The recent debacle concerning Thames Water is causing a raging discussion about privatisation versus nationalisation. Then we have the long term, slow decline of our school infrastructure, but are we arguing about the wrong question?
The fundamental issue seems to be missed: that of how do you maintain and service a universal need, as effectively and efficiently as possible when it has a massive physical infrastructure and delivers its product into every person’s home (almost) or, in the case of rail, a large network of towns and cities?
Whether it is privatised or nationalised the focus has always been on cost avoidance, either to maximise profit or to reduce the burden on the public purse, but for the lack of a stitch in time, costs are not being avoided and instead are stacking up an overwhelming amount of legacy and technical debt. The issue is lack of investment in the infrastructure, resulting in significant amounts of remedial work (stopping leaks, filling in potholes, train delays and subsequent track or control repairs) and a lot of re-doing of things that were done before – as cheaply as possible. The burden on profit or on the public purse then becomes unplanned spend and is usually accompanied by individually derisory compensation schemes but centrally punitive cost.
When the call comes to cut costs for whatever reason the first reaction is always to cut planned maintenance. Sometimes that comes with the self-justifying comment that we are sweating our assets, but that too is missing the point. The assets are not the bits of the infrastructure that suffer wear and tear, but the whole service itself. By “sweating” the components, you are devaluing the whole. The cost of not doing the planned maintenance when you should is enormous and includes lots of things:-
- Temporary fixes that then need to be redone or break fairly soon
- Reputational damage
- Handling increased customer complaints
- Compensation
- Political bandwidth as regulators step in
- Opportunity costs – the work you were going to do gets delayed (again)
At a micro or macro level this behaviour is clearly prevalent in the UK and is, in my opinion, the single biggest factor in our productivity woes. It’s not about investing in the shiny new stuff, it’s about making sure the stuff you already have is not tripping you up all the time.
You could ask why are we so loath to spend on that maintenance plan?
Firstly, short-termism: we love big investment projects (HS2 and Elizabeth Line) but doing a solid job on maintaining existing infrastructure is just not headline grabbing. The real reason is the same whether it is privatised or nationalised: the short-term nature of those in charge. Whether it is a slew of shareholders, a new franchise company or a new government, none of them are “in it for the long haul”. They are all thinking of the next competition they must win (the franchise or the election).
Secondly, regulation rather than governance: having worked in a regulator (Oftel) I can see the value, but that was a short-term need and it was about driving competition in telephony. However, using regulation service delivery can feel like an abdication of responsibility, “it’s not my fault, the regulator is in charge” is something I hear more and more as I cringe at the BBC’s Politics Live. What is really needed is good governance. You would not throw the steering of an ocean-going vessel to the passengers, even though they are stakeholders, why would you do that with shareholders of a utility? Governance is not just about standing there with your hands on your hips, saying “do this, do that” and “you’re not doing it right….”. It’s about decision rights, delegated authority, appropriate oversight and review/reporting. If done well it drives transparency.
Finally, maintenance is hard: it’s not just things, it is people too. In order to maintain services, you have to good leadership (again not just looking for the quick, headline grabbing, win all the time), our investment in leadership, even to the extent of rewarding the wrong leadership behaviours and having a really weird view of what a leader is, is holding us back, a lot. You also need to invest in your workforce. Not just in their early education but also life long and you have to pay them properly.
Recommended approach
There are two things that need to happen for each public service, one short term and massively expensive, and the other long term but planned and less expensive, but still a cost we have ignored.
The first is pick a service and catch it up, get rid of the legacy and technical debt. (The other services will howl, but we cannot as a nation turn around years of slow decline across everything at once). Then, second, leave that service with a smaller but still planned maintenance cycle with sensible governance on top (not regulation).
Rinse and repeat.
I don’t care who does it, but for goodness sake, for all our sakes, let’s start being great maintainers.