account of authority (in the meaning of legitimate power).

I was thinking about this in relation to the current political row in the UK about the House of Lords’ rejection of a House of Commons policy to cut tax credits for people in work. I won’t discuss the tax credits issue itself - important as it is – it is the issue of legitimacy that I want to look at. Britain, famously and unusually, has an ‘unwritten constitution’, and so relies on custom and precedent to determine what is legitimate. In this way, it could be seen as a system based partly on what Weber called ‘traditional authority’ in contrast to the rational-legal authority of written constitutions.

Since the House of Commons is elected on the basis of, certainly, a system of rules and to this extent rational-legal, and the House of Lords is an unelected body the government have been keen to say that the Lords’ action was illegitimate. More precisely, the argument is that it is illegitimate because it violates the ‘convention’ that the Lords will not block financial legislation or legislation deriving from an elected government’s manifesto.

But convention is a rather slippery terrain. As regards tax credits, what was blocked by the Lords was not, technically, financial legislation but, rather, a ‘statutory instrument’. It’s an arcane point that needn’t detain us except to the extent that it shows the imprecision of ‘tradition’ as a legitimating principle. On the other side of the coin, the House of Commons, whilst certainly elected, has a government majority on the basis that the ruling Conservative Party achieved 36.9% of the votes cast on a turnout of 66.1% of the electorate. In other words, 24.4% of the electorate voted for them.

Moreover, although the Conservative Party manifesto promised extensive cuts to the welfare budget, it did not specify that these would include cuts to the tax credits of working people. It is at least questionable whether they would have been elected had they done so. My sense is that what the electorate thought was meant by welfare cuts was cuts to benefits of people out of work. One might say so much the worse for them, but even so the point is that democratic consent to this policy looks rather threadbare.

The imprecision of party manifestos is by no means new. For example, at the 2010 election the Conservative manifesto promised that there would be no top-down re-organization of the NHS. In government (with Liberal Democrat support) there was massive and controversial re-organization. The disjuncture became an argument about what ‘top-down’ meant. At one time these manifestos consisted of quite precise lists of policies. Now, they tend to be much vaguer. And this in turn links with a far more ‘presidential’ approach to UK politics in which the persona of the leader is the key issue, even though the ‘constitutional convention’ is that a House of Commons is elected constituency by constituency and the leader is the person who can command a majority. Thus a key aspect of the last election was which of David Cameron or Ed Miliband was the most ‘prime ministerial’. So, here, what is at stake is what Weber called ‘charismatic authority’.

This complex mish-mash of rational-legal, traditional and charismatic authority makes for plenty of political spectacle and debate. But I wonder if it does not also show the limitations of Weber’s ideal-types of authority? Isn’t it actually rather common for, say, a CEO to draw selectively and eclectically on the different types*? And more challengingly, isn’t the idea that there is a distinction of authority and power a rather dubious one? After all, whatever is decided about tax credits, those affected by or hostile to the changes will ultimately be forced to accept them.

On a more personal note, this week I was awarded the title Fellow of the Academy of Social Sciences (FAcSS). This, too, is about legitimate authority – the Academy’s legitimacy to award the title, the legitimacy it bestows on me. But of course I am just shoehorning this in to make it fit with the rest of the post. The truth is that I am rather pleased and want to boast about it.

 

*Something like this has always been the critique of ideal-type reasoning and the defence, of course, is that these are ideal-types, for conceptual clarification rather than empirical claims. I suppose that my point is that in political debates like this one an ideal-type is treated, at least by implication, as an empirical claim.