Do charities soak up the cost of failure?

Last month I learned more about what is going on downstream from HMRC. One example illustrates: A charity provides volunteers to sort out peoples’ tax problems, because these people have difficulty getting service from HMRC. The charity helps about 20,000 people a year and by their estimate 95% of this work would not occur if HMRC worked. Yes, it is failure demand, and abundant.

The people running the charity have worked out it would cost HMRC about £500K if HMRC were to help these people. The charity receives less than 20% of that from HMRC, requiring some financial support from other sources, and is only able to operate because most of the advisers give their time for free. Many of these advisers used to be tax experts working for HMRC. Now they delight in being able to help people solve their problems (without recompense), something they were unable to do while employed by HMRC.

The people at the charity reckon that if the work they do were provided by the private sector it would cost the poor punters about £2.5M in advice fees. They also expressed concern that most of the people they help are not on the internet. With Gordon Brown’s promise (labelled ‘Smarter Government’) of internet-only tax services and all politicians’ belief in the private-sector being better, what can we look forward to? Only monstrously expensive inaccessible services for those who need them most, with expensive ‘advice’ eating into the monies they are owed. This government used to talk about social exclusion, yet these services exclude by design; dumber government I’d say.

HMRC doesn’t pick up the phone

Last month the National Audit Office reported that HMRC failed to pick up 44 million calls over the last year, 43% of the total. If you did that in the private sector you wouldn’t last long.

As I have noted in previous newsletters, much of this will be failure demand – entirely under HMRC’s control and caused by their wrong-headed design, foisted on gullible managers by the lean tool-heads. HMRC doesn’t study demand because the tool-heads don’t know how to study the system, instead bashing out their tools to standardise the work – a cause of failure demand – and getting workers solving management’s wrong problems (in the name of being a happy problem-solving culture – see next).

Lesley is too busy…

I have been trying to get hold of Lesley Strathie, the new boss of HMRC. I read that she intends to tackle morale which is reported to be shockingly bad, along with sickness and absence. These are always signs that the system is at fault, and I wanted to help her understand that. I wanted to advise her that to do anything to the people – a ‘culture change’ or ‘people programme’ – would not only fail to address the causes, it would be counter-productive. In any event, Lesley might want to ponder on why it is that the happy-clappy team problem-solving culture brought in by the lean tool-heads hasn’t done the trick. [They get people to problem-solve why they haven’t met today’s targets… you couldn’t make it up]

Lesley, sadly, is already doing the wrong thing. HMRC has had something called a ‘cultural inventory’ – a complete waste of time and money – the results of which fingered ‘management’ as the problem. We can anticipate lots of wasted effort on HMRC’s ‘management culture’ while the system over which management presides fails to achieve its purpose.

I anticipated that Lesley might have heard of me as I have been a regular critic of HMRC’s ‘lean’ programme. I wanted to tell her that I had offered her predecessors a meeting to explain these criticisms, but none had taken it up. Lesley claims to be a big advocate of ‘lean’ (oh dear), so in the hope of getting her curious about what has gone wrong at HMRC I sent her a copy of my article explaining the reasons for the failure of ‘lean’ (‘Re-thinking lean service’). I also wanted to encourage her to read the book I mentioned in my last newsletter – all about how ‘lean’ has undermined morale in manufacturing.

But Lesley was too busy to come to the phone. Just like the rest of HMRC.

Culture change is free

If Lesley hadn’t been too busy I would have explained not only that the current morale problems are due to the system but, more importantly, culture change is free! She does not have to waste public money trying to do the wrong thing. By changing the system around to achieving its purpose she’ll drive out costs as service improves and because the right system would put people in control, doing a great job, morale would be transformed.

I discovered of the folly of culture change programmes years ago, indeed I used to do that junk myself. I gave it up when I learned how dumb it is; I saw for myself the impact of a system change on behaviour (profound and immense). I never looked back. I wrote about the experiences that taught me this for Quality World. You can find the article at: https://www.01handshake01.com/v1_lib.php?current=496

You might like to send it to Lesley; she needs help.

Should we legislate to drive costs up?

Last month a goon from one of the big consultancies suggested in Local Government Chronicle’s pages that local authorities should be legally mandated to share services.

Just look around. The shared services programme for the Research Councils (sharing IT, HR and finance) was bought at £40M and is now forecast to cost £120M, and it ain’t over ’til the shared services work (which they don’t and probably won’t). Much the same has been reported with the shared services initiative at the Department for Transport: Sharing HR and finance was supposed to save the taxpayer £57m; but it is now on track to cost £81M.

Meanwhile a spokesman for CIPFA (the mouthpiece for accountants in local government) claims shared services will work if services are simplified and standardised. He has bought the line peddled by the big consultancies; ‘simplify, standardise, then centralise’ is their mantra. All plausible stuff to the wrong-headed thinker.

The evidence for the efficacy of shared services just isn’t there. On the contrary, all the evidence points to expensive failure. Why do they fail? Because simplifying and standardising stops the services from absorbing variety; locking these designs in, by control through IT systems, means you lock in high costs while the ‘new’ services fail. Further, this means spending more money on changing the IT systems incrementally (when they should be abandoned). These follies get on track to consume money as they compound failure with more failure.

Its only people that can absorb variety; and it is for that reason that amazing improvements can be achieved through re-design – designing the services against demand, putting people in control. The results from re-designing services: anything between 40 to 100 percent improvement in efficiency and, always, massive improvements in service. The results from sharing services if you do it right: a few percent through fewer managers, buildings and the like. If we make it a legal obligation to share services we’ll drive in costs for the long term. The only winners will be the goons.

IT goons reap as taxpayers pick up the costs

Just the most recent in a line of reports and publications on the massive costs associated with IT-dominated public-sector reform:


It is the approach – the way we go about IT – that is at fault. For more read ‘Is IT bugging you?’ in the articles section of the web site.

Evidence on the folly of out-sourcing

Along with sharing services, ‘out-sourcing’ has been a favoured mantra of the regime; the centre publishes ‘strategic advice’ on the need, and the Audit Commission bullies local authorities into compliance (you get approval for having a plan for ‘partnerships’ which can include private-sector partners). Yet we find that many local authorities are now ‘in-sourcing’ – a euphemism for discovering that out-sourcing was costing a fortune and rescuing the service back in-house.

A report by the Association for Public-Sector Excellence shows the primary reason for getting out of out-sourced contracts is cost. No surprise there then. I have been amazed at the ways in which private-sector providers (‘partners’) stitch up local authorities into deals that can only get more expensive. The classic is to contract on the basis of transaction volumes then through providing a lousy service they watch the volumes – and their revenue – go up.

I recall talking with the chief executive of what was then HBS. We were standing in his ‘back-office’ for out-sourced benefits processing in a town up-North. He had seen the results of our work using systems thinking to re-design benefits and was saying he wanted to take the ideas and sell them to other councils. Aside from whether his organisation had that competence, I told him the place to start could be with those councils for who he was providing an out-sourced service. I said he could go to them with an amazing proposition: to help them design their benefits service so all benefits could be processed in less than a week and without any need for out-sourcing. He just looked at me and said ‘that wouldn’t be very commercial’. He thought I was naive. You can guess what I thought of him.

You can get the APSE report at: http://www.apse.org.uk/publications/order-form/iinsourcing.pdf

Volume is not value

The Audit Commission seems to be getting lots of copy in the public-sector media; I think it smacks of desperation to make its case for survival. One example is its crowing about the number of ‘hits’ the new ‘Oneplace’ web site is getting. Oneplace publishes all the Audit Commission reports for local authority services. Apparently in the first nineteen days the site had one million hits. The chairman of the Audit Commission said ‘[Oneplace is] an instant hit with those who use, pay for, provide and report on public services’. Oh really?

I’ve been asking around. I am finding (and no surprise) that the people who are clicking on Oneplace are local authority people who want to see what the Audit Commission has published about them. I have yet to find a citizen who has used it to find out anything about their local authority. It is to make the most fundamental error in the web world; knowing the number of clicks tells you nothing about the value that people are trying to ‘pull’.

Further, and as all systems thinkers know, the ratings and assessments provided on Oneplace are unreliable; they are the products of the current assessment regime. No surprise then that local authorities are now arguing with what has been published.

Oneplace? No. Dumbplace, certainly.

CBL doesn’t provide choice

In the last newsletter I mentioned how Steve Bundred (chief executive of the Audit Commission) thought of choice-based lettings (CBL) as an ‘innovation’. Another person present in our meeting pointed to the fact that I had written a whole chapter on why it was a dumb idea. More evidence has been published at:


But it seems Bundred is not interested in evidence. As he replied to me (see last newsletter): if he doesn’t agree with something he takes no interest. Just what you want from a public servant.

Re-thinking lean service, the video

For those of you who prefer watching TV to reading, I did a speech on how ‘lean’ went wrong and it was videoed. You can watch the video at:


A new book

In March Triarchy Press will be publishing a book of case studies, written by systems thinkers from the public sector. As you might imagine, all the cases show massive improvement and were only achievable by ignoring the nonsense rained down from above. We are having a launch event in London on March 9th. If you want to pop along get in touch with Charlotte Pell: charlotte.pell@vanguardconsult.co.uk

Looking for an interim systems thinker?

I know of a couple of Vanguard-trained competent systems thinkers looking for interim work. If you are looking for an interim systems thinker to make a real difference, let me know.